If you have followed the management sphere of the hotel industry in the post-COVID world, mergers and acquisitions have been coming left and right as larger companies are buying up their competition.
But for Charlestowne Hotels, that’s not a route it plans to travel. “These larger companies have resources that they feel they can layer into new assets and new management contracts pretty easily and take over a management company, eliminating certain resources and centralized services,” said Kyle Hughey, CEO, Charlestowne Hotels. “But when we look at it from our perspective, that really just doesn’t work for our model.”
The company’s management philosophy, which simply is “to treat each of our properties like the individual assets that they are,” just does not fit into that, he said. “It’s not really a copy and paste in any location,” he said. “We’re having to create something for each individual property within our portfolio. Therefore, if someone came to us wanting to acquire us, or if we wanted to bring in more properties through an acquisition for ourselves, we just don’t think that it would work with what we’re doing in our philosophy.”
Kyle Hughey Charlestowne Hotels
While the company has no interest in mergers or acquisitions, Hughey said it has seen a benefit from those that have happened. “Over the last year, we’ve seen a lot of inquiries coming in from our development pipeline, where owners may not like the acquiring company,” he said. “They’d say, ‘Hey, we signed up with a different type of management company.’ The acquirer comes in, and swallows them up. They don’t like that because they had that personal relationship with the original company. And they realize bigger isn’t better.”
The CEO said that the company has also learned some lessons from this to strengthen its relationships with its owners. “We were thoughtful and tried to lean in to touch the ownership making sure that they knew that we were here,” he said. “They know each one of us [on the executive team]personally and they can call us so that they don’t feel lost. And if we were growing over the years and or so, we can get ahead of anything that would come like that. We don’t want to feel ripples of that other model that’s been occurring with the mergers and acquisitions.”
For Matt Barba, Charlestowne’s COO, that fits perfectly into the company’s management philosophy. “For us, it is all about relationships,” he said. “Some of those things that you see just add so much distance between you and what we all got into this business to do this for. Not unlike us operating a portfolio of independent hotels where the focus is curated individualized relationships, and engagement with guests, and we don’t operate any differently here within our organization. We want to continue to be able to have these curated personalized relationships with them, and that just doesn’t scale beyond a certain point, or when you have to assimilate to a different corporate culture, that may not be their focus.”
While Charlestowne does not want to become a management giant, that doesn’t mean the company isn’t looking to grow. “Our recent growth really has been marked by a strategic expansion into some of these diverse markets and new continued conversations about unique properties,” said Barba. “We’re not striving to manage an ever-growing number of properties just for the sake of expansion, but we believe in containing a portfolio size that allows us to deliver attentive customized management services.”
Matt Barba Charlestowne Hotels
Last year saw the company add six properties and enter three new markets, including California, Connecticut and Maine. “We’ve opened two new properties in collegiate markets [bringing the company total in these markets to 11]: the Lockwood Hotel in Waterville, ME, and the Hotel One75 in Hamilton, NY,” said Barba. “In Connecticut, we took over management of Hotel Marcel. It’s an adaptive-reuse project that’s part of the Tapestry Collection by Hilton. It’s expected to become the country’s first sustainable net-zero energy hotel. So that is interesting and a little bit of a learning curve for us also, which is great.”
Charlestowne is also developing several properties including Hotel Verdant in Racine, WI, an 80-room, adaptive-reuse project, bringing the company’s Midwest hotels to eight.
Hughey said that the company will continue this success if it sticks to what it has done all along. “We know what we do and know where we fit in really well into the management space,” he said. “We know if a 500-key property in a major market calls, we’re probably not the best operator for that. If it’s a small property in a small market, we say no because it’s really wouldn’t warrant our services. And if its an independent or soft-branded hotel in a secondary or good tertiary market, I think that’s our sweet spot. And we know that, so we’re really thoughtful about the types of properties we take.”
