NEW ORLEANS—There’s a new president and chief development officer at Expotel Hospitality: Larry Spelts. The hire comes at a time when the third-party management company is working to expand its portfolio and rebrand its identity to the industry.
“We did the most exhaustive executive search in the history of Expotel to find the right leader—a person who could share our focus on great results for hotel owners and who could complement our outstanding existing operating team and tell the Expotel story to a wider audience,” explained George Newton III, chairman of the New Orleans-based company.
Expotel’s professional executive recruiter found Spelts, who, at the time, wasn’t in the market for a new job. According to Spelts, Charlestowne Hotels was keeping him busy, and he was “very comfortable and very happy” at the Mount Pleasant, SC-based management company. His decision to move on from Charlestowne after being an employee for nearly eight years was based mainly on “the opportunity to be a partner at Expotel and to enjoy the benefits of the firm’s growth fully, and build net worth in the firm,” he said.
The timing of the appointment coincided somewhat with this year’s NYU International Hospitality Industry Investment Conference, which Spelts used to his advantage. Putting his prior experience in B2B marketing to use, he culled more than 2,000 contacts, deposited them into a database, and “sent out a blast” to inform the industry of his whereabouts. About a week or so afterward, he reached out to the same group about Expotel’s plans to attend the annual three-day event, which was held early last month.
“I was wondering if I’d get busy with NYU, but sure enough, after sending out an announcement that I was going to be there representing Expotel, I very quickly booked up,” Spelts said, noting potential management opportunities with about half a dozen assets preparing transactions. “I had 15 meetings in nine hours on Monday, and a couple of meetings [Tuesday] morning, so it was very productive.”
Spelts has grown portfolios before—most recently taking Charlestowne’s management contracts in total from more than a dozen in 2009 to 51 in May 2017. “Expotel has had a shrinking portfolio of managed assets,” he said. One of the management company’s underlying issues impeding growth was because Burrus Investment Group, which had established Expotel to manage its hotels, has “over the last several years, essentially unwound and liquidated the majority of its assets.”
Expotel’s latest hiring could signify a pivot in the management company’s strategy. However, Spelts believes Expotel has already successfully shifted its approach operationally, structurally and internally; it just hasn’t fully adjusted the way it’s perceived in the hospitality market. It’s also helped by access to capital, which he expects to be a catalyst for [the company]since some asset owners want their operators to have skin in the game.
Differentiating Expotel in the management market will be another challenge for the newly appointed president, especially when asset owners have a lot of options. “Hotel management services have become, to a large degree, fairly commoditized,” Spelts said. “Management agreement terms have gotten shorter. Base fees aren’t what they used to be.” Asset owners are more likely to shop around now than they’ve ever before, he noted.
To tackle this head on, he’s been meeting with the company’s partners and members of its executive team to find out what Expotel is doing that’s special, that maybe most other management companies don’t do—“looking for those differentiating qualities that I can then communicate to the industry to differentiate us,” he explained, adding that he’s been digging deep to also pull out systems and processes unique to the Expotel brand.
In what some might call an asset-light space, another way to differentiate a management firm in a low-barrier-to-entry market with an ever-growing competitive field is to elevate the strengths of its own people. “The culture here is very proprietary,” Spelts noted. “Everyone feels like they own the firm, and everyone approaches the hotels we manage as if they’re an owner because that’s just where Expotel began, and that’s where they came from and that’s the way they grew into the business.”
It’s not a coincidence he’s now at a company with a portfolio of about the same size as Charlestowne’s nearly 10 years ago; Spelts has spent his entire career at smaller companies. He doesn’t expect the new position to be harder, just different. “I don’t see any obstacles that cannot be overcome at Expotel to growing the firm,” he said. “There are plenty of opportunities we need to seize upon in order to achieve the growth.”
Currently, many of the management company’s hotels are located in its home state of Louisiana. Overall, its properties are situated in eight states. Expotel’s portfolio’s strengths include big-box, full-service hotels, but the company’s new president is hoping to change that trend. “What’s missing from Expotel’s portfolio are properties that are in Expotel’s heritage—it’s in their DNA to have these urban, boutique, independent hotels,” he said. “That’s definitely an expertise that I have in my background.”
First priority: Bring in more hotels to manage as soon as possible. Despite having a shrinking portfolio, the organization itself hasn’t decreased its workforce. “We could add half a dozen properties tomorrow and not have to add a single person,” he said. “We’re that fat right now organizationally. That’s bad in terms of our profitability as a management company, but it’s good in terms of asset owners who need a firm that could immediately take on more hotels without skipping a beat—that would be us.”
His long-term vision for Expotel’s portfolio “more accurately reflects the tastes and preferences of today’s traveler,” Spelts said. If all goes according to plan, this grouping of properties would include a third of boutique and lifestyle hotels (which he believes will ultimately attract more leisure travelers); a third of full-service brands; and a third of select-service hotels (lower chain scale properties). “That diversity provides a fair degree of protection against changes in economic circumstances because we all know what happens with travelers under economic duress—corporate travel especially—they’ll trade down,” he pointed out.
And on the management space as a whole, Spelts said, “I think we all should be very interested in educating asset owners as to what makes our respective management company special—what differentiates them. I think some of that’s going to involve separating the wheat from the chaff. Clearly, in all industries, and all segments, there are some who are better than others. Basically, at the end of the day, it’s not fair to the good management companies—who really commit the resources, spend the money, retain the talent, buy the systems, make investments to be a really good, competent hotel operator—to be lumped in with management companies where a guy prints a business card, builds a website and operates out of the trunk of his car and calls himself a management company. And they’re out there.” HB