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HB EXCLUSIVE: HHM’s IC growth surges; hits $200M in managed revenues

PHILADELPHIA—HHM has been quietly building up its Independent Collection (IC) luxury/lifestyle division and recently revealed to Hotel Business that, in the span of 24 months, IC’s size has doubled, surging to 24 properties with 3,000 rooms, pulling in $200 million in managed revenue.

“We are being very strategic in trying to build capabilities as much as we are focused on new markets and new hotels,” said Naveen Kakarla, president/CEO of HHM, which overall has a portfolio of 135 hotels it operates.

Part of that build-up includes expanding staff. The 10-year-old IC division is now being led by industry veteran Jim Biggar, who joined HHM as EVP from his post as president of Sixty Hotels.

Additionally, the company has brought on Josh Levine as SVP of restaurants and bars. Most recently VP of operations for STARR Restaurants, in this newly created position, Levine will focus on the company’s initiative to create an F&B platform initially for IC, as well as the overall portfolio.

“We’re talking about doubling in size, but we’ve kept doubling down in terms of our investment in people and our focus on learning in the space,” noted HHM’s top executive.

The Independent Collection was launched in 2007 with the Duane Street Hotel in New York City’s Tribeca neighborhood, and Kakarla said since then, “We really haven’t repeated a brand. We haven’t repeated a formula for the style of hotel. They really are 24 different expressions. Each of these ‘brands of one,’ if you will, is different in some material ways. We have soft brands (three Autograph Collection hotels), two Leading [Hotels of the World] hotels, three-star hotels, five-star hotels, resorts, luxury, urban. So while we lump them together conveniently as lifestyle hotels, once you look a little more carefully they’re very different.”

The lobby of the Freepoint Hotel, HHM’s boutique hotel in the Cambridge submarket of Boston

Most recently added to the portfolio is Freepoint Hotel, described as a hip, boutique hotel in the fast-growing tech community in the Cambridge submarket of Boston. HHM converted a branded hotel, repositioned the lobby and revamped the F&B experience.

“It’s got the location, but it didn’t have the DNA to attract the technology business consumer,” said the CEO. “We’re ramping it up right now—a lot of excitement, a lot of energy, a lot of work.”

The Freepoint is a sponsored investment deal where HHM is the investor along with an undisclosed private-equity group.

Also added was the Pan Pacific Seattle. The luxury hotel sits about a block from The Spheres on the Amazon headquarters campus. 

Finding that right location is not as easy as in the past, noted Kakarla. “If it took us working through a dozen deals two years ago, we’re looking at two or three dozen today to find the right ones,” he said. “Fortunately, we’ve been successful and we’ve picked up a half- dozen hotels in the past year through some combination of operations or investment or both.”

Some of the other hotels in IC include The Ambrose Hotel, Santa Monica, CA; The Sanctuary Beach Resort located on 19 acres of California’s Monterey Bay dunes; Hotel Milo in Santa Barbara, CA; Hotel Figueroa in Downtown Los Angeles; Hotel 48LEX New York in Manhattan; The St. Gregory Hotel in Washington, DC; The Boxer in Boston; and The Rittenhouse, located here.

IC’s growth has produced some $200 million in managed revenue, which Kakarla observed, makes the division “a pretty meaty company in its own right and it’s 20% of HHM.”

Biggar has been wrangling that “meaty” company, and the CEO indicated the fit is a good one.

“We wanted someone who understood the space but also had as much of an understanding for branded hotels, for sales, for food and beverage, which we think of as restaurants and bars (and where the CEO sees the most opportunity to further distinguish IC),” said Kakarla, adding, “We were in a place where we needed someone who not only would be a good partner but would bring a view to the table in terms of how to structure our existing capabilities and team and where to invest our next dollars.”

Biggar said the focus is primarily on providing a high-touch guest experience, making sure the right associates are in the right positions and developing skill sets.

“We’re a company that has a tremendous reputation for performance…but we see a lot of opportunities for how we deliver on the brand promise for each individual hotel… It’s a little more challenging than when you have just one brand,” he said.

One advantage Biggar cited was hotel owner Hersha Hospitality Trust’s greater deployment of capital toward independent hotels. “That’s been a tremendous engine for growth,” he said, noting IC also has been attracting outside capital via private equity. “And that is certainly fueling our growth.”

A priority for Levine is to improve existing restaurants in the portfolio. “There’s quite a bit of work to do from that perspective as we’ve grown very quickly,” said the SVP, adding, “It’s going to be the entire operation. Everything from our stand-alone restaurants to some of our hotels that offer breakfast only up through in-room dining, banquets, minibars.”

Levine felt the new position would give him the opportunity to make an impact “and create some good things from the ground up.” HB


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