A mentor-mentee relationship from more than a decade ago has led to the creation of Spark Hudson Advisors, a Washington, DC-based hotel real estate advisory and consultancy firm.
Will Perry, who has three decades of industry experience working for major brands, and Ruben Ortega Jr., a former Goldman Sachs executive, are both principals of the company. It was Perry who served as a mentor and career coach for Ortega while he was an undergraduate at Cornell University.
Will Perry Spark Hudson Advisors
“Over the years, we joked that we should go into business together because of our affinity for the hospitality industry,” said Ortega. “Earlier this year, we both noticed we were doing our own independent thing, and it really made sense at this time to put our heads together and create something that is unique in this space and marries our interests in hospitality.”
Perry explained that the company works within, as he called it, three silos—advisory, consultancy and partnerships, “where we’re able to bring some of our balance sheet to the table.
“From an advisory perspective, we would say that’s pre-operations,” he said. “So, let’s say you want to build a hotel. What do you do? So, [we advise on]anything pre-operations in terms of capital stacking, financing and how to structure your transaction. Then, we have consultancy. You have a hotel and the business is actually operating, and we come in from an operations perspective under the consultancy umbrella.”
He continued, “The one that we really don’t talk too much about is the fact we are able to play as a general partner or a joint-venture partner in some transactions. Right now, we’re in small-to-medium transactions that we’re able to get across the finish line.”
Ortega pointed out that what Spark Hudson brings to the table is industry expertise that covers all facets of the value chain, noting, “We understand exactly what it takes to asset manage, what it takes to manage the revenue on the operation side and the technology under the hood for the day-to-day operations.”
Ruben Ortega Jr. Spark Hudson Advisors
They have this knowledge because they’ve worked in all areas of the industry, especially Perry.
“A third [of my career]was actual direct hotel operations—front-of-house type of roles like front-office manager, guest services director or hotel manager with Ritz-Carlton,” he said. “The second third of my career was in sales, marketing and revenue management. And, the final third was sitting on the ownership side. I was in South Africa for more than seven years, where I had partnerships in transactions in South Africa while leading a private family office and actually working on the ownership side of the business for a good while.”
Ortega spent almost three years in the investment management division at Goldman Sachs, but knew he wanted to make a career in the hotel industry.
“So, I went to get my MBA at Harvard Business School just to get management experience and really broaden that skill set,” he said. “From there, I spent a little bit of time with Hersha on the acquisitions team understanding how they do due diligence and deal flow. The last couple of years, I’ve been really focused on how to scale up a real estate team and grow nationwide being at [flexible accommodations brand]Kasa Living. That was really boots-on-the-ground, understanding from start to finish all the different things that go into building a brand.”
The pair first began working together—before the company was formed—as advisors for the Reverb by Hard Rock Tampa East project, a 195-room hotel where they’ve worked closely with the architect, design and development team in an effort to drive down costs.
“A lot of the work that we’ve done with Gensler, which is the technical advisor for Hard Rock, on the operational side has reduced some of the overall costs for the project,” said Perry. “We’ve been working on it for about a year, but we’re finally at a stage now where we are able to get that into the financial markets. We anticipate it will be in the ground by the second quarter of next year. Post-construction, we will serve as the long-term asset managers on this hotel with a third-party manager.”
The company is also in the process of buying a hotel in Greenville, NC, that it will convert to Choice Hotels’ Ascend Collection soft brand. But, a monkey wrench has been thrown into the transaction.
“About three weeks ago, I would have said, ‘Oh, this is a done deal,’” said Perry. “ But, the owner, before selling the hotel, decided to take a trip for the rest of the summer to India. All of our LOIs [letters of intent]are in place, but he says, ‘Oh, I’ll finish the transaction in September”… So, once the owner gets back from his summer holiday, we’ll be ready to start moving forward on the finalization of that transaction. We hope to close on it by the end of the year.”
He knows from experience that pre-acquisition hiccups are not unusual. “Every deal blows up at least three times before it gets done,” Perry said. “You need patience if you want to get the investment basis right.”
The North Carolina deal is an example of the types of transactions Spark Hudson will continue to go after, said Ortega, adding, “[They] tend to be ones that come in on low-cost basis, and we can be flexible on the type of brand that we can put in place. That allows us to really lean on our expertise and knowledge of the different brands and how they add value—and then really put in the capital that’s required to get that performing, and get that outsize return.”
Asset management will be a key component of Spark Hudson because, Perry noted, “a lot of people want to own hotels, but they fail to understand that hotels are the most complicated form of real estate that exists on the planet.”
He added, “If you’re a hotel owner that maybe doesn’t understand the environment of something you’ve inherited or [have purchased], we think asset management is absolutely critical.”
According to Perry, the company is looking at more than 15 hotel acquisition deals it may decide to get involved with.
Ortega explained the locations that are on Spark Hudson’s radar: “Because of the lower cost of entry, we’re typically focused on tertiary markets and college towns where there is a growing tech focus. [Markets where] the 10-year outlook sees it growing at a 5% clip or greater—those are the kind of markets that we get excited about. When it comes to your primary or secondary markets, we’ll look to do a JV or come in as a co-general partner.”
Looking to the future, Perry envisioned Spark Hudson becoming “the 360-degree experts in the lodging industry.”
He continued, “That’s what we’re trying to do. Within five years, we want to have a stronger domestic presence from an ownership perspective. Within 10 years, we want to be more international.”
