As third-party hotel management, accounting and revenue management services company HP Hotels celebrates its 20th anniversary, the world is in turbulent times, much like it was in 2002 when it was founded.
It was shortly after 9/11 and the New York Stock Exchange had one of its worst days ever. At the time, Mike Hines, now HP Hotels chairman, observed the struggle of hotel owners who were fighting against bankruptcy while trying to keep their teams employed, and he wanted to help them.
Along with Kerry Ranson, the company’s CEO, and Joe Powers, its COO, Hines founded HP “based on principles of trust, transparency and relationships to help owners regain financial stability.”
HP Hotels recently added Hotel Indigo New Orleans – French Quarter to its portfolio, in a market the company knows well.
“I guess we were too inexperienced to be scared,” said Hines. “Now, of course, we are facing some of the same issues coming out of the pandemic working with owners to maintain solvency of properties; understanding how to run lean when necessary; working to rebuild rate and occupancy, keep staff trained and motivated; and, finally, look to grow as
an organization.”
Hines and Powers worked for Birmingham, AL-based Jackson Hospitality and were approached by Shimon Patel, an owner they knew, about starting their own management company.
Ranson, who left IHG to found the company, said that he and Hines saw at the time that there was a new type of owner and developer who was trying to move up the ladder of brands, adding, “We would commiserate together, ‘Man, if you could put together a trustworthy group that actually delivered hands-on support, you could make headway right now and take some of these new generational developer/owners from level A to level B and give them an opportunity.’”
He said that Patel was just that type of owner. “He was in the Comfort, Choice, Wyndham world and was starting to move into IHG and Hilton, and [he]had bigger ideas of things,” said Ranson. “So, with that blueprint, we started the company and moved toward setting up those opportunities.”
The company started managing four of Patel’s properties and then added another four properties in the Charlotte area for CW Smith Enterprises. Within three years, it had 30 properties. By year five, HP had about 45 properties under management. Over the years, the company’s operating history includes ground-up development for ownership groups in addition to third-party property management. The company has managed hotels in just about every state east of the Mississippi.
The company’s 20th anniversary logo
One way the company grew so quickly, according to Hines, is that the team would go to potential clients and review their operations at no charge. “If you didn’t hire us in those days, at least you had a road map on what could make you a better operator or owner at the time,” the chairman said. “From that standpoint, the willingness to negotiate was huge, and we made some really big inroads.”
In the early days, the company’s growth was organic, according to Ranson. “The difference then [was that]everything was word of mouth,” he said. “If you were doing a good job for an ownership group, they would tell others. Our marketing—if you want to call it that—was to demonstrate to owners that we could operate the properties well, enhancing profitability and longer-term asset value, while leaving them free to concentrate on development.”
While HP started out working with smaller owners, as the industry evolved, the company evolved with it to work with more institutional-type investors. “The simple fact was we has to adapt and move with the times and what the ownership groups are for us to maintain a level of assets that we make money with,” said Hines.
He did say jokingly that with the private-equity fund and REIT owners, the company has a tendency to “work themselves out of a job very quickly because we’d add value to the asset. By adding that additional value to the asset, it makes it more attractive for a sell…When you buy a hotel for $35 million and you sell it for $75 million three years later, something went right.”
All joking aside, working with the REITs and private-equity funds changed the way the company operates hotels. “The REITs and the PEs brought in a totally different realm of reporting, needs and requirements,” said Ranson. “Those needs have helped us stay fresh, too, because we couldn’t just keep doing it the way we had done it initially.”
The lobby of the Hotel Indigo New Orleans – French Quarter,, which was formerly the Royal St. Charles hotel
It freshened their approach to how they look at things from a technology standpoint, and Ranson said the company was one of the pioneers when it came to technology advancement. “While we were perhaps more hands-on in earlier eras, it also became clear that we would have to benefit from technology advancements,” he explained. “…We don’t have the infrastructure to bring in an entire technology company, but we do have the wherewithal and the entrepreneurial spirit to say, ‘How do we work with groups outside of what we do that can deliver the business intelligence components that we need to run these assets efficiently without burning up our human capital.’”
HP recognized the value of outsourcing in a number of areas. “Over time, we have come to understand the value in strategic outsourcing rather than keep everything in-house and all it entails with investments and training that can age quickly,” said Ranson. “Our new relationship with Kriya and its RevGEN revenue management platform exemplifies this approach.”
While the company believes in outsourcing where possible, he said that it still believes in local knowledge. “One thing we have stuck to is guaranteeing to owners that you will see someone from our executive team on site at least once a month,” he said. “We always have feet on the ground; touching assets regularly. This principle informs the assignment we take on and how we allocate resources to support markets.”
With its experience operating hotels and, from 2003 to 2010 developing hotels, the company saw the opportunity to expand into offering asset management services for owners. “Back in ’08-’09, the only entities doing revenue management were the brands, but we were determined to create our own revenue management company, for our own properties and to offer as a service to other property management companies by way of fee for service,” said Ranson. “An ownership group may not want to pay us to manage the asset, but they sure want our expertise on how to manage things. I believe we were one of the first property management companies doing that.”
Ranson is also proud of the company’s other areas where he said HP was an innovator. “We were one of the first property management companies to get involved with social media like Twitter and drilling down in pricing,” he said. “Charging more for rooms on the first floor as opposed to higher floors or rooms with better views seemed radical back in the day. [That’s not the case] anymore.”
Core to the company its ability to adapt to whatever situation its properties—or the world has been in. “As mentioned, we started as a company in the shadows of 9/11,” he said. “We had to evolve and be adept. And that spirit remains, so we still think of ourselves as a young company. We have learned to pivot over the years whether due to the economy, the goals of investors or in response to consumer trends.”
Hines added, “We can turn on a dime. It doesn’t take us months to change strategies. It doesn’t take us months to find new ways to do things, adopt those ways. If it works, it works. We install it.”
HP has recently added depth to its executive team to identify and conduct due diligence on property management opportunities; maintain strong relationships with ownership groups; and help ownership groups identify investment opportunities and develop long-term portfolio strategies.
Ed Robison, formerly senior director of owner support for the Hilton focused-service and all-suites brands, joined the company in February 2021 as its new SVP of owner relations and development. “Importantly, Ed works with HP’s investors and owners, both existing and new, to build relationships that provide long-term, sustainable growth for HP Hotels,” said Hines.
Jeff Burns, formerly principal, acquisitions, JMI Realty, also joined HP as its new chief investment officer, where he will focus on generating deal flow opportunities for existing partners.
The founders said they are also proud of the growth of their team internally, including SVP Jason LeBarge, Regional Director of Operations Mark Alvarez, Regional Director of Operations Kevin Atkisson and Corporate Controller Ashley Chambless.
“We are looking at multiple avenues for growth, including possibly teaming up with an equity partner,” said Hines. “The question becomes whether that entity would also take an interest in our property management company, which would bring us back to our beginnings in some ways. Regardless, we are never afraid of trying something new.”
If they were to bring on a partner, Ranson said that they have to be involved with the company. “Joe, Mike and I are all involved in the business, day in and day out,” he said. “We have all picked up different hats. Joe may be focused on accounting, but he is quick to come in and [ask]about the service scores. Mike is the same way. We have all carried those multiple hats. We still do. We still respectfully cross over each others’ guardrails to jump in and help. Moving forward, if we do it, it is more important that those people are involved in the business long term.”
HP is already expanding its involvement with boutique and specialty hotels, including soft brands, where they said there are excellent opportunities to activate properties within their communities and drive revenues. Revenue growth will be the next target for the industry.
The company has recently added the Hotel Indigo New Orleans – French Quarter, a renovation and conversion of the former Royal St. Charles for Newstream Capital Partners; and three soft-branded hotels in Alabama for Rhaglan Hospitality, a commercial real estate firm headed up by Jim Lewis and Joe White, that specializes in re-developing historic properties.
As for the company’s future, Hines, Ranson and Powers intend to retain control of the company but understand that a strong organization is predicated on growing career opportunities for outstanding performers. This would provide a natural succession planning for the existing partners. “How do we work a succession plan for these team members who have been with us and give them the opportunity that someone else gave us to start this thing?” said Ranson. “We have a responsibility on giving back. How do we set the company up to do that?”
Hines did say that the company has been approached about selling—and it has approached others. “At this point in time, you have seen a lot of consolidation within the industry itself, with management companies gobbling up other management companies,” he said. “We’ve made an offer or two only to be declined. We’ve been asked if we would like to sell, and we have declined. Both Kerry and I see the future, especially for us, is very good, with responsible growth on our side because some of the clientele that we are starting to talk to about bringing us on to manage their properties, the big guys seem to want them to sign a deal and then they forget the deal. Our clientele tells us that when we sign a deal, we adopt the hotel—the asset, the employees—and make them all our own. “
While no one knows what the future holds, Hines, Ranson and Powers have enjoyed the ride—and the relationships the ride has brought. “When we started the company back in ’02, it was on a wing and a prayer and over the years we’ve had the opportunity to become one of the class organizations in this space, in my opinion,” said Hines. “Making it 20 years through two really bad times and some really great times and still moving ahead like it was just the day we started, it’s unbelievable.”
