PHOENIX—Slightly more than a year after SVN Hotels, a Raleigh, NC-based national hotel-brokerage firm was created by the merger of commercial brokerage Sperry Van Ness International Corp. (SVNIC) and Howard Perry and Walston (HPW) Commercial and Hotel Group, its top executive is on the “campaign trail,” out to build brand awareness and capture inventory.
Spreading SVN’s message at The Lodging Conference held here last month, CEO Sanjay Mundra, who transitioned from that same role at HPW, was enthusiastic about the platform, which has close to 24 offices in the U.S.
“SVN Corp. does about $12 billion in revenue every year but it’s really not known in the hotel space at all, so we wanted to make sure the brand is really an independent, stand-alone brand,” the CEO said, adding, of overall revenues, less than 2% was represented by hotel transactions.
“So, we entered into a licensing agreement with SVN Corp. agreement to say: ‘Give us the SVN Hotels brand. We’ll promote it, we’ll make it a national resource; whatever it needs to be,’” said Mundra, who also is chairman of SVN Corp.’s Hospitality Council.
Going nationwide was accomplished by selecting 21 existing real estate offices in the corporate system in key markets that now dedicate a portion of their spaces and personnel to handle hotel transactions. Some offices, such as that led by industry veteran and SVN Senior Advisor Tom Hamm of Hamm & Co. in Stamford, CT, are dedicated largely to hospitality.
“I would not just pick an office in Lubbock, TX, and say: ‘Okay. You’re a one-man show.’ Hotels are a niche business; either you know it or you don’t,” said Mundra, who added the network might go to 30 offices. “It depends on how things work, but it’s all going to be done out of the leadership in Raleigh; that is the key part. These offices are going to assist our corporate office and everything is going to be centralized. We are going to drive all of the traffic, our website, the marketing from our office, which will remain in touch and involved. So, if anybody has any issue or concern or problems, they have one person to call. And they can call me.”
The CEO expects the company to grow both organically and by acquisition.
“If there is an opportunity to acquire an independent brand or independent group to become part of the platform, yes, that we will look at,” he said.
At this stage of SVN Hotels’ growth, Mundra was candid about the caliber of new talent the firm could entice under its umbrella via a merger.
“I think these brokers are looking for a nice, safe place. Will I be able to attract the right talent right away? Maybe not. I think I have to show some good results, he said.”
Mundra did note during the past 12 months under the SVN brand, 44 hotels were sold. “If you then compare it to the other regional companies, you will notice the volume is very similar, if not that we have done even more, but we were never recognized as a hotel group. That’s what I’m trying to do,” he said. “I’m not concerned, at least at this point, whether I’m attracting the right broker or not; I’m more concerned about making sure I have full geographical coverage for the country; that I can transact and have offices to do this.”
SVN Hotels works with owners and investors across a range of sizes and property types, from large institutions with multiple properties to single-asset, private owners.
Along with hotels, the firm is aligning itself with strategic partners to help those who might need “a complete package,” which could include financing, appraisal services, etc.
“There are a lot of properties that require less amounts of money, meaning deals under $10 million, but with deals above that, especially if they are a CMBS-type of a loan, we have relationships we can bring to the table,” said Mundra. “It’s not our core business; just something we have to have in today’s brokerage business. You simply can’t be a transactions business. It just doesn’t work.”
The CEO noted in the past six months in at least five transactions, “we brought financing along with us to the buyer.”
Now a passive investor, Mundra has owned and operated hotels for some three decades, with 15 select- and full-service hotels in four states. He’s been drawing on his own experiences as he guides SVN Hotels.
“I kind of looked at my own behavior as a hotel owner. What did I do? Who did I buy from? How did I do the whole thing?” he said.
He also realized for the bulk of his transactions over that time period he dealt with only a handful of brokers. Toward this, he suggested the hotel-broker universe is small compared to other professions in dealing with what he sees as a $30- to $40-billion market, and that SVN Hotels’ leap to a national platform will help drive its goal to capture 3-4% of the market, ostensibly yielding approximately a billion dollars.
“You cannot do that in a lot of businesses,” said Mundra, emphasizing: “I’m not trying to beat anybody. I think we have very good players in this industry. They are extremely successful, very credible. We just want to be one player who plays on a national scale, not a regional, where we can co-exist; that’s our intent.” HB
The executive added his objective is not to present SVN Hotels to the lodging industry in a “huge splash, then it fizzles out. We’re very consistent, deliberate, and that’s why our [marketing/awareness] campaign that we’re doing is for the next 24 months. It’s not something we’re going to do for the next six months and see what happens. We have a long-term plan to be in this business.”