As is the case with many start-ups, Jeff Rake, president, XBD Hospitality, formed his company after being let go from his job.
He started his career in marketing and advertising for hospitality and then worked as a broker with Marcus & Millichap until the Great Recession. “I was leery to get involved again after the recovery from the Great Financial Crisis, but eventually there was the pull of the hotel business,” he said.
He took a job as a business development director at a small third-party management company he had done business with in his previous role. “I was new to that side of the business,” said Rake, “and I understood a lot of the other side of the business—the marketing, branding and positioning, and obviously the brokerage, real estate and financial evaluation side—but how to go about getting hotel contracts was a little bit new, but we had a consultant there who helped me figure it out.”
Unfortunately, that company lost some of its management contracts and had to let Rake go, but while there he came up with an idea to use his newly gained knowledge—and help others. “One of the things I figured out was that small companies like that don’t typically have a business development person,” he said. “Unless you’ve got a solid 20 to 30 hotels at minimum, generally that’s not an expense that they can incur based on the overhead…I thought, ‘There could be an opportunity here.’ There’s a lot of very-high-quality third-party management companies around the country.”
He realized an outside business development consultant could work with these firms. “Most of the new business development at smaller companies falls to executives who usually are too busy doing other things like managing hotels to do much in the way of new business development,” said Rake. “What if I develop a model where I get a fractional base salary and gather a network of companies to whom I would give exclusivity to in specific regions of the country according to specific chain scales.”
So, after approaching a few smaller management companies that liked the idea, XBD (Xclusive Business Development) Hospitality was born. He thoroughly vets the companies to make sure that they can perform at the level that owners are looking for. “I do want to hold onto my values and represent the best,” he said.
For Rake, it is about selling the value proposition that smaller is better to owners. “It was convincing owners, investors and developers about the value of smaller, more hands-on management companies whose viability depends on the satisfaction of their owners…,” he said. “I find that a lot of owners, investors and developers totally buy into that.”
He works to identify and connect these owners with an “ideally qualified, third-party management company to help them maximize both their financial and operational performance,” he said.
Rake noted that he has had initial success since founding the company in 2019, and has expanded beyond his initial clients, with whom he was on retainer. “I work with companies that have amazing stories of turnarounds and improved performance on hotels they have taken over management of,” he said. “Those are the companies that often don’t have the resources to market themselves effectively. My job is to ‘provide the at-bats’ for the management company and make the connection for them.”
He said that while a management company’s history and platforms are important, for him it is about establishing the relationships for them to be able to do business. “It is about the synergies that will exist between the two companies,” he said. “I am putting them together and getting some of the follow up and helping out with making sure the t’s are crossed and the i’s are dotted.”
