Though the increased size and scale resulting from Benchmark Pyramid’s pending acquisition of Provenance Hotels are indeed benefits of the deal, that’s not the point.
“It is not a core strategy to just be big or bigger,” Benchmark Pyramid President Alex Cabañas said. “It’s a core strategy of be better.”
The creation of Benchmark Pyramid itself is a product of the mergers and acquisition trend going on among third-party hotel managers because of the benefit of scale it creates, Cabañas said, referring to the merger of Benchmark Global Hospitality and Pyramid Hotel Group in September 2021. At the same time, the merger wasn’t done out of necessity but out of each company finding the right partner, capital, platform and cultural match to do something.
“It wasn’t about just being big, and I find a lot of the consolidation tends to talk more about scale and not enough about specialization,” he said.
Benchmark Pyramid announced the deal to acquire Provenance earlier this week. The companies expect to close on it within the next 45 to 60 days, Cabañas said. The main thing left is lender approval. At this point in the process, the executives haven’t made any decision regarding the future of the Provenance name and its affiliation.
Building on Relationships
Cabañas said he and Provenance Founder and Chairman Gordon Sondland have known each other for more than 10 years as they both operate in the independent hotel space, belong to the same CEO network and are members of the Curator Collection for independent and boutique hotels.
The conversation that led to acquiring Provenance started around the same time Benchmark and Pyramid were merging, Cabañas said. The merger had to be completed first, but he and Sondland started talking about possibilities, held a meeting in Miami and then brought Provenance President and CEO Katherine Durant into the conversation.
“It really happened organically, because it was not a cold pursuit,” Cabañas said. “It was a relationship that turned into, ‘Hey, maybe we ought to start talking about doing something together.’”
Along with the Provenance hotels fitting well into the Benchmark Pyramid portfolio, Cabañas said the two companies are a cultural match.
“Anybody can get deals done, but getting relationships to match up and interests to line up and do business together is always the hardest part,” he said.
Benchmark Pyramid has appetite for more deals, but not just for the sake of growth, he said.
If another deal like Provenance presents itself, creating similar advantages and value for its teams and clients, “then absolutely, all day long, we’re interested in those kinds of things,” he said.
Complementary Portfolios
The deal will add 12 of Provenance's independent boutique hotels to Benchmark Pyramid’s more than 240 properties across the U.S., Europe and the Caribbean. The Provenance portfolio includes six hotels in Portland, Oregon; two in Seattle and single properties in Tacoma, Washington; Palm Springs, California; New Orleans, Louisiana; Nashville, Tennessee; and Fort Wayne, Indiana. The Villa Royale in Palm Springs, California, is owned and managed through a separate partnership outside of the Benchmark Pyramid deal.
The addition of Provenance’s hotels aligns with the hotels Benchmark had in its portfolio prior to its merger with Pyramid, Cabañas said. Along with these hotel types and positionings aligning well with Benchmark Pyramid’s offerings, the deal opens up new geographic opportunities.
Benchmark Pyramid had a relatively small presence in the Pacific Northwest, he said. It also had no hotels in Nashville, New Orleans or Fort Wayne.
“It materially improves our overall West Coast presence,” he said. “As you look at the map, there’s definitely a geographic benefit as well.”
More Value
Prior to the deal’s announcement, the Benchmark Pyramid leadership met with the hotel teams at each of Provenance’s hotels, with Cabañas visiting 10 out of the 12 properties. They wanted to make it clear to the hotel teams that they had confidence in their abilities as the deal moved forward.
“One thing we spent a lot of time on was, ‘Guys, you all know the properties better than we do,’” he said.
The Benchmark Pyramid team is excited to have Provenance’s talent and properties join the family while being able to provide these hotels with the tools, resources and specialization that are not typically available to a smaller operating company. The goal is to make their lives easier and improve performance, Cabañas said.
“That's the way we treat all of our ownership and client relationships today,” he said. “Bigger is only better if we make it valuable to the individual asset and the individual team.”
That was the theme of the Benchmark and Pyramid merger, and that has been the theme of every conversation since given how difficult it has been for small management companies over the last two years, he said.
Along with tools and resources to improve hotel performance, that also means more benefits to the employees and a bigger pool of career opportunities, Cabañas said.
“The thing that matters to me and a lot of our leadership team the most is it gives our team hope for growth opportunities in their careers and even just places to take their family on vacation,” he said, adding it rewards their deserving teams after the last two difficult years.