(Corrected on Feb. 8 to change wording by Ken Cruse in the seventh paragraph.)

One year ago, the executives at Soul Community Planet were trying to build awareness around their small but growing company. Now, a strategic joint venture has provided a multimillion-dollar investment that will allow the company to grow its brand and hotel portfolio.

Soul Community Planet, a holistic hospitality company based in San Juan Capistrano, California, owns and manages four properties in the U.S., three of which operate under the SCP brand.

Prior to the pandemic, the company’s main objective for 2020 was to establish a growth platform, co-founder and CEO Ken Cruse said. Their potential avenues were through putting funding in place to take the company public or setting up funds through Cruse’s private equity investment company, Alpha Wave Investors, dedicated to SCP.

SCP then shifted gears and searched for a public company to acquire and essentially do a reverse merger into that company to grow. It’s through that process that SCP met its joint-venture investor, leading officials to decide the public company they were targeting wasn’t the right fit. SCP did not disclose the name of the investor, who wants to remain private.

“We realized there was a really strong alignment of interest between us and our new investor,” Cruse said.

The two sides negotiated what Cruse called an agreement that gave SCP full funding for the growth of the brand and management company as well as full funding for the growth vehicle for real estate. The $210 million dedicated to real estate coupled with the right debt can give SCP approximately $500 million to grow its portfolio.

The hotel industry is a mature space with some great companies that have done well over the years, Cruse said, but his team found an opportunity for growth in the unmet needs of conscious consumers. These travelers are concerned about their personal wellness, social good and sustainability, but there isn’t much representation of these core values — especially among accessibly priced properties — in the hotel industry.

With these values in mind, SCP developed its first properties over the past couple of years, achieving strong index performance, having strong flow-throughs and receiving positive guest reviews. Cruse said it has been a great proof of concept.

“That resonated very strongly with our partners, and I think it’s consistent with a lot of the way these institutional investment funds are looking to do their business,” he said.

The team at SCP has been in the hotel industry for a long time, allowing them to see what gets done well and what needs some recalibration, Cruse said. Within the U.S. hotel industry, there are brand companies, management companies and ownership companies, and, for the most part, those three disciplines are independent of each other.

The industry evolved this way because each one requires a different skill set, he said.

“Since we've been in the industry for a long time, we can pull together a team that has great experience and very good track records,” he said. “All three of those skill sets are well-represented within our organization.

“Our view is that we can avoid the inefficiency and, ultimately, the conflicts of interest that occur when you have those three different parties that are kind of pulling in slightly different directions or, in some cases, distinctly different directions.”

The umbrella organization, SCP Hospitality, owns the brand, the management side and the real estate, Cruse said. That organization allows the company to be more efficient and flexible, and quicker in making decisions and course corrections, because there aren’t multiple parties pulling in different directions, he said.

As SCP Hospitality looks to grow its portfolio, if the company is branding a hotel, it will at minimum be managing it, too, he said. The plan in most cases is to own the real estate as well, to have the desired level of oversight, but executives are open to working with owners who embrace SCP’s core values. Given the current state of the industry, there likely are owners of distressed properties who would be great partners.

“We can bring in the capital in that situation,” he said. “We can renovate and reposition their assets to be Soul Community Planets. In that case, very likely we would end up in a scenario where we have a third-party owner but we’re the brand and the manager. We’re open to a broad range of creative solutions at this point.”

The four hotels in SCP’s portfolio are quite different from one another, Cruse said. The SCP Colorado Springs is a 176-room motel in Colorado Springs, Colorado. The SCP Redmond is a 49-room boutique hotel in Redmond, Oregon. The SCP Depoe Bay is a 14-room eco-surf lodge in Depoe Bay, Oregon. The Salishan Coastal Lodge is a 204-room property in Gleneden Beach, Oregon, under the SCP Hospitality umbrella but not currently part of the brand.

“Our view is all four of those different product types lend themselves quite well to Soul Community Planet,” he said.

Having this variety in property types gives the company the flexibility to branch out beyond having set requirements for room counts, specific locations and types of construction, he said.

“The strength of the brand is in the consistency of the core values themselves, and how those core values are represented and embodied are often going to be quite different,” he said. “It gives us a lot of flexibility, and we think it actually strengthens the brand having that market-appropriate positioning from one asset to the next.”