The Indigo Road Hospitality Group entered into hotel management and consulting a year ago, two months before the COVID-19 pandemic dealt a huge setback to the hotel industry, as well as restaurants, which comprise the bulk of the company’s bottom line.

Growing a new division focused on third-party management of boutique and lifestyle hotels, while fighting to hold its restaurant business together, has challenged the company.

Based in Charleston, South Carolina, The Indigo Road owned and operated 24 restaurants throughout the Southeast at the start of the pandemic. Today, it still has 22 of those, said Larry Spelts, president of The Indigo Road’s Lodging and Lifestyle Adventures Division.

“We were anticipating that we would have hotels that we’re operating at this point, several of them,” Spelts said. Instead, the company has signed just three management contracts with hotels and became owner of another.

Debuting on Jan. 17, 2020, the company’s hotel division sought to leverage partnerships with investors to obtain third-party management contracts. The group also became a hotel owner in October 2020, acquiring the 47-room Skyline Lodge in Highlands, North Carolina. The property will also be operated by The Indigo Road and is currently under renovation, he said.

The Indigo Road has signed management contracts for three hotel properties under development: The Ellington in Naples, Florida; The Flat Iron Hotel in Asheville, North Carolina; and The Savvy in Savannah, Georgia.

Openings are anticipated in May 2021 for The Skyline Lodge; early 2022 for The Flat Iron; winter 2022 for The Ellington, which recently began construction; and early 2023 for The Savvy.

Steve Palmer, founder and managing partner of The Indigo Road, said the company is poised to benefit from pent-up demand for hotels and experiences after the pandemic subsides.

“The demand is going to continue to be for better quality food and beverage, better quality hospitality all the way around. We all know that there’s a certain tipping point with size of hotels, where that memorable experience is just harder to deliver,” he said. “The demand for smaller, personalized hospitality experiences [is] going to be there.”

Spelts said Indigo Road’s current projects are ranging from 41 to 125 keys and his team would be concerned about delivering a tailored experience if a property exceeds 150 keys.

Spelts said the opportunity to grow the division could also come from hotels changing management.

“During downturns, you find out who the weak managers are and who the good ones are, so hopefully there will be some churn to our advantage,” he said.

He said the group’s restaurant experience is a competitive edge as it navigates opening hotels.

Through past projects together, Spelts said he and Palmer saw how the food and beverage experience is the “defining experience for boutique hotels, particularly leisure-market boutique hotels.”

Palmer said COVID-19 has reinforced the group’s strategy for thoughtful, forward-thinking food and beverage.

One thing he’s noticed about hotels, he said, is that smaller, experiential, boutique hotels in high leisure-demand markets appear to have been less pinched by the pandemic in the past year.

“For me, this last year has only reinforced that the demand for experiential, high-touch hospitality is going to be strong,” he said.

Spelts said the company is focused on existing and planned hotel projects where the aim is to create an experience with food and beverage. However, that’s not to say they wouldn’t look at operating a hotel that didn’t have a restaurant.

And while markets with a strong demand for leisure are high on their list, they also see opportunity in markets with heavy corporate demand. He said feeder markets and drive-to locations are also attractive.

“We would be equally comfortable in an urban setting that has a lot of corporate business as we would in a strong leisure market,” Spelts said.

He cited the group’s Naples hotel project as an example. Though primarily leisure dominant, Naples is becoming more of a business center with startups and businesses moving offices there, he said.

Palmer said leadership is defined in tough times, and both he and Spelts have the experience of going through downturns after 9/11 and the Great Recession.

Good, healthy communication is needed, he said. First, it’s about reassuring clients that they will overcome this. Then, it’s about being transparent.

“Unfortunately, when people get fearful, they contract. Really what investors, managers and especially team members need is a lot of communication. Even if you don’t have all the answers, it’s important to communicate,” he said.

When The Indigo Road was forced to lay off employees, it started weekly conference calls to open that line of communication for the teams, Palmer said.

Spelts said the group is also working with first-time hotel developers on some of the projects, which also requires thoughtful communication. Not only are they new to the hospitality industry but they’ve also never weathered a downturn caused by an external event like this, he said.