PHOENIX—The driving force behind Two Roads Hospitality’s path is its ability to maneuver through the twists and turns of the highly standardized hotel industry, according to the two industry veterans in place to lead its direction and growth.
“We have the ability to move fast—we can be bold and take risks,” said Niki Leondakis, Two Roads’ CEO of hotels & resorts, during an interview Tuesday night at The Lodging Conference. “We’ve combined our teams and companies with the intention to not become another large, bureaucratic, slow-moving organization in our industry.”
Leondakis, the former CEO of Commune Hotels & Resorts, and Jamie Sabatier, the former president and CEO of Destination Hotels & Resorts, are leading Two Roads after their companies completed a merger that was first announced in January.
Sabatier, now CEO of Two Roads Hospitality, oversees the company’s operating and financial performance, global development and growth strategy, human resources and technology. Leondakis is responsible for hotel property financial performance, including operations, sales & marketing, guest experience, food-and-beverage programming and interior design strategy, with a focus on elevating the overall portfolio's lifestyle experiences.
“We’ve done the heavy lifting of bringing everything together,” Sabatier said. “Having one name really helps to create a much more unified company. It’s nice to be able to talk about ourselves as one company to the outside world even though we’ve been one company internally for a while.”
Headquartered in Denver, where Sabatier is located, Two Roads also has offices in San Francisco—where Leondakis is located—New York, Singapore and Shanghai.
Two Roads, which bills itself as an international lifestyle company, is a management company with more than 95 properties comprising approximately $2 billion in total property revenues in its global footprint. Its brand portfolio includes Joie de Vivre Hotels, Thompson Hotels, Destination Hotels, Tommie and Alila Hotels & Resorts.
Leondakis said the company’s business goals are straightforward.
“We’re a top-line-focused company built to generate revenues for our owners,” she said. “We’re not looking to double in size…we’re looking at measured growth that will enable us to be the best in each of our markets and at the same time grow our brands so we’re bringing more customer loyalty strength to help maximize each brand’s individual performance.”
The company is owned by Los Angeles-based Lowe Enterprises and San Francisco-based Geolo Capital. Lowe is a national real estate investment, development and management firm while Geolo Capital is the private equity investment arm of the John A. Pritzker family.
Sabatier said the reach of the two owners is a huge benefit to the Two Roads platform.
“We’ve had two great owners in Lowe and Geolo who invest in deals with partners,” Sabatier said. “Those are nice shareholders to have because they’re going to help us grow.”
The parent companies’ relationships with real estate investment trusts, insurance companies, high-net-worth individuals will help Two Roads’ expansion, the executives said.
“It’s our belief that we grow through having the right owner with the right property with the right ability to deliver a special experience,” Sabatier said.
The company will expand through management contracts as well as acquisitions and new development in North America and Asia, Sabatier said.
A ‘scary’ way to start
The two executives took separate paths to reach the same conclusion after the merger was announced.
Sabatier said he and Leondakis separately outlined their visions for the structure of the company and developed similar plans. That made the implementation much easier.
“It was scary how close they were,” Sabatier said. “There’s implementing it and then there’s having people feel really good about it. We have a good situation on both accounts.”
“We decided to play our strengths both organizationally and individually,” Leondakis added. “With our backgrounds, we divvied it up to reflect that.”
For example, neither executive took the approach of using a scalpel to slice off massive chunks of payroll, Leondakis said.
“Rather than look at payroll efficiencies, we said, ‘Let’s put the experts together and form a strong, powerful team,’” she said.
Leondakis, an avid gardener who enjoys preparing freshly harvested ingredients from her garden, said she has learned what her father meant when he told her as a child that “putting your hands in the Earth is good for the soul.” She has transplanted that adage to her work life.
“It’s a holistic view about life—everything you do really has to come from the inside out,” Leondakis said. “If it’s not organic, then the marketing claims around the authenticity and local connection are just marketing words. … The way to approach hospitality and running hotels to optimize their performance is you really have to start with execution first then you market what you’re executing.”
Sabatier said that philosophy also comes into play when choosing the right property mix for a portfolio—especially in the independent lifestyle space.
“The guest ultimately has to feel the soul of the property,” Sabatier said.
A famous inspiration leads to name, philosophy
Two Roads Hospitality’s name was inspired by the first two lines of American poet Robert Frost’s “The Road Not Taken,” according to Leondakis. It represents the idea that independent, boutique and lifestyle hotels are an alternative choice.
“It inspires innovation, creating and emotional connection with our guests without the rigidity of traditional chain standards,” Leondakis said. “Our heritage of both companies, and that’s what the name suggests, is we’ve always empowered at the individual property level to be the soul of the hotel.”
That carries over to the processes involved in integrating employees and platforms under one umbrella.
“The magic formula is to bring your heart to the table and your ears to the table,” Leondakis said. “Bringing two companies together is never easy, so you have to listen, care and show sensitivity to the troops. At the end of the day we recognize the desires and aspirations of both teams are pretty well-aligned.”
Leondakis pointed to Destination’s “extraordinarily high-performing technology and finance program” that Commune has been able to plug into as one aspect of the merger that has already paid dividends.
As separate entities, Commune focused on urban locations while Destination favored resort properties—another reason the companies were so complementary, Leondakis said.
“As a multibrand platform, that engine that we built was about combining teams and leveraging the strengths,” Leondakis said. “That’s what we did with our roles and built turbo teams.”
“It’s not just Niki and I—we have a fantastic team,” Sabatier said. “The leaders and the bench strength on those teams in revenue management and design and tech services and people services … we feel really great about the whole thing.”
The company’s core executive team includes: Tom Luersen, COO; Todd Wynne-Parry, EVP of global acquisitions and development; Andre Fournier, EVP of sales and marketing; Mark Hays, CFO; and Andrew Arthurs, chief information officer.