Sonesta International Hotels Corp. had a unique challenge in 2020, albeit a challenge many in the business would welcome gladly.
Amid a wave of conversions for affiliated real estate investment trust Service Properties Trust's hotel portfolio and the acquisition of RLH Corp., the company started 2020 at fewer than 60 hotels and now sits closer to 1,200.
Through all that, expectations for excellence in operations and planning for future growth couldn't take a backseat as the company digested that massive wave of growth and coped with a historic pandemic, Carlos Flores, Sonesta's president and CEO, said in a video interview with Hotel News Now.
"Doing airline maintenance in flight is how I refer to what we're doing," he said. "We're building and flying at the same time. It's very low tolerance for risk work. We can't screw anything up."
He noted the things that outsiders will remember about 2020 for Sonesta are "the big peaks" in growth that came as Service Properties first announced plans to convert its IHG Hotels & Resorts-branded properties to Sonesta, then announced similar plans to convert its Marriott International portfolio. But he said the proof of its success will be how the company handled things between those big events.
"As we set ourselves up for long-term success, it's really what happens after those big peaks," he said. "How do we utilize the time afterwards?"
Sonesta now manages roughly 90% of Service Properties' portfolio of hotels, with the potential to grow even further as officials with the hotel REIT continue to negotiate with Hyatt Hotels Corp. on the future of its management agreement.
Sonesta is partially owned by Service Properties and the remaining stake in Sonesta is held by The RMR Group, which externally manages Service Properties.
Beyond conversions from Service Properties, Flores said being a member of The RMR Group opens up various opportunities for his company, working closely with related companies that focus on topics as broad as "procurement, risk mitigation, financing and just general HR strategy."
"For example, working with Five Star Quality Care [an affiliated senior living company] has been wildly helpful to us, and being able to work closely with their chief medical officer Priti Jindal in terms of establishing value to us during this crisis," he said.
He also noted the company externally manages a variety of REITs that are not hotel-focused, but they give insights into things like potential multiuse developments and opportunities to break into new markets.
"When they're looking at multiuse development or redevelopment, as they're looking at their overall portfolios and thinking about what comes next in their respective industry's cycle, we're talking about how we might be able to provide both management and branding or just expertise in advising on some of those development projects," he said. "That would have direct benefits not just on our [profits] but also potentially satisfying some of those key markets we're trying to get into."
But even with that growth avenue, Sonesta officials expect their primary growth engine in 2021 to be their burgeoning franchising operations, which the $90 million RLHC acquisition that closed in March 2021 helped accelerate.
That deal has helped Sonesta grow in various ways, including the additions of new technologies and the franchising operations infrastructure.
Flores said his company has also been able to attract a high level of talent due to its suddenly more impressive scale.
"The world has drastically changed for us going from being a much smaller player in an industry filled with titans and trying to attract talent during a period of historically low unemployment levels," he said. "Now we have the impact not just of the jobs market but having completely different scale and trajectory. We're much more exciting. There's no two ways about it. And that excitement leads to conversations [with high-quality job candidates]."
He did acknowledge such a feverish growth pace isn't without its drawbacks, and he's had to adjust his management style in real time to compensate.
"I've said for many years that I'm an open-door manager," Flores said. "I like to think I get as much as I give when I have the opportunity to provide access. But I have to temper that just because my calendar doesn't afford for as many of those opportunities."
Watch the video above for more insights from Flores.