CoralTree Hospitality founder and President Tom Luersen doesn’t like the word “deal” to describe his company’s September acquisition of a controlling interest in the Magnolia Hotels brand.
“That starts to make it sound like it was transactional, and it was really relational,” he said in a video interview with Hotel News Now.
He described meetings with the leadership of Magnolia Hotels and its owner Stout Street Hospitality as “conversations over wine” between companies with properties that have engaged in friendly competition.
Those conversations grew into a strategy of “how could we help one another be more successful?” Luersen said.
In September, CoralTree, in partnership with its parent company real estate owner Lowe, reached a deal to manage four of Magnolia’s six properties in Denver, Houston, St. Louis and Omaha, and license the name to Magnolia’s additional properties in New Orleans and Dallas.
The move brings CoralTree’s portfolio to 22 hotels and resorts in the U.S.
The company was born in 2018 as the end result of several company mergers and acquisitions that began with Lowe Enterprises founding Destination Hotels & Resorts in 1973 to manage independent resort properties in the U.S. In 2016, Destination merged with Commune Hotels & Resorts to form Two Roads Hospitality. Hyatt acquired Two Roads in 2018, and later that year Luersen and several other executives from the previous companies founded CoralTree Hospitality.
Today the company manages some branded hotels but largely a collection of destination resorts and hotels, such as Terranea Resort in Rancho Palos Verdes, California; Suncadia Resort in Cle Elum, Washington; and Zion Mountain Ranch in Mt. Carmel, Utah.
Magnolia’s hotels, several of which belong to Marriott International’s Tribute Portfolio, trend more to city locations.
What made the acquisition attractive, Luersen said, were the similarities between the companies involved.
“We have found a great marriage between the two of us and what [Magnolia] will continue to do as owners of the hotels,” he said. “We will manage the hotels for them and take the brand to the next level, so it’s pretty exciting times for us.”
The companies have a shared interest in creating memorable experiences for higher-end travelers, Luersen said.
“Magnolia’s hotels are not cookie-cutter buildings. They have historical reverence in the markets they’re in, and they brought them to life by creating these threads of service that are consistent from one market to the other,” he said.
It’s all part of a long-term vision Luersen had when he started the company just over a year before the global pandemic hit the hospitality industry hard.
The leisure focus of most of CoralTree’s resort properties kept the company going through 2020, during which the company was forced to think about its hotel guests in a more comprehensive manner, Luersen said.
That means thinking less about whether the guest is a business traveler or leisure traveler, and more about “who is our guest and how does that guest change?” he said.
The fundamentals of hospitality “can never be lost,” he said. “When it gets lost, the hotels get lost, the resorts get lost, and they don’t find success. That’s why we’re focused on that component.”
The company is nurturing a robust pipeline, for which “the most important criteria is to have smart growth and strategic growth,” Luersen said.
Growing the Magnolia brand is part of the plan.
Notably coming soon is the Lake Nona Wave Hotel in the planned community of Lake Nona, located within Orlando’s city limits. The soon-to-open 234-room new-build hotel “is going to be the most technologically advanced hotel built in the United States,” Luersen said.
For more from HNN’s conversation with CoralTree Hospitality’s Tom Luersen, watch the video above.