Three Appalachian State University alumni have found their way back to Boone, North Carolina, through hotel investment.
SPA Properties, a Charlotte-based real estate investment firm is run by Sean Sassano, Paul Pessina and Aaron Ammar, and assumed ownership of the Horton Hotel & Rooftop Lounge last month, making this its first foray into the hotel industry.
The previous owners of the property, Denise and Fulton Lovin, converted it into the boutique hotel in 2019 with the intention of making it a complete drive-to destination for all traveler types.
Prior to becoming a hotel, the property was built by H.W. Horton in the 1920s and once served as a Studebaker dealership and a Spainhour's Department Store, according to a news release.
Sassano said his team wasn't necessarily looking to invest in a hotel, but when the opportunity came about, they jumped on it.
Once the trio graduated from Appalachian State, they began investing in residential real estate in 2008, later eyeing other asset classes.
"The Lovins ... had this hotel that was new in the market, but we had spent some time there, so it intrigued our interest. It was frankly just opportunistic," he said.
After forming a working relationship with the couple in 2020, it progressed into an opportunity to acquire the hotel.
"Originally, we were a little bit nervous about it, but we knew a lot about the property and it kept sitting in our gut that we need to pursue this," Sassano added.
To help Sassano, Pessina and Ammar understand the nuances of the hotel industry, they immediately put a team of experts together, including Adam Zembruski, the founder and chief operating officer of independent advisory group, Hospiamo.
Zembruski's team serves as the asset manager of the hotel and Aileron Management oversees day-to-day operations.
"Adam has a vast experience in underwriting hotels. He tried to derisk it as much as he could, every time he dug in, he lightened the property more and more," Sassano said.
Confidence among the SPA team also grew once they saw historical 12-month financial data on the property.
Pessina said seeing the full year of numbers in 2019 and then performance during 2020 gave him and his team a good picture of how the hotel responds to different economic cycles.
"That helped get us comfortable with what the downsides would look like ... and what the hotel can do. Frankly, relative to its peers, it was able outperform in the same market, which gave us a lot of confidence," he said.
About the Hotel, Demand Drivers
Zemburski said the hotel has 15 rooms and offers "high-end" amenities. The continental breakfast is complimentary and features handmade granola, items from a local bakery and local coffee. Along with a lobby lounge, the hotel has a rooftop lounge that serves small bites.
The nearby Appalachian State University has about 20,000-plus on-campus students, a demand driver for downtown Boone, he said. Since the Horton is the the only hotel accommodation downtown, that works to the property's advantage.
Though the hotel is adjacent to a university, it will not be involved in housing students. Sassano, Pessina and Ammar do remain highly engaged with the school, however.
"Besides that, there's the Watauga Medical Center. It's regional, they're growing leaps and bounds. Health care is a major demand generator," Zembruski said.
There are also several leisure attractions, such as Blue Ridge Mountain, which offers skiing and hiking. Sports, retail and food and beverage are also prevalent in the town.
Staffing the Property
Pessina said a large part of the ownership transition included bringing in a boots-on-the-ground management and on-property team. The hotel's rooftop lounge is only open three or four days a week, but with a right team in place, the lounge could be open seven days a week, he said.
Within the first 10 days of the ownership transition, Zembruski said the hotel has since created four new salaried management positions, all filled by internal promotions. These roles included an executive housekeeper, front desk manager, kitchen manager and bar manager. Additionally, most of these roles were filled by Appalachian State alumni.
Aileron Management has played a pivotal role in staffing the property. Through talking with the existing staff, Aileron found that many of them wanted more hours, which allowed the company to promote within.
"We had this existing employee base that was a mixture of full-time and part-time people, and Aileron came in and did some in-depth interviewing," he said. "We had those gaps to fill because of the staffing crisis. We did more with the people we currently have rather than going outside to find new talent."
"I can't say enough how impressed we've all been with the people that the Lovins employed. These are passionate, purpose-filled hospitality people."
When asked if more hotel deals are in the future for the SPA team, Sassano said "never say never."
"We've always be opportunistic," he said. "Something I like about investing in real estate is the unknown. I'm certainly open to it, and I think Paul and Aaron would be open to that opportunity should our paths continue in that direction. For now, we'll take a breath and try to stabilize and transition."