Rebel Hospitality President and CEO Brian Sparacino said there are two things that will primarily drive growth for his only months-old management company: a focus on technology and a commitment to transparency with owners.
Rebel, which officially launched in March as the management arm of New York-based private equity firm Capstone Equities, is already seeing significant growth built on those pillars, Sparacino said.
Transparency isn't something owners get a lot of from third-party managers, he said. With the pandemic still in mind, many owners are looking to make a change right now.
"The individual, high-net-worth owners and the private equity firms that are smaller are certainly looking for a change," he said.
On top of that, he said those owners out shopping for an operator, particularly in the high-end, boutique and independent hotel space, aren't finding much in the way of choice, which opened the door for a company like Rebel.
"Especially after the Interstate-Aimbridge merger then the purchase of Colony by Highgate, there's not a lot of options," he said. "Quite frankly, that's a reason why Capstone wanted to create something new. They wanted to provide an alternative option."
Sparacino said there would have to have a pretty compelling reason to want to launch a company in the depths of a historic pandemic.
What Rebel seeks to do is make the information owners need the most easy to access and understand while keeping fee streams as simple and straightforward as possible. The company's commitment to building out a robust technology platform is key to that goal, offering owners an app they could use to sort through performance and budget data with a couple of taps no matter where they are or where their properties are.
"So if you're an owner and your hotel is sitting in South Florida, you can pull all your financial data and have it sorted and delivered to your phone where you have the app, and you can see how you've performed year over year," he said. "You can look at budget forecasts or however you want to slice the data."
With uncertainty around hotel performance and various properties and markets faring differently coming out of the depths of the pandemic-induced downturn, he said owners are more interested in keeping a close eye on their investments than ever before. And that's where proactive management comes in.
"We have to forge a way forward for ourselves and to figure out a path forward, because we could be sitting here in the same spot three years from now still trying to figure out how to get back to 2019 levels," he said.
Rebel's tech initiatives include widespread adoption of guest experience automation — that includes upselling messaging following reservations, room assignments and digital keys — along with incorporation of artificial intelligence and automatic aggregation of review scores for properties.
He said his company's New York portfolio, which has grown to 1,100 rooms with the recent addition for the Hotel Mela, is proof the formula works given the fact it is drastically outperforming a still depressed market.
"Right now, we're hovering somewhere between 74% and 80% occupancy, which is far, far above what the market is doing," he said, noting the Hotel Mela deal came together through word of mouth about its market outperformance.
While Rebel was launched initially as a platform to manage Capstone's owned properties when the company grew frustrated with its previous manager, Sparacino said he sees significant interest in third-party growth and he expects many contracts to be announced over the course of this summer. The company announced the signing of the St. James Hotel Selma in Selma, Alabama, which is part of Hilton's Tapestry Collection, Tuesday.
Sparacino, who led Interstate Hotels & Resorts' independent division prior to Interstate's merger with Aimbridge, said that while he sees growth on the horizon, he doesn't want to just get bigger for the sake of being bigger. He wants to grow the company thoughtfully.
"Despite the common belief, there's not a lot of advantages to third-party management charges," he said. "We're very specific in our term sheets, where we itemize every single expense that we're going to charge you and allow owners to compare it against their current options, whether that's an incumbent operator or a competitor. So far, we've had success with that in doing [management] contracts."
Sparacino said he values relationships more than quick growth.
"We want to be good partners, because we want the company to be around for a long period of time," he said. "It's more about taking care of our partners and feeling like we can build a foundation one management contract at a time. And that can be difficult to manage once you're too large."
Due to the company's connection with Capstone, its portfolio is significantly tilted toward New York, but Sparacino said this summer's growth will help Rebel grow across the U.S., up and down the Eastern Seaboard and to the West Coast.
One of the major challenges that remains for a burgeoning hotel management company, though, is labor. Months ago when starting Rebel, Sparacino was seeing highly qualified people offering up their services for well below their actual value, but he opted not to take advantage of that knowing those employees would just leave when conditions normalized.
"We haven't had a lot of open positions, because we took the position that if we can bring somebody in at 40%, or 50% or even 70% of what they were being paid, when the markets reopened, they were just gonna leave and go somewhere else," Sparacino said.
That approach has remained in tact, with Rebel hoping to get through a difficult labor environment by taking care of people. Things are still tricky, though.
"It's so difficult right now to find people on all levels, even for management, and hourly is a given with the unemployment subsidies," he said.