SAN RAFAEL, California—CEO Tim Harmon aims to take Palisades Hospitality Group to new heights in the hotel space with the launch of the Mosaic Hotel Group division.
Launched in 2012, Palisades has a 35-unit portfolio anchored by more than 30 restaurants, but Harmon is looking for growth in more than one direction.
“We want to spend the time, invest the capital and the effort to create a lasting long term value,” said Harmon, who spent six years on the development side of the hotel business at Auberge Resorts.
San Rafael-based Palisades unveiled its Mosaic division in April. Its portfolio includes three properties in California: the El Dorado Hotel & Kitchen in Sonoma; the Colony Palms Hotel in Palm Springs; and the North Block Hotel in Yountville. Harmon said Mosaic’s mission is to be a collection of award-winning, small, curated hotels in key leisure and urban destinations.
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Tim Harmon, |
Harmon said Mosaic has four more hotels under contract, including Oak Knoll in Napa, California; Hotel Barlow in Sebastopol, California; and Bruma in Valle de Guadalupe, Mexico. The company is in negotiations to acquire four other hotels.
Melony Williams will lead Mosaic as chief operating officer. Williams was with Commune Hotels and Resorts and Joie de Vivre Hospitality prior to joining Palisades.
Harmon said the launch of Mosaic came after two years of exploring the concept and realizing the natural fit for hotels in Palisades’ portfolio.
“The goal was to bring our expertise and experience in the restaurant side of the business to the hotel side of the business,” Harmon said. “Each one will be individual and unique.”
A focus on ownership stake
While the company’s hotel offerings are a combination of ownership and management agreements, Harmon said the goal is to focus more on ownership opportunities. Skylar Skikos leads the acquisition and development of hotel properties through his role as president of affiliate Palisades Hotel Partners.
“It takes a lot of work and effort to create the individually crafted hotels,” Harmon said. “We can better accomplish that by being part of the ownership group. We want to build them up over time as they become more part of the community. By being a part of the ownership, we can take a longer term view.”
Palisades works with investment partners, and the long-term goal is to launch an investment fund, Harmon said.
“The biggest challenge is a lot of these markets are hot and it’s harder and harder to find value-add opportunities,” Harmon said. “We’re willing to be patient. You have to be selective and not get caught up in some incredible bidding wars on properties right now.”
As the ownership platform takes off, the company will turn to third-party managers as part of the operating equation, but the primary goal is to have Palisades operate as many properties as possible, Harmon said.
One of Mosaic Hotel Group’s goals across its portfolio is to provide intimate settings, such as this one at the Colony Palms Hotel in Palm Springs, California. (Photo: Mosaic Hotel Group)
Mosaic will be largely concentrated on the West Coast, primarily because of Palisades’ current size. Its primary targets in the U.S. are destination markets. Harmon also has a keen interest in Mexico, where he is working on securing three deals for hotels that will be managed by Mosaic when completed.
“We’re putting a lot of energy and time in Mexico,” Harmon said. “We really like the market and have a partner there to acquire, develop and own hotels in primary markets. There’s a lot of opportunity there, especially in the higher-end luxury hotels.”
Palisades is affiliated with Forward Hospitality, which was founded by architect and entrepreneur Waldemar Franco, to build its portfolio in Mexico. The company is targeting destinations in Mexico that Americans are familiar with as well as those in developing destinations, Harmon said.
“As the economy there continues to improve and Americans get more comfortable with it, there are many areas of Mexico that are appealing,” he said.
Hitting the sweet spot
Mosaic’s ideal property regardless of location is small, intimate and has a dedication to highly personalized service with 80 guestrooms or less, Harmon said. The company has no target in mind for a specific number of properties in its portfolio.
“The key is rate of growth,” Harmon said. “For the type of hotel we’re creating, it’s got to be slow and steady growth—two to four properties each year.
“There are tremendous opportunities but it really takes spending time, putting the effort in and making sure you get each property right before moving on to the next one,” he said.
The opportunities primarily revolve around the restaurant element each property, according to Harmon.
“That’s one thing that will set us apart—restaurants have long been the Achilles’ heel for a lot of hotel groups,” Harmon said, adding that Mosaic hotels will feature a destination restaurant that appeals to locals.
Restaurants will be operated separately from the hotel by Palisades’ Moana Restaurant Group, which is led by President Jon Swanson.
“The restaurants have a separate identity,” Harmon said. “We do want to make sure we give those restaurants the look and feel of an independent restaurant. Food and beverage is such a big part of travel—there’s a sense of community that makes guests feel part of it.”
Palisades employs 1,900 people at its various hotels and restaurants, which provides the company with the expertise and knowledge to build its portfolio, Harmon said.
“We have the infrastructure, the team, the people and the experience to grow,” Harmon said. “What’s critical now is we’ve put together all the spokes of the wheel and each one supports the other.”