LOS ANGELES — Outsize portfolio performance in 2023 drew in multiple new management contracts for Hospitality Ventures Management Group.
The third-party hotel management and investment company added 15 hotels to its management portfolio, said Robert Cole, president and CEO of HVMG, during a video interview at the Americas Lodging Investment Summit. The owners of the hotels were looking for improved top-line and bottom-line margins. They also wanted to consolidate the number of third-party managers they work with.
These new management contracts came despite the U.S. hotel transaction market being down significantly to previous years, he said.
“It was one of our most successful years from a growth standpoint,” he said. “All but one of those were related directly to owners making decisions around changing their operator based on underperforming hotels or consolidation of managers in their portfolio.”
There’s a direct correlation among HVMG’s portfolio performance and its growth, Cole said. When owners are considering new operators for their properties, some of the first things they want to know about are the operator’s portfolio index numbers, general operating profit margin and top-line performance.
HVMG had a historic year of performance last year compared to the wider hotel industry, he said. Its portfolio grew revenue per available room by 12% year over year, higher than the industry’s 4.9% growth. That was the result of a five-point increase in market share RevPAR index. On top of that, the company flowed 39% of its increased revenue to its GOP line while the industry average was 20%.
“Not only did we double the RevPAR growth of the industry, we essentially doubled the flow through of the increased revenue to the GOP line, so again, there was a direct correlation to those results to the growth of the company,” he said.
At its current size of about 57 hotels across 16 states, HVMG has enough scale to help it attract and retain top industry talent for both its corporate and property-level operations, Cole said. It's growing enough that it can offer employees the opportunities to advance their careers.
On the other side, it's still small enough to provide a more hands-on relationship and give owners easier access to HVMG's senior leadership to answer their questions, he said.
"We like that size," he said. "It's a great balance between having the resources, infrastructure, and also being able to maintain very hands-on relationships with our key owners, all of our owners and our capital partners," he said.
For more from the interview with HVMG's Robert Cole, watch the video above.