MADISON, Wisconsin—The North Central Group is celebrating its 30th anniversary by launching North Central Hospitality to address repeated requests for third-party hotel-management services.
North Central Hospitality joins North Central Management, which handles day-to-day management duties for NCG’s 28 company-owned hotels, North Central Development and North Central Mortgage as wholly owned subsidiaries of the North Central Group. Bill Petschonek serves as VP of operations for North Central Hospitality.
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Jonathan Bogatay |
NCG president Jonathan Bogatay said the company explored every angle before deciding to move ahead with the launch.
“We wanted to make sure before we ever got to this point that we did our homework that we could be relevant and successful,” he said.
Petschonek said the company’s intent is to provide management services for owners other than NCG, including individuals, partnerships, real estate investment trusts and other companies.
Heightened interest
Bogatay, who has been with North Central for a dozen years, said the company always owned and operated its own hotels and received numerous requests for its services along the way. As hotel development opportunities slowed thanks to the stalled economy, now’s the perfect time to begin third-party management operations, he said.
“That (development) pipeline is not as robust, so there’s an opportunity for us to leverage the talent and processes we have,” Bogatay said. “I’m very confident that based on the interest expressed to me personally that there are opportunities out there.”
North Central Hospitality will focus its efforts on select-service and extended-stay hotels, particularly those that fly flags in the Hilton Worldwide and Marriott International portfolios because of parent company NCG existing familiarity with those brands. Bogatay said properties branded by other quality franchise operators also will be considered.
“Our core competencies excel in the select-service arena,” said Bogatay, adding that NCG has owned and developed more than 50 hotels in its history. “Our hallmark is built on select service.”
“We’re going to go across the U.S.” he said. “We’ll grow where the opportunities lie.”
Petschonek joins North Central Hospitality as a hotel-industry lifer. He was a GM at a Howard Johnson hotel when he was 21, worked at Marriott for 10 years and worked for Promus Hotels Corporation, among other places.
He said his experience in operations and sales and marketing will be strong suits. “I’m a quick learner and can adapt to new situations,” he said.
Four-pronged approach
Petschonek said NCH’s mission has four prongs:
- protecting the asset;
- increasing value;
- growing the business; and
- driving profitability in a smart way.
“When I was with Hilton, we went from owning and operating all assets to one that managed most of the portfolio for others,” Petschonek said. “I have always managed hotels as if the hotel was mine. We’re very in tune to what an owner wants: Be profitable and grow the business.”
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Bill Petschonek |
The company was set up as a separate company from North Central Management because the executives want total focus on the third-party hotels they sign, Petschonek said. The company will look for single properties and portfolios.
The new company will use the back-end systems and support services of North Central Management, which will allow it to get up and running quickly, Petschonek said. “The biggest challenge is to market ourselves to people that don’t know that past performance of the North Central Group,” he said.
There is no timetable to reach a certain number of properties for NCH.
“We’re committing ourselves so we won’t outgrow our ability to succeed,” Bogatay said.
The launch of NCH signifies the strength of the parent company, although like the rest of the industry, it had some unsettling times during the past two years.
“We certainly suffered with the rest of the industry,” Bogatay said. “I’m very pleased that our portfolio’s recovery started much sooner and was very robust in 2010. We look to turning the corner in 2011. Revenue will come back. Much of the industry is still getting its arms around what rate growth will look like in 2011 and 2012.”
NCG will begin development when the conditions are right, he said. It has several development projects ready to go—it owns the land, has the brands lined up and franchise agreements signed. “It’s about timing of when we break ground,” Bogatay said.
Part of the NCH platform will be a certain amount of calculated risk-taking, especially when it comes to raising rates, Petschonek said.
“You don’t do pricing in a vacuum,” he said. “You look at all the factors, and at the end of the day you have to take risks. We’ve demonstrated on our owned-and-operated hotels that we’re willing to take risks.”
“It’s OK to be bold and aggressive, but not reckless,” Bogatay said. “It’s OK to lead out. Someone has to take the first step. You have to sell value and understand what the value proposition is. It ties back to operating hotels for outside owners as if they are our own.”