NEW YORK CITY—Choice Hotels International is looking to spark growth of its Cambria brand. Operator Fillmore Hospitality is looking to play in the upscale, select-service space.
Those two desires have come together, with Fillmore helping to kick-start development of Cambria via a deal to develop 15 Cambria-branded hotels.
Launched into the teeth of the most recent downturn, Cambria has struggled to gain a foothold in the industry during the past seven years. The brand has 23 properties open, but during Choice’s annual convention earlier this year, executives revealed plans to have 100 Cambria hotels either open or under construction by 2018.
Tom Goodwin, president of Fillmore, said the company has had a desire to increase its presence in the urban, upscale select-service space for the past three years.
“If you look at upscale, select-service products in high-quality urban markets, they generate 88% of the net operating income per room of big-box, full-service properties but with about half the development cost and 25% of the brain damage,” he said. “We were really looking for ways to get into upscale select service in really dense urban markets.
“And if you’re going to do that, you have two choices: You can go independent, which we have a ton of experience in on the hotel and resorts side, but which you would (not) do on the select-service space. Or you go with an emerging brand.”
Fillmore’s executives decided to take option No. 2.
“Choice is looking for a way to reboot the growth of Cambria, which is really a terrific brand,” Goodwin said. “They want operators who have independent experience. There was a great marriage there.”
Goodwin believes Fillmore has a strong location strategy in place for its Cambria offering. That includes what he said might be the last buildable location in New Orleans, an affluent suburb of Dallas, and several other markets. All of the sites except one will be ground-up construction.
“I really think Choice is committed to seeing Cambria evolve into a really high-quality, trendy (brand), but classically so (and) not trendy in a crazy way. We think this is really going to have some legs,” Goodwin said.
There are challenges in launching a brand that is still trying to get its sea legs after several years. It doesn’t have the name recognition among consumers of, say, a Courtyard by Marriott flag, Goodwin said.
“Given our independent experience, we’re going to launch these with a 12-month pre-opening sales-and-marketing program,” he said. “They don’t have the flags planted. We’re going to help create that story.”
About Fillmore
The Cambria properties will slide into a portfolio that includes 10 hotels that Fillmore operates. Fillmore’s sister company, Fillmore Capital Partners, owns the hotels, Goodwin said.
“(Fillmore Capital) allows us to access capital and because we’re involved on the equity side, we really do take an owner’s view of things,” he said.
Other hotels in Fillmore’s portfolio include a mix of branded and independent hotels. On the branded side, the company touts flags such as Sheraton, Courtyard and DoubleTree by Hilton. Independent offerings include the Sea Ranch Lodge in Sonoma, California.
Going forward, Goodwin said the company is likely to focus more on conversions than ground-up construction.
“When you’re building in dense, urban markets, the process to obtain entitlements is lengthening and the construction time is lengthening,” he said. “That gets you out to ’18, ’19 when people are less sure of the industry.”