ATLANTA—Joel Eisemann sees plenty of opportunity ahead as the supply pipeline hits its stride during this economic cycle.
Among the most notable of those opportunities, according to InterContinental Hotels Group’s chief development officer of the Americas, are expanding the recently acquired Kimpton brand, the fledgling Even brand and its roster of dual-branded projects.
Eisemann said during a break at last month’s Hunter Hotel Conference the philosophy for the IHG brands—including Kimpton—hasn’t changed.
“It’s the same basic thing: the right product, the right location providing the right amenities and services to the guest,” Eisemann said.
The timing is right for aggressive expansion because this cycle’s fundamentals could provide the best economic landscape many industry executives will see during their careers, Eisemann said. For IHG, that means stepping up the pace of Kimpton, for which it paid $430 million for in December.
“Kimpton is a very powerful, very successful brand—there isn’t anything that needs to be fixed,” Eisemann said. “We’re taking our time to understand what the Kimpton brand really is.”
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Eisemann said IHG inherited a “great pipeline” from Kimpton, and the acquisition has resulted in additional robust pipeline activity.
“Kimpton is 100% managed, and we at IHG are primarily franchisors—although we do manage several hundred hotels,” Eisemann said. “Kimpton has been institutional owners, we have a wider base.”
The brand operates 60 hotels, all of which are located in the U.S. Last week, the company announced Kimpton was awarded the management contracts for The Carlyle-DuPont Circle and the Savoy Suites hotels in Washington, D.C., that are owned by Foxhall Partners and Iron Point Partners. It was announced that Kimpton was selected to design and operate a proposed hotel adjacent to the Entertainment and Sports Center in Sacramento, California. That project is owned by The Sacramento Kings professional basketball team and JMA Ventures.
“A big part of every acquisition is growth opportunities,” Eisemann said. “The biggest opportunity we see is that Kimpton is primarily a U.S.-based company and IHG has the advantage of recognizing the ability to grow internationally.”
However, international representation and distribution on the IHG platform are primary advantages Kimpton will have as it explores global expansion, Eisemann said. The ability to reach international travels in their home countries will be a big opportunity for Kimpton.
“There’s no number goal for Kimpton,” Eisemann said. “It’s about responsible growth in the right types of markets. There’s a tremendous opportunity for growth in a lot of markets in the United States.”
Eisemann said IHG has already received a number of inquiries about international opportunities for Kimpton because of its approach to development.
“That’s the unique thing about Kimpton … its takes unique buildings and makes them unique hotels,” Eisemann said.
Growing the Even brand
Meanwhile, the company is also looking to grow the footprint of Even, its wellness-oriented brand launched in 2012. While the brand eventually will be franchise-driven, the two open hotels in Norwalk, Connecticut, and Rockville, Maryland, are corporate-owned. Three franchised properties are under construction in the New York City area, and Eisemann said a corporate-owned project in Seattle is in the initial stages of development.
LRR Holdings, which is building two Even hotels in New York, announced in late March that it is also building a 251-room Crowne Plaza in the city that is scheduled to open in 2017.
Eisemann said the company isn’t worried about getting to a magic number in terms of critical mass; it’s more concerned with putting the brand in the right primary markets.
“When we launched Even, our perspective was that we wanted to show the investor community we were committed to the brand, committed to its success and put our balance sheet behind the brand to help it grow,” he said. “We’re aiming for high visibility locations that serve as poster boards for the brand. Our ultimate goal is having franchise community carry on after we perfect the product.”
Eisemann said IHG is able to work out some issues that don’t impact owners as it is developing the Even properties.
“In Norwalk, we built the bar and didn‘t like the way it looked, so we tore it down and built another one,” Eisemann said. “It’s an investment in the hotel, but a much bigger investment in the brand long term. … For important projects that will have a big positive impact on the system, it sends a message about our commitment to the brand.”
Dual-branded properties on the radar
The dual-branded asset is another growing trend that IHG is capitalizing on, according to Eisemann.
Eisemann pointed to a project in Atlanta in which owner AWH Partners and management company Spire Hospitality is converting the former 501-room Hotel Meliá into a 360-room Crowne Plaza hotel and a 102-room Staybridge Suites property. The project is scheduled to open in January 2016.
“You’re able to take a big, old obsolete hotel and convert into something that better serves the customers’ needs,” Eisemann said.
IHG has between 20 and 30 dual-branded projects in various stages of the pipeline, Eisemann said. Other development plans for dual-branded IHG hotels include a Holiday Inn and Candlewood Suites hotel for Joliet, Illinois, a Crowne Plaza and Staybridge Suites hotel for San Diego and an IHG-managed Hotel Indigo and Holiday Inn Express hotel for Austin, Texas.
“They are higher cost projects that need more equity and financing,” Eisemann said. “Those are deals more for the sophisticated developers.”
Eisemann lauded the performance of the extended stay segment, which plays a prominent role in dual-branded projects as well as single-property development projects. He said IHG’s offering in the segment—Candlewood Suites and Staybridge Suites—are providing excellent growth for the company.
“Developers love extended stay, and it’s clearly understood by the traveling public,” Eisemann said. “From an operational perspective, it’s efficient. Owners can get very good margins.”
But the extended-stay market has more room to grow, he said.
“On a relative basis, it’s still underserved,” Eisemann said.