Here is a transcript of the recent video interview with Philip Maritz, where he discusses his operating philosophy, his Sundance development, his expectations for the M&A market and more.
PALO ALTO, California – Philip “Flip” Maritz is currently working on reimagining the Sundance Mountain Resort in Utah talked and talked to Hotel Investment Today about his development philosophies, the exciting property he and his investors acquired from actor Robert Redford, as well as where he thinks the market is heading next.
Here is a full interview transcript from the interview:
Jeffrey Weinstein: Hi, I’m Jeff Weinstein, editor in chief of Hotel Investment Today, and this is On the Money.
Today I have with me Flip Maritz, managing director of Broadreach Capital Partners in Palo Alto, California, and co-founder of St. Louis, Missouri-based hospitality investment firm, Maritz, Wolf & Company.
Flip has chaired or co-chaired hotel management companies, including Rosewood, Fairmont, and Dolce, and he’s developed or redeveloped so many great hotels and resort properties, among them the Carlyle in New York City, the Fairmont San Francisco, Little Dick's Bay in the Caribbean, the Santa Barbara Biltmore, the Mansion on Turtle Creek in Dallas, multiple Four Seasons, and so many more.
He more recently opened his first from-scratch hotel, the Ameswell in Silicon Valley, California. Flip, thanks for being here today and welcome.
Philip Maritz: Pleasure, Jeff. Nice to see you. Thanks for inviting me.
Weinstein: All my pleasure to have you. Let's jump in.
You've done so much, and I want this to be somewhat personal, so I want to ask you: where do you find inspiration? Where do you look for inspiration when you’re considering what to do next?
Maritz: This is kind of a dull answer, but I sort of look to things we’ve already done and reflect on how they could have been done better, including at the time, but maybe more significantly, considering the changes in the culture of the country, the traveling public patterns, and so forth.
I’m generally pretty hesitant to be a pioneer doing totally new things with the Ameswell maybe having been an exception to that. So, it’s really trying to leverage existing experiences, relationships, projects to carry forth and to try to do better.
I’m generally pretty hesitant to be a pioneer doing totally new things with the Ameswell maybe having been an exception to that. So, it’s really trying to leverage existing experiences, relationships, projects to carry forth and to try to do better.
Philip Maritz
Not so exciting, but the little experience or engagement I’ve had with Futurists and things like that – they’re always wrong.
So, I’m a big believer that anyone, including the smartest among us, for those who spend the most time sort of telling us what’s going to happen next, they’re usually wrong in my experience.
Weinstein: So, it’s interesting that the way you put your inspiration because it works perfectly with the next question, I wanted to ask you. And that’s some of the best learns you’ve had along the way and going through some of the processes you’ve been through before when it comes to development.
What are some of the greatest learns from moments in your development history that you still carry with you, that you still apply?
Maritz: Peter Drucker, the great management guru, who’s no longer with us, had a saying. I think it was ‘Culture eat strategy for breakfast.’
I really do believe that because you can create the best setup, plans, the best documents, and then somehow the world intervenes with unexpected events. And if you have the right team of people in place, well aligned, thoughtful, caring, energetic, creative people, which is to say, good culture, then you’ll find a way through.
It’s pretty tough. So, I would say that's the number one lesson. The other thing is, of course, is sort of obvious, which is, what’s the expression: ‘You can't fight the Fed.’ These macro trends are forces bigger than any of us or any group of us, and you just either have to structure your organization or your investments in a way to survive the unexpected downturns, or you have to be flexible, nimble, and be able to pivot and accommodate.
So, I would say, and those are sort of similar thoughts, those are the two greatest lessons I’ve learned.
Weinstein: Do you survive more, or do you pivot more?
Maritz: Well, hopefully survive. But you know there are also times when you can’t. We owned the Fairmont in New Orleans when it was hit by [Hurricane] Katrina.
We were well insured. We had a difficult lender. But did we survive. We survived financially, but we didn’t survive enough to actually fix the hotel and repair it. So, we sold it. And it’s now the Waldorf. I think it’s doing great, but you know there are also times when it takes a new set of principles, or people, or capital.
So, there are times when you have to gracefully, hopefully gracefully, recede or give up or not surrender exactly, but there’s no shame in calling a failure a failure, for whatever sorts of reasons, and you know the best baseball players hit about what? .350? No one’s out there batting 1.000.
Weinstein: I listed some of the great hotels that you’ve been a part of developing. You have another one coming and we've talked about it before. You acquired Sundance Mountain Resort in Utah from Robert Redford. I know he’s still involved. But what can you tell us about what’s going on at Sundance? What are you developing? What’s happening next?
Maritz: Well, we’re at an interesting point because we’ve just finished what was phase one, or what we called act one – kind of a homage to the legacy that Redford left us, at least his Hollywood legacy which is kind of fixing what was already there and was already great.
It’s a beautiful ski mountain that’s sort of been the traditional financial foundation of the place. So, we did a nice terrain expansion. We upgraded some lifts; we added new capacity. We added a ton of snow making equipment, which is ever more important. It has allowed us to grow revenue and EBITDA, and to build or to rebuild the culture there in a way to position us for what we’re now calling Act 2.
I you have the right team of people in place, well aligned, thoughtful, caring, energetic, creative people, which is to say, good culture, then you’ll find a way through.
Philip Maritz
Act 2 really started in May when we broke ground on a new 63-room inn. So, it’s going to be small, low density. I had a deal with Bob Redford that we wouldn’t build anything taller than the tallest tree. So, we really are committed to maintaining his commitment to conservation and the environment.
So, everything we're going do there we’re going to do sensitively, low density and sustainably. But that’ll include this new base hotel, which will be 100 feet from the new high speed chair lift at the bottom of the mountain. We’re building a new day camp at the base of another lift for day skiers, and we’ve started some for sale residential, which we're off to a pretty strong start in terms of pre-sales. So, we’re getting to it. We’re busy, and we’re building, and in another year and a half we should have a great hotel, which is kind of the hole in the doughnut out there.
Weinstein: Sounds exciting.
Maritz: Yeah, it’s fun.
Weinstein: So, you have a lot of experience in M&A. I’m curious for your take on the state of affairs, where you see things for the next 12 months when it comes to M&A for hotels.
Maritz: It’s tough, I think. Tough and complicated. Obviously, there’s a cascade of refinance, of mortgages coming due of different types and varieties. I think we’ve seen a lot of, sort of, preferred equity deals coming in to again help lesser capitalized hotels survive what continues to be an overhang, different market by market.
Obviously. I'm in speaking to you from New York City. Now, I'm still a bit involved in the Carlyle. It’s amazing what’s happened to the luxury business in New York City largely due to supply shrinking. But, oh, my God, I mean rates and occupancies that we’ve never seen before. But it’s not widespread. It’s Uptown and upper East Side. It’s Lower Manhattan. It’s Meatpacking District and other places. It's not Midtown. So, it’s complicated, tricky.
I don’t know. They’re opportunities, but they’re few and far between. And they’re tricky, and they’re clever. You have to be nimble. And you both have to be patient and flexible.
Weinstein: Considering the anticipated moves by The Fed, and people feel pretty confident about some movement in the next 6 months, some good movement. What do you think that'll do to M&A in this space.
Maritz: Well, I hope it’ll boost it.
I think the impact of interest rates was undervalued, underestimated. How long we’ve been benefiting from these historically low rates. I think a lot of us sort of got used to that as if it was going to last forever, and nothing lasts forever. So, that’s probably another lesson learned is just when you think things are sort of permanent is when they change.
So, I’m optimistic that the fed will cut. Whether it's 25 or 50 – I don’t know.
Weinstein: A hypothetical for you: If you had a blank check to develop or buy whatever you wanted given a reasonable return, not just a trophy asset, but you needed to deliver 20%, what would you do with it today?
Maritz: So, the last thing we built you referenced earlier the Ameswell Hotel, which is in Mountain View, California, the next town south of Palo Alto. So, it’s sort of Ground Zero for Silicon Valley, a stone’s throw from Google headquarters from Microsoft, Silicon Valley headquarters not far from Meta, WhatsApp… I mean, it’s sort of the best corporate market on the planet, arguably. But it’s a difficult place to build. So, a five-year entitlement process, and then, of course, COVID hit mid- construction for us.
Act 2 really started in May when we broke ground on a new 63-room inn. So, it’s going to be small, low density. I had a deal with Bob Redford that we wouldn’t build anything taller than the tallest tree. So, we really are committed to maintaining his commitment to conservation and the environment.
Philip Maritz
We finally got the damn thing open. But, you know, it opened under totally different circumstances from when it was conceived. And so, your question, I think, which was pretty targeted toward new construction – this period between when you conceive something and when you actually open something, to think that the conditions will remain the same, particularly in an environment like California, which is which is sort of has an anti-development bias. So, the process is very long, very slow, very changeable, and very costly. It is expensive. So, I can understand why smart guys like Blackstone just say, you know what, development – not our gig, not going do it.
Would we do it? Yeah, I mean, Sundance we’re basically… There’s a lot of new development there, but we’re going from an established brand, if you will, with an established reputation. This financial foundation that that will carry us through.
So, I realize I’m sort of dodging your question. I don’t really know. I mean, if you had to say today, you’d probably do a resort on an island somewhere or on a ski mountain.
Weinstein: But you’re more likely an acquirer than a developer?
Maritz: I think probably these days, and the cost of construction is just crazy. It’s crazy. So where can you make those numbers work? It’s a head scratcher.
Weinstein: One last question. You’re standing up in front of a group of your contemporaries – hotel developers, investors. What would be your message right now?
Maritz: I probably go back to what I said about lessons learned about culture, about people the importance of finding talented, creative, smart, energetic, ambitious people, and then treating them in a way that they feel fully empowered and engaged to express that creativity to practice the energies that they can bring to bear. Give them the room and the rope, if you will, to do what they do really well.
I think, ultimately, it’s a people business. Having said that, I think that a change that the hotel business does need to adopt over time is to become a little bit more modern in their practices, a little more ambitious in the use of technology, a little less old fashioned in some of the management techniques and technical tools that I think are becoming increasingly important in this business. AI is way overhyped, but there’s a place for it, and it can improve the efficiencies and make the guest experience better.
So, I’d say let’s be a little more open to those changes.
Weinstein: Phillip Maritz, thank you for being with me today.
Maritz: Pleasure, Jeff.