Aperture wants to ‘punch above its weight’ with growth

ATLANTA — Atlanta-based management firm Aperture Hotels has doubled its portfolio size over the past year and doesn’t plan to stop that forward momentum anytime soon. 

Aperture Hotels CEO Charles Oswald said the growth has come from building a team that can compete with larger management firms. 

“We’re certainly a team built to punch above its weight,” he said. “We’ve built capacity and a full, strong leadership team that has that capacity to grow and take on the next asset.”

Aperture, formerly Banyan Tree Management and historically almost exclusively an extension of Banyan Investment Group, was spun off last March to create its own identity and expand its third-party management portfolio. 

The company’s initial portfolio was typically located in the SMILE states of the U.S., but the 12 Aperture has added this past year has expanded that geography with properties in Tennessee, California, Texas, Florida and Wisconsin. 

Oswald said Aperture is willing to go anyplace it can fly from Hartsfield-Jackson Atlanta International Airport, which “opens up a lot of destinations.”

Anticipated growth

He said he anticipates Aperture adding 10 properties over the next year. Oswald said there’s also potential for growth through M&A. He said he’s more optimistic about that over the next 12 months than the last year. 

“We are very open to M&A,” Oswald said. “It’s more about finding the right cultural fit and the right type of product that’s complementary to what we do, but not way outside of what we do today.”  

As for how Aperture fits in the industry as a smaller player in the management game compared to some of the giant companies in the space, Oswald thinks there is plenty of room for companies like his. 

“We have access to all the same systems and technology that they do, and we’ve hired some of the biggest, brightest players in the industry to come into our team.” 

That team has collective experience managing over 600 properties, which opens up many possibilities. Those growth plans include increasing Aperture’s presence in the top 25 markets in the U.S., whereas historically, the company has been in more tertiary cities. 

Aperture added the Hotel Spero in San Francisco to its management portfolio over the past year.

“We’ve now found ourselves with a presence in places like San Francisco, for example (with Hotel Spero),” Oswald said. “We’d like to be in more of the major markets. But we’re pretty open to any place we can fly. “

Oswald thinks that growth can come organically by managing more properties in markets they are already in. 

“For example, we have four in the panhandle of Florida right now and will hopefully be growing. We have four around Madison, Wisconsin,” he said. “Once we got one in California, we can go out and get a second one within driving distance.” 

The commonality of Aperture’s current portfolio is upscale select service, but Oswald said the company would like to expand more into compact full service and lifestyle. 

“I think that’s where we want to be… properties that are more experiential for the customer. When we look at some commonality in the newer assets we’ve added, it’s leisure-oriented.” 

Staying away from extended-stay

Despite a surge in new brands for extended-stay hotels, Oswald said he doesn’t anticipate managing many properties in that space. 

“We certainly would manage extended stay, but one thing that people need to be cautious about with extended-stays is there a lot of new extended-stay brands out there,” he said. “If you look back in the trailing 12 months, I believe, you’ll see that the average length of stay has fallen to 1.8 [nights] across the country, which is down 4% from where it was in the same time the prior year. 

“I don’t know that, looking forward, extended-stay is a growth market if we’re talking about growth markets and good places to invest in,” Oswald said. “I tend to believe that many of these extended-stay projects are being done, not because it’s what the customer is looking for because the customer is seeking something more experiential, but rather because it’s an efficient box to operate, and it’s what the investor wants, and we’re forcing it on the customer."

Where Aperture wants to grow

Oswald said that looking at ADR and RevPAR trends informs him of why upper upscale is a segment Aperture wants to be in.

I think that’s where we want to be… properties that are more experiential for the customer. When we look at some commonality in the newer assets we’ve added, it’s leisure-oriented.

Charles Oswald

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“When you look at the growth of the segments, upper upscale is certainly accelerating, and it’s growing faster than upscale, which is growing,” he said. “As you go down the chain scale, you end up with a decline in RevPAR, which is happening in the economy segment. This is a remarkable shift from where we were a couple of years ago. Upscale is outperforming… Across the board, occupancy is relatively flat, and most of our RevPAR growth will be on the ADR side.” 

Oswald said he is optimistic about the growth opportunities available from just working with existing clients or ones that he or his management team have worked with before. 

“Those opportunities have mostly come through us through management company churn. It’s us working with somebody that I’ve worked with before, under prior management, or they’re referred to me by somebody that I’d worked with before,” he said. “These are folks who have already realized a successful investment in the past, and maybe we solved the problem for them and realized an incredible IRR in the past… It’s based on those experiences we’ve had working with each other.”