Davidson preps for luxury division

LOS ANGELES – Davidson Hospitality Chief Investment Officer Jason Rabidoux says he has been as busy as he has ever been as he continues to grow the group’s third-party business – both domestically and internationally.

In an interview with Hotel Investment Today at ALIS in late January, Rabidoux said Atlanta-based Davidson will be announcing within the next six months a dedicated luxury division, moving higher than its traditional upper upscale and lifestyle positioning. He added that single asset luxury deals are in the pipeline and that they already have some of the needed talent in-house, including Steve Contos, executive vice president and managing director – Luxury & International, who will lead the luxury group after overseeing luxury and resorts for Marriott in the CALA region.

Davidson Hospitality CIO Jason Rabidoux

“It’s a natural growth vehicle for us, but the Caribbean and Latin America is going be a big focus for us as well,” Rabidoux said. “We have five deals that we’re currently working on in luxury, dominated a little bit more by ground-up than existing assets. We do have one complete gut, renovation, redo and reopening that’s going to be luxury, and we have an existing asset that we’re evaluating and working on with a partner right now.”

Rabidoux added that the overall third-party market for luxury hotels is not nearly as deep as resorts and lifestyle. So, he added, it will take more time to grow in the space, and they will only grow thoughtfully and efficiently.

Davidson also plans to beef up its activity in Europe, more particularly the U.K., the Iberian Peninsula, Ireland and the Nordics, which includes considering portfolio opportunities.

They already took over a spa resort Ragdale Hall, a few hours outside London that is owned by Fortress Investment Group.

“There really is no real Pan European solution,” Rabidoux said. “You have to think about the microenvironments. It’s very regionalized.”

Net, net, Rabidoux suggested Davidson as a whole could add 10 contracts this year, depending somewhat on the strength of the transaction market.

He added that Davidson is open to portfolio acquisitions in the U.S. and has been pursuing some, but made clear it is not a primary focus on how they plan to grow the business.

There really is no real Pan European solution. You have to think about the microenvironments. It’s very regionalized.

Jason Rabidoux

“Our private equity partner, Nautic Partners, is very supportive. So, M&A is constantly something we’ll look at,” Rabidoux continued. “Do we hope we might get one done at some point in time? Yes. But if we don’t, we’re going to keep growing the business the way that we have – being thoughtful about how we do that.”

Overall, organic growth is dominating Davidson’s business and Rabidoux reiterated that activity right now is probably at its highest level. “We pursue some acquisitions with partners. But most of the growth is third-party management, and a lot of it is repeat clients and customers that have come back over and over again,” he added.

Rabidoux also referenced its Pivot lifestyle operating vertical recently being tapped by New City Properties take management of the luxury lifestyle FORTH Atlanta, situated in Atlanta's Old Fourth Ward with a number of other management transitions coming up in the end of the first quarter and into the second quarter to add on to the currently portfolio of some 85 assets.

Managing the mix

On the operations side, Rabidoux said slower RevPAR growth and increasing costs in the middle of the P&L remain challenging, citing ongoing geopolitical noise and unknowns that create uncertainty.

For example, Davidson will soon open for the season at the Grand Hotel on Mackinac Island in Michigan. On the heels of visa restrictions and being a big employer of H2B and J1 visa applicants at the hotel, the challenges are magnified.

Nonetheless, he said the group perseveres for owners to drive the bottom line and Rabidoux identified their big emphasis on F&B as an opportunity to do so.

Davidson has some 230 restaurants and bars in its system accounting for $700 million of its $2.2 billion in revenue. So, they have a dedicated team of 10 executives focused on driving that piece of the business.

For the last two inflationary years, Rabidoux bragged that Davidson has kept food costs flat or below the prior year.

One of those F&B team members is solely responsible for procurement and Rabidoux said that has made a big difference in what he called “an enormous accomplishment.”

The F&B mix has also evolved with bar and restaurant business now accounting for two-thirds of the overall mix versus more profitable banquet and catering business.

“We’ve lost only a couple points of overall profitability,” Rabidoux added. “Across our portfolio in 2025, we had 30% F&B profitability.”