Adding experiential expertise, new markets drives this deal.
CEO also offers insight into why so many management companies are merging.
CHEVY CHASE, Maryland – Inside the past 10 days there have
been five management company mergers or sales – one more transactional with PE
firm KSL Capital Partners cashing out on Davidson Hospitality Group, and the
others more likely driven by the need to generate greater efficiencies and add talent
to manage growth.
Among the deals was Chevy Chase, Maryland-based PM Hotel
Group, who announced a merger with lifestyle management company Sightline
Hospitality, marking a significant development in PM Hotel Group’s lifestyle
hotel division Modus by PM Hotel Group. The deal added 22 properties to PM’s
portfolio of now 85-plus hotels that are either open or set to open within the
coming months. It also gives it greater geographic diversity, especially on the
West Coast.
Additional deals for PM are in the works in Lake Tahoe,
Austin, Greensboro, Philadelphia, Orlando and a few other markets. PM Hotel
Group President Joseph Bojanowski told Hotel Investment Today that perhaps a
dozen new deals – some smaller, experience-driven properties – can get done
within the next six month and he alluded to one particular deal that could be
even bigger.
When asked to explain the recent rash of management deals,
Bojanowski said that it's very difficult for smaller companies to provide the
depth of talent, expertise and services required to not only survive, but to
thrive in this environment.
“When you look at what continues to happen in the capital
markets and the pressures that are coming around everything from DSCR tests
(debt-service coverage ratio) to refinancings and everything else, premium
performance is a minimum requirement,” Bojanowski said. “You need depth of
experience and support across every element of the hotel operation to be able
to deliver for an owner. There aren’t any more silver bullets left on the
revenue or expense side, making premium performance super nuanced.”

Sightline's Dr. Wilksonson’s Backyard Resort & Mineral Spa in Calistoga, California
So, at the end of the day, Bojanowski said finding
best-in-class talent needed to support excellence has likely resulted in more
mergers and acquisitions among management companies.
And for PM Hotel Group, Bojanowski said being a private
company without an overlording parent company allows it to better manage growth
and the pressures that come with it. He said that also gives comfort to owners
who want closer, more personal relationships with their managers.
“We’re feeling pretty good about this size,” he said. “I don’t
know that you get a tremendous additional benefit for being 300 over 100 because
the ratio of support to hotels is probably the same.”
PM’s strategy
The newly merged entity will continue to operate under the
PM Hotel Group name, with plans to seamlessly integrate Sightline Hospitality's
approaches as well as a majority of its executive team.
The 22 hotels are predominantly in new markets with some in existing
PM locations. The hope is to better serve existing owners in a more efficient
way to deliver services and provide a deeper level of market expertise to drive
demand. Bojanowski estimated that benefits of scale could reduce costs in the 500-basis
point range for hotel EBITDA, depending on the size of the property.
“What we know is the environment coming up in 2025 where we expect
to have low single-digit RevPAR growth that is growing slower than expenses,
which requires market expertise and critical mass to deliver more cost-effective
services,” Bojanowski said.
He also pointed to PM’s commercial strategies team, which he
said runs significant RGI premiums.

Evo Salt Lake City joins PM Hotel Group's portfolio
“Where we’re really going to make the difference is the
depth of experience we bring with driving rooms revenue, bar and restaurant
revenue, ancillary revenues, and then driving them through the most cost-effective
channels to make the cost of customer acquisition go down even more
significantly,” he said.
Bojanowski also referenced emerging Gen Z travelers who
prioritize experiential stays. “Because the Sightline team possesses a deep
level of expertise in this area, we think it can give us a first-mover
advantage. We think this segment is fragmented at this time and it is a great
opportunity to take advantage of this demographic shift,” Bojanowski said.
Bigger picture, the plan is to give owners and developers
more ability to focus on buying and developing assets – with PM’s assistance,
of course. “Some of these new [Sightline] markets are very focused on, or well
positioned to take advantage of the travel trends that are going to be in place
for the next 10 to 15, years, and in markets where people want to be,”
Bojanowski added.
At the end of the day, Bojanowski said the transaction will
be accretive and valuable to all impacted parties. “It will provide opportunity
for the associates on the Sightline team. It will provide better returns for
the owners. And it will provide better scale and opportunity for the existing
owners on the PM Hotel Group side.”