Brand integrity key to Aspen Hospitality’s growth criteria

ASPEN, Colorado – Aspen Hospitality raised its profile considerably in April when after four years of discussions and negotiations it announced a deal to acquire 100% of 10 vacant office floors in New York City’s iconic Rockefeller Center to expand its Little Nell hotel brand for the first time outside of Aspen, Colorado. While the “deal phone” has been ringing ever since, don’t expect this owner, operator and brand manager to start rolling out multiple Little Nells, or even its other evolving brand, Limelight. The group’s strategy is not at all about putting dots on the map, said Aspen Hospitality CEO Alinio Azevedo, and is much more about buying into high-quality assets like 10 Rock.

“We have a small list of places we want to be, and we’re paying a lot of attention to markets that are on those lists – we’re very focused,” said Azevedo, who in 2017 joined this division of Aspen Skiing Co. owned by the venerable Crown family after running development in the Americas for Four Seasons Hotels and Resorts. “But for markets not on those lists, we’re not just trying to create as much deal flow as possible.”

For the moment, four assets are in various stages of development and include the just-opened Limelight in Denver, which Aspen Hospitality owns in a joint venture with Denver-based Continuum Partners. Aspen also has the Limelight hotels in Aspen and Snowmass in Colorado, as well as the Limelight Ketchum near Sun Valley in Idaho. Additional Limelight Hotels in Mammoth, California, and Boulder, Colorado, are slated to open in 2025, and the company also owns and operates the ASPENX Mountain Club and the Snowmass Mountain Club.

The jewel brand is The Little Nell and, yes, Azevedo is looking for more global opportunities but would not disclose anything during his early May interview with Hotel Investment Today. He said the focus is on the New York City property and once it is ready, he will more likely entertain other deals in markets where it can maintain the rate and position integrity of the property in Aspen.

“When you look at what markets in North America and, quite frankly, on a global basis that allow you to do that – it’s not many. It’s a handful,” Azevedo said. “If I were to look at different markets, I would create parallels to being at the base of the mountain (their location in Aspen). Quite frankly, it’s part of why we’re so excited about Rockefeller Center. To us, it feels like the center of New York with global positioning super well known and very hard to replicate. I don’t know who else will be able to claim in the future that they have a hotel within Rockefeller Center. So, that’s kind of how we think about it – market-driven ability to drive comparable rate and position that we already have, but also in the best location in those markets. The funnel in which we will operate is a very select funnel.”

Looking at the Limelight brand, Azevedo said it is starting to transition from a pure resort play to considering more urban opportunities – Denver being the first and Boulder also being positioned as urban. “It’s part of a broader strategy and also a means to diversify our business from seasonality and snow risk,” Azevedo explained. “As you go through that, we are naturally looking into markets that run at higher annual occupancies than those mountain resort towns. Then you start looking into creating opportunities to diversify cash flow and let our team members work on a year-round basis by rotating across our properties.”

The bigger picture investment thesis is high barrier to entry leisure-oriented market sets where Aspen Hospitality wants to play. It also calls for taking at least a minority stake in every project as the parent company is a long-term holder and truly values the real estate. At the moment, it has partners in Denver and Boulder but is doing Mammoth on its own.

“The Crowns like to own real estate – they have a history in hotel investments that goes many years,” said Azevedo, who grew up on his own family’s small resort in Brazil. “This is a family that’s going into the fourth generation. The first generation with Henry Crown was very close to Conrad Hilton and was very involved in the early days of Hilton Hotels. The family has also owned the Ojai Valley Inn in California since the 1960s. So, they have a history in this space, and they like to be in this space.”

When considering investment partners, Azevedo said sharing the same values in terms of focusing on quality, doing the right things in the community and for team members is crucial. “Our DNA is family-owned businesses who do things on a very long-term basis as a means to generational wealth transfer,” he said. “That’s really what we’re building on. So, we find partners that align with that because if you don’t, no matter how good the deal looks on paper, there are bound to be problems. There has to be fundamental alignment on strategy and values to start.”

But buying assets right now is not easy with luxury resorts performing so well coming out of the pandemic that valuations are set very high. That means Aspen Hospitality will focus more on greenfield development in key markets, at least in the near term, according to Azevedo.

“Because we’re long-term holders, we have the ability to take the appetite of the development risk, which is something that not every REIT or private equity firm can do,” Azevedo added. “Being in the right market in the right place is really important. Therefore, if that means we need to take more development risks, we’re going take more development risks.”

He cited the hotel in Mammoth Lakes, California, as a great example to support their thesis. “We believe that once we go through the development cycle and a property like that opens, we’re going to be very well positioned in a market that has tremendous supply and demand characteristics and super high barriers to entry.”

When asked about recent performance, Azevedo said the group is about to wrap up its fiscal year with high double-digit RevPAR growth versus the previous year, aided by a great winter season for their ski resorts as well as the return of international travelers to Aspen that started in January. For the calendar year, the group is still growing at double-digits but now at the lower end. “We’re starting to see the curve flattening in terms of our ability to grow RevPAR,” he said, adding that strong demand by Americans traveling to Europe is having some impact on results.

All that said, Azevedo is happy with Aspen Hospitality’s position and its future opportunities. “We’re so very focused on growing our brands globally now and we believe there is a lot of runway,” he said.