Noble House preps for next moves

KIRKLAND, Washington – The next-generation Colee family leadership of owner-operator Noble House Hotels & Resorts is gearing up for what they expect to be increasing opportunity for equity participation, acquisition and third-party management growth by launching an identity refresh to match the moment and amplify a 44-year-old company legacy.

Pat Colee has stepped back from the Kirkland, Washington-based hospitality group he founded in 1981 and son James is now leading as CEO with a 29-hotel portfolio (upper upscale and luxury predominantly in California and Florida). A pipeline of eight new-build projects are in various stages of development and levels of equity participation.

Noble House has been sitting on dry powder and with James Colee’s development background more acquisitions and some further curated development is in the cards. It currently has equity positions in about 40% of its portfolio, according to President of Acquisitions Sean Mullen, and while third-party is still a big play, Noble House is taking majority equity stakes in several new projects.

CEO James Colee

“We want to be ready,” Mullen said, “as we’re seeing a lot more opportunities. During COVID, we saw just huge bifurcation in the bid-ask spread. So, we were very selective. We’ve had some equity capital sitting on the sidelines and now that there’s a more realistic ask, we’ll turn around and have more transactions.”

Mullen said Noble House is looking at a lot more opportunities in mountain and ski towns and is about to announce a deal in Bozeman, Montana, with three additional deals lined up in the same area.

President of Acquisitions Sean Mullen

“Ski business is relatively flat, but the summer and year-round demand seems to be increasing as people want a different lifestyle,” Mullen explained.

Noble House also just signed on to take a minority stake and management in a new-build, 200-room luxury destination resort property in Pennsylvania, which will help it grow in the Northeast where last year it acquired the Chatham Inn in Cape Code, Massachusetts.

Elsewhere, Mullen said Noble House wants to grow its presence in the Caribbean, Mexico, Hawaii, as well as Canada, including all-inclusive in the resort markets. Again, taking equity positions are part of a potential equations.

Noble House already has a hotel in Cabo San Lucas and sees Mexico as a huge opportunity. Mullen said they have been close on a few deals there but have yet to pull the trigger. He said they are close to deals in Mexico for a 300-key equestrian-polo resort, as well as a 400-room all-inclusive in the Cancun area where they will be minority investors.

Criteria for growth for both equity positions and more strict third-party opportunities in any market remains a constant for Noble House: like-minded equity partners looking for evergreen situations. “We work well with people who understand long-term positioning and some of the elements that we work on such as food and beverage, ambiance, lighting, mood,” Mullen added.

Ski business is relatively flat, but the summer and year-round demand seems to be increasing as people want a different lifestyle.

Sean Mullen

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On the disposition side, Mullen said in markets where it has become so hard to make money due to operating expenses and government regulations, they are more inclined to look at sales.

“Some of it is going to be, quite frankly, based on corporate preferred and international markets coming back because those are two markets that haven’t come back yet,” Mullen added. “It’s going to be based on what we really think is realistic in those markets – if it’s going to come back, when, and to what extreme.”

Management partnerships

On the performance side of the ledger, Mullen said transparency with its partners is paramount. One way to do so for Noble House is to include all management and technical fees upfront to avoid any hidden or surprising fees.

On the incentive side, instead of working off budget-based initiatives, they work with partners to look at cash flow, getting a taste after the equity partners meet debt payments and other key obligations.

An interesting approach to driving cash flow for Noble House is through local, experience-based, all-inclusive membership programs at some of its properties. For example, non-refundable initiation fees are $110,000 at the LaPlaya Beach & Golf Resort in Naples, Florida, and an initial $200,000 with an added $50,000 annual fee at the Snake River Sporting Club in Jackson Hole, Wyoming.

Mullen said because most members like to have their own private areas for dining, locker rooms and lounges in addition to hotel amenity access, often a bit of capex is required. But, he added, ROI on the capex is generally a very reasonable three years.

“As long as the events and programming are included, memberships are fine,” Mullen continued. “If you’re a moderate price membership and there is an additional fee for every outing – those are the memberships that we’re not seeing succeed.”