TLC notebook: TPG, Dimension, Peachtree, Dellisart

PHOENIX – In one-on-one meetings during The Lodging Conference in Phoenix last week, Hotel Investment Today quizzed developers and managers to learn about growth plans and challenges. Here are summaries from some of those interviews.

TPG gearing up for third-party growth

TPG Hotels & Resorts is stepping up its development, acquisition and especially its third-party management, according to President Ben Perelmuter and Chief Development Officer Tim Muir.

To that end, during The Lodging Conference, TPG announced it has been selected by Douglas Development to manage three upscale independent boutique properties in Buffalo, New York. The properties include The Richardson Hotel, The Roycraft Inn, and The Mansion on Delaware.

Tim Muir, CDO, TPG Hotels & Resorts

Now proactively soliciting third-party opportunities, last year TPG executed 26 HMAs and opened 22 hotels. This year it has executed 16 HMAs and by the end of October will have opened some 15 properties. By the end of the year, it will likely match 2022 openings.

After taking over the management of 10 PeachState Hospitality hotels in late January, Muir said there are two similar multi-property management deals in the works.

Property acquisition is still a part of TPG’s equation and Muir said they are still looking for assets on the East Coast and leisure destinations more in the independent space. “We pick really good, hard to enter markets that take a lot of capital and experience,” he added.

To better prepare for the third-party growth, Perelmuter is also working on beefing up the company’s operations team which is primed to relocate to Dallas. He also said the group is likely to launch an independent collection sometime in 2024.

TPG does have a capital investment arm called Smith Hill Capital to selectively offer debt and parlay some of the opportunities to management. It will opportunistically consider joint venture developments to further grow management.

Generally speaking, Muir said TPG looks for great markets, great locations, good products, good people where they know their management can make a difference. “We’re not chasing a number; what we’re chasing are the right opportunities,” he said.

20% in 20 months goal for Dimension Hospitality

Dimension Hospitality, Key Largo, Florida, is stepping out of its somewhat quiet position in the market to significantly grow its 78-hotel portfolio where it shares equity in about 25 assets. The goal: 20% growth in the next 20 months primarily through third-party but also through development with partners.

Among its big three ownership group are Apple REIT and Southwest Value Partners, and now the family-owned business is looking to further extend its list of partners on the management and development side.

Joe Viglietta, COO, Dimension Hospitality

CEO Greg Friedman, who has taken the reins following the passing of his father and company founder Sam Friedman, is looking for good partners with higher caliber, higher RevPAR, select- serve and full-service hotel assets. Because it has 35 years of experience renovating properties, Dimension believes with all the potential PIPs in the offing, they could have another leg up.

Joe Viglietta has joined the team as COO to help address the needs of the organization moving forward and sees talent development and new technology as ways of maximizing return on investment for owners, service levels for guests and opportunities for associates. Dimension’s $1 million technology investment includes a sales tool that identifies new sources of business in the earliest stages of the selling cycle; an integrated financial management system that provides forecasting and budgeting data; and among others channel and revenue management tools to achieve higher asset value and greater revenue generation efficiency.

The technology ramp-up is also meant to position Dimension to scale its operation. Acquisitions and third-party contracts are top of mind and Jeff Shockley has joined the team as EVP of Development and Analytics to support that goal. Shockley said Dimension will be a very selective investor in the upscale and upper midscale hotels, both single properties and small portfolios. On the development side, it takes about 25% stakes.

“Now that our infrastructure is sound, the technological piece has been addressed, we are ready to grow,” said Shockley, who came over after spending 28 years with Hotel Equities in Atlanta. “We have a very robust, capable and talented support staff in all disciplines and want to find new partners to complement our existing three.”

Shockley added that Dimension is very focused on the upper-select-service and full-service tiers and will use its current business partners to source and bring deals, as well as connect with potential joint venture partners to do ground-up development.

“We have some very good banking relationships and there are ground-up opportunities that we’re looking at right now that are very compelling,” Viglietta said, adding that there could be some acquisition deals, as well.\

Peachtree leans into credit business

Peachtree Group Chief Investment Officer Brian Waldman said risk-adjusted returns today are better on the debt side than development, which accounts for the fact that its credit division has closed $556 million in loan originations of the $1.1 billion the company deployed year-to-date. The remaining $526 million was deployed to acquire five hotels and undertake three new hotel development projects. The company also opened five hotels that were under construction as of September 2023.

Brian Waldman, CIO, Peachtree Group

Waldman said sees this trend continuing for, at least, the near term and certainly deep into 2024, especially as interest rates remain elevated and with an estimated $1.9 trillion of U.S. commercial real estate debt maturing before the end of 2026. Notable credit transactions for hotels completed this year include a $47.9 million first mortgage loan for the construction of a 215-room Autograph Collection hotel in Huntsville, Alabama, which is expected to open in 2024.

Peachtree Group’s SVP, Credit Jared Schlosser said they are targeting more than $1 billion in originations for 2023 with continued growth into 2024 as we anticipate interest rates to remain elevated and banks to further reduce exposure.”

Peachtree Group’s acquisition division completed five hotel acquisitions – mostly off market – with 677 keys, including the 137-key Hampton Inn & Suites University Capital, Austin, Texas. Historically, Peachtree acquires 10 to 15 hotels a year and with a secure balance sheet, Waldman said, they have predominantly been a cash buyer.

Year-to-date, Peachtree Group’s development division has closed on three new projects representing $293 million in aggregate value, including the 257-room Embassy Suites in Gulf Shores, Alabama. The development division is expected to break ground prior to year-end on the construction of four more hotels with an aggregate value of $200 million.

Dellisart grows a la carte management services

Dellisart chairman and CEO Douglas Artusio talked to Hotel Investment Today about its unique approach to management, which now includes a la carte service offers for owners who still want to lead their properties but need help in areas such as sales, revenue management and digital solutions such as social media management. Today, Artusio said they serve almost 100 properties – mostly midscale – through their various offerings.

Dellisart also does third-party management for about 12 hotels (1,300 rooms) and just signed two additional deals that will join the system within the next few months.

Douglas Artusio, chariman and CEO, Dellisart

Dellisart created subsidiaries for Hotel Sales Max, Hotel Rev Max, and Hotel Digital Max where owners pay a monthly fee for an annual service contract that includes a 90-day termination notice. To date, Artusio said the Max products are generating 90% to 95% renewal since their creation about 18 months ago and already account for about 50% of the company’s revenue. He said a fourth product should be added around the end of the year.

Hotel Sales Max focuses on bringing in a dedicated sales team to assist individual properties in enhancing their sales reach remotely. Hotel Rev Max focuses on working with each individual property on their rate structure, channel management, and overall revenue strategy. Hotel Digital Max assists hoteliers with tools such as SEO, targeted personalized email marketing, social media, web-based advertising along with text and multimedia messages as a marketing channel.