Kennealey is in charge of the new business that combines the assets of KSL Resorts and Mission Hill Hospitality. How will he drive the business forward and where might he lean-in hardest?
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DENVER – Hotel Investment Today talked to Greg Kennealey about the launch of Peregrine Hospitality, which now combines the assets and management of the former KSL Resorts and Mission Hill Hospitality.
With all assets owned by parent company KSL Capital Partners, Kennealey talks about his distinct position as an owner-operator and how that distinction always drives Peregrine's true north.
He talked in depth about the company's process of putting together all-important teams at both the property and corporate levels, what they are doing to drive the bottom line, and what he thinks the opportunities are in the marketplace.
Watch and listen to our interview with Kennealey to get a sense of Peregrine's purpose, direction and approach.
Complete video transcript
Jeffrey Weinstein: Hi, I'm Jeff Weinstein, editor in chief
of Hotel Investment Today, and this is On The Money.
I’m here today with Greg Keneally, CEO of Peregrine Hospitality,
the recently rebranded entity that encompasses the teams from KSL Resorts and
Mission Hill Hospitality.
In April 2024 Greg was named CEO of KSL Resorts to oversee
operations, development, and strategic direction of the organization and its
growing portfolio of resorts. He continued as CEO of Mission Hill hospitality,
which he launched in 2021 with hospitality focused investor KSL Capital Partners.
We’ve fallen in love with the premium select-service space. We see opportunity there, as well, for us. For an opportunity to make sense for us, we have to see opportunity to elevate performance through management, people, process, systems and, in many cases, also capital renovation and repositioning.
Greg Kennealey
Greg is a former principal and head of hospitality at KSL
Capital Partners, and earlier in his career he was an associate at LaSalle Investment
Management, and he held leadership positions at IBM Global Services and
Forrester Research. Greg, nice to see you. Thanks for being here.
Greg Kennealey: You bet. Great to be here. Thanks so much
for having me, Jeff.
Weinstein: Oh, my pleasure! Let’s jump right in. So, very
brand new, recently launched Peregrine Hospitality. Set it up. How many hotels
are in the portfolio? What’s the strategy and what kind of goals do you have
for this year?
Kennealey: Sure enough. So, Peregrine, as you as you
mentioned, is sort of the combination of KSL Resorts and Mission Hill earlier
this year. We now own in partnership with KSL Capital – we own and operate 44
hotels across the U.S. – everything from premium select-service all the way up
to luxury resorts.
So, that’s in place. And now we are obviously always focused
on driving performance of those properties, with cooperation, which we're super
excited about.
Weinstein: What does cooperation mean to you?
Kennealey: Less adversarial, I guess. There’s a lot of
factors that industry folks have been talking about for quite a while that, I
think, are finally going to kind of hit threshold here in 2025. We have the
proverbial wall of debt maturities that are coming, and that’s forcing certain
ownership groups to really rethink whether they want to kind of re-up and stay
in the ownership position on a given hotel.
Our brand partners were very flexible with PIPs and so forth
during COVID. That flexibility is coming to an end, which is going to force
reinvestment into properties, which again puts strain on the capital side of
the business.
For better or worse, there’s more certainty in the political
space than there was in 2024. And there’s an awful lot of investment groups
with dry powder. I think the combination of those things sets up for a more
robust transaction market in ‘25 than what we’ve had in the last couple of
years. So, we're excited to be active there if we can find really good deals
that we have a lot of conviction in.
It wouldn’t be uncommon to have 10 or 12 interviews even at a mid-level. It’s six or eight, most of which would be in person, and we bring that rigor to the property-level leadership teams, as well. My guess is our housekeeping screening process is maybe even more robust than some of the other folks in our industry.
Greg Kennealey
Weinstein: So, you operate up and down the segments. Where
do you see the more opportunity this year, as far as what segments? And then,
where geographically do you think you'll see more opportunities.
Kennealey: I guess the simple answer is that smaller
transaction size – those are easier to get done. And I think, pick a number,
sub-$50 million, sub-$75 million of enterprise value of a given hotel.
The factors I just mentioned that are kind of playing out in
the capital market side of our business and the pressure that creates is likely
to be more acute for smaller and regional owners. So, you may see more trading
volume there than you have in the past, whereas the larger players have bigger
balance sheets and maybe able to kind of navigate that or weather that storm a
little bit more effectively.
That said, from an investment perspective, we continue to
see attractive opportunities across all of the segments. Historically, KSL has
really enjoyed the large operationally complicated resorts in top 15, top 20
resort markets. We love that space.
The number of major resorts that trade in a given year is by
definition small. Over the last few years, we’ve pivoted into smaller, I guess
you call boutique resorts, particularly in California and one out in the
Hamptons. We like that space quite a bit, and so we’re likely to be quite
active there in 2025 and beyond.
I’m a little bit biased based on my last few years with
Mission Hill. But we’ve fallen in love with the premium select-service space. We
see opportunity there, as well, for us. For an opportunity to make sense for
us, we have to see opportunity to elevate performance through management,
people, process, systems and, in many cases, also capital renovation and
repositioning. So, when we find that combination anywhere on that spectrum that’s
where we get excited, and we’re likely to lean in pretty hard.
Weinstein: You’re creating a new platform. You’re building a
new platform in an interesting environment, and everybody talks about building
teams and finding the right people. How are you approaching that? What’s your
secret sauce for trying to accomplish this?
Kennealey: I guess the short answer is, we’re approaching it
very, very carefully. I hope we have a secret sauce. We’ll see. But we can have
the best investment strategy in the world, and we can do all the financial
engineering common amongst our private equity brethren. But at the end of the
day, it’s our 4,000 employees who are at the properties, who are ultimately
delivering a value to the guest, and ultimately driving the profits of those
hotels.
But there are no cash registers at the corporate office. So,
it's all about that team. And, so, we spend frankly a substantial amount of our
time evaluating and selecting individuals to join our organization at a senior
level. It wouldn’t be uncommon to have 10 or 12 interviews even at a mid-level.
It’s six or eight, most of which would be in person, and we bring that rigor to
the property-level leadership teams, as well. My guess is our housekeeping
screening process is maybe even more robust than some of the other folks in our
industry. We talk a lot about the most important decision we’ll ever make is
who we choose as teammates.
One of the mantras in our organization is hotel performance is our true north. So, we’re not focused on growing Peregrine, the operating company. We’re focused on driving EBITDA growth at our hotels.
Greg Kennealey
So, the bar is really high. We look for people who are
honest, smart, and hungry, and if they have those innate character traits, we
believe that we can teach them the skills part if we need to. So, we’re really
looking for people who have that sort of innate DNA. It’s been an exciting year
for Peregrine in that regard. In 2024, through the merger, and then just
through the launching of our own new select-service Division, investing in the
capital projects team, food and beverage…. We’ve added people across all areas
of the enterprise in part to do an even better job of driving value of the
hotels we’ve got, but also to put ourselves in a position where we can
effectively scale for growth.
So, we're hopefully
doing a great job of selecting great people. I think one of the reasons we're effective
at that is we have a bit of a different model.
It’s an important distinction. But we function more as an
owner-operator, and then a management company or true pure play management
company, and I think that creates different career opportunities for people in
certain cases. Frankly, it creates different economic opportunities for people.
And I think that’s helping us to generate lots of interest, which then enables
us to be selective.
Weinstein: So the owner-operator model. It’s nice that you’re
operating for your owner. KSL owns a lot of your assets.
Kennealey: All of them, correct.
Weinstein: But that creates a little pressure. They want to
see a better bottom line. It’s not easy to drive bottom line right now, let’s
face it. There’s a lot of challenges. What levers do you think you have to pull
this year to help drive bottom line?
Kennealey: There’s a tremendous amount of pressure there. We
are in business to be a top performer and to drive great returns for our
investors first and foremost, and there’s a lot of pieces to that puzzle. But
we definitely feel that pressure. One of the mantras in our organization is
hotel performance is our true north.
So, we’re not focused on growing Peregrine, the operating
company. We’re focused on driving EBITDA growth at our hotels. I don’t know
that our high-level playbook is materially different than anyone else’s, but I
think it’s an ownership mindset that really matters – a high sense of urgency and
a willingness to kind of go that extra distance and that just incremental level
of discretionary effort and rigor. For us, it starts, as I mentioned before,
with making sure you’ve got the right talent. You have the right people on the
bus, and they're in the right seat. Nothing changes the performance of a hotel
more than a great leadership team. But holding all else constant, you do
nothing else. Right? You get that right and the numbers are moving the right
direction.
We’re also taking a taking a good hard look again at the Phoenix/Scottsdale market. That’s one that we’ve swung and missed on a few times, and we’d like to get back in there. KSL has historically owned assets there off and on for years, and they’ve always performed really well for us.
Greg Kennealey
We are trying to be even more creative than we have in the
past in revenue management. That’s becoming an increasingly more complicated
side of the business. It used to be week to week then it was day by day, now it
feels almost hour by hour, minute by minute. And the number of channels and the
switches and dials – part of it is really just getting a lot more complicated.
You have to invest in some great talent there.
And then there’s the cost management side of the business.
This is, perhaps, where the owner mindset really comes into play. Are you doing
those extra things every day to delight guests without spending a ton of money
on it, and finding those nickels and dimes in your P&L that you can pull
out to bring more to the bottom? We’re trying to instill that at sort of a day
to day, person by person, culture level because you can’t be in every financial
review every single week. Right? So, you have to pull that through the entire
organization. And I think we’ve done a good job of that in ‘24. We're going to
lean into it even harder in ‘25.
Weinstein: Are there any particular places you're finding those
nickels and dimes?
Kennealey: I guess the short answer is, yes. We look most
especially at the labor side of the business because it is the largest expense
line in the P&L. But from our seat it’s not about wages. We believe in
paying great people a very fair or above average market wage to keep them, to
motivate them and have them focused on their job and not on their paycheck and
have them feel good at the end of every work week. But what we really try and
do is figure out if we had two great people, could they do the job of three?
If we invested in technology, could we get more done with
the team we’ve got? Could we use less shifts? Could we have less people in
certain functions? So, a smaller, greater team is kind of our objective. And we’re
also rigorous about labor management standards and all the things that we can
do to make the team more efficient.
But I think that distinction between sort of the wage side
of the cost equation versus the efficiency side is really important, and that
aligns very well with culture and values because we’re all on the same team. We’re
all trying to drive the same result, and we talk about it through the mindset
of efficiency. It seems to resonate very well with the property teams.
Weinstein: One last question, Greg. Dallas, Nashville –
they’ve been the hot markets, right? What’s the next hot market?
Kennealey: That's a good question. We’ve tried off and on
for a number of years to get into Nashville, and you know we keep getting
priced out. Nashville keeps surprising us as it continues to grow.
We actually like Dallas quite a bit. We’ve recently taken a
run at a couple of deals there, and Texas more broadly, is a place we like a
lot.
We have renewed interest in Florida.
We continue to like greater Atlanta, particularly in certain
sub-markets.
I guess those are a few that kind of come to mind.
Like a lot of other groups, the dots on our map look sort of
like a smiley face.
We’re also taking a taking a good hard look again at the
Phoenix/Scottsdale market. That’s one that we’ve swung and missed on a few times,
and we’d like to get back in there. KSL has historically owned assets there off
and on for years, and they’ve always performed really well for us.
Weinstein: Well, Greg, thank you. Really nice to spend a
little time with you. I appreciate it.
Kennealey: Likewise.
Weinstein: Continued success at the brand new Peregrine Hospitality.
Kennealey: Very much really appreciate it, Jeff.
Weinstein: Thank you.