The founders of the boutique brand with values surrounding health,
kindness and sustainability say they want to reach 50 hotels. Could it come via partnership with a big brand?
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LAGUNA BEACH, California -- Two hotel industry veterans developed their own brand with a guiding light to create something clean and gracious. Today, Ken and Pam Cruse have grown Soul Community Planet - where you might have an experience watching a California sunrise with a surfer dude and a healthy breakfast - to 10 hotels with more on the way. They say they are marginally profitable and want to keep growing to as many as 50 hotels. Will they enlist the help of a big brand to help with distribution and manage costs? They aren't looking to sell but they will answer the phone to talk to potential partners.
Watch Ken and Pam Cruse talk about the evolution of Soul Community Planet, what makes it unique and where they want to take it next.
Full transcript
Jeffrey Weinstein: Hi, I'm Jeff Weinstein, editor-in-chief
of Hotel Investment Today, and this is on the money. Today I'm lucky to have
with me as my guests Ken and Pam Cruz, the co-founders of Soul Community
Planet, a hotel brand with a tagline of fueling souls, inspiring community and
sustaining the planet.
If you're not familiar with the brand, it was founded on the
core values of being healthy, kind, and green. These principles guide their
commitment to providing holistic hospitality experiences that promote personal
wellness, social good and environmental sustainability.
Ken is the co-founder and CEO of both Alpha Wave Investors
and a hotel and hotel investment company and Soul Community Planet. Prior, he
was CEO of the Hotel REIT, Sunstone Hotel investors.
Pam is chief marketing officer and helps lead the formation
of SCP’s holistic hospitality brand and culture. She focuses on applying the
holistic values of the company to a broad range of experiences and to launch
the hotels, restaurants, bars, marketplaces, recreational activities, and
consumer goods. She's a seasoned marketing executive, having had tenure with
Marriott International and with U.S.A. Today.
The couple resides in Southern California with their four
daughters. Ken, Pam, welcome. Thanks for being here.
Ken and Pam Cruse: Good to be here. Thanks for having us,
and when the intros are that long, I guess it means that that we’re old.
Weinstein: Not quite, not quite that old. So, I sit here,
and as I introduce you and I think of your values, and I think of what's going
on in the world right now - it causes me to pause and wonder. How do you go to
market differently today, and do the current set of geopolitical affairs
actually help you?
Ken Cruse: That's a very interesting question. I'm going to
hand it over to Pam for that one in terms of relationships with a unique
customer base.
Pam Cruse: I don't think it's changed except maybe after COVID.
And we looked at our core values and the core values of conscious consumers who
we wanted to target and looking at those core values prior to COVID going
through COVID and coming out of COVID. It's actually even more of a focus of
people understanding that they need to focus first on themselves, which is
where Soil comes in in our brand name.
Being part of a community. Everybody longs for connection
and community, and we know that really came out during COVID, and then, of
course, sustaining the planet. And I will say we are working, and as are many
others on regenerative travel, how can we give back. How can we make it even
better? I will say there's a lot of talk these days about food and our farming
and the agriculture. And there's a lot more we can do for regenerative soil wise,
regenerative eating. And I do think that's a positive motion going on right
now, and it all fuels back into who we're targeting. And it's really back to
basics.
Ken Cruse: We're married and business partners at the same
time. So, I can put her in the hot seat right out of the gate. She hates to
take the first question, but if I can just coattail on that real quickly. One
of the things outside of geopolitical that we are very excited about is what
we're seeing in the world of technology, in particular, and how AI is moving in
a way that's not only helping small boutique brands like ours compete with the
bigger guys, whether the bigger guys are OTAs or the chains. It's also changing
the way people live their lives. It's changing the way that people prioritize
how they're spending their time and their ability to do so. So, our considered
view is that we're in an age of abundance now, and by any historical measure we
definitely are.
But we're moving into an even greater age of abundance and
flexibility that's going to lead to opportunities for people to travel, to
places like where we've got our hotels and nature-based destinations with
boutique experiences. So, we're very excited about that trend. I don't say that
that switch is flipping this second, but it's very, very in the very near
future that's likely to be fundamental, that we're benefiting from.
Weinstein: So, explain portfolio. How many hotels do you
have? Explain what they're about? Then also, what do you have coming? What does
the pipeline look like?
Ken Cruse: Perfect. So, we've grown this brand as a passion
project for the last few years. As you mentioned in the intros, Pam and I spent
a career in the hospitality industry. And during that time we saw a lot of
great things, a lot of companies that are doing things quite well. We also saw
some significant and profound opportunities emerging to address customer needs
as they continue to evolve.
The genesis of Soul Community Planet, as you touched on, is
our personal value system. Living by the values of healthy, kind and green. And
we've leveraged them, the experience and hopefully a couple of skills, or at
least lessons learned, along the way in our several decade careers to form our
company. We're a little different from most of the companies out there in our
space in that we are vertically integrated. We have the brand management company
and the real estate under one roof. What that's done for us is it's given us
the ability to have a very deep, immersive cultural practice that spans all
aspects of our business. It's also given us the opportunity to morph. The brand
tweak things, turn the dials very quickly and modify things. So, we kick things
off in 2018 with just one hotel as our test kitchen. We have 10 hotels today.
And we consider our concept as being proven.
So we're ready to scale. It's proven around two different
asset types. One is what I call midscale iconic coastal resorts, and the best
example in our portfolio would be Salishan Coastal Lodge in the Central Oregon
Coast. If you've never been there, it is amazing spectacular property. A couple
100 keys, golf course, spa, marketplace, wonderful restaurants and so on. The
other concept that we're growing – the brand around is what I would, and this
is a really fun, one small town downtown boutiques that are typically acquired
at a big discount to what the institutional buyers are paying for larger scale
hotels because we're buying them from smaller, typically less sophisticated
owners who maybe undercapitalize the assets. But this is well located real
estate, small scale, but can be acquired at a fraction of the per key value
that people are paying for institutional hotels.
Our strategy around that type of property is to assemble a
complex of hotels within a specific market. I'll give you two examples,
Mendocino, on the northern coast of California. We own two smaller boutique
hotels that comprise 53 rooms today, and then we'll acquire two or three more
over the course of time to a simple portfolio between 100 and 200 keys in that
market.
Same situation for Laguna Beach. We have 2 smaller hotels.
We're in the process of repositioning and renovating them. As opportunities
arise, we'll look to build out that complex to at least four hotels that we can
run somewhat synthetically, as if it were a larger scale institutional
property. So, we get the benefits of the small boutiques. But then the
operational efficiencies of a larger scale hotel.
Weinstein: So, you mentioned you're ready to scale. What
does that mean?
Ken Cruse: Well, with 10 hotels, we have a proven concept
under our belt. If you look across the board, I think, recognized in the U.S.,
there's something like 170 hotel brands. I don't even know that we're one of
them. So by scaling what I mean is the network effect and the benefit of having
multiple hotels growing within regions where we already have existing
successful properties is quite profound. So, taking it from 10 hotels in five
different markets to 50 hotels in those same five markets is the next phase for
us.
The reason I say it that way is that, and the reason I say
that the brand is well proven, is that we have a great deal of repeat business.
We have extremely high net promoter scores from people who have stayed at our
hotels. But we lack a network where an individual who comes to stay at our
hotel, loves it, doesn't necessarily have a chance to come back to one of our
other hotels during their travels in any foreseeable time period.
We still benefit often because they either come back to the
same hotel they visited, or they go tell five or 10 of their good friends what
a great stay it was, and we get that wonderful organic advocacy of our brand
that works super well for us.
Our view is, though, if we grow the portfolio as sort of
within a nucleus of hotels that exist and then have it in in areas that other
people in that market are likely to travel to, we'll see repeat business from
the same customers happen more and more.
Weinstein: So, how is the brand performing? How are the
properties doing compared to your budgets?
Ken Cruse: And I'm glad I let you talk first because I'm
just going to jump in on other things. So, the properties perform, again we use
3 key KPIs (key performance indicators). With our properties from the
operational standpoint we look at guest satisfaction, and we typically measure
that in two ways – net promoter scores as well as ranking on the customer
reviews. And Tripadvisor is a good one. I think Google is a big one as well.
In most of our markets, we are the number one, or at least
in the top five hotels in all of our markets.
Best example of an on-brand SCP hotel, especially from the
small town downtown boutique concept, would be our Redmond, Oregon hotel, which
is in the Bend, Oregon, MSA.
That hotel 5-star ratings, all the food and beverage outlets
are top rated within the market. So that all synergizes together, and the net
promoter score is at 70 now. But we see many instances where the net promoter
score is in the 90s and we have a healthy competition across our hotels on NPS.
That hotel also performs at around 150 index against its peer set in the
market. And that's remarkable because it's unbranded. It's relatively new. We
opened it a few years ago and yet the performance has been terrific from a market
penetration standpoint.
Typically, we look at our hotels as if we would consider a
hotel successful typically if it's at about 100 to 105 occupancy index and
about 110 to 120 ADR index. The Redmond hotel blows through those benchmarks wery
well.
And then the last and very important from the real estate
standpoint, KPI, that we measure is flow through to profitability. And we see
very good flow through numbers. That's the one area where we've got the most
room for improvement to be very frank. When we're running a small scale company
like this one that's reliant on repeat business and the like, the load
associated with marketing for attracting a new guests and sort of building that
relationship is a little bit higher for us.
We, like everyone, have seen escalation in
operating costs. Human costs have gone higher. We've tried to meet that and
beat that in terms of where the market is heading, but that's obviously
resulted in a little bit of a drag on the flow through to profitability. But
company is nicely profitable. The brand and the management co., which are all
wholly owned, are profitable. We don't run them for big profits, but we run
them at least break even. So, that's a nice thing to have.
Weinstein: So, I'm just an old cynical journalist, and I'm
already becoming jaded by the word experiential. It's bandied about way too
much for my liking. And I'm sure in some cases it rings true, in other cases,
maybe not. So, how do you make experiential more than a buzzword?
Ken Cruse: Okay, I'm gonna start. And I'm gonna hand it over
to you because Pam has done such a great job of taking that exact concept that
we couldn't agree with you more, that this is the thing that everybody's now
talking about, just like green was the thing that everybody was talking about a
couple of years ago.
You can talk about it, but to do it well is very, very
difficult, and that's one of the strengths that we have as a fully integrated
company. We can mobilize on these concepts. So perhaps talk about the epic dawn
patrol experience that we rolled out last year and sort of how that's worked
and how that has multiple, frankly benefits for our for our company.
Pam Cruse: First, I'd like to say that experiential is
definitely a buzzword. Now, it's interesting to me, because when we were doing
our research, we were forming the brand way back 2017-2018, it was out there.
If you look at like the hierarchy of needs, and relating that to someone. So, I
find that fascinating, because to me it moves to transformational, which sounds
like a big, big promise. Right? So, you want to be careful. But there is
something, for example, called the Transformational Travel Council that we've
worked with as well.
But I wrote down the word awe, and there's a real simplicity
to experience. It can be as simple as guiding someone out to watch the sunrise
or sunset.
We have launched what we call our epic experiences. So, we
want to have these really wow moments that offer something different that
somebody wouldn't experience, but is tied really to the local. So, for example,
Laguna Beach, we were written up in Sunset Magazine. We had a great experience
where you can go out with a local surfer, really well known surfer, but makes
everyone feel comfortable, meet them where they are right at the same time.
And going to Beach Boys song, San Onofre Beach in Southern
California, just iconic and just really homegrown. I guess I would say organic
in the sense of just cooking over a fire. Sitting with the locals right there,
watching the sunset getting out in the water, things like that.
Ken Cruse: But if I could. Sorry to interrupt. But let me
just chime in real quick. We've used the term experiences from day one to mean
something distinct from what Pam was just describing. The epic experiences are
super fun. They're great buzz creators, sorry.
Pam Cruse: But experiences are about what the guest experiences when
they walk through our doors, and we've endeavored to distinguish. So maybe
we're getting a little bit mired in semantics here with what we're calling
experiences. But we think about SCP as delivering exceptional exceptional guest
experiences that meet our guests wherever they happen to be on their life
journey and an exceptional experience for a business traveler going to a
Hampton Inn, for example. That may be a hot cup of coffee and eggs that don't
taste like plastic, and that's a good experience for that individual, and
versus what we try to deliver is a little bit different.
We always like to say, when you walk into one of our hotels it
just feels different. It's hard to describe in succinctly in words. But the
vibe is different. The lighting is different. The sound, maybe, is a little
different. The whole thing feels different. But the big thing that should feel
different with all of our guests is the experience that they get when they walk
in the doors, they are treated as the hero for choosing us, and the authentic
gratitude that we express to them for thank you for turning left coming into an
SCP hotel.
Ken Cruse: We're a young company. We're trying to grow and when you do
choose to stay at an SCP hotel you're not gonna get you're Bonvoy points.
You're not gonna get your honors points.
You are, though, going to participate in our every state is
good program which helps to make the world around us a better place just by you
choosing to stay with us. We're not going to hand you a shovel and a sapling,
and say, hey, go plant this tree. But you chose to be part of our system and
our community, and therefore we're going to plant a tree for you, and there's a
whole litany of different outcomes that happen every time a guest chooses to
walk into our door and the psychological, true loyalty benefit that we get from
that from having people being aligned with us in our value system and doing a
good thing just by turning the corner and walking into our doors. We think that
that's far more valuable and far more authentic frankly, than the points
programs that keep people coming to the other brands. Nothing against the point
programs. They're powerful. But we have a different approach to it.
Pam Cruse: And just to add on to that. Some of the core
elements in one of our properties, for example, would be like a mindful quote
on the wall that might not sound like an experience. But somebody experiences
that they read a Bob Marley quote or something. It kind of resonates, and it
kind of puts them in a place of well, this is something different. So, there's
touch points very intentional that are psychological, mental, physical. They're
for spiritual. They're for environmental. We have a lot of intentionality. And
that creates that experience as well.
And the Global Wellness Institute has a lot of data. They
just sent out some articles yesterday about simplicity and people going back to
analog travel. And we have peaceful rooms, for example, so very intentional on
this experience that we're not going to lock up your phone and say, no, you
can't do that. You can have your phone. We're just we don't have a TV in there.
We know that you could access something on your computer if you really wanted
to. But our intention is to help set you up for a great sleep, provide you with
some books, something you may not do so that's an experience of itself as well.
Weinstein: So I have time for one more question, and I can
help myself. As you're certainly aware, a lot of the major hotel companies have
been acquiring outdoor-related, more experiential, cooler brands as bolt-ons.
And when I think of SCP, boy, you seem like a perfect bolt-on for a giant. Now
you're scalable on top of that. What do you think when I bring that up?
Ken Cruse: Well, thank you for asking that question. It's an
interesting one. We didn't form this company to sell it. This is a passion
project for ours. We wanted to leverage our experience and sort of lead by
example a little bit, and hopefully be very disruptive within our industry in a
positive way.
We're seeing a lot of deals happen. We're seeing, obviously,
the big chains. We know them all and we love those guys. We think they're
amazing companies. And we and frankly, Pam and I have both worked with many the
key teams that are out there and think the world of them. But today we're
really not looking to sell the company. We think we've got a lot more to prove.
But we're certainly we've had conversations, and we'll
continue to have conversations with folks about. Is there a win-win here
because you said you hit the nail on the head? We're in markets. We're
addressing an occasion of stay. We have physical assets that are very distinct
from what is typically offered by one of the major chain families, and I think
that that can be highly additive to their system and working with them on
distribution, could be highly additive to ours.
We love having problems to solve and opportunities to
address. And so certainly we're not going to close our doors or not answer the
phone for these conversations.
Weinstein: But we'll stay tuned.
Ken Cruse: Yeah. Stay tuned.
If I can. I know we're out of time. But last point on that
one is in the U.S. alone there's something the numbers move all over the place.
There's something like 60,000 hotels, many of which are hotels that would be
candidates for conversion to SCP. A lot of these amazing hotels that were built
30, 40, 50. Salishan was built 60 years ago, and it's just iconic, beautiful
hotel.
There are many more like that that are conversion candidates
to our brand. So, we are excited about the scaling opportunity. We're going to
do it in a thoughtful way. I'm a real estate guy, so we'll do it based on
fundamental real estate underwriting. But there are a lot of great hotels that
we hope to bring into our portfolio over the next few years.
Weinstein: Good luck Ken and Pam Cruse, Soul Community Planet.
Thanks for being with me today.
Ken Cruse: Thank you, Jeffrey. Really appreciate it.