SCP's Ken and Pam Cruse ready to scale

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.