CHICAGO—When Vamsi Bonthala and Sheenal Patel founded Arbor Lodging in 2005, they were “deal guys” looking for acquisitions.
The company is now a national owner and operator of hotels. “Today, we employ specific investment strategies and have built a platform that is extremely focused on culture and making decisions that are driven by our guiding principles,” said Bonthala, who is CEO of Arbor Lodging Partners, the division of the company that makes investments in hotels and acquires loans secured by hotels.
“The company was founded with the goal of uniting the best practices of enterprising hotel operators and sophisticated institutional investors to effectively underwrite and execute investments in the lodging space,” said Patel, CEO of Arbor Lodging Management, an affiliate of Arbor Lodging Partners, which manages operations for its own hotels and those owned by third parties.
Bonthala said that the hotel company is very “story-driven” when pursuing deals. “While we certainly have markets that are higher on our priority list, at the end of the day, we are pursuing projects based on the details of the specific asset,” he said. “We do not chase market growth or macro themes, but are instead focused on the specific value we believe we can bring to a particular property through thoughtful pricing, smart underwriting, strategic capital expenditures and operations enhancements.”
While they are both proud of the projects the company is involved with, two stand out.
One of them is the Hotel Phillips Kansas City, Curio Collection by Hilton, in Missouri. “In Kansas City, we executed a significant renovation to restore one of the city’s iconic historic hotels to its former glory,” said Patel. “In addition to doing a comprehensive renovation to the rooms, common areas and mechanical systems, we also repositioned the restaurant and introduced two new F&B concepts: a speakeasy-style cocktail lounge and craft coffee bar. We continue to own the hotel and it has ramped up quite well.”
The next is the DoubleTree by Hilton Hotel Park City – The Yarrow in Utah. “In Park City, we acquired a heavily distressed independent hotel during the height of the recession,” said Bonthala. “It was bleeding money and had significant deferred maintenance. We were able to stabilize operations and make the hotel profitable through really hard work in an extremely difficult time and environment. We exited the investment for a very good result and continued to stay on with new ownership to execute a comprehensive renovation program and convert the hotel to a DoubleTree, finally fulfilling the promise the well-located property always had.”
In addition to Hilton, IHG and Marriott are among the brands the company has worked with. “We look for partners that can bring real value through the brand equity in their name and the room nights they can contribute through their distribution system,” he said. “Further, we look for them to work with us and trust us in how we want to design and position a hotel. At the end of the day, we are in it together, so we are looking for brands that seek to be true partners.”
The company operates in both the select-service and full-service segments. “We believe that there are best practices from both types of hotels that we can bring to the other type, and operating in both segments allows us to be the best operator we can be,” said Patel.
As have many in the industry, both Patel and Bonthala see the current labor shortage as a major issue. “We view recruitment as an organizational strategy where all stakeholders are involved,” said Patel. “We have strong relationships with outreach programs in many of our markets, and we stay connected to applicants who demonstrate future potential. Internally, we have various recognition, incentive and talent development programs geared toward nurturing employee engagement and career advancement.”
That peer-to-peer incentive/recognition program was rolled out last year through a mobile interface. “The initial success of it has been promising, but we believe that with some slight modifications it can become a larger part of how we recognize and incentivize employees for exceeding expectations,” he said. “We plan to revise the program further in the coming year. We are also focused on creating a web-based system to collect operational data quickly and automatically so that we can make changes and refine operations faster.” HB