Examples of what experience can achieve
For more than 50 years, Interstate Hotels & Resorts has brought success to properties at all service and luxury levels, and in every stage of their life span from new construction to historic preservation. Here are a few examples of the difference we’ve made to the bottom lines of three unique hotels.
Doral Tesoro (Former Westin)
Fort Worth, Texas
Originally opened as the Westin Beechwood Creek and Troon Golf, the Property's initial operations were hampered by the repercussions of the September 11, 2001 terrorist attacks and softening economic conditions. Following the bankruptcy of the owner in 2002, the Westin brand and management did not live up to expectations of the lender, who subsequently hired Interstate as a replacement manager of both the hotel and the golf course. In March 2003, the hotel was repositioned and renamed the Doral Tesoro Hotel & Golf Course alongside a $2 million renovation. A redesign of the golf course was undertaken by renowned golf course designer Jay Morrish to improve the course's playability.
The lender sold the Hotel in 2006 to a partnership comprised of a New York City private equity firm and Interstate. With a new capital structure and owner vision, Interstate continued to execute the asset improvement strategy of the newly formed joint venture. After achieving the desired results, the partnership sold the asset in 2008 and achieved a gain of approximately $20 million.
In 2004, the Hotel had produced occupancy of 45.3%, ADR of $99.42, and RevPAR of $45.01. In 2005, following the implementation of Interstate's strategic plan, the Hotel increased occupancy to 51.0%, a 12.7% change. ADR increased to $108.49, a 9.1% change, and RevPAR increased to $55.36, a 23% change. Since that time, the hotel has continued to improved, achieving occupancy of 56.3%, ADR of $120.66, and RevPAR of $67.96 in 2006. With the implementation of Interstate's strategic plan, the hotel's net operating income increased steadily. In 2004 the hotel achieved a NOI of $663,427. NOI then increased to $1.4 million in 2005, $3.0 million in 2006 and $3.6 million by the end of 2007, resulting in a sales price of $52 million.
Interstate acquired the 329 room Hilton Concord hotel in 2004 and immediately enforced a value creation strategy. The strategy was comprised of three objectives. Most immediately, Interstate restructured the Hotel's sales and marketing team. (The previous associates were not of the necessary caliber to proactively plan and execute sales, marketing and catering strategies that best complemented this full-service, meetings hotel.) Secondly, through implementing a uniform scheduling and control system for the Food and Beverage operations, the Hotel was able to achieve higher levels of profitability. Finally, Interstate completed a $2.5 million PIP to enhance the value of the meeting space to clients, improve the arrival experience and amplify the guestroom comfort.
After a steady decline in occupancy and ADR, the hotel finally began to turn around following implementation of Interstate's strategic plan for the hotel. In 2004, the hotel achieved occupancy of 52.9% and ADR of $114.04, a 2.0% increase, and RevPAR at $60.35. The Hilton Concord had produced occupancy of 59.0%, ADR of $111.51, and RevPAR of $65.84 in 2005. Following the completion of the PIP and the implementation of Interstate's strategic plan for the property, the Hilton generated occupancy of 70.6%, ADR of $113.02, and RevPAR of $79.80. From there, the property continued to improve. In 2007, the hotel achieved occupancy of 72.4%, ADR of $121.26, and RevPAR of $89.83. Interstate increased net operating income from $3.0 million in 2005 to $4.4 million in 2006. In 2007, Interstate further improved NOI to $4.5 million.
In addition, Interstate was able to improve the property's performance within its competitive set. Prior to Interstate's acquisition of the hotel, it was underperforming the market. In 2004, the hotel's RevPAR penetration was at 100.6%. It dipped slightly in 2005 due to the hotel's property improvement renovations to 99.0%. Following the renovation and the implementation of Interstate's strategic plan, RevPAR penetration increased to 101.2% in 2006 and 104.3% in 2007.
Sheraton Myrtle Beach (Former Radisson)
Myrtle Beach, South Carolina
In 2005, Interstate entered into a ten-year management contract to provide management services to the 402 room Radisson Myrtle Beach hotel with a planned conversion to Sheraton. Interstate believed there was significant opportunity to positively impact the operating results of the hotel through the conversion to a substantially stronger brand, a more aggressive management style, implementation of lost controls, more effective management team, and a stronger regional sales effort. Interstate was able to leverage their strong relationships with brands to find the right brand choice to reposition this hotel.
In 2005, the hotel achieved occupancy of 57.2%, ADR of $106.24, and RevPAR of $60.72. After the conversion to a Sheraton and following the implementation of Interstate's strategic plan, the hotel achieved occupancy of 64.6%, ADR $107.14, and RevPAR of $69.17 for 2006. In 2007, the hotel achieved occupancy of 66.8%, ADR of $115.67, and RevPAR of $73.85. In 2005, the hotel had a negative net operating income of $1.7 million. In 2006, the hotel achieved a positive NOI of $874,000. In 2007, the hotel increased NOI to $1.4 million.