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Doubling Down

New Castle Hotels & Resorts Outlines Aggressive Expansion Strategy

Wednesday, June 22, 2016
Dennis Nessler
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While some hotel companies may be scaling back growth plans based on a degree of uncertainty in the hospitality market going forward, at least one company is looking to double down, quite literally. New Castle Hotels & Resorts currently has some 20 properties in its portfolio, but the Shelton, CT-based owner and operator has set its sights on 40 properties by the year 2020, according to President and CEO Gerry Chase.

The expansion will be split between third-party management contracts, acquisitions and new development opportunities. Chase talked about why the company, which was formed in 1980, is positioned well to execute on its four-year plan.

“We just have the dynamics right now that support the structure of our company probably better than at any other time and probably better than any other company. We’ve been able to create diversification being a preferred operator for major brands, as well as an investor on some projects, and having a third-party management arm. And our projects in the pipeline supports that goal,” he said.

Chase—who noted the company is looking for a mix of full- and select-service hotels with major brands—added the company is in the process of finalizing a $25 million JV fund to help support its investment strategy as well.

New Castle, which has some nine projects in various phases, has already executed two acquisitions this year. The company purchased and repositioned the Hampton Inn Milwaukee Downtown, and is preparing for the opening of the Fairfield Inn and Suites New Orleans this summer. Chase said the latter property, which is located near Canal Street, is going to include a bar and more of a New Orleans décor. He added, “it’s not prototype at all.”

In addition, a dual-branded Residence Inn/Courtyard by Marriott is planned for Dartmouth, Nova Scotia and is slated to break ground as early as this fall. Chase also noted the company is in the process of redeveloping an historic building in Denver and has secured land in Nashville and Charleston for projects that will likely open in 2018.

Meanwhile, third-party management will become a key focus for the company going forward. New Castle is close to securing several third-party contracts, including a hotel on Long Island and a resort in Quebec, according to Chase, who further highlighted the opportunity on the operations side.

“Third-party management is something I’m going to be pushing a lot harder right now. It’s a skill base that we are very accomplished in, but we have not really focused on that. It’s been more doing it for people we worked for in the past and friends and we’ve been focused mostly on the development side. We’ve talked about it internally and I think it’s the right time to expand because we have the bench strength to be able to support adding value for other investors. There’s a real need out in the marketplace for people that either manage themselves who don’t have the resources or they have the wrong management company,” he said.

Chase further added the company is working toward broadening its appeal. “We’re going to be one of the easiest third-party management programs to work with. We’re going make sure the terms and fees support the needs of the investor,” he said.

Chase also reinforced the fact the company is a preferred operator of diverse brands within the Marriott, Hilton and Starwood families. As such, he mentioned this August New Castle will be celebrating the 20th anniversary of the opening of the Westin Nova Scotia. The shuttered Nova Scotian became the first Westin franchise property and New Castle is ready to renew the franchise agreement for another 20 years, according to Chase. “Halifax is kind of neat being the first Westin franchise celebrating 20 years. It was fun negotiating the first franchise and it’s even more fun negotiating the renewal,” he said.

When it comes to the rest of the company’s portfolio, Chase noted in the past 18 months the company has sold a number of its older assets helping to fund some of its current investments. He also added that the company has invested in many of its properties so the portfolio is in good shape. “Most of the product has either been renovated, been new builds or new acquisitions that had a complete PIP done, so they’re positioned very strongly for the future,” he said.

Chase also remained relatively unfazed with the prospect of a potential economic downturn as it relates to industry performance and the ability to grow. “I’m pretty comfortable that even if things slow down a bit that our programming is pretty well set, and I’m very comfortable that we can execute. It won’t be flawless, because we always have to adapt but that’s the reason we still exist after 35 years. I’m very happy with the direction of the company,” he concluded.
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Dennis Nessler    Dennis Nessler
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