Steady, methodical growth has defined Greenwood Hospitality since its inception in 2009, but while the company has effectively carved its niche within the hospitality management ranks it has also set its sights on becoming a more sizable entity in the coming years.
With 22 properties currently in its primarily full-service, upscale portfolio—and two more under development—the company has more than $200 million in revenue under management, according to Aik Hong Tan, principal, Greenwood Hospitality. The long-time hospitality executive told Hotel Interactive® recently the company has designs on doubling that figure to some $400 million by 2020.
“I think we’re in a good spot; we’ve grown over the years,” said Tan, who acknowledged reaching the aforementioned figure would not likely be “organic or one hotel at a time,” but rather through larger acquisitions. Tan pointed out the company has typically averaged adding about three properties each year, which has been the case in 2017 as well.
He elaborated on some of the potential benefits of growth. “By having size we can scale everything and better control costs. Ownership is getting more sophisticated and more demanding. We need to have the systems and processes to support that. Just like the brands are consolidating, the independent management companies are going to end up fragmenting as well. We don’t want to be stuck in the middle,” said Tan.
Nevertheless, he emphasized the company is not necessarily bound and determined to jump into an acquisition unless it’s the right opportunity. “I think we have to be very strategic. We’re not those guys that have a low cost of capital that can just go buy anything they want, but we buy what fits us best. We know what we can do best, which is full-service in a strong secondary market. That’s what we’re good at,” he said, adding that the company’s expertise encompasses “repositionings, renovations, brand changes, upbranding and managing expenses better.”
Greenwood—which was founded by four principals, including Tan—has grown its leadership team to 12 and its number of associates to nearly 3,000. Tan noted that providing a solid foundation for its employees has been a key priority for management.
“People ask me my job description and I say ‘I have about 2,800 ambassadors.’ So if each family has on average four people, I have responsibility for over 11,000 people. That’s how I look at my life. I don’t look at it as ‘I have 22 hotels and so many hundred million dollars in revenue and asset values of whatever.’ Those are dollars, but it’s people that make those dollars work. I know a lot of people say that, but we are very invested in making that happen,” he asserted.
He further underscored the importance of retaining top talent and how the company looks to compete with the likes of the big brand companies, such as Marriott International.
“We’re trying to make it clear there’s a career path. Some people like to be swimming in a big pool, but I hope to show them that most of my corporate vp’s are promoted from within; there’s a growth path. You can be a regional area manager overseeing three hotels or vp, operations and so forth. That’s a different career path than what they can offer. That’s how we try to do it and that’s why scale is so important,” he said.
Tan noted the company is atypical in that it is decentralized and has no corporate headquarters, which he sees as an asset. He further touted the importance of Greenwood’s culture.
“It’s that sense of achieving things and being glued together, that’s what we’re investing a lot in. There may bad apples along the way, but usually the bad apples get called out up by their peers. That’s the culture we’re trying to build where folks that don’t fit get voted off the island,” he joked.
In speaking about overall industry conditions, Tan acknowledged that he does see supply starting to become an issue, at least in certain markets, and noted the national average of 1.9 percent growth can be a bit misleading.
“I think it’s challenging. We’ve got a lot of supply coming in. In some of our markets we see as much as 5, 6, 8 percent growth. Most of the markets we’re in are strong enough to absorb it, but you still have to go through the pain,” noted Tan.
In light of the shifting fundamentals, Tan explained that the company has ratcheted back expectations for many of its properties and is looking to realize additional efficiencies.
“We’ve been in that mode for a year now. We’ve been challenging our general managers and teams to always prepare for the worst and hope for the best. In our budgeting and scheduling we challenge them to be week-by-week in terms of how you manage your labor costs; how you manage your expenses; and we don’t allow complacency to set in. Everyone can look like a hero when the tide is coming up, but when the tide is going down that’s a different story,” he concluded.