With some 540 hotels in its management portfolio, Interstate Hotels & Resorts is no stranger to seamlessly taking over the operations of a hotel without interrupting guests. However, transitioning 83 properties simultaneously is a completely different story.
Nevertheless, that’s precisely the challenge that the Arlington, VA-based management specialist encountered late last month following its acquisition of 82 hotels and one restaurant from White Lodging. The deal, which was first announced in early December, closed on January 24.
John Rubino, EVP, Crossroads Hospitality, Interstate’s select-service division, referred to it as “an exciting transition” and detailed the company’s approach. “When we first thought about this we said ‘wow, we have 83 assets coming on board.’ It’s the largest ever for our company in one single day. What we did is we put together a team of people. It’s something that can’t be done by one or two people, but we had a whole task force transition team in place that was working on this months in advance,” he noted.
That task force included representatives from IT; HR; operations; sales and marketing; payroll; finance; and accounting; all of whom met several times each week to plan for the transition. “We staffed what we call our ‘war room’ with key members from each discipline,” said Rubino.
He further noted as the transition approached the company provided on average two to three people per property and set up an 800 line for team members to call if they ran into problems. He acknowledged a few ‘minor hiccups’ at just a few properties that were taken care of within a couple of days. Rubino added, “we’re very happy with how that turned out.”
Rubino also credited White Lodging—who had a transition team of their own in place to provide details like historical data, for example—with helping Interstate through the process. “They were very cooperative, very professional and we felt it was a really smooth transition because of that,” he said.
While Rubino was unable to identify the two ownership groups involved in the transaction, he stressed that they played a large role in the changeover as well. “We have two great ownership groups now and they were very involved in the process and very supportive of the transaction and the transition. They also had their transition team so it was really a collaborative effort between Interstate, both ownership groups and White Lodging,” he said.
As a result of the deal, Interstate welcomed some 2,500 new associates to its team. According to Rubino, there has been very little turnover at the property level, which was also a key factor. He pointed out that with the exception of a handful of vacant general manager and director of sales positions, “there was not a great deal of turnover.”
He added, “We’re happy with the quality of associates we’ve inherited with this transition. We feel that their philosophies match our philosophies. We have a culture where we like to give back to the community and where we accommodate our guests and we assist our associates in achieving their goals; giving back to the communities in which they live and work. They’re our top priorities and they are the foundation of the values that drive financial results in our minds. And these associates fit that philosophy for us so we’re excited to have them joining us.”
The properties in the transaction were all premium branded assets, including brands within the Marriott, Hilton and Hyatt systems. Four of the properties are full-service hotels, while the remaining 78 are select-service. Rubino acknowledged the full-service hotels necessitated additional staff for the transition primarily because “they require a higher number of associates.”
Rubino commented that the company placed a priority on getting a jump on the technology aspect. “Everything is done electronically from payroll to reporting daily revenue stats and our concern was making sure the IT piece was in line, because that would really prevent a lot of the associates from doing their jobs. It would make it difficult for us to track things so we started that process very early with preliminary visits to the properties to see what challenges we thought we would incur,” he stated.
The EVP reiterated that he is pleased with how the transition has gone. “We did a two-week temperature check with regional team members [last week] and to my surprise most issues were rectified fairly quickly and we’re really operating at a smooth point right now,” he said.
Rubino noted that the company has executed some large-scale deals previously that involved roughly half the number of hotels, but acknowledged the difference in size and scope of the most recent deal. The company also indicated there may be another double-digit hotel transition in the offing in the near future.