Carving Its Niche
Armed with a new strategic investment of some $210 million, Soul Community Planet (SCP) looks to further carve its hospitality niche as a holistic hotel company and brand.
The San Juan Capistrano, CA-based company—which has grown to include three properties since being founded in 2018—recently finalized terms for the strategic investment to pursue additional growth opportunities.
Ken Cruse, CEO and co-founder of SCP, described its overall mission.
“Our focus is on providing holistic hospitality for people desiring to make positive choices for themselves, for their communities and the planet. Generally, as a social enterprise or purpose driven company our vision is to make the world around us a better place through those core values,” he said.
Cruse talked about the infusion of capital—which he noted that paired with prudent levels of property-level debt—gives the company north of $500 million to grow through acquisitions and partnerships, as well as the ability to further brand advancement and make competitive enhancements to existing properties.
“We developed the idea two years ago, and we’ve nurtured it and refined it. With the proof of concept in the existing three properties we were able to go out and talk to some of our capital relationships. We were very gratified by the fact that even in a very challenging market like this we’ve got an amazing new strategic partner with a lot of capital to help us grow the brand,” he said.
As it relates to its growth strategy, Cruse specifically stressed that the company wasn’t looking to take advantage of the current distress in the market.
“We think rather than capitalizing on the misfortune of the distressed hotel owners we can build positive and lasting relationships with them and expand the brand in the right way. That’s sort of a twist on our growth strategy versus what a lot of other folks are looking to do at this moment,” he said.
The company is looking to grow primarily through the conversion of well-located vintage motels and boutique hotels. Cruse noted that it can provide “win/win solutions” for owners of distressed assets by bringing in additional capital to solve debt issues, as well as upgrade the properties.
The CEO also noted he remains bullish on the industry’s prospects going forward despite the current downturn as he looks to forge new partnerships.
“Together we’ll capitalize on what we believe is going to be a very profound recovery in our industry over the next few years. We’re taking a long-term view,” he said.
Meanwhile, in conjunction with the new investment, SCP has formed SCP Hospitality, an integrated brand, management company and hotel owner. This structure is designed to ensure effective oversight of all aspects of SCP’s culture and operations, while eliminating the inefficiency of typical third-party branding and management arrangements, according to Cruse.
“Our view is that’s the only way to run a hotel company in the current world. There’s no need to have an independent real estate owner, independent operator and independent brand. It just creates conflicts of interest and leakage in the system so we own all three elements of it and that was the vision from day one,” he said.
The company’s three properties—which include SCP Colorado Springs (Colorado), SCP Redmond (Oregon) and SCP Depoe Bay (Oregon)—have performed well despite the pandemic, according to Cruse.
“We look at three different metrics for success at our properties: guest satisfaction, revenue generation as it relates to our competitive set, and profitability. We just have some amazing, positive stories across the portfolio in all three of those metrics,” he noted.
As an example, Cruse noted that the Colorado Springs property recently ranked number 3 in the entire market in terms of guest satisfaction.
In fact, with its three core values of wellness, kindness and sustainability, Cruse insisted the pandemic has helped highlight the basic tenets of the brand.
“We think the pandemic has actually emphasized all three of our core values very well,” he noted.
Cruse further reinforced the company’s values while describing its target audience and touting its affordability.
“In general, we think conscious travelers as a meaningful, growing and very underserved segment of our industry have a stronger voice. SCP is the only values driven concept that’s focused solely on wellness, kindness and social good on the accessible price end of the spectrum for our industry,” he said.
He described the brand’s competitive set from a pricing standpoint as Courtyard by Marriott and Hampton Inn by Hilton. However, Cruse pointed out that’s where the similarities end.
“We tend to take character assets that have been around for a while. Rather than bulldozing them and building a new stick-build modern structure we capitalize on the character of those assets. We modernize the infrastructure; so there’s a very different look and feel to the end product versus the other guys who are in our space. We kind of define the design style as ‘eco-industrial’ in some instances,” he said, further describing the brand’s look and feel as “bohemian” with unique features like brick walls, industrial ceilings, and hand-painted murals.
SCP donates 5 percent of its profits to charitable causes that share its core values. In addition, Cruse noted that nearly 25,000 trees have been planted as a result of its partnership with “One Tree Planted,” which plants one tree for each guest stay.
“It’s pretty exciting to be able to make those kinds of differences. That’s really the crux and distinguishing factor of our brand. We truly exist to make the world around us a better place and as a result this appeals to a much deeper consumer base. We have a much more meaningful attachment to our consumers when they come to stay at our hotels. They become advocates of the brand and they help us create this virtuous cycle where we’re growing the brand really through the advocacy of folks who get what we’re doing and appreciate the cause,” he said.