With designs on increasing its presence in the Pacific Northwest, as well as gaining a unique portfolio of boutique properties, Benchmark Pyramid last week acquired Portland, OR-based Provenance Hotels.
The deal—which is expected to close upon lender consent in the second quarter of 2022—will add 12 properties to the growing Benchmark Pyramid management portfolio, which now includes more than 240 hotels across the U.S., Europe and the Caribbean.
Benchmark Pyramid is the result of a merger between two hotel and resort management companies, Benchmark Hospitality and Pyramid Hotel Group, which was finalized last September. In the seven months since the merger was finalized, Benchmark Pyramid had added 31 hotels to its portfolio of third-party operated hotels in the U.S. prior to the announcement of the Provenance acquisition.
Benchmark Pyramid President Alex Cabanas noted that he and Provenance Founder and Chairman Gordon Sondland—who will join the company’s board of directors—had a long-standing relationship and were in discussions about the potential merger for the better part of a year.
“While there are lots of opportunities out there, I find that a lot of them are relationship driven where the trust and even using Gordon’s word ‘chemistry’ was right from the start and that’s how it began. I would also say I always admired the Provenance portfolio from a Benchmark legacy perspective. We always liked the portfolio and the types of assets and brands they managed,” he said.
The newly acquired properties include two downtown Seattle, WA hotels—Hotel Max and Hotel Theodore; the boutique Old No. 77 Hotel & Chandlery, which is blocks from New Orleans, LA’s French Quarter; the newly renovated Hotel Preston in downtown Nashville; the Hotel Murano in Tacoma, WA; and The Bradley in Fort Wayne, IN. Also included are six downtown Portland, OR properties.
Cabanas further detailed the geographic benefits the acquisition provides.
“We have a relatively smaller presence on the West Coast and this gives us a much greater presence in the Pacific Northwest. When you really look at the map of properties in our portfolio it was definitely a geographic hole for us. Not that we were deliberately looking for something, but when you when you slap those properties onto the map—particularly in Portland, Tacoma, and Seattle—it really fills out a region where we didn’t have as much exposure,” he said.
Cabanas did acknowledge that while at least a couple of the aforementioned markets, such as Portland and Seattle, have struggled a bit in recent years the long-term outlook remains positive.
“We believe strongly those [social] issues are being resolved and the cities are pulling themselves together. Both cities had tremendous investment in all commercial sectors and residential over the course of many years prior to COVID, so we believe in those markets recovering and recovering strong,” he said.
Cabanas emphasized that the property-level personnel from the Provenance hotels would be staying in place and that Benchmark Pyramid has been in constant communication with team members.
“There’s a great team in the Pacific Northwest. We’ve already met every one of the property team members and they all knew that this was happening well before we announced it. We need everybody at their own property to continue to take care of the property. Fortunately we’ve been able to deliver that message and it’s been very well received,” he said.
Cabanas further added, if anything, the company would be seeking additional personnel.
“Given what we’re doing and where we’re growing we need more people than we currently have,” he said.
Meanwhile, the company plans to reinvest in some of the assets being acquired with plans to renovate 8 of the 12 properties with some $40 million as a result of its recently announced GenPro venture, which was created by Provenance Hotels and affiliates of Gencom. Jointly led by Sondland, and Gencom Founder Karim Alibhai, the venture will seek to expand through future acquisitions and/or redevelopment opportunities. GenPro’s hotel assets will be managed by Benchmark Pyramid.
Nevertheless, Cabanas insisted it’s not about just adding size and scale and that the company would continue to look at organic growth opportunities and individual assets, but is not necessarily focused on numbers.
“Specialization is a strategy, being better is a strategy, scale is a benefit of the first two being right and then we have to make scale a good thing. Scale is not a focus, it’s a means to an end and an opportunity for us to deliver more results and more capabilities to our people. It’s not the headline reason to do what we do,” he said.