Hands-On, High-Touch Approach
One of the key advantages of not being a large, multi-layered organization is the ability to be nimble and quickly adapt to changing circumstances, and that has certainly served General Hospitality Services well during the past several months.
The Nashville-based third-party management firm—which was founded in 2006—has leveraged that ability as well as its hand-on approach to help cut the losses for its half-dozen properties in the wake of the Coronavirus pandemic, according to Jason Mellen, vp, operations, General Hospitality Services (GHS).
He touted the company’s strengths, particularly in a difficult operating environment. “Given that we already had a high-touch ownership mentality it set us up very well to go to our owners and say ‘what are the goals? What do you need our help with?’ We can then translate that back to our property managers and associates to say ‘here’s the goal, rather than being GOP focused now we’re NOI focused as property leaders,’” he said.
Mellen further elaborated. “Our strengths throughout this process are what we already had in play having phenomenal relationships with our owners and employees. That’s not to say that it created an easy transition, but it made the process up to this point a little bit easier to swallow and enabled us to act very swiftly to minimize losses and keep properties operational,” he said.
Mellen noted that keeping the properties operational was not necessarily an easy decision, but it proved to be the right one. “It was more beneficial for us to remain open. We saw April as the worst month. As a portfolio we’ve seen approximately 10 percent growth month over month [since],” he said.
Mellen acknowledged those numbers were boosted significantly by the company’s Fairfield Inn & Suites Destin in Florida. The panhandle property saw a marked increase in demand when COVID-19 restrictions were lifted. “As soon as the beaches opened occupancy skyrocketed there,” he said.
The GHS portfolio is made up of select-service and extended-stay properties under the IHG, Hilton and Marriott brands, focused primarily in the Southeast and ranging from Florida to Indiana. Mellen asserted the company is looking to expand its management portfolio moving forward.
“I think that we’re well positioned for owners that are in the segments that we currently operate. Our target is those owners who have maybe had a bad experience with a much larger organization or they’re somewhere in that 2- to 6-property range and through this they just found it too challenging to continue do on their own,” he said, adding the company’s principals have also engaged in discussions with lenders to potentially take over properties that are in distress.
Mellen underscored the company’s ability to move quickly, particularly as it relates to cutting costs. “We were able to be very successful, very fast with our portfolio managing that top-line loss and minimizing the losses on the bottom line,” he said. According to Mellen, within 30 days the company saved roughly $4,000 a month by reworking contracts with vendors of various services, such as telecom, landscaping, and pest control, as an example.
“Our mindset with all of our vendor partners is that it’s a partnership. In a time like this we need their help more so than ever. Through this some of our existing partnerships have been phenomenal and worked with us very well. In other cases it’s kind of led us to some new partnerships that have been able to drastically help us out as well,” he said.
The company currently operates two extended-stay properties, Home2 Suites by Hilton Clarksville Louisville North and Candlewood Suites Louisville North. Mellen acknowledged that extended-stay has outperformed other segments and those properties are no exception.
“We’re seeing our two extended-stay properties very much outperforming…You can visibly see the guests are spending more time in the hotel, and the benefit of having the kitchenettes has really become that positive thing for that segment,” he said.
As part of the GHS corporate culture, there is an emphasis on what the company refers to as the four Ps: people, product, processes and profit. Mellen emphasized the importance of people in that equation while acknowledging that the company did have to furlough some of its employees.
“People have always been our primary focus. If you hire the right people and you treat them the right way then obviously you’re going to run a better organization overall,” he said.
Meanwhile, when it comes to product, he noted the approach was pretty straightforward. “We really want to make sure that we are treating the assets of owners that we represent as if it is our own. We want to make sure that we’re extending the asset life,” he said.
In terms of processes, the company is leveraging new technology and software systems to make things easier for its employees on the ground, while at the same time “creating a high level of visibility for our owners,” noted Mellen.
Finally, he noted profit is generally the last of those four elements to fall into place. “If we do those three things well that will bring to the bottom line tremendous returns for our owners,” said Mellen.
