RALEIGH, N.C.—One of the top-ranked hotel developer-owner-operators in North America just unveiled its 2013 growth strategy. If Concord Hospitality Enterprises executes well the company will end the year much larger than it is now.
Concord’s plan includes opportunistic hotel acquisitions and divestments and third-party management. That’s in addition to an aggressive hotel development program.
Let’s look back before we look ahead. In 2012, Concord pushed out more than $500 million to new hotel development and opened two hotels, while breaking ground on six more. For 2013, Concord expects to triple that performance, opening six hotels and breaking ground on 10. Looking ahead to 2014, Concord expects to open 12 newly developed hotels.
“We have a very aggressive pipeline of 17 LEED-designed hotels, that include two Cambria Suites projects in New York, and one in Washington D.C.,” says Mark Laport, president and CEO of Concord. “We also are very active in numerous secondary U.S. markets and Canada and will expand our presence in Cleveland and Pittsburgh.”
By the end of 2013, Concord estimates that 25 percent of its 4,626 owned hotel rooms will be LEED certified. Concord’s new properties consume 20 percent less energy than local building codes require and the company also participates in Clean the World, a global initiative that recycles personal hygiene items that are distributed around the world where hygiene-related diseases are an issue.
What about hotel acquisitions? “We have not been an active acquirer but are beginning to see a number of transactions that match up well with our business model,” says Laport. “We will acquire opportunistically and simultaneously seek to monetize select assets in our portfolio to reinvest in new development projects and acquisitions. Whenever possible, we will seek to retain management of the divested assets.”
In 2012, Concord grew its base of third-party management contracts by five hotels. The company expects that trend to continue in 2013 with the addition of at least another five hotel assets.
“We retained management of properties that we sold, and we added contracts on behalf of relatively new ownership groups that are expanding their holdings,” says Laport. “We already have several new engagements teed up for 2013, pending closing, which will bring our operations westward to new markets like Las Vegas and increase our number of hotels in markets such as Phoenix. We also are working with a number of sophisticated institutional investors who plan on additional acquisitions in 2013.”
Concord intends to continue to provide 35% to 40% equity in its development projects. With that ratio, Laport expects to find attractive financing and well-qualified partners.
“Recently we received six term sheets to finance a new development project. The equity was oversubscribed by more than 100%,” Laport says. “Our level of financial and operational commitment resonates with investors who would prefer to co-venture with a partner that’s guarding their investment.”