As Seen In April 7, 2015

Reprinted with permission of Hotel Businessw®, copyright ICD Publications 2015

GettingPersonalHMG Hospitality prides itself on creating a service culture

MANAGEMENT REPORTranking the companies

HB Roundtable SeriesOperating in an up market

VOLUME 24 NO. 6 APRIL 7, 2015

As Seen In April 7, 2015

Reprinted with permission of Hotel Businessw®, copyright ICD Publications 2015

By Stefani C. O’ConnorExecutive News Editor

When January rolled around this year, the executives at Hotel Managers Group

decided to keep a long-mulled resolu-tion: to raise the bar for the West Coast management company.

The steps taken were not baby ones. Instead, cofounders Jack Giacomini, chairman, and Joel Biggs, president and CEO, made a calculated leap and rebranded the company HMG Hospitality (HMGH).

At the same time, both Giacomini and Biggs agreed one of the hats the latter was wearing might fit better in 2015 on another executive’s head, so the duo cast about for the first sole-role president in the company’s history.

They did not have to search far. That hat—with all its feathers of responsi-bility—is now perched on the head of Yolanda Bender, the company’s former VP of sales & marketing who, when asked who she thought would be a good candidate for the newly created post, simply said: “Me.”

Forthrightness, candor, confidence and planning for the future are among the characteristics hotel owners appreci-ate and respect in their management companies, and the refreshed HMGH team is intent on bringing all these at-tributes into play, along with additional services and a strong foundation built on the team’s years of industry experi-ence as it moves forward.

“We felt, by rebranding it to HMG Hospitality, that would give a better idea of where our new focus was going to be: third-party management, asset management, consulting for renovations and new-builds—just encompassing all that hospitality is, with our focus not just on accountability and reporting, but also guest satisfaction and keeping the employees happy. We felt this would be much better reflected with the new name,” said Bender.

Giacomini indicated the company is looking to run in tandem with the industry, if not ahead of it. “We had to change our way of thinking to keep pace with the changing nature of hotel management. It’s changing week to week, if not day to day. You have to be

on top of your game. We thought this was the way of including our strategic vision with what’s happening in the industry,” he said.

Part of that has been increased concentration on guest satisfaction and revenue maximization, driven by burgeoning competition across all lodging segments. Addressing those avenues led to splitting Biggs’ role as president and CEO.

“We felt the change within the com-pany, as far as structure and the re-branding, should happen all at the same time,” said Biggs.

For her part, Bender unapologetically feels she is the right person for the job, albeit acknowledging “the great deal of weight on your shoulders when you ac-cept [such a] position.”

The new president noted as she, Biggs and Giacomini brainstorm strategies around HMGH’s future, she’s happy to have their depth of expertise. “There’s no substitute for those many years of experience,” she observed.

The triumvirate of executives each has his or her bailiwick regarding the company. As might be expected, Giacomini is focused on the company’s long-range strategic direction. “That takes me into the development arena, where I’m dealing with people who are either acquiring or developing hotels,” he said. “I spend a lot of my time meet-ing them and discussing the feasibility of their ideas, then doing some internal analysis for them. And, hopefully, out of all that comes a successful hotel project,

either acquisition or development, and a project we can manage.”

The company anticipates an expansion of its 14-hotel portfolio by 33% to 50%, with an increased focus on consulting services for development and renovations. However, Giacomini has a distinct stance on what a consultant’s role should be.

“I look at a consultant as [someone] coming into a project, giving you [his or her] advice, taking a paycheck, going away and not being responsible for the results. We look at it as coming into a project, providing advice and expertise and, then, we become responsible for the results we have projected,” said the chairman.

Biggs, who held the president and CEO post at the company for the past 25 years, is working with Bender to ensure a smooth operational transition.

“I’ve set aside the next 12 months to work with Yolanda very closely—and with Jack—to have her immersed in all aspects of HMG Hospitality. While Yolanda is taking over the big picture, I’ll be spending more time with own-ers and at the properties in strategic planning at each location. That’s going to be very helpful to us because we have owners within our portfolio who are developing and also purchasing new properties,” said Biggs.

As part of the new structure, the ex-ecutives indicated the company is imple-menting platforms to improve such areas as accounting, real-time reporting, human resources, property websites, marketing, sustainability, and employee relations, retention and training.

“On-property training is vital,” said Bender. “You can’t just throw [people] out there and expect them to do things

STANDING LEFT TO RIGHT: Joel Biggs, Yolanda Bender and Jack Giacomini

SEATED LEFT TO RIGHT: Young Yoon, Donna Lewis, Michele DeMayo and Rick Skinner

Getting PersonalHMG Hospitality rebrands & restructures with added emphasis on service

As Seen In April 7, 2015

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the right way. Even the seasoned profes-sional needs to be held accountable.”

Bender is spending time with the new team that’s been put in place at HMGH. This includes Young Yoon, corporate director of development; Donna Lewis, VP of sales and marketing and revenue management; Michele DeMayo, EVP; and Rick Skinner, VP of operations. The new president also is putting a keen eye in reviewing policies and platforms under consideration “to make sure we don’t drop the ball and miss something. When we are ready to roll [something] out, we minimize any error that could come along.”

The revamp of the company also plays to its desire for expansion. HMGH’s portfolio currently consists of properties split be-tween full- and focused-service hotels and one timeshare property, the Wave Crest Resort in Del Mar, CA. The managed-properties are concentrated in California, with a smattering in Utah, Denver and Nevada, and include brand product from Hilton Worldwide, IHG, Wyndham World-wide, Choice Hotels International and Starwood Hotels and Resorts Worldwide, Inc. It also has two California indepen-

dents in the portfolio: the full-service, 202-room Mission Valley Resort and the fo-cused-service, 63-room Anaheim Express Inn Maingate. HMGH has a 40% equity investment in one property: the Hampton Inn & Suites Las Vegas Airport.

Among properties under development are a 104-room Fairfield Inn & Suites by Marriott in Perris, CA; a 129-room Resi-dence Inn by Marriott in Truckee, CA; and The Lodge at Painted Rock, an inde-pendent near Lake Isabella in California.

“We are going to focus more in 2015 on full-service properties,” said Biggs. “However, we also have a niche in focused-service properties, and we’ve done very well. At one time we had six Hampton Inns & Suites.”

Bender noted expansion could pose challenges. “Our core has always been personalized service; we look at each hotel as if it were our own. We’re very focused on driving revenue essentially to the bottom line. One of the challenges is, as you grow, you don’t want hotel owners to feel they’re just a number; that will never happen [with us]. Secondarily, there are management companies that

popped up [as a result of the recession] and, quite frankly, I think they’re just management companies in name only. That’s something that we’re up against. But, I think, with what we offer in our experience, we’re able to counterattack that,” she said.

For Biggs and Giacomini, changes within the industry go beyond the rapid advance-ment of technology, the intrusion of OTAs or the emergence of platforms such as Airbnb. According to Giacomini, it’s some of the owners and investors coming into the industry that are posing a basic chal-lenge in the current environment.

“I think the challenge to an old-time, reputable management company is primarily new investors and owners who are coming into the business and not understanding the role of professional management. Some of the new entrants into the industry kind of look at it like the restaurant business: I can cook and I know what a good restaurant is, therefore I can own a good restaurant and make money. We come from the point of view of you can’t do that. If you stay in hotels and think you know a lot about hotels on the surface, that’s one thing. It’s another thing to operate them, create a staff and meet all of the standards of brands, regulatory agencies, etc., while building repeat business—all the while making a profit and return on investment. My main [challenge] is convincing new owners that we can make that happen. Them making a multimillion-dollar decision to go into the hotel business and think they can run it, or a relative can run it, and be success-ful is just not going to happen in 99% of the cases. That’s my challenge: educating new entrants into the business and mak-ing them understand how the business re-ally has to be professionally run to create ROI,” said Giacomini.

A distinct positive for those making a foray into hotels is qualifying for a fran-chise, Biggs indicated. “We truly believe you can get an excellent return on your investment when you have a franchise for your hotel,” he said. However, he added, “One of our tasks is to put together the best opportunity for our owners, whether it be independent hotels or branded.”

Both Biggs and Giacomini have been “making it rain” for owners since the 1980s. Before cofounding Hotel

continued on page 28

The executives at HMG Hospital-ity consider themselves “good neighbors” when it comes to sustainability, and plan to work on ways to further reduce the en-vironmental footprint under the new rebranding.

For example, the company’s 416-room Crowne Plaza San Diego-Mission Valley has won numerous awards for its sustain-ability programs, which include recycling and waste management, and energy and water efficiencies. It also adheres to IHG’s Green Engage initiative and is recycling commingled items (plastic, paper, glass, tin, aluminum and card-board), cooking oil, food waste, green waste (grass and tree clip-pings), e-waste (computers, CPUs, lightbulbs), linen, blankets and bedding material, wood pallets and wire hangers.

And, guests staying at the HMGH-developed and -managed 69-unit Comfort Inn & Suites in Tooele, UT, will find a multi-unit Tesla SuperCharger station for electric cars.

“The property has numerous green aspects: solar, smart ther-mostats related to entrance with your key… We’re doing anything we can to help our hotels be as green as possible,” said Biggs.

He added “We’re starting that at the corporate level as well. We know we have to do it, so we’re try-ing to stop sending paper, receiv-ing paper, using paper and cutting down too many trees. We believe we’re going to see more of that with our properties in 2015 and beyond.”

—Stefani C. O’Connor

Growing green

The Comfort Inn & Suites in Tooele, UT, offers Tesla SuperCharger electric-car charging stations.

The Four Points by Sheraton in San Diego features a variety of meeting and event spaces.

As Seen In April 7, 2015

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“ We had to change our way of thinking to keep pace with the changing nature of hotel management.”

—Jack Giacomini

Managers Group with Giacomini, the CEO headed Biggs Hotel Group. He merged his eponymous company with Giacomini’s Santa Fe Management, later transitioning the name to HMG in 1996.

The duo got their first assignment in 1985, a Travelodge in Ontario, CA. “It was a little 55- or 60-room property. We got a call from Travelodge that said: ‘The owners are having trouble. You’re a brand new entry in the hotel manage-ment field, one of the very few in the Western region, so have a look and see what you can do.’ We took it on and cre-ated value and, of course, it was sold,” said Giacomini.

The fledgling company’s next op-portunity came from managing seven Residence Inns located in Florida, Texas and California. “We had them for almost 10 years,” said the chairman.

The two executives largely have the federal government’s infamous Resolu-tion Trust Corp. (RTC) to thank for pushing them out of their “comfort-able” hotel jobs and into management.

“The RTC was seeking hotel management to manage the distressed [hotel] assets it had taken over. We received a lot of our early business from the RTC lenders and created value for hotels, which they later sold off,” said Giacomini.

A third-generation hotelier who started out as a bellman and came up the ranks to GM and other execu-tive positions, including SVP of Atlas Hotels, the chairman indicated making the move to management was worth the risk. “When I left Hilton, I was making the enormous salary of $400 a month. I’ve never looked back.”

Similarly, Biggs also served at Hilton, where he worked up to director of sales at the Mission Bay Resort before moving on to become a VP at Chatmar, Inc. (then Chatmar Holiday Inn), which owned Holiday Inns in Northern California. He then returned to Southern California, working as VP for a company that had Holiday Inns and restaurants.

Biggs connected with Giacomini dur-ing the chairman’s days at Atlas Hotels, and wound up running the company’s 400-room Pacifica Hotel in Culver City in western Los Angeles for five years.

While comparatively new to HMGH, Bender has been in the sales and marketing space across several

industries for some 20 years. She made her foray into hospitality in 2008, going into sales at a hotel. “I opened the Embassy Suites in Los Angeles Glendale, where I was the director of sales and marketing,” she said.

Prior to joining HMGH two years ago, she oversaw sales teams for Campbell Lodging as corporate director of sales and marketing, wrangling a 15-hotel portfolio for the family-run busi-ness that included Hilton-, IHG- and Marriott-branded products. “The family decided to sell the portfolio, so I contacted Joel—and the rest is history,” said Bender.

“Jack and I talked about this change within our company, bringing in a new president. We talked about a lot of dif-ferent individuals, but we always like to get input from our people. So, Jack and I invited Yolanda to dinner one night and we said, ‘Yolanda, we want you to know we’re looking for someone to come in and take over as president of our company, and we wanted your com-ments on who do you think would be a good person to talk to.’ She said, ‘Me,’ and we agreed with her,” said Biggs.

Bender attributes her success in lodging to drawing on previous career experience. “I just did what I used to do in the other industries, which was to prospect and go out and sell. That’s what I bring to sales and marketing: the basics,” she said.

While expansion is on the revitalized HMGH’s agenda, all three executives are of a like mind when it comes to property accessibility.

“We do want to be able to ‘touch’ our properties often so, with that in mind, we think from the Mississippi west is still kind of our focus,” said Biggs. “That’s not to say if a good property comes up in any other part of the coun-try we wouldn’t take it. We certainly will look at all opportunities, but we feel our expertise and what we offer is here in the West.”

As part of the revamp, HMGH recently hired Yoon, who previously worked with IHG as corporate director of business development. “We have him working primarily out of our L.A. office, where we believe there’s going to be some excellent opportunities this year. With Young, we’re going to be focused from Texas to Washington and all the West.”

Given the existence of a timeshare

“ Our core has always been personalized service; we look at each hotel as if it were our own.”

—Yolanda Bender

“ One of our tasks is to put together the best opportunity for our owners, whether it be independent hotels or branded.”

—Joel Biggs

continued from page 27

Reprinted with permission of Hotel Businessw®, copyright ICD Publications 2015

property in the portfolio, the execu-tives were asked if that might be an avenue HMGH was looking to tread. By way of explanation, Giacomini said, “In our little corporate circle here, I’m considered the wild one, always looking for new opportunities. This timeshare came along to us through a referral. We did a little bit of consulting on it, and the consulting turned into, ‘Will you take it over on an interim basis?’ We agreed to do that and, so far, the owners are very pleased with what we’ve brought to the table, and they’re considering our interim management contract to become extended or perma-nent.”

The experience has put timeshare on HMGH’s radar, Giacomini indicated. “We thought this might be another avenue for our company’s expansion. There seems to be less competition in timeshare management than there is on the hotel management side of the ledger. It’s not over yet. We’ll see what happens. It may be an opportunity for us,” he said.

Among the three hotels HMGH has under development is The Lodge at Painted Rock, a 70-acre planned resort facility about 40 miles northeast of Bakersfield that’s been in the works for about four years by the owners, who have put in infrastructure, utilities and a Western-style lodge building.

“They have full entitlement and plans to build 50 to 100 hotel units or con-dos—that decision hasn’t been made yet—and they’ve progressed to the point where they now need professional expertise or a joint-venture partner to come in and complete their planned project,” said Giacomini.

HMGH has been retained by the owners to find a JV partner, finish the planning and then operate the resort.

Similarly, the company is working with real estate developer Richard Barsell to develop 13 acres into a mixed-used project in Truckee that will include a Residence Inn by Marriott.

The company is involved in another Marriott product, a Fairfield Inn & Suites by Marriott in Perris, CA. The Cedric family owns the property with a sliver equity contribution by HMGH, which hopes to break ground on the hotel in third quarter.

Although he did not go into detail, Biggs said HMGH has an additional five new-build properties it’s working on, three in Southern California and two in Utah.

The executives are optimistic the rebranding and new initiatives will fur-ther enhance HMGH’s position in the industry. “I do think the net result for our existing owners of the streamlined business model is one where we’re go-ing to be able to react much quicker to changes in the marketplace, but we’re also going to save them money. The bottom line is we’re looking for ways to cut back on expenses, yet make report-ing for them much more real time, much more accessible, anywhere they are, with any device that they’re using. Definitely to be nimble and dynamic; that’s a big goal,” said Bender.

“We see the hotel industry evolving very rapidly, extremely rapidly,” said Giacomini. “Our effort has been to bring in fresh ideas, renewed energy and renewed focus. We want to be on the leading edge of that evolution, and deliver that to our client properties. You recognize that you have to change your wardrobe frequently to be among the best dressed and be a leader, so what we’ve done is just changed our attitude and our mentality and brought in fresh new thinking in order to be in front of the evolution of this industry.” HB

TOP TO BOTTOM: The 129-room Hampton Inn & Suites McCarran Las Vegas Airport, the only hotel open in which HMG Hospitality has an equity investment, is owned by Western Hotel Partners, LLC.

The lobby of the Crowne Plaza San Diego features a contemporary design.

Among properties under development are a 104-room Fairfield Inn & Suites by Marriott in Perris, CA (above), and The Lodge at Painted Rock near Lake Isabella in California (left).

As the industry has changed, so have the dynamics between own-ers and management companies. HMGH’s CEO Joel Biggs noted negotiating contracts is different than it used to be. “But, when all is said and done, we know that owners want their properties to be successful, which means differ-ent things to different owners: It’s guest satisfaction; it’s great rev-enue management; a great team running the property; bottom-line profits,” he said.

“What we have found compared to our owners of 10 to 12 years ago is the makeup of the owner is different today. We’re dealing with very professional families, and sons and daughters who have grown up in the business. They are now more into development than purchasing small properties the way they used to,” said Biggs.“Our goal is still the same: Operate suc-cessful properties. But, the way we go about it is certainly differ-ent than it used to be.”

—Stefani C. O’Connor

Changing times

As Seen In April 7, 2015