Roedel explores new brands, more complex hotel properties

Source - hotelbusiness.com

Wilton, NH—Roedel Companies has had a good few years.

With a strategy of acquiring distressed hotels and applying the right renovation and management techniques, the company effectively doubled the size of its portfolio. "We've been looking for opportunities to buy hotels that are on really good real estate, but for whatever reason, they’re broken and need to be fixed, whether it be extensive repositioning renovations or sufficient management practices," explained David Roedel, partner, Roedel Companies, who is also in charge of business development.

"We think we're pretty good at buying hotels that are at some level of distress, whether it's absolutely distressed and bank owned or just in need of a cycle of renovation where the current owner, for whatever reason, doesn't want to do it and they would rather sell it," he said. "We've been successful doing that—we purchased five hotels coming out of the recession all with that similar flavor." Of those five, three are currently in the heavy design and renovation phases, which the company hopes will be complete a year from now.

Roedel noted that the company isn't only an ownership group but a management company and construction company through its affiliates, RGH Hospitality and ROK Builders respectively, enabling better efficiencies at its hotels.

The company's most recent acquisition is the Courtyard by Marriott in Nashua, NH. Originally built as a full-service Marriott, the property was converted into a Courtyard in 2006. "They wanted to shave expenses, but they didn't think through the opportunity of can this still be a banquet/conference hotel?" explained Roedel. The 245-key property will undergo a complete renovation, which will include a full-service conference center. "We feel that market needs a conference center badly," said Roedel, noting that the property has a unique position within its market: "Good real estate, good bones, and when you renovate it, it really can look like a brand new product."

This property also marks the first Marriott-branded property in the company's portfolio, and Roedel said that he would be happy to see more to follow and, in fact, it makes sense considering the company’s history. Roedel Companies was formed in 2000 as the successor to Chalet Susse International Inc., which developed, constructed, owned operated and franchised a chain of Susse Chalet and Grand Chalet hotels throughout the Eastern U.S. from 1968 to 2000. "That chain sold in 2000, and out of 36 hotels, 26 were converted to Fairfields," explained Roedel. "As we got into the franchisee side of the business, I always assumed at some point, we'd do a Marriott. That's what you do; it's one of the better brands. For whatever reason, we didn't.

"Fourteen years later, the opportunity came up for this one and they were fantastic to work with," he continued. "I think they understood that we're a company with a pretty good track record that's poised to grow, so they were very accommodating in getting us approved, and they were fantastic throughout the design process. We’re very excited to do more Marriott products."

Another new opportunity for the company includes expanding to independent, historic hotels, with its acquisition of Hotel Saranac in Saranac Lake, NY. The company plans to restore the hotel, including re-establishing the property's storefront facades, arcade, terrace, dining room/ballroom and second-floor lobby. The state of New York awarded the company $5 million in state economic funding for the project.

"At the end of the day, it really was a relationship buy with the former owner," explained Roedel. "He wanted out and we looked at the facility and thought, 'If not us, who?' So we successfully applied for and received a grant from the state of New York to help us finance the project." Roedel added that with four generations of family members living and working in the area, the company knows the market well and has the right local connections. And while it was a relationship buy, "We obviously bought it for investment purposes," he said.

However, Hotel Saranac serves another purpose as well. "It gets our company in a place where we're familiar with things like adaptive reuse, historic tax credits, grant opportunities and the concept of the independent hotel, which is something we historically have not been known for," he explained.

Roedel noted that while the company has been known for limited-service, rooms-only operations, a look at the current portfolio shows a different story. "We actually have quite a bit of food and beverage and catering," he said. "We're looking at opportunities with a little bit more full-service hotels, or hotels that have a fairly significant food and beverage division. Besides being a good investment, it'll be great for our company, as we grow, to have experience in different areas of hospitality."

While the company has looked at distressed properties for the last few years—something Roedel said it would continue to do—he noted that its strategy is changing. "The past six months, we have not seen nearly as many of that similar type of story," he said, attributing that to a more robust market in which lenders have loosened the purse strings, allowing owners to successfully refinance.

"Looking forward, we're really considering select new developments," he said. We have a number of those we're looking at today, getting back into the development business, one of which is slated to start in October: a ground up Homewood Suites in Massachusetts.”

With the majority of its portfolio in the Northeast, Roedel added that high barriers to entry remain fairly strong. "In many townships, it’s difficult to put a hotel in, and now I'm seeing a trend where real estate prices are getting to where it's tough to make a hotel pencil. I see really good pieces of real estate, but the ask for that land is extremely high," he said, noting that this makes it even more important to make sure the new-development deal is right.

Still, the executive is positive about the future. "We've sustained pretty significant growth for our size the past few years. We've effectively doubled the size of the portfolio. Moving forward, we'll look at select new developments typically in mixed-use communities where we can identify the reason to go there," he said, noting the company could do two to four hotels a year if it wanted to ramp up the development side. "But we'll only do that if we find sites that have really compelling reasons to do so.

"Within our five-year strategic plan, I think we’d be very disappointed if we didn't double the size of the portfolio once again, but again, only with smart deals. We only want to do deals that make good financial sense, fit into our strategic plan and align with our core values," he concluded.

-NICOLE CARLINO