Skift Take
This boutique hotel chain's strategy? Speed wins.
Graduate Hotels opened its first two properties in 2014 in Tempe, Arizona, and Athens, Georgia, and since then, the boutique hotel chain known for its proximity to centers of higher learning has expanded to six properties across the U.S., and it continues to grow.
Two years from now, a new Graduate Hotel will open on New York City's Roosevelt Island, on the same site where the Cornell Tech campus from Cornell University is being built. It will be the only hotel on the entire island, and is slated to have 196 rooms.
Skift recently spoke to Graduate Hotels principal and president Tim Franzen about what it's like to grow a boutique brand that specializes in secondary and tertiary markets, and the challenges that also come with further consolidation and competition in the hospitality industry.
Editor's Note: This interview has been edited for length and clarity.
Skift: How did Graduate Hotels get started?
Tim Franzen: Ben Weprin, the founder and CEO of AJ Capital Partners, was taking a look at the core business model of AJ Capital Partners and figuring out where we needed to look for new avenues for investment. When he started the company, he was really focusing, at that point, on high-end luxury resorts in places like South Beach Miami, the Caribbean, and Mexico — that sort of thing. He also had a stake in Auberge Resorts for a time. Then, he quickly saw that that market was getting a little overheated. There weren't great buying opportunities that he was seeing in 2009 and 2010. He started looking at more of the big city centers and really niche areas of those city centers.
He came back home to Chicago, and started working on projects like the Hotel Lincoln in Lincoln Park, a place that is obviously a neighborhood of Chicago where we're very interested to buy hotel products. Then he was also doing some adaptive reuse like the Soho House in the West Loop and eventually the Chicago Athletic Association.
Over time, we were also starting to see less of value creation in some of the big major metropolitan across the country and so, at that time, we started looking for other avenues for investment. And we started by looking at the possibility of moving into more secondary markets.
We morphed into really focusing on university anchored secondary and tertiary markets and what we found was that most of those markets had a very limited — or very lackluster is probably a better word — hotel product in what were some very dynamic and unique
