Hotel Managers Springboard and Hotel Equities Are Merging: Exclusive
Photo Credit: Exterior of the Moxy Halifax Downtown Hotel. Hotel Equities
Skift Take
Typically, in mergers, the bigger fish swallows the smaller one, stamping its quirky innovations into corporate conformity. This deal is attempting something different.
Springboard Hospitality and Hotel Equities have signed a strategic merger agreement, creating a combined entity that will manage more than 250 properties across the U.S., Canada, the Caribbean, and Latin America, the companies told Skift.
The private companies didn't disclose the financial terms of the deal. The deal was signed May 1 and doesn't require regulatory approval.
The deal unites Hotel Equities' focus on branded properties with Springboard's specialty in independent and lifestyle hotels. For now, the company names will remain separate. Ben Rafter, previously CEO of Springboard Hospitality, is now CEO of Hotel Equities and Springboard.
"This wasn't done for synergies," said Rafter. "Unlike many industry consolidations that focus primarily on scale, this merger emphasizes complementary strengths."
The combined entity will offer services to hotel owners, such as operations, revenue management, marketing, and development.
Managing Branded Hotels
Hotel Equities (known as HE to insiders) hires, trains, and manages over 11,000 employees at over 200 hotels, priding itself on the quality of its training programs, which it does in collaboration with several schools.
The firm has been growing at a steady pace, signing 66 new deals last year, including being chosen to manage the first new hotel development in the U.S. Virgin Islands in over 30 years, the Hampton by Hilton in St. Thomas.
Marriott has chosen Hotel Equities to manage the properties under its recently acquired brand, Postcard Cabins. These properties aspire to be distinctive-looking but minimalistic cabins located an hour and a half outside of major cities.
Postcard Cabin locations usually only have a handful of units per site and are geographically scattered.
"The operational challenge will be how do you efficiently manage all of the locations effectively," Rafter said, noting that Hotel Equities has a broad network of offices and practice in managing far-flung operations.
Storytelling Skill
"Where the typical hotel management company might hire a token 'VP of Lifestyle' to appear hip, Springboard has built its entire identity around creating authentic experiences," according to Rafter.
If an owner wants to develop a hotel in a city that's inside, say, a converted former notary building, a typical operator might simply post a few Instagram ads acknowledging the history. Rafter's team goes deeper, he says: "We'd research the entire history of the building."
Marketing efforts might include stamping every invoice handed to customers to echo the history of the building.
"We'd have our team write a custom guide for the neighborhood that's relevant to its target demographic, and then train the front desk staff to have it memorized to offer recommendations to guests on request."
Cultural Fit?
Brad Rahinsky, the now former president and CEO of Hotel Equities, will serve as chairman. Other key leadership changes include Al Smith, Hotel Equities’ president of hotel operations, becoming that brand's chief operating officer, and Rob Robinson, executive vice president of Springboard Hospitality, becoming the president of that brand.
Rafter is a serial grower and seller of businesses. His startup Innerlinx, later called Livebid, was bought by Amazon. His last hotel management company, Aqua Hospitality, sold its 58-property portfolio to Marriott Vacations Worldwide, the timeshare operator.
"As a former tech startup guy, I've created a startup environment at Springboard," Rafter said, in response to a question about potential cultural integration challenges. "As management companies grow, it's more difficult to remain nimble," Rafter said. "We want that nimbleness and that entrepreneurial culture."
"Management companies need disruption," Rafter said. "The hotel management industry has gotten a little bit stale. ... We want the controlled chaos that comes with innovation."
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