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A Collaborative Effort
FelCor, HFS team up to redo 40 hotels

IRVING, TX— In today’s booming hospitality market, owners and developers are not only buying and building new assets at an often frenzied pace, but are also intensely focused on updating their existing properties in the form of renovating and repositioning projects.
Arising from these burgeoning portfolios has come more of a need than ever for talented design firms, which are frequently now taking on multiple projects for hotel owners. FelCor Lodging Trust, based here, is actively working to add to its portfolio and also extensively renovating a large number of properties.
Because of the sheer number of hotels and the need to have the renovations completed in a short amount of time, the company turned to Long Beach, CA-based HFS Concepts 4 with an agreement to redesign a staggering 40 hotels within just 24 months.
According to Troy Pentecost, executive vp, asset management for FelCor, the decision to partner with HFS Concepts 4 was primarily based on the company’s strong past relationship with John Mamer, president of Concepts 4, the design arm of The HFS Group. “There was already a history with Concepts 4. We knew we were pulling together this huge project— this was the largest undertaking of capital for a company our size,” said Pentecost. And because of the size and scope of that project, it was clear early on that FelCor had a decision to make.
“When we were pulling our plans together, we knew we didn’t have capacity for the project without either hiring more people internally or turning to an outside company,” said Pentecost. “When we were looking at those outside companies that could handle a project of this magnitude, it was a pretty short list…we brought in HFS because they are one of the few firms with the capacity to handle the design, purchasing and installation within a very tight time frame.”
FelCor approached Mamer and his team about 15 months ago when the publicly traded hospitality REIT was in the process of selling a number of its underperforming assets and remodeling many of existing hotels. “Originally when we met it was about taking on 13 properties. We committed to that…and that eventually went to 22, to 29 and finally turned into 40 properties to be completed over the next two years,” said Mamer, who explained HFS’ turn-key approach was the main reason for the two companies working together.
“If they had to hire separate architects, designers, procurement companies, general contractors and coordinate them, FelCor likely wouldn’t be able to take on this many projects,” he said.
“With this agreement we will handle all the architecture and interiors, the procurement, supervise the installation and also bring in consultants…we can coordinate each of the disciplines,” said Brent Lynch, HFS’ executive vp.
Robert Carl, FelCor’s senior vp, design and construction, explained the makeup of the hotels included in the 40-property deal with HFS. “It’s a mixed bag, most of the properties fall into the Hilton family of brands, primarily Embassy Suites and Doubletree. There’s also a number of Holiday Inn hotels as well,” he said, noting throughout the span of the renovation projects, FelCor is maintaining a very close relationship with HFS Concepts 4.
“FelCor takes a little different approach compared to other REIT’s. Many have third-party managers that handle things like renovations. But we oversee all capital work,” he said. “We’re collaborating on the design and are maintaining a very close working relationship with HFS and interfacing our project managers with their architects, designers, purchasing agents and project managers.”
Carl explained that because of the size of the refurbishment project, communication between the two companies is of the utmost importance and as head of FelCor’s design and construction division, he has weekly conference calls with Mamer and his team to discuss any concerns, problem solve and get a status report of the hotels’ progress. “It’s been pretty seamless so far…we have very open communication. It’s really the only way to work.”
Before work commenced on the first batch of hotels, FelCor and HFS Concepts 4 met to ensure the two were on the same page in terms of an overall design concept. “As a company, we are more conservative in our approach when it comes to design,” said Pentecost. “We were not looking for what’s hot or trendy right now, we wanted designs that would stand the test of time in terms of color palette and product and we want to exceed the standards for each brand. Traditional design does depend on the market— we’re not looking to be trendy in a city like Jacksonville but in Chicago/Deerfield we’re competing with a brand new Westin so the design will be more cutting edge.”
In the case of the Holiday Inn properties, which are in locations such as Houston, Boston, Philadelphia and San Francisco, the goal is to create hotels that don’t have a traditional midscale look. “The hotel brand is midscale, but we wanted the hotels to be a step above in terms of design and finishes that would enable us to compete in the next market segment in each location,” explained Carl. “We’re using materials like granite and finishes that you would see in more upscale hotels.”
With a significant number of properties falling into the same brand and with one firm handling all of the design, there was also an emphasis on ensuring each hotel had a unique look. “We’re creating an individual look for each property,” Mamer explained. “We look at each hotel and bring in the flavor of its location. A property in Philadelphia will have historical flavor to it, while others may be more contemporary versus a resort feel in Florida. There will definitely not be a packaged look, we view each as a custom job.”
Mamer contrasted it with a previous portfolio job HFS Concepts 4 did for Red Lion Hotels. “When Red Lion bought West Coast hotels and reflagged all the properties, we worked off a model room for 24 properties …they wanted consistency— we adapted the model slightly, but it was one specific regional West Coast look,” he said.
To facilitate the process, FelCor’s asset managers are also weighing in. “We didn’t want a look that was cookie-cutter,” said Pentecost. “But the number of properties also allows opportunity. If we find a great product, it can be used in more than one hotel just in a different area or color, etc.” He explained himself and FelCor CEO Rick Smith approve all color boards for the hotels along with the company’s regional vice presidents of asset management. “We know we’re not designers, but we know and understand what fits within certain markets.”
With a goal of exceeding both brand standards and customer expectations, HFS Concepts 4’s knowledge of the different brand standards was imperative. “There has to be a lot of trust in a relationship like this,” said Mamer of the two companies. “Working on the fast track with so many hotels, we are confident in our experience with brand standards and each one’s requirements. But for most brands, we have free design reign and can choose from a wide array of color and finishes.”
While each hotel that has or will be renovated differs in scope and complexity, Mamer said the majority include full-scale guestroom redesigns. “In many cases we’re gutting the bathrooms and putting in new fixtures and finishes, vanities, lighting, wall coverings, paint and soft goods. We’re also doing exterior work on many of the hotels and most are getting new fitness and business centers.”
While the projects are progressing on schedule— the Holiday Inn Select Houston; Embassy Suites Dallas Market Center and Embassy Suites Burlingame, CA have already been completed— Mamer noted the scheduling has been challenging. “We’re working in a very specific time frame and FelCor has to deal with the displaced revenue from the renovations so things are very, very tight— if we’re off by even one or two days, we let them know.”
Unfortunately sticking to a schedule is even more difficult with renovation projects. “There are unforeseen things,” said Mamer. “You take down tiling in a tub and the underlying surface crumbles; you’ve got to work to make up that time.”
“Renovation is never a cut and dry process,” said Carl. “There are just so many unknowns. You’ve just got to roll with it and adjust. We monitor the displacement very closely and work together to accomplish this. Because of the volume of projects in the industry we’re all dealing with very long lead times compared to two or three years ago.”
But HFS is taking steps to keep things moving, according to Lynch. “We’re planning ahead for shortages and are coordinating schedules so we do not waste money by having to warehouse product,” he said.
Although there are obstacles, using one firm, particularly a turn-key firm with established relationships with contractors and vendors, has enabled the project to stay on track with regards to scheduling, a big plus for FelCor. “We’re able to take advantage of the volume we need in terms of product,” said Carl. “HFS’ buying power is a real plus.”
“We have very strong vendor relationships, which is critical because it allows us to lock in prices,” said Mamer. “We’re doing a lot of outsourcing from China on product. That requires very serious coordination. We have 25 people on the ground in Shanghai to meet with the manufacturers and monitor the quality and manufacturing process. We can anticipate installation costs and show owners exactly what they are going to get.”
Thus far, the progression of the renovation of the 40 hotels has been relatively smooth sailing and FelCor will continue to play an active role in the design process of all of its properties, according to Pentecost. “As a REIT, we feel our focus on design sets us apart. We work with the brands, designers and construction to make sure we get the right look and the right product,” he said.