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Denihan’s David Duncan Talks Growth Plans

In January 2012, David Duncan assumed the role of david duncan small Denihan Hospitality Group’s president after serving as its chief financial officer since 2003. And it was a fruitful year, as the boutique owner-operator launched a West Coast development office, signed management agreements for the Mansfield, Franklin, and Shoreham hotels in New York City, and opened the James Royal Palm in Miami. Duncan recently spoke with Lodging Managing Editor Megan Sullivan about Denihan’s recent accomplishments and growth plans for 2013.

Lodging: In December 2012, Denihan announced the signing of a management agreement with Ark Partners for the Shoreham hotel, which will be converted to an Affinia. How will this move strengthen Denihan’s position in the boutique market in Manhattan?

David Duncan: This is an addition to a long-standing relationship we have with the owner, Ark Partners, so from our collective perspective it’s a nice reflection on the strength of that relationship as we continue to add assets that we work on together. I believe we’re the largest boutique operator in Manhattan, and this just makes sure we continue to have that strength of positioning. The asset itself is located in Midtown where we have a fair amount of assets but not necessarily in that particular submarket, so we’re really looking forward to branding it an Affinia in the latter part of 2013.

The owner there has done a very nice job of keeping that property reasonably current. The renovation will really focus on guest touchpoints and most likely the reinvention of the food and beverage solutions there. For us the challenge and the opportunity is in finding the operator that understands how to run a restaurant within and as an amenity to the hotel, and still maintain a very high local customer base. We think the combination of a new restaurant and bar solution plus improved guest touchpoints will give it an additional lift in 2013 as we continue to manage it.

Lodging: In November, the Denihan-managed Royal Palm Hotel in Miami relaunched as The James Royal Palm after an extensive renovation. Will the strength of the Miami hotel market continue to grow in 2013 and what makes it a top investment market for hospitality in the U.S.?

Duncan: We’re really excited about South Beach and the opening of the James Royal Palm for a bunch of different reasons. It’s a very strong real estate market for a hotel owner and from our perspective, if you’re going to compete in the boutique space, there is no better place to demonstrate your capabilities than South Beach. For us being able to launch a roughly 400-room hotel with really dynamic restaurant and bar solutions is a really great opportunity where we can demonstrate the variety of skill sets we have in our operating platform. The early returns are exceedingly positive and the guest comments have been really strong, even though we’re in the early days of that launch.

Lodging: In what other key urban markets is the company looking to expand its portfolio?

Duncan: In 2012 we announced our initiative to double the size of the company over the next three to five years. We opened a development office in San Francisco to make sure we have on-the-ground capabilities looking for deals on the real estate ownership as well as hotel management front. We’re focused intensely on Los Angeles, San Francisco, Seattle, and San Diego. Los Angeles in particular, followed closely by San Francisco, is one of the biggest feeder markets to our existing portfolio of 15 hotels.

We continue to focus on the top 20 urban markets in the U.S., with a high priority on coastal gateway markets. We know already that the guest perception is very high for what we do; it’s just a matter of making sure we have those hotels located in the right spots.

Lodging: Will there be a focus on growing one particular Denihan brand? What other goals does the company have for 2013?

Duncan: Because we own the real estate and the brands, we don’t try to sell one flavor of ice cream to everyone, but rather we think of our brands as solutions. We really look at the real estate, the configuration of that real estate, and the submarket before we really start talking to owners about which brand works there. I would expect as we talk about doubling our portfolio we’ll add to our brand portfolio across the spectrum—the James and Affinia, as well as the collection of luxury independents like the Surrey and the Benjamin. I feel fortunate to have those solutions and not just try to superimpose a brand on real estate even if it doesn’t work.

We’re going to continue to embellish our restaurant and bar portfolio, as well as our hotel brand portfolio, working on existing assets, making sure those are the best performers in the submarkets, and watch the activities in South Beach because it will be really interesting to see what Denihan brings there.

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