It was late August of 2010. The hotel industry was still mired in a tremendous slump, trying to shake off the tumultuous economic times of 2009. But on one day, Omni Hotels & Resorts made a bang in industry news cycles with not one, but two significant announcements.
On the acquisition side, Omni came out of a competitive bidding process to take over the renowned Amelia Island Plantation off the coast of Northern Florida. The property was in bankruptcy and Omni beat out the competition with a plan to expand the inn—the hotel component of the island—and to make it a more group-focused destination.
On the development side, Omni’s deal for Nashville was made with the City of Nashville in a public-private partnership with Omni taking the risk of construction costs that will result in the building of a new, 800-room hotel adjacent to the Music City Convention Center—set to open in 2013.
In the meantime, the Dallas-based hotel company has opened a large new hotel in its hometown and has taken over management of the Mount Washington Resort in New Hampshire. It all adds up to the privately held hotel company creating a lot of buzz in an otherwise stagnant hotel development environment.
Much of that success can be attributed to Omni’s unique position in the industry. The company carries no debt. But more importantly, it operates in a niche between upper-upscale and luxury, and while it carries a strong leisure business, it brings a focus to the lucrative group business market. In addition, it has a reputation as a service-oriented brand, making it attractive to not only consumers but also meeting planners.
“I think what makes Omni a little different is that we really strive to be unique, local, and authentic in all our markets,” says Mike Deitemeyer, president of Omni Hotels & Resorts. “Unlike a lot of our competitors who have two or three styles of guestrooms, or fairly set lobby schemes, we bring in a design team when we take over a project and try to speak the vocabulary of the local market. At the end of the day, talk about a four-diamond physical quality but with five-diamond service.”
Omni is also creating a unique positioning with its locations. For many travelers, the brand Omni may conjure thoughts of urban locales, such as its properties in downtown Pittsburgh, Pa.; Atlanta, Ga.; or Boston, Mass. But many of its hotels are resorts located in the mountains of New Hampshire and Pennsylvania, the desert of Arizona, and the beaches of Mexico.
“If you think about the majority of our portfolio it’s very urban. When we bought Omni in 1996, it had a lot of suburban hotels—and a lot of them were franchised—but today we have more than 50 properties and they tend to be much more urban,” Deitemeyer says. “We’ve recently expanded toward resorts [the company added “& Resorts” to its name] but we typically aren’t looking at suburban hotels today. However, as we’ve built a strong portfolio of urban hotels, we’ve now stepped out and are doing more resorts.”
Ultimately, Deitemeyer says it’s all about going where there’s demand.
That Omni has been able to develop hotels such as the Nashville and new Dallas property in a tough economy is a testament to the company’s positioning. “I’m excited about the future, as I think a lot of people are in the hotel space—that’s just the basic supply and demand,” Deitemeyer says. “There’s not a lot of new construction and, candidly, we’re doing most of what’s happening. The thing I’m most proud of is that even in a down economy we’ve gained market share. I think it validates that we are doing things right.”
In addition to growing market share, Omni closed out 2011 with gains in rate, occupancy, and RevPAR, Deitemeyer says. “I’m blessed without the burden of a lot of debt on our company. We measure success through growth and growth as it relates to our competition,” he says. “We’ve been consistent and been able to take care of our customers regardless of the economic cycle.”
Deitemeyer says the company has always had the capital to grow. “There was a lot more competition for projects four or five years ago than what we’ve seen recently,” he says. Because the company carries no debt and has capital on hand, Omni has been able to win deals for some very large-scale and high profile development plans.
“The scale of them has become bigger. You have some public-private in there. You have a bankruptcy project in there,” he says of the company’s recent developments. “These type of projects typically take commitment. Public entities don’t want to go down the road with someone who might be a financing risk. In a bankruptcy court, the judge wants cash. There are a lot of things that have put us in position to be opportunistic at this time.”
For a company like Omni, which may have had difficulty competing in the past for deals that may have had little equity, the economy has created a much more even playing field, and Omni has taken advantage of its opportunity. “We know it will get more competitive again, but it won’t be like it was in the past,” Deitemeyer says. “We believe we’re poised for some pretty good growth over the next few years and we’re really excited about that.”
Mike Garcia, Omni’s chief financial officer and senior vice president of acquisitions and development, says that even though Omni has had some big ground-up projects recently, acquisitions are still the main vehicle of growth in this day. “Pricing on acquisitions is more favorable than building from the ground up,” he says. “If we can find, acquire, and renovate a project, we still see that as more advantageous.”
He says there are still opportunities to buy properties out of bankruptcy or to buy at a discount. However, he says there aren’t as many as Omni thought or the hotel industry thought. He also says that there are some key cities that the company is currently looking at that may utilize the public-private path that the company followed in Fort Worth and Nashville.
“What’s interesting about the growth of Omni compared to other brands is that we don’t need to grow,” says Tom Santora, chief marketing officer and senior vice president of sales for Omni. “All of the growth is really strategic and opportunistic. As we do grow the brand, we are going to make sure we evolve the brand.
“As we look at projects, whether from the ground up or through acquisition, we are going to make sure it fits within the brand image and what we are trying to create.”
Already, the company is going to some big places that fit particularly well with that image and focus.
When Omni was awarded Amelia Island Plantation via bankruptcy court, it immediately set out on big plans. The company is undertaking an $85 million redevelopment plan. Omni’s part of Amelia Island covers 1,300 acres. Deitemeyer thinks of it as a unique piece of real estate in the United States. “What we saw was an opportunity to build something in Florida that we think rivals some of the great Mexican and Caribbean resorts,” he says.
He says the company saw an opportunity to add rooms and expand the meeting space. It also saw an opportunity to reconnect the retail village on the island and the primary hotel. “We want to simplify the way the resort works than how it’s been run in the past,” he says.
Amelia Island has long been a destination for business meetings. “We are actually adding an extra ballroom and adding meeting space,” Deitemeyer says. “One of the challenges was that the meeting space was very spread out. What we are doing is bringing more meeting space into the primary core, making it easier to move large groups around.”
Nashville had a major music and convention center under construction and needed an anchor hotel. “I remember talking to Mike [Garcia] about it and we sent a letter to the mayor of Nashville,” Deitemeyer recalls. “The timing was just right. Within days we got a response and were up there talking about our success at the time.”
Omni was very bullish on Nashville. It thought it was underserved. “As that project evolved, and developed a personality, we thought it would just be an amazing hotel,” Deitemeyer says.
To get the deal, Omni had to beat out some stiff competition, particularly from Marriott. “When you talk to a mayor of a city in their vernacular about what you think their city is, and then you understand that the project needs to have a local personality, they love that,” Deitemeyer says. “They want something that is unique to their market.
“And also we had a good balance sheet,” he continues. “That puts us in a position that, where others come in with a lot of conditions, we can go in and say we’re going to do something and do it. Our reputation is such that if they make two or three phone calls they’ll find out that Omni will do what they say.”
That reputation extends beyond the balance sheet to the company’s reputation as becoming entrenched in a community and to provide quality service to guests. Those aspects played a big part in the Amelia Island and Nashville deals, as well as Dallas and Fort Worth before them.
When it comes to service, Omni aims to set itself apart and has done so rather successfully over the years. Deitemeyer says the company has been able to transfer its service quality over its hotels despite the location and hotel type.
“It starts at the base level and being a good employer,” he says. “It’s about encouraging employees and developing leadership skills.”
Deitemeyer says that he is proud that Omni has one of the lowest turnover rates in the industry and has been voted one of the best places to work in approximately three-fourths of the markets it serves. “That to me is huge,” he says.
“One of our core values is to treat everyone as family,” he continues. “Everyone has something like that in print, but because of our model—where we’ve talked about consistency—we’re not always rocking the world of our associates. They understand that.”
Omni has several key training programs that focus on human engagement and interaction. “It’s what really distinguishes a hotel company and service company,” he says. “We also inspect what we expect. Any success of a training program depends on the follow up. We retrain through role-playing.”
He says that even when economic times are tough, Omni’s success has been in understanding that there are places you need to shave expenses and hours that need to be pulled back, but it has not sacrificed customer service in the lean times.
It’s been a big last couple of years for Omni Hotels and Resorts and based on its positioning and balance sheet, the next few look to be even better.