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HHM Takes Unique Approach to Hotel Management

HHM Takes Unique Approach to Hotel Management

Naveen Kakarla’s intention was to come work for Hersha Hospitality Management (HHM) for maybe a year or so, as an educational stopover between his previous career practicing law for a large Washington, D.C., firm and his planned future as a real estate entrepreneur. That was in 2005. Eight years later, Kakarla is still at HHM, as its president and CEO. The road map he once thought he was following remains folded up in the glove compartment, probably permanently.

I’m delighted in my role,” says Kakarla, who combines an executive assuredness with an everyman approachability and looks a solid decade younger than his 45 years. “I’m a guy that came out for a year to learn the industry and to experience entrepreneurship at a grassroots level, and I absolutely fell in love with the industry and put all my energy toward what we’re doing here.”

That’s easy to do when you find yourself at the center of one of the most uniquely structured companies in the hotel space, one that is continually growing and empowers its leaders to make decisions that will impact the business years down the road.

Structural Efficiencies
To understand Kakarla’s role, you must first understand HHM’s function within the extended Hersha family. HHM is, simply put, an operating company. Hersha Hospitality Trust is a real estate investment trust (REIT), publicly traded on the New York Stock Exchange under the abbreviation HT. Neither HHM nor HT existed as individual companies prior to 1999, but when the founding partners of the Hersha Group turned to the REIT structure as a vehicle to raise capital and create a growth opportunity, the two separate companies were born, and the Hersha Group was on a path toward becoming, in the words of industry expert Bjorn Hanson, “maybe the best example of a company that is in all phases of lodging.” It also boasts a construction arm (Hersha Development Corporation) and a supply management and interior design services company (Hersha Purchasing and Design).

For the first several years after the management company and the REIT were born, HHM worked exclusively for HT; when HT bought a hotel, HHM was often its operator of choice. But around the time Kakarla joined the company, HHM reached what he calls an “inflection point,” having developed its reputation as a management company such that external requests for HHM’s services began flowing in.

HHM still doesn’t actively solicit contracts, but through purely organic means, it has grown to a base of 115 hotels, of which 61 are owned by HT.

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