Posted: February 12, 2013
Q&A: Jamie Sabatier
New president of Destination Hotels & Resorts foresees growth on the ‘urban side’By Eric Peterson
One of the architects of the W Hotels brand, James "Jamie" Sabatier focused on commercial real estate in the New York City area after a run with Starwood Hotels and Resorts from 1999 to 2006. Then Englewood-based Destination Hotels & Resorts came knocking last year and brought him back into hospitality and across the country to Colorado as the company’s new president.
With $800 million in annual revenue, DH&R has emerged as the fourth largest hotel-management company in the country after adding nine properties to its portfolio in the past two years. DH&R has a 40-year history in hotel management in Colorado, beginning when Robert Lowe, founder of Lowe Enterprises, built the Gant in Aspen in 1973. (Lowe Enterprises is the L.A.-based parent of DH&R.)
The Gant remains a highlight of the DH&R portfolio, and nine of the company’s properties are in-state, as are 1,200 employees, including 90 in Englewood. About half of the 40 properties managed by DH&R are owned by affiliate company Lowe Enterprise Investors.
ColoradoBiz: Why did you get back into hospitality after a stint in real estate?
Sabatier: I was very attracted by the opportunity. The company has a very strong history, 40 years in business. Coming from the New York area, I was very intrigued by Colorado. My wife actually was a ski bum in Vail after college. I felt with what I brought to the table, we’d be a very effective match, and so far, so good.
We tend to manage upscale, luxury properties where we can really bring a customized guest experience, as well as drive real returns for our owners. It’s important we have the right balance between customers and owners.
ColoradoBiz: What’s next for DH&R?
Sabatier: What I hope to bring is a continuation of the growth trajectory. We had record revenues and profits this year. Over the last 20 months, we’ve brought nine properties into the system. Moving forward, we’re going to do a lot of the same.
There’s been a very conscious effort to grow beyond the resort portfolio. We’ve had a fair amount of growth in our urban footprint, and we expect to see a lot of growth on the urban side. We have a lot of runway in the U.S. but our customer base is looking for us to expand in areas where they are going. We think our ability to provide capital, our ability to provide development, and our ability to operate ... we’ve been active looking at opportunities in the Caribbean and Mexico and we see those as logical growth vehicles as well.
As you look at how the independent property world has evolved, you can go to almost any major urban market and a high-quality independent property can compete very effectively with a branded property, and at a much lower cost because you don’t have to pay all the fees you do at a branded property.
And you don’t have to drive traffic to the property if you’ve got the right location, like our property in Chicago called Mile North is a half a block off Michigan Avenue, or in Houston, our Hotel Derek is right next to the Galleria.
ColoradoBiz: What is the market for independent hotels in comparison with branded properties?
Sabatier: Providing an authentic, engaging experience is really important, and our guests are looking for that. Our time is precious, and we want real and interesting experiences. That caters to an independent hotel mentality.
In the past, the brand was the one who spoke to consistency and quality. It was Hilton and Holiday Inn that set the standard. Now with TripAdvisor and Yelp and Google and other websites, you’re able to know and have confidence your hotel experience is going to be a good experience like no other time for the independents. Within five minutes, you can find out about any hotel in the world and not have to worry about whether it’s a brand or not. It’s rare reservations are being made without some sort of affirmation from those sources. The information flow makes you very comfortable before you go anywhere.
We need to deliver a great product and we need to get guests to tell people about that, and it’s amazing how that now feeds on itself.
ColoradoBiz: How do owners going with a hotel management company like DH&R?
Sabatier: Independent properties on their own don’t necessarily have the critical mass to drive efficiencies from a purchasing standpoint, or to drive sales and marketing initiatives like we do. We market our mountain properties like a collection. In the summer, we kicked off a "Countdown to Winter" marketing program that has been a huge success. That takes resources, and as an independent property if you don’t have the backing of a parent like ours, I think it’s a challenge.
Then there are some fiscal benefits. When you aggregate in a brand environment what the manager will charge, with a brand you’re looking at anywhere between 10 and 17 or 18 percentage points. With our model, where we’re both manager and brand if you will, our fees are in the single digits. It’s a relatively large difference.
As long as we can demonstrate the ability to drive the top line, we’re going to be in very good shape. If you say our margins are 8 or 9 percent lower, than the brand is going to have to drive 8 or 9 percent more in revenue. That’s a lot.
ColoradoBiz: What’s your outlook for tourism in Colorado?
Sabatier: Let me look out the window. My office looks out at the Front Range. I love looking west and seeing the clouds and not being able to see the tips of the mountains.
We clearly had a very tough ski season last year because of lack of snow. This season, the phones are definitely ringing. You’ve got pent-up demand. We’ve got lots of people calling and asking, "Is there snow? What are the conditions?"
But overall, we’re feeling good about things for Colorado and our properties here. While it’s known for skiing, it’s really become a four-season state, especially in the markets we’re in. Aspen is arguably bigger in the summer than the winter. Vail and Snowmass are getting there, but they’re not there yet.
ColoradoBiz: How about the rest of the tourism universe?
Sabatier: The economy seems to be improving. In general, we’re seeing growth in leisure travel. We’re actually seeing rate premium on the transient and group side. Across the country, we are cautiously optimistic.
On the Web: www.destinationhotels.com
DH&R Properties in Colorado
Manor Vail Lodge
Destination Resorts Vail
Destination Resorts Snowmass
The Gant (Aspen)
Hotel Telluride (Telluride)
Inverness Hotel and Conference Center (Englewood)
Park Plaza Beaver Creek (Beaver Creek)
The Stonebridge Inn (Snowmass Village)
Top of the Village (Snowmass Village)
Vail Cascade Resort and Spa (Vail)
The Villas at Snowmass Club
Denver-based writer Eric Peterson is the author of Frommer's Colorado, Frommer's Montana & Wyoming, Frommer's Yellowstone & Grand Teton National Parks and the Ramble series of guidebooks, featuring first-person travelogues covering everything from atomic landmarks in New Mexico to celebrity gone wrong in Hollywood. Peterson has also recently written about backpacking in Yosemite, cross-country skiing in Yellowstone and downhill skiing in Colorado for such publications as Denver's Westword and The New York Daily News. He can be reached at Eptcb126@msn.com