Small boutique brand Nylo Hotels looks to grow its portfolio through conversions and new builds.
DALLAS—After a slow start, Nylo Hotels is finally on a strong growth trajectory.
The Dallas-based boutique hotel company opened its fourth hotel last fall in its hometown and in late December announced a deal for its first franchised hotel, a 298-room conversion property on the Upper West Side of Manhattan slated to open in the third quarter of 2013.
“With New York being our fifth hotel, we’re not an independent hotel company anymore. We’re a small brand with a lot more brand awareness than other brands our size,” said CEO Michael Mueller, who’s been with the brand since it was introduced in 2005 at The Lodging Conference. The first Nylo opened in 2008 just as the recession was starting. Its second property, a 163-room hotel in Warwick, Rhode Island, had a major flood in 2010 that closed the facility for nearly 18 months.
An affiliate of Lehman Brothers Holdings, a major investor in Nylo, owns the Manhattan property, which is a conversion of existing hotel On the Ave. Mueller said the hotel differs in several ways from the brand’s other properties: It’s larger (others range from 76 to 200 rooms), has less meeting space and will cater to a predominately leisure customer base, whereas other Nylo hotels typically generate 70% of their business from business customers.
Food and beverage, a hallmark of the Nylo brand, will differ slightly in New York as two third-party operators will run restaurants in leased spaces. The hotel will operate the lobby bar.
The growth plan
While not yet official, Nylo is making plans for a property in Nyack, New York, up the Hudson River from New York City.
“We’re not yet sure of the exact size of the hotel or an opening date as the project is still in the permitting stages,” said Mueller. “Nyack is a popular getaway spot for New Yorkers. And while the city has an urban feel, the hotel will be more like a traditional Nylo.
“It won’t be a 100% new build, however. There is an existing structure on the site that we’ll be saving parts of to integrate into the property.”
Beyond these two projects, Mueller said the company is looking at a variety of markets for further expansion.
The “sweet spots” as identified by Mueller are the “Northeast—the Boston-to-New York corridor and down to D.C.—and the big markets in Texas because we already have a substantial footprint there.”
He said the company is also actively looking at Miami, the West Coast and “everywhere in between.”
“We’ve become a little more selective about the deals we pursue,” he said. “They skew a little more toward conversions rather than new builds. Our pipeline is about 50/50, but the conversion deals are probably the ones that will be first to start.”
Another avenue for growth may be the XP by Nylo, a new-build, select-service brand extension announced in 2008. Although none are yet open or under active development, Mueller said several deals are in the pipeline.
The most recent Nylo to open, a 76-room property on the south side of Dallas, is a prime example of the brand’s commitment to sustainability. The property, which debuted last August and is the third in the Dallas area, was a conversion of the 101-year-old Dallas Coffin Building. Nylo operates the hotel for developer Matthews Southwest.
The developer, along with architects from Foster+Partners, incorporated a number of elements from the building, including the original concrete floors and exposed ceilings. Nylo and the owner are currently pursuing gold level leadership in energy and environmental design certification from the U.S. Green Building Council. The hotel’s green features span a range of operational and facility aspects:
- All carpet is Green Label Plus as certified by the Carpet and Rug Institute.
- Landscaping and a roof garden are irrigated with rainwater collected in a cistern next to the building.
- Low-E film coating on the windows reduces solar heat gain.
- Staff restrooms use a reclaimed water system to capture gray water from sinks and showers that is used to flush toilets in the restrooms.
“Green is a huge opportunity for us. We would miss that big opportunity if we didn’t recognize the potential competitive advantage we have by being the greenest brand out there,” said Mueller. “And since we’re a relatively new company with only five stores we can do it without great pain, unlike a chain that’s been around for years and would need to make significant investments in hundreds of hotels.”
Food and beverage as differentiator
While as a boutique brand, F&B has always been a key element in the Nylo story, the company is now putting a closer focus on the topic. “We probably underestimated the potential for our food and beverage when we started the concept,” he said. “Our bars and restaurants have done fantastic so we’re doing a lot more with the branding in our bars and restaurants and look to grow those concepts on their own.”
The chain recently renamed and reconfigured the bar and restaurant in its Plano, Texas, property to Locl, a new brand it intends to introduce at other properties. The three-meal Locl Restaurant serves what the company calls chic urban cuisine and joins Soda Bar, a concept in the new Dallas South Side hotel, as new bar concepts.