Asset management’s growth leads to merger
06 FEBRUARY 2015 7:24 AM
Executives cite the rising importance of asset management to global ownership companies as the chief reason for the formation of CHMWarnick.
LOS ANGELES—The growth of the asset management discipline in the global hotel industry is the primary reason executives at CHM and Warnick & Company are joining forces to form CHMWarnick.
The new company, announced during last week’s Americas Lodging Investment Summit, includes principals Chad Crandell, Richard Warnick and Ken Wilson.
Crandell said the timing for the merger makes perfect sense because the need for asset management services has dramatically increased during this economic cycle.
“Asset management as we know it is 20 years old, and it’s naturally progressing toward a more integral part of the industry,” Crandell said. “We’re in the cycle where asset management needs to have scale in terms of the number of hotel rooms under management, brands represented, the number of employees, etc.”
“Asset management is going to the next level,” Wilson said. “It’s transitioned from a brand-owned, take-care-of-everything-yourself to a recognized investment opportunity.”
CHMWarnick has 54 hotels comprising more than 23,000 rooms with a market value of more than $8 billion in its portfolio.
A safe haven
Wilson said a whole new scope of global buyers looking for a safe haven in the United States for their investments has emerged, and asset management plays an important role in their success.
“They need resources in the U.S.; they need go-to people,” Wilson said. “We’re in a very good cycle—we’re at least back to where we were in the good old days. We believe foreign investors really like U.S. hotels in the current environment.”
“We have one master,” Warnick added. “You can’t be a passive owner of hotel real estate; that’s just not the way our business works.”
Crandell said the complexity of an industry that combines individual business surrounding spas, restaurants, labor contracts and other elements makes it essential for hotel owners to have representatives looking out for their interests.
“The hotel industry is increasingly complex, and the velocity of that complexity is increasing,” Warnick said. “It’s not revenue anymore. … It’s now net revenue because (there are) so many people that have their hand in that pie. Even the best brands are better when they are appropriately challenged and collaboratively work with us.”
The company will remain focused on the U.S. for the time being but will pursue global opportunities as they appear, according to Crandell.
A merging of cultures, names
Warnick said the companies’ cultures fit well together based on his company’s advisory experience and CHM’s management track record.
“We see great synergy between the advisory and asset management businesses,” Warnick said. “Skill sets employed on the advisory side are well used on asset management sides.”
Warnick said both companies spent years building their brands, so it made sense to combine them.
“It would be foolish to jettison that and not take advantage of our names,” Warnick said. “If a client old me they were going to throw away 20 years of brand equity, I’d seriously question them.”
Wilson said the executives don’t want to be distracted by having to reeducate the industry about a new name, so combining the names is the perfect solution.
According to a news release, the new company’s client roster includes private equity firms, pension funds, Fortune 500 companies, government entities and sovereign government funds, among others. The portfolio includes prestige brands such as Four Seasons, Hilton, Hyatt, Mandarin Oriental, Marriott, Ritz-Carlton, Trump Hotels, Westin and W Hotels, along with several high-profile independent hotels.
In addition to overseeing operations, the team also represents the owners of several under-construction hotel projects, including: the Westin Hotel at Denver International Airport; Marriott Marquis McCormick Place Chicago; and a $2-billion luxury mixed-used project in San Francisco, for which the group is providing development, pre-opening and/or asset management services.
The company has offices in Boston, Denver, Los Angeles, Minneapolis, New York City and Phoenix.