Denihan Hospitality Group, which has eight hotels and four brands ripe for expansion, is taking its management focus to Washington for the next step in its growth, CEO Patrick Denihan said.
LOS ANGELES—Denihan Hospitality Group is continuing to build its footprint across the United States by growing its own brands, as well as pursuing opportunities with the soft brands of major hotel companies and independent properties through third-party management contracts.
Denihan Hospitality, which owns and/or operates seven hotels in New York and one in Chicago, is looking to become a bigger force in the upscale and luxury segments of the hotel industry, said CEO Patrick Denihan during an interview at the recent Americas Lodging Investment Summit. Denihan’s sister, Brooke Denihan Barrett, is also CEO of the company.
“I can tell you that we want to have calculated growth,” Denihan said. “We want to make sure that we reinvest our time and energy (and) that we see a payback. … So, growth for growth’s sake, no thank you. Growth to grow value is a way that I and my sister want to continue to move forward—that’s what we want.”
Last April, the Denihans hired Vera Manoukian as president and COO. Denihan said there was an immediate positive impact in average daily rate, revenue-per-available-room index and gross operating profit.
Denihan Hospitality will focus on growing its third-party management business—including managing soft brands from major hotel companies and building on the names it has in its own portfolio, Denihan said.
“We can work with partners to help them develop their own boutique or one of our branded boutique hotels—an Affinia, or a Benjamin, a Surrey, or James,” he said. “That’s why we’re trying to be as flexible as we can going forward. That will help us amass more revenue into our management platform.”
DC provides the next stage
The company opened its most recent hotel—the James New York-Nomad—last summer. Now it turns its attention to the next James Hotel on the list—a 204-room property in Washington, D.C. Denihan Hospitality will manage the hotel that is being developed by Trammell Crow Company and KochSmith. The new-build property will be the fourth James Hotel in Denihan’s portfolio when it opens in 2020.
The James Washington D.C., part of the 780,000-square-foot Armature Works development, will feature 10,000 square feet of meeting space, a signature restaurant on the ground floor and a rooftop bar. Other components of the development include a 465-unit apartment building, a 170-unit condominium building, outdoor public spaces and 42,000 square feet of street-level retail.
“D.C. is always a market that we wanted to be in,” Denihan said. “This ownership is getting in here at the right price point because they will divide this complex and keep it separate in terms of the three parcels: the residential, the condo and the hotel.”
The 2.3-acre site, which used to house an armature factory, is located in a part of the city that is experiencing rapid urban renewal, he added.
“When you look at this site here, the density of what’s going to happen in the next three to five years is going to add tremendous value to all this real estate,” Denihan said.
Denihan Hospitality doesn’t have any financial equity in the hotel, according to the CEO. Groundbreaking will take place in June with an anticipated opening in 2020. The company has a 10-year management contract with a five-year option.
“The biggest opportunity is to bring our design at the James to this part of D.C., to bring our expertise and how we integrate the food and beverage together with the design,” Denihan said. “We’re very confident we’re going to be able to execute that well.”
The hotel’s ballroom section on the second floor will be connected to an outdoor terrace. The two-floor rooftop bar will have unobstructed views to the United States Capitol—straight down the railroad line that runs next to the site, according to Denihan.
That sightline will be among the hotel’s signature aspects, and it will be important to complement it, he said.
“Making sure that you put the right design together, that the whole operation flows, and that you’re conscious of what is going to change and not change in the desires of people as we go forward (is key),” Denihan said. “We’re always thinking about what might change … what are guests going to want differently? … (and about) the execution and hiring the right teams of people so that when you or I or our customers come … they know that our focus is all about them.”
The train line and the main thoroughfare passing in front of the property will make the hotel an excellent advertisement for the James brand, he said.
“When we execute this well, we’re going to have many more developers say, ‘I want you to help us in this city or this city and use your expertise to make this happen,’” Denihan said.