The company that results from the Benchmark Hospitality International and Gemstone Hotels & Resorts merger still doesn’t have a name, but company officials are already confident it can make waves in the hotel industry.
HOUSTON, Texas—Officials with Benchmark Hospitality International and Gemstone Hotels & Resorts believe they have something special on their hands with the currently unnamed company that results from the merger of the two entities, which was announced Monday.
Alex Cabañas, previously CEO of Benchmark and now CEO of the new company, said he believes the transaction, which has already closed, is more than just “another merger.”
“There was no particular urgency for us to get a deal done,” he said. “But it was the right fit for our people, first and foremost. Our business models are very aligned. We certainly saw it as a good growth opportunity for (both companies). And we thought the strategic opportunity was good for us both. But the most important thing is that we’re doing business with people that we can say are a good culture fit. This is about the right people working together.”
The newly merged entity will have a total of 58 properties comprising independent, experience-focused hotels and resorts with roughly 10,000 employees, which represents a significant jump in scale for either Benchmark or Gemstone. Cabañas said neither company is releasing a price associated with the deal.
The two companies have been working on the deal for 18 months after starting initial talks during the 2015 Americas Lodging Investment Summit, Cabañas said. The two weren’t in a position where they had to merge, he said, but looking at ongoing consolidation in the industry did give them more incentive.
“No good business person ignores what our team refers to as the chess board moving around us,” he said. “There have been lots of strategic moves made in our industry. It was a factor that we considered.”
How the pieces fit
Cabañas noted that by joining forces, the companies complement each other both geographically and the spaces they play in—Benchmark has more large resorts and convention-driven properties while Gemstone’s strength lies in smaller, personalized boutique hotels. But both have a similar focus and approach.
“There are a lot of geographic benefits,” he said. “And we’ve had some team members who have worked for each company. It’s good when those people in the field see nothing but benefits.”
Cabañas said the two companies’ way of doing business will work well with the direction the industry is heading.
“The industry is moving toward independent, unique experiences,” he said. “That’s where both of these organizations have played an aggressive role. … That will be a major factor for us, and the way we manage relationships and partnerships is a significant factor.”
Jeff McIntyre, co-president for the new company and co-founder of Gemstone, said he’s noticed an odd phenomenon as the two companies worked toward completing the transaction.
“The sense of enthusiasm grew instead of nervousness,” he said. “That’s rare. … The enthusiasm was contagious. It grew and grew on all levels of our organizations as they became exposed to this transaction. People wanted to get it done quicker. I’ve been through (mergers and acquisitions) before, and this is pretty unusual.”
Both Cabañas and McIntyre said they believe the merger will work because each company has some organizational strengths that will complement the other. Cabañas called out Gemstone’s experience and business intelligence, financing and cluster revenue management as important assets. McIntyre said Benchmark’s sales and marketing and overall revenue-management infrastructure will be useful to the new company.
McIntyre said both companies have strong training programs, and that will continue to be an emphasis for the merged entity.
“They had a university environment, and we had a university environment,” he said. “It will be fascinating to watch us put together a great educational environment for our management teams and for everybody at every level of the hotel.”
Cabañas and McIntyre said the next six months will be devoted to integrating the two companies into a single entity.
“Right now, we’re 100% focused on the integration of the company and making sure we do it right,” Cabañas said.
He also noted that the six-month timeframe will be largely focused on dealing with the company’s current projects and properties, but management is still eager to grow.
McIntyre agreed the “strategic growth” that happens in a “meaningful and measured way” will be a key focus going forward, but he said each side of the equation will have to make a focused effort not to slip in the day-to-day operations.
“We can’t lose momentum at our hotels,” McIntyre said. “We can’t be distracted, and we have to make sure that in our enthusiasm to get combined that we don’t lose the capability and momentum we’ve established here.”
After that work is done, both executives said they are optimistic about leveraging their newfound scale for owners and employees.
“All of a sudden having 10,000 employees and 58 properties is pretty powerful on its own,” McIntyre said. “That will be cool to take advantage for our people, whose opportunities got multiplied for their careers. And it means we’ll have a very robust infrastructure we can now provide to our owners.”
Searching for a name
Benchmark-Gemstone officials have already hired a marketing firm to help establish a new name for the merged company.
Cabañas said that’s an important step in the deal because both companies have been very deliberate in carrying this out as a true merger instead of one company coming in and absorbing the other. He said even with a new name though, he plans to maintain the Benchmark and Gemstone identities in some way.
“Those names will still exist in our new architecture,” Cabañas said. “The question is if we end up with a global name that gives us a fresh new identity to build behind. That’s been the toughest part of this whole deal.”
He said it’s hard not to get emotional about the name change.
“I’m sure 15 to 20 years from now, (the new name) will feel right,” Cabañas said. “But for now—I’ll be honest—this feels odd.”
McIntyre said officials with the new company have taken to calling it “Newco” for the time being, but he’s excited to announce an official new name at some point in August.
“We’re not feeling rushed about it,” he said. “We wanted to do it right.”