Aimbridge’s O’Stean on benefits, challenges of scale
 
Aimbridge’s O’Stean on benefits, challenges of scale
18 FEBRUARY 2020 9:19 AM

Aimbridge Hospitality’s chief development officer talks about the company following its merger with Interstate Hotels & Resorts, how it's planning further growth and what it’s doing to work with owners who are worried about being just a number.

LOS ANGELES—Now months after the closing of the merger, the integration of Aimbridge Hospitality and Interstate Hotels & Resorts has settled into a comfortable pace.

During a video interview with HNN at the 2020 Americas Lodging Investment Summit, Aimbridge Hospitality Chief Development Officer Greg O’Stean spoke about how the two companies have come together and are working to continue growing their management presence across the world.

When Aimbridge and Interstate merged in late October 2019, they created the world’s largest third-party management company that is seven to eight times bigger than its largest competitor, O’Stean said. The combined companies have more than 60,000 employees at properties and at corporate offices, and a portfolio that comprises about 1,400 hotels in 20 countries and 49 U.S. states—the company no longer has a presence in Alaska but plans on returning, he said.

Since the deal closed, the company has been working on integrating the two corporations, adding that they are in the eighth or ninth inning at this point, he said.

“The good news for that is that most of that’s being done at our (Plano, Texas) headquarters, not out in the field,” he said. “The intent of the integration, of bringing the companies together, is that the folks who are in the hotels managing the properties for our owners—they’re focused on running the hotel. They’re not involved in which systems we’re going to have and which platforms are we going to adopt.”

Domestically, the company will continue to be known as Aimbridge Hospitality, he said. In Europe, where Aimbridge did not have a presence while Interstate did, the company will be known as Interstate, he said, pointing out with some amusement that Europe doesn’t have interstates.

While having the size and scale it does offers a great number of cost efficiencies is a great draw for owners, being the largest third-party manager isn’t without its own set of challenges, O’Stean said. There are a number of owners who want to be in a portfolio of 20, not one of a hundred or 1,400, he said.

One solution to that is within its smaller companies, such as its lifestyle company, Evolution Hospitality, he said. Evolution built itself as being a small California, lifestyle-oriented management company.

“They’re not Aimbridge West, they’re Evolution,” he said. “How they appeal to a certain type of owner that says, ‘You know what, I like to work with this operator and this regional team. And I know that they’re going to show up for my budget meeting. I know exactly who’s going to be there. I’m not just one part of this huge thing. I’m part of a smaller universe.’”

While it’s still figuring out how to work through these challenges, the company knows it can’t be all things to all people, but it wants to be more things to more people, he said.

Looking ahead to its plans for 2020, O’Stean said the company would like to buy some smaller companies. The portfolio has eight verticals ranging from economy properties up to resorts, and the company would like to grow each of those in the U.S., he said. Internationally, it hopes to do the same thing but more selectively.

“We’re looking at some joint-venture opportunities and some countries we’re not in presently that will give us—overnight—a big platform and a big growth vehicle,” he said. “So I’m talking about 10, 15, 30, 40 properties in one fell swoop. Because with Advent as a partner in our balance sheet, we now have the capacity to do that and grow strategically.”

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