SCP Hotels focuses on core values to attract its guests
 
SCP Hotels focuses on core values to attract its guests
03 APRIL 2020 7:33 AM

The CEO and co-founder of Soul Community Planet Hotels explains the origins of his company and how its properties offer a consistent experience based on the company’s values of personal wellness, social good and sustainability.

LOS ANGELES—The properties developed by Soul Community Planet Hotels are tapping into a movement that has existed for a long time: consumer awareness about lifestyle, wellness and sustainability.

The company has opened three hotels so far, operating under its three core values of personal wellness (soul), social good and connectivity (community), and sustainability (planet), said company founding partner and CEO Ken Cruse.

“What we’ve endeavored to do here is build a brand from the ground up that is founded on those three core values and virtually nothing else,” he said.

The three hotels—located in Colorado Springs, Colorado; Redmond, Oregon; and Depoe Bay, Oregon—are somewhat minimalist with a bohemian vibe and what their designers called an eco-industrial look and feel, Cruse said. Designers and company executives originally thought that would appeal mostly to millennial travelers, but they have tapped into a much broader psychographic, rather than demographic, appeal, he said.

The hotels’ guests are “people who really embrace the idea of personal wellness and social good and the environment,” he said.

Creating SCP
Prior to creating SCP Hotels with his wife, CFO Pam Cruse, and COO Bill Tremper, Ken Cruse founded Alpha Wave Investors, a real estate investment vehicle of which he remains CEO and that has completed 15 deals in multifamily real estate and hotels but will be a pure-play hotel investment company going forward. He was also the CEO of real estate investment trust Sunstone Hotel Investors.

Cruse said he’s been fortunate his entire career to work with great companies and amazing people, he said. That gave him exposure to some of the best operators in the hotel industry, he added.

“I was able to get an incredible education in the industry on what works and what doesn’t work and how things get done,” he said.

Cruse and his wife met in grad school and both worked at Marriott International at the same time. They have the same vision and love for the core values in SCP Hotels, he said.

“Our thought was, if we can do what we've been doing our whole careers around hotels and hotel investment, and then the brands create something that advances our personal journey and are the values that we care about that is also something that the overall market is really in need of and it addresses a deep need, that would be a pretty interesting endeavor,” he said.

At this point in his career, Cruse said he’s focused on doing the things he’s passionate about. Everyone can go work for a paycheck, but that doesn’t mean they have reached their true potential or are truly happy, he said.

If so much of people’s lives are defined by the work they do, it’s important to Cruse that he does the work that he’s passionate about, he said.

The hotels
The company’s newest property is a 14-room lodge on the Oregon coast in Depoe Bay, Cruse said. It’s centrally located among some of the best surf breaks in the state and some of the most picturesque shoreline in the world. The company turned the property into a surf lodge, repositioning it as a venue that will be attractive for retreats focused on things such as yoga, foraging and surfing. It’s also a great property for people traveling along the Oregon coast who don’t want a luxury stay and want to immerse themselves in the local culture, he said. The property has a surf shed with storage, hot showers and a wood-fired hot tub.

“If you think about it after surfing all day in the cold water in Oregon, coming in, sitting around a fire and having a wood-fired hot tub, that’s the kind of camaraderie that builds that is very representative of what we’re trying to establish across the brand,” he said.

While that’s the feel the property is trying to achieve, the 14-room property is physically different from the company’s other two hotels, and that speaks to one of the strengths of the brand, Cruse said. People who stay at a Marriott know it will be similar regardless of where the hotel is located, and that makes sense because people don’t want to guess what it will look and feel like, he said.

“For us, the strength of Soul Community Planet is the consistency of the core values themselves, but how they're represented from one property to the next is open to some interpretation,” he said. “But it's also based on what the market is looking for, and what the target customer base in those locations is looking for can be very different.”

The hotel in Colorado Springs is a former 176-key motel with extra meeting and restaurant space that the company repurposed into a multifaceted venue that appeals to travelers looking for co-working and fitness experiences, he said.

The hotel in Redmond, Oregon, is in one of the highest-growth markets in the U.S. for decades now, Cruse said. Redmond has the attributes that Bend had 20 years ago, and there’s significant movement by investors into the market because it has an airport and a regional events center hosting more than 400 events each year, he said.

As a result, the market had a significant need for hotel rooms, and the company found a great asset of strategic importance to the city, he said. The hotel received a property tax freeze, historic tax credits and opportunity zone incentives. From the city’s perspective, SCP Hotels came in and activated a formerly dormant vintage hotel that’s now driving in more business to the market, he said.

“It’s created this hub of activity that was very consistent with the vision of the city and the city’s urban renewal plan,” Cruse said. “It’s been a great case study of what Soul Community Planet can and should be for a community itself. It’s become this catalyst for additional activity in the downtown market, which is just how we envisioned it.”

The company has three property types ranging from a large motel, a vintage hotel and a lodge on the coast, Cruse said. They have different characteristics and different market dynamics, but the look, feel and core values have obvious commonalities, he said.

Growth strategy
Over the last five years, SCP Hotels has stayed away from major acquisitions given where the industry is in the cycle and how economically sensitive hotels are, Cruse said. Now that the company has figured out the concept for the properties, it’s time to scale up the business in a thoughtful way, he added.

This year, the company is looking to do a fund that is earmarked to acquire hotels to convert to the SCP Hotels brand. SCP officials have received inbound inquiries from other institutional holders that have assets that are under-branded or misbranded. In the U.S., there are about 26,000 hotels operating without a brand, which means there is a great deal of conversion opportunity, Cruse said. Most of the company’s growth will come through conversions of hotels in portfolios currently held by medium-sized and large institutional players.

The company isn’t looking to get into franchising because the culture of the brand is so important and its executives want to retain control over it, Cruse said. With the right ownership group and SCP Hotels continuing to operate the hotel, he believes the company might be open to some form of licensing in the future.

When looking for new opportunities, the team wanted to stay out of major urban markets and focus on proving the brand’s concept in secondary and tertiary markets first, Cruse said.

“It has proven to be a pretty good exercise,” he said. “It’s enabled us to refine the brand in a very cost-effective way.”

Being able to acquire the assets in the less-expensive markets allowed SCP Hotels the freedom to experiment and develop the brands how executives wanted, he said.

“If you buy an urban hotel in any major market today, you’re paying top dollar, and you can’t afford to experiment a whole lot,” Cruse said.

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