Spokane Journal of Business

Hospitality Associates swells

Spokane company will add 27 properties to portfolio with $105 million flurry

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Hospitality Associates Inc., a Spokane-based hotel development and management company, is continuing its quietly aggressive growth strategy, which includes about $105 million worth of construction currently under way or planned for this year.

Those projects include 10 new hotels and three hotel expansions under construction now and another 14 new hotels and three new assisted-living facilities, together worth between $55 million and $60 million, on which work is expected to start next fall and winter, says company President Terry Wynia.

The assisted-living projects will be the first for a Hospitality Associates division formed in 1997 to develop and manage that type of facility. The company also will build its first all-suites hotel this year, and might buy two or three more hotels before summer, Wynia says.

Hospitality Associates now operates 45 hotels in Washington, Idaho, Oregon, Utah, Nevada, and Hawaii, and has an ownership interest in about 40 of those, Wynia says.

By this summer, he expects the 22-year-old Spokane company to have 60 hotels open and to employ 1,500 people, up from 1,200 currently. He says Hospitality Associates likely will have 75 hotels open by this time next year, and expects to be operating 100 hotels within three years.

As the company adds hotels, it gains tremendous economies of scale, Wynia says. Purchasing power increases for everything from design services and construction to furnishings and operating supplies such as bed sheets and toilet paper.

This years building projects will push Hospitality Associates into Montana, Wyoming, California, Arizona, New Mexico, and Delaware, the latter of which represents its first move outside the West. Wynia says the Delaware project, which is scheduled to start construction this fall and be completed in 2001, was brought to Hospitality Associates by someone the company had worked with before, and was accepted even though its outside the companys primary market.

Eventually we will go nationwide, Wynia says. He says no time line exists for such an expansion now, but the company will grow into new areas as opportunities arise. He lists Texas, Florida, and the Midwest as some of the ripest targets.

Construction projects currently under way include new hotels in Eugene, Tualatin, and Newport, Ore.; Federal Way, Arlington, and Mukilteo, Wash.; Bozeman, Great Falls, and Kalispell, Mont.; and Las Vegas, Nev. Also, hotels in Ashland, Woodburn, and Albany, Ore., are being expanded.

Wynia says most of the hotels Hospitality Associates operates are inexpensive, limited-service hotels that dont include restaurants, lounges, or large convention facilities. Still, the company doesnt take a cookie-cutter approach by building dozens of identical facilities.

We try to custom design each one to meet the needs of the community where it is located, he says. A small town might need a quality, economy hotel, while a larger city might have the demand for a more upscale, all-suites hotel catering to businesspeople, he says.

The Spokane company gathers data supporting potential need for its projects from newspapers, trade journals, developers, and market research, but its employees and customers are its major source of information, Wynia says. Our own organization is a tremendous database, he says, as employees talk daily with travelers about places they visit and the types of hotels they like.

Wynia says the limited-service hotels that Hospitality Associates specializes in are among the fastest-growing segment of the hospitality industry nationwide.

Full-service hotels are capital intensive to build and labor intensive to operate, making limited-service hotels far more efficient and especially attractive in todays low-unemployment environment that makes it difficult to find service workers, he says.

Franchise change

Wynia says the national hospitality industry also is seeing a rash of mergers and acquisitions, a trend that prompted Hospitality Associates last summer to enter a franchising agreement with Atlanta-based U.S. Franchise Systems Inc., which controls such brand names as Hawthorn, Best, and Microtel. That agreement will replace agreements Hospitality Associates has had with Best Western, Holiday Inn, and Choice, which is the franchiser of Comfort Inns.

We wanted to align ourselves with a stable franchise so there wouldnt be changes in management and philosophy, he says.

Hospitality Associates now is converting its hotels to the Hawthorn and Best brand names, Wynia says. So far, 25 of its hotels have taken the Hawthorn name, and 15 have been renamed Best. The entire transition is expected be completed by the end of this year.

In addition to new names, the refranchised hotels have received new dcor and additional guest-room amenities such as VCRs, irons, and hair dryers. All now have fitness centers, and the Hawthorn properties offer hot breakfast buffets.

Wynia estimates that about $10 million has been invested in improvements related to the franchise transition.

The upgrades and the ease of marketing properties under just one franchise have boosted business at Hospitality Associates hotels, Wynia says. He declines to disclose company revenues.

Move to assisted-living

The companys first assisted-living project will be a $5 million, 80-unit facility in Provo, Utah, which is expected to get under construction this spring. Similar projects in Colorado and Nevada will follow later in the year, Wynia says.

He says the company has spent several years researching and planning its entry into the assisted-living market, a move that was prompted by a desire to diversify the company and an opportunity seen as the U.S. population ages. Wynia says demographics have been and will be especially important in selecting communities. He says the company targeted areas with large populations of people between the ages of 45 and 65, who either may be considering retirement options for themselves, or are responsible for caring for aging parents, whom they want to live nearby.

Its about 90 percent the same as doing motels, Wynia says, adding that many large hospitality companies, such as Washington, D.C.-based Marriott International Inc., operate retirement facilities. Similarities he points out between successful hotels and assisted-living centers include a well-designed and well-built facility, services that meet customer needs, and caring employees.

We dont want to do it if were not going to do it right, he says.

Wynia expects Hospitality Associates assisted-living division to start out relatively slowly, with three projects this year, and then to grow more aggressively as the population ages, potentially with four or five projects next year and as many as eight projects the following year. In the next few years, it will become as big as the hotel division, he predicts.

Good for Spokane

Hospitality Associates overall growth continues to push it up a nationwide list of hospitality companies ranked according to the number of hotels they manage, Wynia says. Were in the top 10 nationwide, and with our growth, we will continue to climb, he says.

Hospitality Associates operates two hotels in Spokanea Hawthorn Inn & Suites at the edge of the Spokane Business & Industrial Park, which also houses the companys eight-person headquarters and two of the companys seven regional offices, and a Best Inn & Suites, at 6309 E. Broadway.

Although most of Hospitality Associates activities are outside the Spokane area, Our growth is good for Spokane, Wynia asserts, noting that the company buys supplies and services from many Spokane vendors. Wynia, a Spokane native, says he likes to do business face-to-face with people he knows here.

Lindquist Architects, of Spokane, designs Hospitality Associates buildings, and Paras General Contractors Inc., also of Spokane, does most of the construction, Wynia says. Spokanes Northwest Bedding Co. provides beds for Hospitality Associates projects, and laundry equipment for the hotels is bought from Washington Supply, in Mead.

Printing Resources Inc., of Spokane, prints promotional materials for the company, and Jamison Signs, also of Spokane, makes many of Hospitality Associates signs.

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