Our external hotel manager is One Hospitality Group, a subsidiary of O'Neill Hotels & Resorts Ltd., (“OHR”). OHR was founded in 1994, is led by John O’Neill and is involved in the investment, development and management of a number of hospitality businesses. OHR has offices in Vancouver and Whistler, British Columbia, Canada and Scottsdale, Arizona and Wichita, Kansas in the United States. OHR has a development company called SunOne Developments Inc. (“SunOne”) which has developed four Oak Tree Inn hotels during 2014 in Santa Teresa, New Mexico, Glendive, Montana, Brunswick, Maryland and Wellington, Kansas. SunOne also has an extensive pipeline of projects. During 2014, OHR rebranded its hospitality management business as One Hospitality Group (“ONE”). ONE currently manages 64 hotels in Canada and the United States with leading hotel brands including Hilton, Marriott, IHG, Starwood and Coast in addition to 38 Oak Tree Inn hotels and Penny’s Diners.
Through our management team and external hotel manager, we will focus on the following growth strategies to increase cash flow.
Our internal growth strategy focuses on revenue and yield management, group purchasing power, operating improvements and expansion opportunities:
- Employ a variety of revenue maximization techniques, to manage and maximize room rates and occupancy rates as well as the enhancement of other non-room revenues
- Generate increased occupancy with improved hotel signage and profile
- Improve operating results through the introduction of national bulk purchasing programs, targeted renovations and capital expenditures
- Identify expansion opportunities in markets where demand exceeds supply.
We believe that a significant portion of our future growth will come from the construction of additional Oak Tree Inns and the acquisition of branded properties. In order to minimize risks typically associated with development of new hotels, we have established a strategic development relationship with a development partner, SunOne Developments Inc. (“SunOne”).
Through the experience and relationships of our management team, we will identify potential property and portfolio acquisitions using investment criteria that focus on:
- The quality of the properties
- The strength of the underlying operations
- Market demographics
- Conservative leverage
- Fixed rate, long term debt
- Opportunities for expansion
- Security of cash flows
- Potential for capital appreciation and
- Potential for increasing value through improved property performance and management.
We focus on transportation-oriented, branded hotels located in secondary and tertiary markets in the U.S. near railroads, airports, highway interchanges and other transportation hubs and demand generators providing select and limited-service lodging to corporate and transient travelers, crew and contractual customers. Acquisition properties will feature strong underlying fundamentals including an initial target going-in capitalization rate in excess of 8.5%, and an acquisition price that is less than replacement cost. We aim for all investments and acquisitions to be immediately accretive to Adjusted Funds from Operations (“AFFO”).