Now that SBE finally has gained control of the Morgans Hotel Group portfolio in a December deal valued at an estimated US$805 million, what’s next for the luxury lifestyle player, which now controls brands such as Delano, Mondrian, Hudson and its own SLS?
HOTELS recently spoke with newly named COO Jorge Giannattasio, who came from Starwood Hotels & Resorts as a senior executive for Latin America, about how he views SBE’s new opportunities and challenges, including clarifying the segmentation of these brands to potential developers.
HOTELS’ Investment Outlook: What can you tell us about SBE’s new growth plan?
Jorge Giannattasio: Most of our hotel footprint is located in the gateway cities, and we will maintain the same strategy in terms of where we are going develop our relationship with owners and developers on a global stage. We will not go to secondary or tertiary markets at this point.
With Morgans brands, I think that Delano has a significant potential for growth, Mondrian also, and also we will continue growing with SLS in big cities and on the global stage.
HIO: You have experience in Cuba with Starwood. Is Cuba something SBE is looking at?
JG: Not at this point. Our strength is lifestyle experiences and that market doesn’t exist in Cuba at this point.
HIO: With your experience in Latin America, are you targeting any particular markets there?
JG: We already signed a hotel in Buenos Aires and we have a hotel in Cancun. Hopefully we’ll be able to extend our reach to other gateway cities in markets that are a little bit more mature with good airlift.
HIO: What will be the mix of managed versus owned or franchised opportunities?
JG: The great majority at this point will be managed hotels because we have the significant structure and capabilities right now to expand a management organization. As we continue, and by the way we want to increase our footprint by more than 50% in the next two to three years about 35 or 37 hotels (23 today), we will go more deeply into franchising, especially for certain brands. We’ll grow more into franchising when we have a brand that’s already developed, established and with an identity that shows it has acquired the tender loving care that SBE delivers as owner of the brand.
HIO: In what kind of shape is the Morgans portfolio?
JG: My initial assessment is that it will not require a massive investment across the portfolio. It will be certain assets and with different levels of investment.
HIO: Can you elaborate on the branding potential of the portfolio?
JG: We have the potential to develop brands like Delano and Mondrian, and even Sanderson has significant potential with extensions way beyond the United Kingdom. We are going to put a lot of emphasis on first clarifying and then developing these brands because there is a lot of potential value for our guests, as well as a lot of value for our owners and developers.
HIO: What challenges do you face developing a new organization?
JG: We have been enjoying incredible growth in a very short period of time and when that happens the organization is stretched thin in certain areas. So one of my main focuses is to provide the muscle, to provide the tools in the right places to be able to continue the growth and success.
HIO: What operational changes need to be considered?
JG: We need to divide the company in certain areas, geographical or by function, to provide better services internally and better support to our owners.