Exclusive: Harmon joins “dream team” to develop ultra-luxury portfolio

Long-time friends and collaborators, Mark Harmon, founder of Auberge Resorts Collection, and Jonathan McManus, Honolulu-based founder of the Private Label Collection, are officially teaming up. Harmon is joining McManus as the new chairman and partner of the Private Label Collection to selectively develop with and manage for astute owners who only focus on quality, relaxed luxury projects that potentially create outstanding upside value.

Harmon just completed a four-year consulting arrangement with Auberge after selling his interest in 2018, while Hawaii-born McManus got his start in the 1990s developing condominiums in San Francisco before rediscovering the hospitality business and eventually acquiring what is now one of the top ultra-luxury hotels on Maui, the Relais & Châteaux-affiliated Hotel Wailea. McManus also remains a partner in Springboard Hotels & Resorts, a management company with 38 hotels across 10 states.

“What I think I can bring to the table is that complementary set of skills around entrepreneurial development, understanding design and the marketplace,” Harmon told HOTELS in an exclusive interview last week. “With Jon’s business acumen and [Managing Director] Markus Schale’s operational expertise, the mix will help us do just a few deals because we’re not looking to create a large growth platform. We’ve all been there and done that. We want to be very selective in the opportunities that we pursue.”

“Having gone through our respective journeys, having managed the nuances of ownership, we can share it with ownership groups as they go through theirs. And if we keep it very exclusive and small in numbers, I think we may have something quite special.” – Mark Harmon (right), with Jonathan McManus

Currently, the Private Label Collection includes the McManus-owned, 72-suite Hotel Wailea in Maui, which he says is running at 90% occupancy these days as well as a US$1,000 ADR. It also has the 122-room Kaimana Beach Hotel and Hau Tree restaurant in Waikiki, which it has managed and successfully repositioned over the past year for BlackSand Capital, and it recently acquired a 6-suite villa in San Miguel de Allende, Mexico, where there are plans to reposition the project as well as potentially acquire adjacent real estate to expand the business. In addition, the team is getting close to announcing a new mixed-use, ultra-luxury project in Hawaii where it will take a small equity position. The team also has designs on the West Coast of the U.S.  and has been in discussion with some Relais & Châteaux owners about finding ways to collaborate.

Harmon, who retains family ownership of Auberge de Soleil in Napa Valley, California, (and will remain as part of the Auberge Resort Collection) along with McManus both have extensive experience in high-barrier-to-entry markets and believe it puts them in a perfect position to help grow their portfolio with the right development partners. “You just can’t replace these assets and it led to a conversation with Mark about how valuations have become so stratospheric for these types of ultra-luxury assets,” McManus recounted. “We’re seeing interest and receiving phone calls from family offices and institutional and private equity groups. So, what if we can add our value? Having gone through our respective journeys, having managed the nuances of ownership, we can share it with ownership groups as they go through theirs. And if we keep it very exclusive and small in numbers, I think we may have something quite special.”

Harmon and McManus see a mix of new development and repositioning opportunities and are willing to come in as equity partners, or with contracts that allow them to participate on the upside to truly align owner and operator interests.

Defining the ethos

The pair points to their work at the Kaimana Beach Hotel at the foot of Diamond Head to describe the Private Label Collection ethos.

The hotel was dependent on Japanese travelers who haven’t been able to visit in two years and was locked into a certain management style for some 40 years. Private Label Collection reimagined the property, and especially focused on the F&B to make an inclusive gathering place for the local arts and surf crowd. They call it “conversational dining,” informal, where locals and tourists can come to relax, mingle, dine and watch people come and go.

Pool at Hotel Wailea, Maui (Photo credit: John Russo)

Occupancies remain a bit soft (around 75%) as Waikiki continues to rebound from COVID, McManus said, but F&B revenue matched rooms revenue and is driving the bottom line. They are serving roughly 300 brunches a day from 8 a.m. till 3 p.m. and another 250 dinners a night.

“Design, sense of community, food and beverage and the service culture leads the way for us,” McManus added. “We had a great design team and a partnership with BlackSand that allowed us to work quickly and make a 180-degree change in direction that Hawaii hasn’t seen… It was really important to let the community feel like they had their own beachfront restaurant again… That is sort of the ethos that we’d like to have – finding owners that hold those pillars to be as important as we believe they are.”

Looking ahead

Harmon and McManus maintain that their expansion plans are modest. “The one thing that I think both Jon and I have learned over the years is to say ‘no’ often,” Harmon said. “We really want to focus on the right fits from so many different perspectives – that fit with ownership, that fit with a spectacular location, that fit with the opportunity to create value. It takes a lot of patience to continue on that path, and we’re not bound to a path where growth is the sole goal.”

That said, the duo believes that is a lot of opportunity in Hawaii, especially in the ultra-luxury space. “Results in 2021 have proven that out at Auberge de Soleil as it was absolutely a record year,” Harmon added. “That type of approach of indoor-outdoor living, outdoor dining and separate cottage-style accommodations – I think that’s the direction the market is looking at for our segment, which is the high-end of the luxury market.”

When asked to define the Private Label Collection brand, McManus and Harmon said its main focus is to deliver equity for ownership through reimagining properties, development their collective experience. “We have our management arm that will continue on with the ethos of Private Label Collection, but it isn’t trying to be a brand that is guest facing. It’s really an ownership-facing brand,” McManus said.