Los Angeles-based developer Lowe is getting the band back together by launching the CoralTree Hospitality Group after having sold its interest in Two Roads Hospitality to Hyatt Hotels Corp. in December.
Lowe, the wholly owned parent of CoralTree, has been developing and operating hotel real estate for about 46 years, having formed Destination Hotels in 1973 to operate two properties it owned and proceeded to grow the company into a significant operator of independent and lifestyle hotels and resorts throughout the U.S. Two Roads was created in 2016 when Destination Hotels merged with Commune Hotels and Resorts, a Geolo-owned company.
CoralTree President Thomas Luersen told HOTELS on Thursday that coming out of the gate with 17 hotels was possible because some properties in the Hyatt-Two Roads sale were restricted by existing branding deals and other limitations. Under a structured arrangement in the Hyatt deal 17 owners were able to move its management to the newly formed company. For example, CoralTree-managed Hotel Talisa in Vail, Colorado, is part of Marriott’s Luxury Collection.
Luersen would not share the investment Lowe made to launch CoralTree, which officially launched on December 1, but said the intention is to return to Lowe’s hospitality roots and manage unique assets in the resort and lifestyle spaces. Lowe has developed, acquired or managed more than US$28 billion of real estate assets nationwide and currently has more than US$2 billion in commercial real estate projects in the pipeline or under development.
CoralTree will be led by Lowe executives who worked previously at Lowe-affiliated companies, Destination Hotels and Two Roads, including Co-CEO and CoralTree Chairman Rob Lowe, Jr. and Luersen, a 20-year company veteran. The Englewood, Colorado-based team also includes Executive Vice President Andre Fournier and Senior Vice President Robert Mellwig, who are also Lowe shareholders and former executive team members of Two Roads Hospitality and Destination Hotels.
The portfolio includes independent and soft-branded properties such as Terranea Resort in California, the El San Juan Resort in Puerto Rico, and Hotel Lincoln in Chicago. The group is also providing asset management service and currently oversees Lowe investments such as Wild Dunes Resort near Charleston, South Carolina.
The plan moving forward is to grow strategically and selectively with lifestyle hotels and resort communities. Luersen said the pipeline is active and he anticipates the group will be announcing deals in the next 30 to 60 days. He said some of the 17 current owners could also contemplate management changes so there is some vulnerability, as well.
Luersen said Lowe has deep interest in resort and resort communities and there is a very strong chance it will take equity positions in some properties to help CoralTree develop and manage assets. In past incarnations, he said Lowe typically had an interest in about 15% of the hotels being managed by the Destination Hotels.
Growth will focus on the mainland U.S. and should include second-home communities and vacation rentals where there is a platform for luxury resorts.
The executive team at the new home office in Englewood, Colorado, is predominantly alum from Destination and Two Roads. The group has about 55 employees in the home office and about 3,400 when including property-level teams.
“Our uniqueness is the fact we have been in the space for 46 years with great experiences and we start something new with a large platform,” Luersen added. “We have deep relations in the market and look at the business through the lens of Lowe, so we can see things and act in ways with owners that pure managers cannot…. We want to be very personal in our relationships with owners, guests and teams. We will not have a lot of layers because success comes when we get closest to the guest.”