With the opening of the second Postcard Inn hotel in Islamorada, Florida, Starwood Capital Group is taking its next step toward developing a funky, retro brand with scale.
Roy Shanholtz, vice president of asset management for Greenwich, Connecticut-based Starwood Capital Group envisions 20 to 30 Postcard Inn hotels, leading to the sale of a new 3- to 3.5-star brand within the five- to seven-year timeframe of the investment fund. The group already plans to renovate and rebrand a 51-room property it owns in Islamorada called La Siesta and complex it with the newly launched hotel there. Its partner, Hersha Hospitality Management, will operate all the Postcard Inn hotels.
Resort locations seem to work best with the vibe of the brand, but Shanholtz does not rule out urban locations. The first hotel – a renovation of a Travelodge – opened about two years ago in St. Pete Beach, Florida, and has been outperforming its competitive set, according to Shanholtz.
Without offering too many details, Shanholtz says the Starwood acquisition team is looking at more limited-service portfolios and already has identified sites ranging from Snowmass, Colorado, to Hawaii. Shanholtz also says the brand has potential for locations such as Virginia Beach, Virginia, and the New Jersey shore on the East Coast, to California and Seattle on the West Coast.
“There are a lot of distressed, resort-based properties that have not been renovated or touched,” Shanholtz says. “Postcard Inn has retro, funky vibe so when you are putting money in, you don’t have to go to the extent of a 4-star brand. We can break some of the rules, while embracing the local environment. By having a brand not as regimented as a 4-star, not only can we embrace the local environment but we can do things like put quotes on the wall. We are a little different.”
From asset management side, not much worries Shanholtz about the further development of the brand. He says Starwood already has the “winning formula” on the renovation side, which should range from US$5million to US$15 million for acquisitions that should range from US$10 million to US$30 million.
Of course, based on market conditions and an uncertain future, what does concern Shanholtz is the exit from the fund.
In Islamorada, a US$11 million renovation led to the launch of the Postcard Inn Beach Resort & Marina at Holiday Isle. Starwood Capital acquired the property in 2009 and touched just about every space in the old boathouse style resort in the Florida Keys.
The culmination of the renovation will come on December 8 when the hotel unveils the country’s first fast-casual Shula Burger restaurant, created by the restaurant team from legendary football coach Don Shula.
Islamorada hotel Managing Director Bob Van Bergen says he expects to realize a US$20 to US$30 bump in room rate as a result of the reposition and is already starting to see results. “The renovation has had an immediate impact with occupancy almost doubling over last year — and the market has not doubled.” Looking ahead, he says actual and 90-days-out bookings are up almost 100% from last year.
