Portfolio Increases Asset Value Through Service

By Derek Gale, Senior Associate Editor -- HOTELS Magazine, 11/1/2007

OAKBROOK TERRACE, ILLINOIS The founders of Coastal Hotel Group, Helmut Horn and Graham Hershman, have branched out from their California roots and now run Portfolio Hotels & Resorts, a suburban Chicago-based hotel management company that they are looking to grow in the Chicago market and beyond.

The company, which began acquiring and managing hotels in late 2005, currently operates 11 properties in the United States, a number set to rise to 14 by year's end. New hotels include the Radisson LAX along with the soon-toopen InterContinental Chicago O'Hare and Park View Hotel (also in Chicago). Three or four more properties are in the early stages of development, including one in midtown Manhattan, according to Hershman, the company's COO.

As for locations, "We will look anywhere for the right product," Hershman says, noting a preference for upscale properties with unique market positions. At the same time, in the right market (like the high-barrier-to-entry city of Chicago), the company will manage almost any product, Hershman notes. The goal is to serve a given hotel's owner and maximize the asset value, whether in the short or long term, Hershman says: "That's the overlying guide, and the specifi cs are then tailored to each property to give them that individual feeling." Those specifi cs vary, but always include bringing the personalization and service level of a boutique property to a Portfolio hotel, regardless of its size or its brand. "The staff can help create a boutique hotel feel even if it is a 400- to 500-room hotel," Hershman says.

Key to achieving success in its properties is the framework that Portfolio provides to its managers, Hershman explains. "As a management company with a diverse group of properties, each individual management team is responsible for running [that] property," he says. "We create the framework for managers to succeed; they work within that to make owners' objectives happen. People like the opportunity to express themselves as managers within Portfolio."

Marketing for the hotels is done independently at the property level for now, but going forward, Hershman says the company may consider doing some consumer- facing marketing of the Portfolio name to help tie together the independent hotels in the collection.

As for the competition, depending on hotel product type, Portfolio is up against management companies like Arlington, Virginia-based Interstate Hotels & Resorts or San Francisco-based Joie de Vivre Hospitality. But most of the company's deals are done with familiar developers or by word-of-mouth, and because "we are not trying to grow for growth's sake," Hershman worries less about the competition and more about attracting and developing talented people, which he says is the biggest challenge moving forward. He hopes to create more opportunities to grow employees as the company continues to bring some bigger hotels into its collection.

Asked if this might include any hotels outside the United States, Hershman says, "We'd be glad to do the right deal. But it's got to be a substantial deal to make it worthwhile. It's tough to do as a one-off." Meanwhile, the company may look to begin turning some of the assets in the portfolio in 2008, Hershman says.