Lotte Hotels Corp. has hired industry veteran Jim Petrus as CEO of the Americas with a brief to put the South Korea-based owner-operator on the map in the Americas and a goal to reach about 25 hotels in the region within five years. Lotte currently has three hotels in the region – the iconic Lotte New York Palace, a new Lotte in Seattle and another hotel in Guam.
Petrus left Maui and an asset manager’s role with four Blackstone hotels in Hawaii to move back to New York, where he toiled for more than two decades with the likes of Starwood, Trump and Hyatt. Perhaps his biggest role was serving as global brand leader and senior vice president of operations for the St. Regis brand.
In an exclusive interview with HOTELS, Petrus said, “The people at Lotte (pronounced lo-tay) are really focused on excellence. They run wonderful hotels. From the chairman on down, they are committed to a thread of excellence, balancing the need to support both people and profits. It’s a great opportunity for me to take a blank sheet of paper, do something creative and tap into all my skills… They have global aspirations and realize they must first have more of a presence in Americas.”
Something to prove
Lotte, Korea’s fifth biggest company with diverse holdings creating some US$110 billion in assets and 60,000 people around the world, currently has 34 properties totaling 11,200 rooms with an additional three properties in the pipeline. Its brands include ultra-luxury Signiel; L7, their lifestyle brand; and Lotte Hotels, their signature brand. It has properties in Korea, Vietnam, Japan, Russia, Myanmar, Uzbekistan and the United States.
Growth in North America won’t come so much through individual acquisitions as it will by management contracts with perhaps small equity participation, franchises and maybe a joint venture deal, according to Petrus, who added that the L7 brand could be the predominant expansion vehicle. He elaborated by saying the company is open to acquiring or executing a joint venture with another brand to add to the portfolio.
Key gateways will be targets with an additional focus on hi-tech corridors like San Jose, Austin and Charlotte in the U.S. “Those markets represent a great base and align well with L7 or Lotte,” Petrus said, adding that he will also pursue some destination resort locations, especially in drive-to markets.
“This is about exploring opportunities and looking at ways to grow responsibly,” Petrus said. “It is not growing for growth sake. Lotte wants to make sure the business economics of deals provide financial stability. Acquisition is part of the formula.”
While almost every hotel company has an asset light approach today, Petrus said Lotte might have to first buy-in with some equity to gain traction and trade down the line to become more of a strict manager. He said Lotte understands this necessity if it wants to ramp up faster.
Petrus also said that Lotte will need to be nimble in the Americas and easier to work with. “We have something to prove and must show we’re easier to work with in the process,” he said.
Recognition in the Americas is also a big challenge for Lotte, according to Petrus. “Lotte bought the New York Palace for big bucks and it created an affiliation with an icon. They have been able to attach the brand to the property,” he said. “We must be able to replicate that with a few other key assets. The next moves we make will set the tone for the brand and that becomes critically important. Then we must build the regional infrastructure to support the brand. Those are immediate priorities. The key is to communicate our desire to be in this part of the world and work with investors and organizations.”
While there is no franchise program in place, Petrus said Lotte realizes it is another vehicle to expand given the right guardrails. It is open to exploring franchising with the right partners, he added.In his new role for just a few weeks, Petrus is first making sure he is entrenched and best understands the company culture. “Being Asian-based, it is important to understand how we created success,” he said. “Koreans have level of gentility and respect. They are thoughtful and warm-hearted… The new Seattle hotel was able to introduce an Asian-inspired culture at the worst time ever (September of last year), and it was interesting to see the response. Consumers responded very favorably and Lotte is number one on TripAdvisor in the market. That’s really interesting when you’re going up against established players with bigger engines.”