So many hoteliers are industry lifers and they keep finding ways to reinvent themselves. Take Greg Mount, a long-time Starwood Hotels guy who more recently from 2014 through 2019 led Red Lion Hotels, growing the brand through acquisition to some 1,300 hotels from about 50 properties. Today, Mount sits as co-founder and partner at Victory Hotel Group, which was founded in 2021 when it acquired a majority stake in boutique operator Hay Creek Hotels. Victory also partners with Equis Hotels to provide a variety of hotel consulting services.
Naturally, Mount’s partners in Victory include people he has worked with and done deals with over the years. Victory COO Gary Sims was a long-time colleague at Red Lion. His Hay Creek partner is long-time Westin comrade Norman MacLeod, who was ready to sell a stake in his 15-year-old Hay Creek brand when the right partnership and opportunity presented itself. MacLeod remains the day-to-day leader of the brand.
Mount’s equity partners at Victory, who he has done some 20 deals with over the years, came to him pre-pandemic and said they really liked the independent boutique hotel space in higher barrier to entry locations. They wanted Mount’s help to go out and acquire those assets. Yes, long-time industry relationships led to the start of Victory Hotel Group.
Today, with equity partners Steve Fishman and Shelbourne Capital, Mount has helped grow Exeter, New Hampshire-based Hay Creek to close 30 properties from about 23 at the time of the June 2021 acquisition. It still likes drive-to regional and high barriers to entry markets and generally prefers to take about a 10% to 20% equity stake in new deals. Victory works with high-net worth investors as well as family office and equity fund capital, and is growing primarily via off-market opportunities likely not on the radars of the larger and aggressive management company giants too often, Mount said, more willing to pay higher multiples for assets in their quests to go public.
Hay Creek differentiates itself with its F&B expertise, according to Mount, and has legs for growth, which could include another management company acquisition in addition to single asset add-ons. “We continue to be active, looking for additional management companies in the boutique and independent space for acquisition,” Mount told HOTELS just after the New Year. “We like the Hay Creek model. We think it has some legs and some interesting aspects to it. They have been very successful not only on the boutique side, but also in the standalone restaurant side in many of the hotels. We would probably keep the brand in most cases. But if it was the right acquisition, we might be inclined to switch names.”
More recently in December 2021, Victory and Hay Creek announced the addition of six new agreements closed in the 4th quarter of 2021, including much desired expansion of upscale independent hotels into the West Coast (Nevada) of the United States.
The pipeline is very diverse, according to Mount, with a mix of new development and existing asset opportunities. “We are very bullish on what we’ve been able to achieve thus far,” he said, “and we are exceeding the equity returns that we had put forth in Hay Creek. At this point, it’s going to continue to deliver some momentum. We have our first property out West and we’re going to continue to push West (it was negotiating a deal in Monterey, California, at press time). Hay Creek is primarily a Upper East Coast regional company, and our plan is to grow it down the East coast, as well as across the West.”
For Victory Hotel Group, the goal is to execute on opportunities, reposition the assets and then sell its positions in three to five years. “Our preference is boutiques and independents, but if come across the right branded asset in a major gateway we will execute on it if it’s good deal,” Mount added.
On the performance front, Mount says the story during the pandemic seems to continually change from market to market. In New York City, for example, where Hay Creek operates the 350-room Beacon hotel, Mount said the number of cancellations that they were seeing for January and February since the Omicron variant spiked was significant.
“Until that point, it was really gangbusters, it was really doing very well,” Mount said. “So, I think we’re going to see a little bit of a short-term pivot until it settles down. I also think it’s going to recover quickly as people want to travel and get away. The regional drive-to markets (where 80% of Hay Creek inventory lies) are going to continue to be strong, while the bigger inner-city stuff is going to be tough.”
Mount likes to credit Hay Creek’s sales team for having done a good job consolidating its marketing team and leveraging the regional marketing aspects to improve demand. “We are monetizing the opportunities that exist,” he said. “The basics are never going to change, and as long as you stay focused on them, you’ll be successful.”