Interests in 26 Hotels; Company Started by David A Simon,
Former Chairman and CEO of Prime Hospitality Corp
|FAIRFIELD, N.J., October 9, 2002 — Paramount
Hotel Group, a third-party, independent hotel management and ownership
group, today announced plans to double the size of its managed portfolio
within the next several years. Founded in 1999 by four former senior
officers of Prime Hospitality Corp., Paramount currently manages and/or
has ownership interests in 26 hotels located in the Eastern half of the
The company will use a multi-pronged strategy to achieve its growth goals, including:
Obtaining third-party contracts
“As the economic recovery continues to stall, owners and investors are becoming increasingly impatient,” said David Simon, Paramount chief executive officer. “Most experts predict that an economic recovery is up to a year away in most markets, and owners can’t afford to merely ride out the storm. As a result, a growing number are turning to experienced operators like Paramount to stabilize their properties, increase market share and position them to maximize profitability throughout the economic recovery. For example, for one owner’s portfolio, we have increased gross operating profit by more than 35 percent in the past12 months and have increased RevPAR 25 percent in 2002.”
Paramount’s four principals have more than 100 combined years of experience in hotel operations, development and construction management. Typical properties the company seeks for third-party management will be first-class, full-service hotels in the 150- to 350-room range. The properties, including branded and independent hotels, will be business traveler-oriented and located primarily in suburban and secondary markets. The company also will seek management contracts in the premium limited-service segments, as well as select boutique hotels.
As an independent management company, Paramount has long-term working relationships with all of the major brands, according to Simon. “Our management team has experience as both a franchisor and franchisee and knows how to negotiate agreements and maintain partner-like communications. One of our strengths in third-party management is operating with an owner’s viewpoint. We also have excellent working relationships with hotel lenders for acquisition and new development financing.”
Co-investing with other parties to acquire and develop properties
When appropriate, Paramount will invest side-by-side with other investors to obtain long-term management contracts. “We have the funds available to co-invest with partners in both individual and portfolio transactions that make sound economic sense for all of the parties,” he commented.
“We will from time-to-time coinvest on the development of new hotels as well,” said Simon. “We recently participated in the acquisition and conversion of a limited-service property in Rocky Hill, Conn., to the Hampton Inn brand.”
Providing construction management for new hotels and renovations
Simon noted that development is at near historic lows, creating significant opportunities for savvy investors. “Development has slowed considerably but is expected to pick up quickly as the economy recovers. We are seeing developers begin to put plans in place for the most desirable locations so they can get out of the ground first and make it more difficult for potential competitors. Paramount’s principals have developed more than 120 properties. We know how to find premium hotel sites, complete the concept planning, carry out due diligence, assemble the construction team and oversee the project from negotiating the government approval process through opening. We expect to begin work on an upscale, extended-stay property for a new client shortly.”
Simon added that the company also has significant expertise in renovations and repositioning. “There is a growing backlog of projects for three- and four-star hotels. As part of the renovation process, many properties will need to be repositioned, an area where we have a proven track record,” he said. “Our management team has completed more than 200 renovation projects, including the recent successful conversion of the Susse Chalet chain to the Fairfield Inn by Marriott brand, which was named Deal of the Year at the 2001 UCLA Conference and Best Conversion of a Fairfield Inn at Marriott’s 2001 owners conference. We saved several million of dollars through creative management of the process, including eliminating warehousing costs during the renovation.”
“The next 12 months will be critical for the hotel industry and will test operators’ ability to deliver under the most difficult conditions,” Simon pointed out. “Owners and investors seeking the safe haven of experienced operators won’t be shy about switching management companies to help them make the most of these difficult times while laying the groundwork for the inevitable economic recovery. This will create an enormous opportunity for a savvy, well-financed, experienced operator like Paramount.”
Paramount Hotel Group, founded in 1999, is a mid-sized, independent hotel management and ownership group. The company currently manages and/or has ownership interests in 26 properties, with more than 3,000 rooms, primarily under the Marriott, Hilton and Park Inn flags, as well as independent hotels.