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The battle is often not won by the strongest but by the most focused. There are only 14 Montage and Pendry hotels to date. Yet less can be more for quality control.

Alan Fuerstman had a broad smile on Wednesday as he toured Pendry Washington, D.C. – The Wharf, slated to open later this month. He spoke with workers in between their efforts to swiftly install the finishing touches on the luxury lifestyle hotel.

The CEO of Montage International said that sweating the details was critical to sustain his hospitality management company’s long-term bets on Pendry Hotels, a lifestyle brand, and Montage Hotels and Resorts, its “ultra-luxury” brand.

Pendry DC is Montage International’s 14th property. Some industry observers would say that’s a slow pace of growth for Montage International, which Fuerstman founded two decades ago.

The privately held company has been picking up its pace of growth. Next year, it’s slated to open in California Pendry La Quinta, Montage La Quinta, and Pendry Newport Beach, and in New Jersey, it will open Pendry Natirar. In 2024 it plans to open Pendry Tampa and Montage Cay (in the Bahamas). In the works are another soon-to-be-revealed project in the Caribbean and perhaps “two or three more international properties” to be announced within the next year. The company does not disclose financials.

Yet Montage International’s pace of growth is still relatively slow in the context of industry pressure to expand portfolios quickly for the marketing advantages that scale brings.

“We’re disciplined about measured growth as a way to create long-term value,” Fuerstman said. “For us, success is less about scaling up in size to some magic number of properties and more about being hyper-focused on delivering consistent quality.”

Contrarian Growth Strategy

Montage International has carved out whitespace in the shadow of giant competitors such as Marriott and Hilton by providing a reliable experience across properties, the CEO said.

“Some competitor brands deliver disparate experiences as you go from property to property,” Fuerstman said.

The best way to drive high repeat customer rates is to unswervingly stick to brand standards, he argued. Yet large competitors often have mammoth loyalty programs and well-capitalized marketing funnels for driving direct bookings that a player like Montage lacks.

“If you focus on quality you don’t have to worry about the distribution as much,” said Michael Fuerstman, co-founder and creative director of Pendry Hotels who was also at the D.C. property helping with the launch. He is also Alan’s son. “Specifically in the luxury and ultra-luxury segments, we can have more personal relationships with our guests than the large-scale companies. That drives repeat business.”

An exterior view of the lobby seating area at Pendry Park City. Source: Montage International.

Choosy on Locations

Another key to competitiveness is serving only destinations with high luxury demand, Alan Fuerstman said. Montage has had to “take a pass on many opportunities” because potential hotel placements “didn’t make sense.”

“Quite often, public hotel companies are forced to grow by sometimes compromising where a brand is put,” Fuerstman said.

“If you put an ultra-luxury hotel in a market where it can’t get high enough rates, one of two things happens,” Fuerstman said. “You have a disappointed owner because you’re not providing the returns you should be. Or you compromise on the quality of service because you can’t afford the labor and the cost per room to deliver the right level of service.”

Fuerstman insists that his management contracts include capital reserves at each hotel to maintain brand standards regardless of market cycles.

A suite at Pendry Chicago. Source: Montage International

Branded Residences Is Key Ingredient

One of the real estate categories that surged during the pandemic with no sign of letup has been branded residential offerings. Some of the demand has been driven by foreign investors looking for a stable asset for cash or as a trophy of sorts for social status and buzz.

Every Montage hotel has, and about half of Pendry properties have, a residential component, such as single-family homes, condos, or villas.

“Residential is a big part of what makes the economics work as we develop new hotels,” Fuerstman said.

Earlier this year, one of 40 residences at Pendry West Hollywood sold for $21.5 million, or about $3,400 a square foot, with the buyer going on to buy a second. Last year, a unit sold for about $4,800 a square foot, which the Los Angeles Times reported was the highest price per square foot ever in L.A. condo sales. Having said that, nearly half the units remain unsold.

Exterior view of the lobby of the Pendry West Hollywood Hotel. Source: Montage International.

Capital Partners

While the near-term economic outlook is uncertain, luxury can be a long-term resilient sector, according to Montage’s top boss.

“Smart investors understand that luxury yields the best returns,” Fuerstman said. “If you look at some of the sales of our assets, with Montage Healdsburg at over $2 million a key or the pricing for Beverly Hills and when Laguna traded.”

“The record pricing we’re getting is proof that if you protect a great brand and if you constantly re-invest in the physical aspect of it, you’ll deliver the economics you’re looking for as an investor in real estate,” Fuerstman said.

Focus on the Details

During a preview tour of Pendry DC, furniture was still being installed in the lobby, a rooftop bar, and a spa. Staff training had begun, with a 20-year veteran of the company helping to oversee instruction.

“At every Pendry, we want touchpoints for guests to experience, even if other aesthetics of properties of a physical might differ,” said Michael Fuerstman.

Lobbies always have a big, light- or space-based piece of art in or near the lobby. Staff offer guests an arrival beverage that guests can get “spiked” with a secret alcoholic ingredient by quoting the day’s password at the hotel bar. In another signature touch, every guestroom typically gets a macaroon as a turndown treat.

At Pendry DC, workshops shared the company’s instruction of its philosophy, called “know thyself,” which helps encourage staff to act as if they were hosts in their own homes welcoming guests.

“The original lifestyle brands were less about service and more about creating a scene,” Alan Fuerstman said. “We saw a void in the market that Pendry could fill by marrying a culture of extraordinary service and still retain the energy, vibrancy, arts, and nightlife of lifestyle.”


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Tags: boutique hotels, future of lodging, luxury, montage

Photo credit: A view of one bar with something of a Murder on the Orient Express vibe at the soon-to-open Pendry D.C. Source: Montage International.

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