Independently owned lifestyle hotels lack resources to battle against the global conglomerates with their streamlined loyalty machines. But Springboard thinks it can boost quirky properties by revamping the playbook for third-party hotel management.
For years, the third-party managers of hotels have stayed behind the scenes, working on behalf of owners to staff and run properties. But Springboard Hospitality, a manager of 40 hotels in 10 U.S. states, seeks to become a consumer brand that markets its lifestyle hotels directly to travelers.
Springboard is about to relaunch its website with a redesign that spotlights the lifestyle hotels it manages and offers destination and trip- and event-planning tools.
The move comes during a surge of growth for the small Los Angeles and Honolulu-based company. It added six U.S. hotels to its portfolio in 2022 and now manages more than 6,000 rooms with a mix of independent properties and ones “flagged” with the brands of the giant hotel groups.
“We aspire to be the best independent lifestyle operator in North America,” said CEO Ben Rafter. “We want properties that tell a story.”
Rafter is a repeat grower and seller of hotel and tech businesses. (His startup Innerlinx, later called Livebid, was bought by Amazon.) The last hotel management company he led, Aqua Hospitality, sold its 58-property portfolio to Marriott Vacations Worldwide, when the giant acquired it via a purchase of Interval Leisure Group.
In 2018, Rafter joined a handful of other individual investors to buy OLS Hotels & Resorts, which had less than a dozen West Coast U.S. properties whose key owners were real-estate investment trusts Pebblebrook and LaSalle. Rafter’s team later renamed it Springboard Hospitality to capture their ambitions better.
“We bet that there’s a growing segment of travelers that crave distinctive experiences so we wanted to expand our lifestyle capability,” Rafter said.
Springboard is one of the few management companies focused on lifestyle hotels that haven’t been rolled up by larger companies, taken public, or bought by private equity. The company’s leadership sees that as a strength in nimbleness rather than a vulnerability of being outgunned.
“If you ask what’s our competitive advantage relative to our peers, I would say that the most critical thing is you know, as an owner, who you’re working with when you’re working with us,” Rafter said. “We’re not trying to grow to 500 properties.”
Smallness isn’t a virtue in the eyes of roll-up plays such as Aimbridge Hospitality, a third-party management giant so large it can get favorable terms with corporations such as Marriott and can have efficiencies of scale.
“Aimbridge, like its peers, is selling something different,” Rafter said. “What they do is great and they’re great at it. But it’s almost completely different. It’s a scale game. It can manage every Residence Inn from here to the end of the world.”
“But working with a giant comes with a bunch of manuals and rulebooks to go with it,” Rafter said. “You don’t get a CEO who will cover every property in the course of the year and know the demand pick-up or pace in your market on any given day. And a company like that probably won’t be very interested in how you customize a 125-room or 50-room four-star lifestyle property.”
The executive sees Springboard growing to around 60 properties with a bit more than 10,000 rooms, which might be the limit to having a customized, closely observed feel for its portfolio.
The company’s expansion plan involves filling out drive-to markets in the West Coast gateways while continuing to push East. Getting to about 25 percent market share for independent lifestyle properties in highly desirable destinations. Market share like that could help create a dynamic of efficiency to consistently drive the premium, high-margin room rates needed to support the upkeep and activations necessary for the lifestyle segment.
Rafter also believes there’s an opportunity to bring lifestyle hotels to markets where the segment is underpenetrated such as, say, Anchorage, Alaska, or the Ozarks in Missouri and Arkansas, or Waikiki, Hawaii.
What then? Rafter speculated that next-level growth could be about monetizing that demand more effectively. If Springboard knows it will have a certain threshold of guests on a given week in a given destination, can it create add-on experiences, such as a sunset cruise, to boost the overall take?
Making a Tech Play
Like many third-party management companies, Springboard helps owners with operations, marketing, revenue, capital planning, and sales goals. Yet it claims to stand out from most of its peers on the technology front by having an intelligence platform, basically an a la carte selection of recommended tools for tasks such as revenue management — or deciding what rates to set based on supply and demand.
Rafter had previously worked at a few tech companies, but he doesn’t reify technology for technology’s sake. He would rather have a set of software systems that play nicely together and quickly give hotel operators a clear, full picture of operations than pick the most cutting-edge technologies.
“Our approach is identifying which technologies we think are best in breed, particularly for independent properties, and making sure that they all talk to each other well,” Rafter said.
“I feel bad for owners that invest in all these technologies and then none of them work correctly because it’s actually the integration that’s the glue that makes efficiency and profitability possible,” Rafter said. “I could name 20 guest messaging technologies for sale, but very few will avoid sucking up all the time of team members or, even worse, require hiring more team members. We want to deal with maybe just one across our system.”
Independents Have a Place
Springboard works with the properties flagged by brands from the giant hotel groups, but it sees itself as having a team well-trained to support independents, too.
While there’s a lot of economic and competitive pressure on independent hotel owners, who lack the efficiencies of scale, co-branded credit cards, and loyalty programs of the global hotel groups, Rafter believes that the sturdiest of the bunch will thrive for decades to come.
“To use a Hawaii example, for one of the properties we were managing, we once spent three months arguing with the brand requirement for a coat closet in the rooms,” Rafter said. “It’s Hawaii. The property needed surfboard storage.”
Springboard has such a wide range of properties in terms of size and service scope that it takes a customized approach to its contracts and partnerships. It typically puts an investment stake in any property it manages, but that’s not a requirement. Some owners prefer the incentive structure to be based on metrics such as tying a reward to the rate of that cash flow grows.
“The typical contract of taking X percent of EBITDA [earnings before interest, taxes, depreciation, or amortization] or GOP [gross operating profit] is, I think, antiquated,” Rafter said.
As much as Springboard might prefer to plug-and-play and go selling, some projects take two or three years and involve heavy planning with owners, local designers, and local food-and-beverage vendors to renovate and relaunch hotels with more experience-driven programming, so the contract has to reflect that cost and timescale.
“We’re one of the very few players operating in the completely independent space who can augment operational and tech capabilities with a highly customized approach,” Rafter said.
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Photo credit: A guest at a lifestyle hotel in Hawai'i that's independently owned. Source: Springboard Hospitality.