By Mike Nixon, President
Once upon a time, when Julian MacQueen founded Innisfree Hotels, he looked for opportunities that were more inexpensive in nature … things he could do with relatively little cash.
Sometimes those hotels turned out to be acquisitions from other companies, in markets like Montgomery and Nashville, Birmingham, Columbus and, of course, Mobile, where our company got its start.
None of these hotels were in resort markets, although we did begin to acquire the odd ones like Days Inn in Orange Beach, Beachside Resort on Pensacola Beach and Young’s by the Sea in Gulf Shores.
Julian quickly recognized that these hotels tended to be more profitable than the ones in the other places. So, sometime in the mid- to late-90s, we decided we would focus our attention on the Gulf Coast.
All that being said, Julian is not the sort of owner who wants to sell properties. Once he buys them, he wants to keep them kind of forever.
Yet around the same time we had the notion to concentrate on these beach properties (that were very seasonal and volatile in the way of rates and occupancy), we decided to start peeling off our hotels in other markets.
There are a couple reasons – one is the profitability.
The other piece of the puzzle is these other markets have very low barriers to entry.
If you own the first hotel at an interstate exit, you’re in a great position. Unfortunately, someone else says, “Look at that hotel! It’s always full … I’m going to build a hotel here, too.” And before you know it, there are 40 hotels at the same exit, and it becomes very difficult to make money. You start slicing the pie into thinner and thinner slices, and there’s really not enough for one person.
In the beach markets, we have high barriers to entry.
When building on beaches, you must deal with the Department of Environmental Protection, handling the mounds of paperwork involved with construction on sand and barrier islands.
All of a sudden, it’s much harder for someone to come in and build a hotel next to you. So we educated ourselves and got good at those things, and this acts as our little protective bubble. Today, it is our forte to overcome these challenges.
One by one, as opportunities presented themselves for us to sell the other properties, we did. That’s why our portfolio is made up the way it is today. In the future, it won’t necessarily be beachfront, but our focus will stay in resort and destination markets with high barriers to entry.
Our first recent foray off of the beach was the Killington Mountain Lodge in Vermont. What we liked about this property is that it enjoys the exact opposite high season of our beach properties. Perhaps a long-term goal for Innisfree is to have as many winter resorts as we have summer resorts.
That way, great staff can move from Florida to Vermont when the seasons change.
(And our guests always have somewhere wonderful to visit, no matter the season.)
– As told to Ashley Kahn Salley
Lead Storyteller, Innisfree Hotels