Hotel Online  Special Report

 Generation’s Operating Partner Program
Pays Off for Company and Partners
March 4, 2005 - What company wouldn’t want to be an innovator, boldly turning the tired old business model upside-down and shaking it a couple of times? Every organization wants to be a leader in the industry, boast entrepreneurial employees, and, of course, make more money. But what happens when a company puts its money where its mouth is? It’s one thing to talk a good game; it’s another thing entirely to actually let go of the management apron strings and let someone else stir the pot.

That’s just what The Generation Companies LLC (Generation), a Research Triangle Park, North Carolina real estate developer, asset manager and operator of extended stay hotels, did. Their innovative Operating Partner Program, pioneered in the hotel industry by Generation in 2000, promotes smart, successful hotel General Managers to Operating Partners, giving them not only more control, but more of a financial stake in their hotel. It’s a chance for managers to get a piece of the action–a big piece–and run the property like it was their own. But, sometimes, you get more than you bargained for. What happens when Operating Partners start acting like owners? 

Change, and a better bottom line, for everyone.

OPERATING PARTNERS -- Generation’s four Operating Partners are (L-R) Jason Liesegang of Candlewood Suites Richmond West; Michael Donaldson of Candlewood Suites Raleigh, NC/Crabtree; Jimmy Davis of Suburban Extended-Stay Hotel of Jeffersontown/ Louisville, Kentucky; and Peter Hutchins of Candlewood Suites Washington/Dulles.
Generation’s four Operating Partners (OP) Peter Hutchins, Jason Liesegang, Michael Donaldson, and Jimmy Davis agree the program is more than a change in management; it’s a change in mind-set. “I don’t feel the pressure of having to explain to Corporate why I did something,” Hutchins, OP of Candlewood Suites Washington/Dulles, says. “It’s freeing. I do what’s right for my guest because it’s the right thing to do. I’m the boss.” Good, profitable hotels don’t just happen, according to Hutchins, Generation’s veteran OP. There’s a dedicated professional behind that success. The program rewards Operating Partners for that success, giving them an opportunity for autonomy and a stake in the financial rewards, while, at the same time, fostering a long-term commitment to their hotel and community.

But with change comes growing pains. Suddenly Generation has people asking for more information–and input. “Our bias is to work with partners versus employees,” says Ron Jacobsen, Generation VP of Operations. “We believe this environment builds extraordinary value over time versus the traditional GM model. But beware, organizations threatened by strong, owner-like thinking should not consider a program like this.  Generation thrives on this kind of behavior.

The biggest challenge facing the Operating Partners upon entry? Most say it was seeing the big picture (after initial emotions ranging from shock to sheer terror). But they all agree that the biggest benefit is the level playing field–and the respect and action that come with it.  “Now, when we present a good idea, not only does the company listen, they listen knowing that we’re on the same level,” says Jimmy Davis, OP of Suburban Extended-Stay Hotel of Jeffersontown/ Louisville, Kentucky. “Now, I’m really in the conversation,” Candlewood Suites Raleigh/ Crabtree’s Michael Donaldson agrees. “I’m a better negotiator. I negotiate a lot harder than I used to. I fight for what I know is right for my property,” Hutchins states. The veteran at three years, Hutchins is now an expert at seeing the big picture, both for his property and from the standpoint of the company. “ It’s only gotten better year after year,” he enthuses. “I’ve met my as well as the company’s financial goals. The program builds a certain stability. Customers know me and staff rely on me. Everyone knows that I’m on top of things for them and the hotel. Generation trusts that I’m handling everything well, which frees them up to be more creative and innovative and inspiring.”

The biggest change the four have seen has been in themselves. “I’m faster on my feet, move quicker, and I’m watching things better, making sure I get more for my money,” Davis explains.   “You think every single hour differently about things than you did before,” muses Donaldson. “ I analyze every expense now, every line item, assessing true productivity of expenses.  When your name is on the line, you get creative, find other avenues to do things. We’re spending money differently than a year ago.  I’m more responsible. It has my name on the front door now and that means something. I feel more supported yet in less contact with corporate than I ever have.” “My team knows that I’m putting myself out there because I trust and believe in what they can do. The economy will always change and we will always adapt and find a way to be successful,” Liesegang, Candlewood Suites Richmond West, states.

Not for the faint-hearted, to qualify, general managers must undergo a rigorous application process, make a meaningful good-faith deposit, and prove their hotel management expertise with high scores in the areas of revenue growth, guest service, preventative maintenance, quality assurance, and telephone etiquette. But all four of Generation’s OPs agree it’s worth it.  According to Liesegang of Candlewood Suites Richmond West, “You have to think past the initial hurdles and focus on the program as a whole, and mostly on the long-term benefits.” “I wish I’d started sooner. But, it’s all about confidence. It doesn’t matter what market you’re in, if you’re a good GM you can be a good OP,” says Davis. “Why hire another GM when an OP makes so much more sense, for both the company and the person,” Donaldson concurs. “You’re doing the job anyway, why not become an OP and make more money? This gives me the stability and income potential I couldn’t repeat anywhere else.  Down the road I think it’s going to become more difficult not to be an Operating Partner, ” Hutchins concludes. According to Mark Daley, President of Generation, Peter couldn’t be more correct, “Working with Operating Partners leading the charge at our hotels is the future of our company. This commitment will make us sought after by the best operators in the business – great people and hotel operators – like the Operating Partners we have today.”

The Generation Companies is a Research Triangle Park, North Carolina based real estate developer, asset manager and operator of extended stay hotels in North Carolina, Kentucky, Virginia, Florida and Tennessee. Generation has more than 2800 hotel rooms and $140 million in real estate assets under management, and employs over 350 associates at 23 properties.


Ron Jacobsen
Vice President of  Operations
The Generation Companies
Also See: Coupland Joins Generation as CFO/Jan 2005
Intercontinental Hotels Group Appoints The Generation Companies to Operate the 59-suite Candlewood Suites-Yorktown, Virginia / January 2004
The Generation Companies Names Jason Liesegang Owner-partner for the Candlewood Suites-Richmond West / January 2004
The Generation Companies Names Michael Donaldson Owner-partner for the Candlewood Suites - Raleigh/Crabtree / February 2004

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