Broughton Hospitality Group Runs
14 Hotels; $28M in Revenue
|By Sandi Cain, Orange County Business Journal Staff
In 2001, Larry Broughton left his executive post at San Francisco-based boutique hotel operator Joie de Vivre Hospitality and started his own hotel management company. “In retrospect, it wasn’t a great time to start a hotel company,” Broughton said.
The economic boom of the late 1990s still was in force when Broughton set out on his own with Huntington Beach-based Broughton Hospitality Group.
Early in 2001, he picked up contracts with two small hotels, the Hotel Mojave in Palm Desert and the Spanish Garden in Santa Barbara. Then the bottom fell out after the 2001 terrorist attacks.
Broughton, a former Green Beret who served in the Gulf War, said he still was able to grow revenue every year. But it took until 2003 to reach $5 million in yearly sales. These days, Broughton Hospitality manages 14 hotels and 290 workers, including those employed by the hotels themselves. This year, Broughton said he expects to generate about $28 million in revenue.
Managing hotels is part of the business. Broughton Hospitality also is hired for contract negotiations, marketing, budgeting and for help in developing and opening hotels. Then there are deals. Broughton puts together investors to buy hotels and takes a stake in them himself. He and investors usually go after hotels they can turn around.
The largest hotel Broughton Hospitality manages is the 224-room Hotel Huntington Beach near the recently remodeled Bella Terra mall off the San Diego (I-405) Freeway. This year, the company worked to reopen the Victorian-era Tallman Hotel north of San Francisco. The neighboring Blue Wing Saloon & Cafe opened last fall. In Hermosa Beach, Broughton Hospitality is co-developer of a luxury hotel that’s set to open by 2008.
At about the time Broughton formed his hotel company, he also started a small restaurant, the Surfside Cafe, in Carpinteria. He ended up selling the cafe in a novel way: He gave it to the winner of an essay contest where contestants paid fees to enter. Now Broughton Hospitality is looking to manage restaurants. The Blue Wing Saloon is the company’s first venture.
Entering other markets has its risks, Broughton said. His motivation: the dark days after 2001 in San Francisco. “When the bottom fell out (there), it was like the walking dead,” he said. “That motivates us every day.” The turning point for Broughton Hospitality came, he said, when he could finally take a salary—about two years into the effort—and his wife could stay home with the kids.
Last week, he was named the regional entrepreneur of the year by Ernst & Young.
These days, the hotel business hasn’t been this good since 2000, with occupancy, room rates and profitability on an upswing that’s projected to continue at least through 2008, according to industry forecasts. Boutique hotels such as those managed by Broughton account for about 1% of the hotel market, with about 41,500 rooms out of 4.4 million rooms nationwide, according to Hendersonville, Tenn.-based Smith Travel Research. The advantage is that boutique hotels on average have higher occupancy and revenue per room than the overall industry, according to Smith Travel. Boutiques typically have less than 200 rooms. Some have unique themes or are historical.
The challenge for Broughton is in marketing 14 different hotels and whether to put them under the Broughton name.
Costa Mesa-based Ayres Hotels, another boutique operator, spent four years developing the brand for its 16 hotels, said Don Ayres III, who oversees branding, marketing and sales. “It’s very difficult, especially if you don’t have the end product (brand) in mind at the start,” Ayres said.
Broughton said his company is starting to work on branding.
“We couldn’t brand out of the gate because we didn’t’ know what we were going to be yet,” he said.
Joie de Vivre and San Francisco’s Kimpton Hotel & Restaurant Group LLC waited a decade before stamping their names on their hotels, according to Broughton. Ayres waited 15 years.
“Branding definitely brings more focus to the hotel,” Ayres said.
Few management companies even try to put hotels under their own name.
“It’s not impossible, but it takes time and money,” said Don Wise, chief executive of Resorts, Marinas and Vineyards Inc. in Napa.
Last month, Joie de Vivre was named to operate CIM Development’s Strand hotel in Huntington Beach—its first venture into OC.
Broughton’s early branding moves are subtle. Last fall, the company started a quarterly magazine for guests highlighting the company’s hotels. “It’s a way to brand the hotels without them carrying the same name,” he said. Broughton said his goal is to double the company’s number of hotels in the next five years, from San Francisco to Puerto Vallarta.
In the back of his mind is the downturn that started in 2001. “I don’t ever want to forget that uneasiness,” he said. “If people forget 2001, it’ll happen again.”
|Also See:||Broughton Hospitality Group Awarded the Management Contract for the Inn at East Beach, Santa Barbara, California / May 2005|
|Broughton Hospitality Group Opens Two Hotels in California; Santa Barbara and Palm Springs / Nov 2001|