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So You're 45 Years Old. You Just Sold Your Hotel Empire in a Deal Worth $834 million.
What next? If you're Robert W. Winston III, You Try to Do it Again
By Jack Hagel, The News & Observer, Raleigh, N.C.McClatchy-Tribune Regional News

Sep. 24, 2007 - RALEIGH -- So you're 45 years old. You just sold your hotel empire in a deal worth $834 million.

What next?

If you're Robert W. Winston III, you try to do it again.

Almost three months after Inland American Real Estate Trust bought Winston Hotels, the Raleigh company he founded 13 years ago, Winston is back in the game.

He and his former development chief, Kenneth Crockett, formed hotel management company Winston Hospitality, and a development arm, Crockett Capital.

They have lined up plans to build eight hotels, including what will become the Triangle's first Westin Hotel, and others from Maine to Miami.

That's in addition to the three they started as Winston hotels but are finishing for Inland.

"Our ultimate goal is to be bigger than we were before," said Winston, who grew a single Wilmington hotel into a publicly traded company with more than 50 hotels in 18 states. "But we'll get bigger in a very thoughtful manner."

They plan to grow through acquisitions and development.

Though they are free of the regulatory red tape associated with public companies, they're not ruling out the possibility of selling stock on Wall Street again -- "if it's the right time and the right opportunity," Winston said.

Winston got to this point by being opportunistic. His company rode a wave of real estate buyouts in the past two years.

Private investors found value in buying property portfolios wholesale and selling individual properties at retail prices. They chased safe investments first: offices, warehouses and shopping centers that offer annual leases. But competition caused prices to surge faster than rents, making returns unattractive.

That's what led Inland and other investors to hotels, which are considered riskier because they rent by the night but offer better returns than those overheated property classes.

Winston Hotels deal

Inland offered Winston $15 per share, or about $441 million, plus debt and transaction fees for the portfolio. Winston's board thought that was better than the company could do by operating publicly, so it accepted. Shareholders approved the deal in June.

The deal closed July 1. The next day, Winston was millions of dollars richer. He was back at work.

"I would never retire," he said. "It's just not the way I am. I'm an entrepreneur. I like to work with people and grow companies. I'm a hotel guy."

Until recently, hotels seemed to be a sure bet. The industry has recovered from a slow spell after the Sept. 11 terrorist attacks. Occupancy has increased, daily rates have risen, and hoteliers are seeing handsome gains in revenue per available room.

But analysts predict that a slowing economy will pinch business and leisure travel. And a credit crunch is leading to bumping up borrowing costs for some and builders and buyers.

That in part is why most of Winston's latest projects are in the Triangle, where the growing population and businesses are helping the occupancy rate stay above the national average.

Revenue and nightly rates are growing faster in the Triangle than in the rest of the country, according to Smith Travel Research.

"This is as good a place -- if not the best place -- in the United States right now," Winston said. "It just so happens that the best place is where we live, and it doesn't happen like that all the time."

His confidence was echoed by other hoteliers this month:

--Concord Hospitality Enterprises of Raleigh sold 20 of its Marriott Hotels for $440 million. It plans to build more hotels with the money.

--Tampa, Fla., company eSuites Hotels said it would build one of its first hotels in Morrisville. It wants to grow the chain, aimed at tech-savvy business travelers, to 300 hotels.

--Cambria Suites, a Choice Hotels chain with a strategy similar to eSuites, broke ground on 103 rooms in Morrisville. Owner Yogesh Manocha says it will be the country's seventh Cambria.

The competition is what gets Winston up in the morning and keeps him working late.

It's why he's doing the kinds of things chief executives don't typically do: order telephones, set up FedEx accounts, meet with payroll companies.

"I'm going to Office Depot on Saturday to go shopping for supplies," he said. "And guess what: I'm looking forward to it. We're growing something." or (919) 829-8917


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