Defining Hospitality

DH - Stephen Wendell
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squadcaster-38j0_1_09-10-2025_161834: [00:00:00] if it was easy everybody would do this. And um, I think, you know, the excitement is on the other side. And, we've seen of guests come in and eat at a James Beard worthy restaurant and have their weddings and you know, have 4th of July celebrations watching outdoor movies.

Like the experiences that we've watched people have at that property and the feedback that we've gotten about how much they love it has been incredibly rewarding for sure.

Speaker: What I do is inconsequential. Why I do what I do is I get to shorten people's journeys every day. What I love about our hospitality industry is that it's our mission to make people feel cared for while on their journeys. Together we'll explore what hospitality means in the built environment, in business, and in our daily lives.

I'm Dan Ryan, and this is Defining Hospitality.

This podcast is sponsored by Berman Fall Hospitality Group, a design-driven furniture manufacturer who specializes in custom [00:01:00] case goods and seating for hotel guest rooms.

dan-ryan--he-him-_2_09-10-2025_161834: today's guest is one of our very few boomerang guests. It's his second appearance and we're really excited to have him on. So please enjoy.

Uh, he's a hospitality professional who's also educated in law. He previously worked as a law clerk for the Philadelphia Eagles. He's the co-founder and CEO of Mountain Shore Properties. Ladies and gentlemen, Steven Wendell. Welcome, Steven.

squadcaster-38j0_1_09-10-2025_161834: Yeah. Thank you for having me back. Good to be back. Good to see

dan-ryan--he-him-_2_09-10-2025_161834: It's, well, I'm so glad to have you back, and also mostly because I love excitement and I know when we spoke a couple years ago and we've been in touch since then, but, um, you are co-founder and CEO of Mountain Shore Properties, the bulk of that portfolio. Has always been select service properties, uh, cash generating, um, assets.

And then you went [00:02:00] out and did Camptown, a project in Louisville that's more in the luxury and lifestyle space, independent, quasi independent. Um, and now I feel like you've changed. It's given you this incredible bug, which I think you knew going into doing those, but now there's this overall excitement about this luxury and lifestyle play in your portfolio.

squadcaster-38j0_1_09-10-2025_161834: Yep.

dan-ryan--he-him-_2_09-10-2025_161834: Because they could be seen as others as like really cool bespoke experiential e um, properties, but also I think from a, from a business case, they're contributing a lot more earnings to the bottom line. Not just for hotel owners in general, but also for the big brands that have kind of. Figured out this way to bifurcate the luxury and lifestyle segment from the select service.

And it's actively happening right now, a lot of reorganization, but [00:03:00] for the, the number of properties that are out there in the luxury and lifestyle space, there outsized contributors of earnings to the big brands, and I'm assuming also by virtue of that to the ownership groups that have them. So tell us about this transformation and tell us why you're excited.

squadcaster-38j0_1_09-10-2025_161834: Yeah. No, thank you. I, I, I think that's right. I think, um. They're moving in this direction. And, you know, it wasn't 15 years ago where they were hesitant to, to move in this direction. And, you know, they had their tried and true serve brands that the owners were popping up, that were making great margins, that were paying them fees that REITs were, were gobbling up after they were developed.

And, and then I think there was this move from the guest really first, right? This hospitality world is all about the guest to say, I want something a little bit more than this. And. As independent brands started popping up, uh, and guests were gravitating towards 'em. And even Airbnb in its early days was creating something that [00:04:00] was something different and unique. I think that the, the big brands took notice and said, okay, we need to do something. And so that's something was starting their own but also gobbling up and buying, know, and every one of the major brands, you know, you talk about Hyatt buying Dream and then buying Standard and Bunkhouse. You've got Hilton buying graduate hotels and buying, um, nomad.

And then you've got, uh, Marriott doing the same, uh, and even a core. So like all these major brands have, have made their move into lifestyle space and they know that that growth is there. From an ownership side, all I'll say is it's a lot harder, I guess if things are harder than there, there's some carrot at the end and that is more profitability. And I think it's not only more profitability when you get it right. Uh, it's more profitability for longer, right? We're all doing these developments. difficult. They're extremely expensive. You're putting long-term debt on this. You're [00:05:00] trying to build assets that really have longevity. Um, and like, you know, a courtyard can be a nice thing, it can be a great in a Marriott courtyard is what I'm saying, deal.

But there, there's no chance that it's lasting longer than 30 years. You know, probably 20, 25 years if you build hotel Genevieve in Louisville, or if you build x, y, Z boutique brand, it's around 60 years. And, um, I think in this world, uh, that that's, there's something to be said about that, especially with the upfront cost of capital being, um, so much.

And, and the last thing I'll say is on the lifestyle. Side of things, you really have no rate cap. um, with the increasing cost of construction, with the increasing cost of labor, margins are shrinking. The only way you're gonna kind of, you know, get there so to speak, is, is to have a DR growth. And these, you know, kind of soft brands allow you when you get it right, [00:06:00] really increase a DR.

dan-ryan--he-him-_2_09-10-2025_161834: Something surprised me, uh, before we started, uh, recording where you were. I don't have the words of vocabulary for it, but I think it was that we've reached this kind of inflection point where those select service kind of tilt up simple new construction type buildings. Were always like. A better deal from a a constructability perspective, but because rates and everything have gone crazy on the construction interest rates, et cetera, et cetera, even if you're doing a new build or a reposition, although I guess on the lifestyle side, maybe you'd be doing more of a reposition.

So like the structure's already built, you're taking advantage of that replacement cost arbitrage. But it seems that there's been this inflection that now also these independent and lifestyle hotels are easy. Nothing's easy, but like from a cost perspective, it's almost [00:07:00] like kind of an even trade to build out, uh, a luxury and lifestyle.

squadcaster-38j0_1_09-10-2025_161834: yeah, and like I, I, I think it's most important is just that, you know, before you get to the finish, it's still concrete and the foundations are the same, and all of that stuff is the same. And so it used to be. That to do a courtyard by Marriott or a Hampton Inn, you know, I mean, just take an example.

Let's just give you concrete examples 'cause we know this to be true, right? We, we, we built a Hampton Inn in Tallahassee, Florida in 2018 $21 million. we sold it, you know, for over $30 million and maybe today it's worth 35. Again, we don't own it, I'm just giving you kind of a round bond. But to build that same property today, that same property that we built for $21 million in 2018 is gonna be well north of $30 million.

dan-ryan--he-him-_2_09-10-2025_161834: Wow.

squadcaster-38j0_1_09-10-2025_161834: And, and so. What you wouldn't do it now, that's a profitable deal for us. It's probably been profitable for the people that bought it [00:08:00] for us in the sense that they've been making money. But you wouldn't take all that risk that goes in with it to ramp it and start it today. And so what's happening is that that that costs of select serve is getting so great. Now you can go on the side of the road and build a three story stick building and probably still be okay, but like again, how long is that building gonna last? How big is your PIP gonna be in seven years to replace the soft goods? It's, it's all, and so when you go and look and say, okay, especially for a group like us, it's like maybe gonna do one property a year, one property every two years. We're building in urban centers, we are focused on, you know, long term. And so when you look at that, yes, it's more expensive to do your ff and e, you gotta pay more in soft costs to do a boutique brand. But a lot of those costs are kind of the same. As you would to do this, this, uh, this select brand. And oh, by the way, now when you're done, your, your, your rate ceiling is not there and all of those things.

And so to, to our [00:09:00] standpoint, it's like we're just gonna go to a little bit of the extra mile to do a nicer product. And, and we think that's gonna resonate with guests for longer. And you know, by the way, also, when you build that thing, uh, the housekeeper, the to, to clean the courtyard is, it's the same, right?

You know, it's, it's the same act. But now if you've got a more sustainable revenue generating hotel, you have more money to pay that person, which is where we are in the entire life cycle. And so, know, that's our bet. Again, it's much harder to get it right because, um, everyone knows what they're getting.

With the Hampton Inn, that's why it works. They don't know what they're gonna get. With your new brand, and you have to earn their trust and you have to earn their business over time. So you need to be prepared for the ramp to take longer, but that once you get through the ramp, you're at a higher plateau than you would be if you were in select service.

dan-ryan--he-him-_2_09-10-2025_161834: Yeah. And. Uh, I love when I talk to guests and if I'm doing my job right when they light [00:10:00] up and I'm like, oh, tell me more about that. It gets really exciting. If we go back in time to our first conversation on this podcast, I remember at Camptown up in the Catskills, you were talking about, I think the fire pit outside and how you could create this really incredible experience, uh, that could be different.

And, but so you've built this thing that you probably wouldn't get at a Hampton Inn, right? I don't think they have fire pits.

squadcaster-38j0_1_09-10-2025_161834: no.

dan-ryan--he-him-_2_09-10-2025_161834: Um, but the same way you lit up about that, uh, I'm gonna go out on a limb here, and the Genevieve and Louisville, I don't think any of your select service properties, I don't know if there's a select service property anywhere that you can get a Michelin starred restaurant within it.

So like from a sense of purpose and passion, I feel like this lifestyle and independent like. The select service portfolio kind of gave you the airlift to try do all these other things, and now this light bulb has gone off that I don't think you really [00:11:00] fully considered until you've opened up these two and then you have more coming.

So tell us about that transformation. I.

squadcaster-38j0_1_09-10-2025_161834: no, 100%. I was like, I thought I knew a lot about hotels when we started doing these hotels. The two lifestyle that you, that you bring up, camp Town and Hotel Genevieve. And now I'm like, oh, okay. I knew nothing about hotels. Now, now, now I know something about hotels. And so running a restaurant in a hotel, running an event space at Camp Town, having, you know, outdoor pool, having, you know, all of the amenities and having different types of groups coming in a rooftop bar in Louisville.

So there's just all these elements that happen at a lifestyle hotel that make it wonderful, make it amazing, make it why people wanna be there. And so now I think what we've we're doing is taking the learnings from those, like where have we made mistakes? Where did, like Louisville's a great example. We, we built too many kind of f and b outlets in one space.

So. On the next iteration. I don't think we need to do that. I think we need to be more focused with one or two outlets instead of three or four. And, um, those are the type of [00:12:00] things that we have learned that we will not create the same mistakes and we'll apply them moving forward. But I'm just as excited, I think, if not more so about what we're doing because I feel like I have a real like, roadmap of what to do and how to do it.

We're renovating a old school in the town of Fayetteville, West Virginia, where I was originally born into a 40 room boutique hotel with a restaurant named after my grandmother, Patsy, or her name was Pat, but her friends called her Patsy. so like, just all that happened at Camptown and, you know, to get that project open, the two years that we've been open and learning how to ramp, learning how to market an independent hotel correctly, like we just, we know what we're, what we're setting ourselves up for.

And I think now, you know, any good entrepreneur or business person learns. You know, from the deals they've done, from the mistakes they've made and, and makes it better moving forward. And I think that's where we are. And so, you know, it's easy though. I can see how some people may have quit in the messy middle. [00:13:00] You know, Gary Vaynerchuk likes to talk about the messy middle, and like, if you're in the messy middle, a lot of people quit and, um, don't get to see the other side. And so I think we're, we're through a lot of that and there's gonna be a lot of hard decisions and moments, uh, because that's the industry we're in.

But I think we have some real great projects that we're coming out of the ground out with right now,

dan-ryan--he-him-_2_09-10-2025_161834: that's also that messy middle. I love that. I didn't know, I never heard that before as, as, as related to Gary Derrek, but I think that's why great entrepreneurs are in a way, almost masochistic, right? Because they're like, I'm gonna get there. I don't know how we're gonna pivot the path the whole way there, but it's gonna happen.

And, uh, yeah. It's, it's a, it's a crucible to be sure.

squadcaster-38j0_1_09-10-2025_161834: it, it is. And like, if you've listened to so many different entrepreneurs, like of, of all these different industries, you know, Steve Jobs and Bill Gates and Jeff Bezos, like the, the Titans, and like almost all of 'em had like some like near death moment of [00:14:00] their business, if not multiple. And,

dan-ryan--he-him-_2_09-10-2025_161834: Been there, done that.

squadcaster-38j0_1_09-10-2025_161834: we didn't have a near death.

We've had some like, whew, man, this is rough. This is a close call. Or we're, we're, you know, we're, but like, so we're not even, and so like, I look at that and it's like, man. hear 'em say it and it's like almost like a funny tale now 'cause they're all so successful. But like they were in it at

dan-ryan--he-him-_2_09-10-2025_161834: Yeah.

squadcaster-38j0_1_09-10-2025_161834: and like many of them could have just said, I'm done like this, this doesn't worth it. And so I, I think I tell myself that a lot when we're having issues and like, you know, something's hard and it's like, well if it was easy everybody would do this. And um, I think, you know, the excitement is on the other side. And, and again, watching, you know, just camp town, we were talking before, the last conversation was before it was built and now we've seen of guests come in and eat at a James Beard worthy restaurant and have their weddings and you know, have 4th of July celebrations watching outdoor movies.

Like the experiences that we've [00:15:00] watched people have at that property and the feedback that we've gotten about how much they love it has been incredibly rewarding for sure. For a project that was really hard.

dan-ryan--he-him-_2_09-10-2025_161834: So going in that, uh, the messy middle and then also looking forward to Fayetteville. Um, you're a former collegiate baseball player, and this is one thing I believe that all entrepreneurs need to keep in mind. And it's a baseball thing because in baseball you can get into the Hall of Fame if you hit 30% of the balls that come at you, right?

If you hit more than 30, and that, and that goes into, I'm a, I'm a partner in a company called Berman. Falk up in Canada, and we do custom furniture. And as Canadians, they, they have the hockey term. It's like you're not gonna. You're not gonna make the shots you don't take. Right.

squadcaster-38j0_1_09-10-2025_161834: 100%.

dan-ryan--he-him-_2_09-10-2025_161834: And in that messy middle, and I think the platform on the, on the independent side is, uh, you, it, it's a platform for experimentation.

And if done correctly, [00:16:00] you can experiment. You, you can get your hand slapped, but then you're gonna find your way. And then it's like that field of dreams thing to bring in another baseball thing. If you build it and you have that passion, it carries through and they will come.

squadcaster-38j0_1_09-10-2025_161834: Yeah, it's 100%. And I, you know, I think Camptown for the first year, we could have looked at the results and said, man, you know, like not everybody, like our occupancy isn't exactly where we thought. And like, it's being difficult to get the word out and now, you know, the word is out. And like success begets success obviously.

And, and as people more and people experience these places and they tell their friends about it, you just, more and more people come. And so I think, again, I was referencing this before, but like the ramp, you know, we always talk about RAMP and the hotel business, like what's your ramp? And you can open a Hampton Inn and be full, uh, six months, you know, after opening because that system has so much goodwill built into it.

And there's so many people that stay there. my concern really, as we build into this [00:17:00] world of so many different flags, and, and I don't even think the brands will tell you that they have. Too few flags today, but what they're doing is preparing for some of those flags to die. And they will then have, whether it's a soft brand that takes its place, you know, maybe Courtyard in 10 years is no longer relevant, but AC by Marriott is, that brand, you know, Marriott's okay in that situation, they've got enough flags to fill the, fill the hole or the void.

And so, but I want, you know, that doesn't help the owner of those hotels, that the brands are kind of falling down. So we've been really thoughtful about what we're doing. And, and I will say that, um, to the brand's credit, they're being more, uh, giving more leeway to creativity because I think they know that they have to, to, to attract the owners.

And I think they know by, at the end of the day, when it comes to lifestyle, that's the right thing to do because it's gonna resonate with guests, which means it's gonna be more revenue, which means it's more money for them and their shareholders.

dan-ryan--he-him-_2_09-10-2025_161834: Yeah, and [00:18:00] I wanna get into that bit in a second. But, um, I used to be on the advisory board and I'm a huge fan of the Independent Lodging Congress, and I think it was in like 2017 or 18, they had a, like a side panel discussion with lenders, right? So they, I think it was like Deutsche Bank and maybe Bank of America and someone else who specialize in hospitality lending.

And they were saying, and it, it, it kind of shocked the audience. This is before the pandemic that, you know, to get debt on a property that's not really associated with the flag was always hard to do in the past. Now you don't need that, that, that checkbox isn't as weighty as it used to be. I think with COVID it may have changed things again, and it's still really difficult, but I feel like with these independent properties that you're doing are, do you have a flag associated with them right away or is it harder to raise the debt side, or, or are you tapping into all your [00:19:00] LPs on the equity side?

So that's the first two questions there. And then the third one, the third question on that is if you go forward in 10 years, 20 years, who knows? Um, do you have an ideal mix of select serve versus.

squadcaster-38j0_1_09-10-2025_161834: Hmm.

dan-ryan--he-him-_2_09-10-2025_161834: Like kind of luxury lifestyle or like, is it a 50 50? Do you, do you want to trend more towards that way? But I'd love to hear your, your thinking there.

squadcaster-38j0_1_09-10-2025_161834: yeah. No, great questions. So I think the equity side is one piece that, you know, our, our investors luckily trust us to, to do, to do, right? And I think so far so good. But, um, the debt side, 100%, it's still easier. I can just tell you the Madison deal, which is a tribute by Marriott You, you know, we had four term sheets, very, very competitive, uh, you know, the debt process.

So I found that it's still easier. To get at if the major brand is involved. What's also happening is the major brands are becoming for them to be involved. [00:20:00] IE they sign franchise agreements, like normal old days type stuff, but they're also signing like design hotels as owned by Marriott. And that's kind of an affiliate agreement, but you're still backdooring into Marriott's Bonvoy system

dan-ryan--he-him-_2_09-10-2025_161834: Mm-hmm.

squadcaster-38j0_1_09-10-2025_161834: and, and the ability to, to points and use points.

So 100% it's much easier to, to get the financing if you're affiliated with the brands. And I, and I just think that's forever gonna be the case. And you know, it is what it is. It doesn't mean you can't get it done, it just means that it's easier. And then on the mix, I would love to continue to have, you know, a quarter of our portfolio to be select, serve in kind of places that. Makes sense for it to happen and opportunities that present themselves where, you know, Charleston, West Virginia is a great example. We have at a courtyard that's, you know, a, RevPAR leader, many weeks of that market and it's just not a market that's probably needs a lifestyle hotel. Um, I think there are always gonna be [00:21:00] markets like that where, you know, a really nice select surf hotel does just fine and, and serves the, serves the, the, the needs of, of the, of the demand of the public there. But you know, selfishly, um, as hard as they've been to do, I am still love the process of figuring out how to, you know, make these hotels, these life size hotels. And so I think that's what we'll end up doing more of. I mean, the three hotels that are currently in our pipeline are all Lifestyle two Marriott, one completely independent.

And again, on that independent one, we got financing. That, that bank wants us to think about what affiliation we might do, you know, and so there's no requirement there. And of course talking to different folks, but I think one thing that will be true for the next five years to 10 years is that you're gonna be able to do a project if it's independent and doing well, and still call one of the brands and, and get an affiliation. [00:22:00] They, once they get to a critical mass of these hotels, they might be more strict about what they let in. But next five to 10 years, I think they're gonna be letting in more. Because quite honestly, it's easier for the brands to acquire via that way of affiliation than it is to have new hotels built just 'cause it's so difficult to build hotels right now.

dan-ryan--he-him-_2_09-10-2025_161834: So you're also in Philly, which is very close. How far are you from Malvern, Pennsylvania?

squadcaster-38j0_1_09-10-2025_161834: Oh, like 15 minutes?

dan-ryan--he-him-_2_09-10-2025_161834: so I'm a huge fan of Vanguard and John Bogle and over the years and like that mix of 75, 25, it sounds like that 25 would be like your bond portfolio. And then the 75 is like the more volatile but higher return, higher risk, um, stock portfolio equity portfolio that's.

squadcaster-38j0_1_09-10-2025_161834: that's correct. And I think that the, like, I mean I look at the three selects we have now, two of them are doing really well, one's kind of okay. And then, you know, camp Town is now kind of [00:23:00] at very good cash flow and Louisville I think is on its way there. And it's just had a, you know, an interesting journey I will say, to get to being JDV by Hyatt now.

But I think we're, we're one of two hotels in downtown Louisville that are. Hotel. So World of Hyatt went from having a regency to a regency and now a boutique hotel in, you know, NuLu. So it's, we've already seen a, a big result. September and October are gonna be massively up year over year, which is great to see.

And so we're excited to have this whole 60 million world of Hyatt people have a hotel, you know, in,

dan-ryan--he-him-_2_09-10-2025_161834: Hmm.

squadcaster-38j0_1_09-10-2025_161834: That they didn't have before.

dan-ryan--he-him-_2_09-10-2025_161834: So, okay, this is where I want to kind of start talking about the big brands, like the motherships, if you will. So, um, I've been seeing recently this bifurcation between luxury and lifestyle and everything else, uh, over the past, I don't know, 10 years, but, um, more recently there from a [00:24:00] design and construction perspective, or a design perspective, which is really, I think, where.

On the in where the independents get to really shine or the soft brands get to shine. IHG reorganized their design team around Kimpton vignette Regent. So that luxury lifestyle has its own balloon

squadcaster-38j0_1_09-10-2025_161834: Yep.

dan-ryan--he-him-_2_09-10-2025_161834: Playground Hyatt, which is like super surprising to me. They're, they're like bringing, building a team in New York City, right.

And they're a Chicago, like, tried and true Chicago company. And they're like, okay, well maybe there's more. I don't know exactly what the motivation is. Maybe it has to do with, um, creativity. Like, like New York as a, as a, as a place of fashion and design.

squadcaster-38j0_1_09-10-2025_161834: hub.

dan-ryan--he-him-_2_09-10-2025_161834: Yeah. Creative hub.

squadcaster-38j0_1_09-10-2025_161834: and I, and I think, you know, with Standard being a big part of that acquisition and the standard people already being in New York, I think that's a big reason why. Yeah.

dan-ryan--he-him-_2_09-10-2025_161834: Yeah. And yeah. Yeah. 'cause you're with JDV Bunkhouse, although I think bunkhouse might be staying down in.

squadcaster-38j0_1_09-10-2025_161834: They're staying [00:25:00] in Austin.

dan-ryan--he-him-_2_09-10-2025_161834: Uh, yeah, because they're like, that's Austin, right?

squadcaster-38j0_1_09-10-2025_161834: Yeah,

dan-ryan--he-him-_2_09-10-2025_161834: Marriott's had a luxury and lifestyle footprint in New York City. Uh, Hilton, I think is building one out up there. So there's this interest. It's they're being treated differently, um, because I think of their outsize contribution and how they also need to be unique.

And this is my long way of setting up this question where, like, if you look at brands like JDV Bunkhouse, autograph Kimpton, and even like a Waldorf or, um, an addition,

squadcaster-38j0_1_09-10-2025_161834: yeah.

dan-ryan--he-him-_2_09-10-2025_161834: right? They all have different DNA, um, very different, like, but how do you think the parent companies are nurturing that individuality versus systematizing it?

Right? Because they see the brand, the value in it. But o oftentimes when big companies, big, big corporations systematize too much, they can kind of like crush the life out of it too. So like.

squadcaster-38j0_1_09-10-2025_161834: it's an amazing question, and I think every [00:26:00] one of these companies is asking themselves that. I, I will give you the answer that I think they should be doing, but I know that they won't each be doing it for each brand. And unfortunately, there's some brands that are so young and there's only two of 'em or three of 'em.

Like, they're like babies that you're, you, you gotta let flourish and they're gonna, think, stifle them before it even gets started. And that's unfortunate, but I liken it to a house and you're reconstructing a house and you've bought it and you've, you've demoed, demoed it to the studs. need the brand to do all of the infrastructure, everything that you can't see when you come in at the end of the day and you look at the house and you need the lifestyle boutique creative people touch all of the things that you will see.

And they have such strong pipes and that's their distribution system. it is so powerful and it's more powerful than it's ever been that that is what they need to like lean into. [00:27:00] And oh, by the way, we, you know, your MX fees, you know, your credit card fees are 2.5% instead of 3.3.

dan-ryan--he-him-_2_09-10-2025_161834: Oh.

squadcaster-38j0_1_09-10-2025_161834: Like all of those things to give to the lifestyle group, that's a huge, you know, accretive margin and it doesn't do anything to the guest experience. When it comes to guest experience. I think that that is where they need to sit back. Listen to the creatives and say like, this is what we think matters, and this is what this brand is about. And I know just because I was on the, the inside of it for a second, that bunkhouse and Standard are trying to come in and say, okay, what is dream? What is on das? What is Thompson? And, and really make sure before they go forth and put a bunch of more out there, that they define what those brands are and what they're about and, and try to keep that brand mission. know, I think on all of this stuff, it becomes difficult when you're losing money or you're not making right.

You know, money solves a lot of problems and you can kind of [00:28:00] keep your brand mission. So I think that is the, the, the true answer is if they can focus on the infrastructure. Let the, the creatives kind of, you know, not run amok, but be creative and, and, you know, some, some brands may need, you know, go to a bowling alley and they put the bumpers in the, in the gutters.

Like some may need those gutters and others may be able to just, you know, go bowl the way they wanna bowl. But that's, that's what I think the focus should be. Um, and I think that's why you're seeing Hyatt making a deliberate choice to be like, okay, everyone that's kind of around the lifestyle team is gonna sit in New York and they're not gonna be directly in Chicago.

And kind of influenced directly of how we used to do things or how we're supposed to do things. So I think that is allowing for attention. I mean, as you've seen, you work with developers all the time. You know, it's like the tension between the owner of the hotel and the, and the, and the interior designer, right?

Like, not everything is just green, green [00:29:00] lit. There's always this value engineering process. And so I think there's a tension there that's good and, and is ultimately, you know, accretive to the owner and, and profitable. But, um, they each need to let themselves stay in certain lanes.

dan-ryan--he-him-_2_09-10-2025_161834: And I think those guardrails are really interesting. I, I had a recent guest, Chris Lenz on, who has, um, two and I think soon to be three, um, Hyatt Properties in Panama. And he, I mean, he invests so much in the design, in the experience, and what I picked up from him is that Hyatt actually trusts him as an owner that he's going to.

Throw his passion into this, it's gonna be great. And I, I'm sure it's the same thing with you, but there must be like on a spectrum, other owners where those guardrails really need to be there because, you know, if you go to stay at a bunkhouse and it falls flat, like that's also detrimental to the brand.

So, and I like that idea of the tension but have you seen any experience where it's like on a different [00:30:00] project where they want this all to work, but then it's like the tension is just too great gotta

squadcaster-38j0_1_09-10-2025_161834: 100%. And I think a lot of times you see that with owners that haven't done hotels before, right? There's a lot of time hotel owners and second time, or people that have done apartments their whole life. And um, you know, you know, we're working with a group in Madison right now that has never developed a hotel.

And so they brought us in as their joint venture partner. And I think they've been smart to do that because there's certain things that happen when you're doing a hotel that you're just like. Oh my gosh. Like, like the model room. Like, just take that for example. It's like if someone's never done a hotel, why am I, what am I doing?

Like, like the lights this goes here. And it's like, well, because like we might be, have bought the right chair, wrong chair by a foot or six inches and that could ruin the whole room.

dan-ryan--he-him-_2_09-10-2025_161834: Yeah,

squadcaster-38j0_1_09-10-2025_161834: I think you see this run amuck when you have first time folks or inexperienced folks and I, and, and even us, I, I think about [00:31:00] pre-opening and model room and that kind of stuff and you're like, man, that just seems like a lot of extra expense and you know, can we do it quicker?

And it's like, actually if you take more time and are more thoughtful on the front end, it is gonna save you a ton of money,

dan-ryan--he-him-_2_09-10-2025_161834: totally.

squadcaster-38j0_1_09-10-2025_161834: On the long, on the long end for sure.

Speaker 2: Hey, everybody. We've been doing this podcast for over three years now, and one of the themes that consistently comes up is sustainability, and I'm just really proud to announce that our sponsor, Berman Fall Hospitality Group is the first within our hospitality industry to switch to sustainable and recyclable packaging, eliminating the use of styrofoam.

Please check out their impact page in the show notes for more info.

dan-ryan--he-him-_2_09-10-2025_161834: Um, I wanna go back. You mentioned the, the pipes that, the big, that the big brands bring. And from a marketing perspective, like my understanding is if you take a typical select service, um, let's say a Marriott, courtyard Marriott gets a percent of the total revenue of that property. Correct.

squadcaster-38j0_1_09-10-2025_161834: Yep. [00:32:00] That's correct.

dan-ryan--he-him-_2_09-10-2025_161834: Okay.

And on some of these independent jaw or independent projects, it's not the deal. The, the, the way that they're structured is different. So it's not like they're getting a percent of the total revenue, but it might be what's coming in from the reservation system. 'cause you can also market your hotel outside of that ecosystem because you, you're also like bringing a different experience from even just when you're out prospecting guests or, or trying to, to get guests to come to you.

How does, how does that work? And that seems like a big, huge difference and.

squadcaster-38j0_1_09-10-2025_161834: Huge difference. So yeah, and I think, look, I think again, it's these brands acknowledgement that. Have to, they're pivoting. I think I give them a lot of credit for these, you know, large ships that are tough to steer and move agilely and like they are. And so they're saying, okay, well I can't charge you just full [00:33:00] 5%, 6% franchise fee on your, all your revenue at your tribute or at your, you know, whatever soft brand hotel, you know, JDV Genevieve. So we're gonna charge you a revenue stream, a, a fee on just the revenue that we produce for you. So they're putting their money where their mouth is and saying, look, we believe in our distribution system. We know what we can get and, and if we get it for you, then we'll, we'll get a fee there. Amazing. It feels like a pay to play. Now there's these certain, it fee sales and marketing fees that you have to pay the brands. 'cause they're, that's, that's not really a fee that you're paying that to them and they're spending that money to, to, to work for

dan-ryan--he-him-_2_09-10-2025_161834: Mm-hmm.

squadcaster-38j0_1_09-10-2025_161834: And then the second thing that I think has been really. Great for them to acknowledge is a lot of them don't charge your fees on f and b revenue, it's a world of Hyatt or a Bonvoy person coming into the hotel.

And then, then they'll charge you a small fee on that. 'cause they're basically saying, Hey, I'm putting this person in your hotel and you gotta gimme a little fees on that. And that's in a great acknowledgement of how hard that industry is and [00:34:00] saying, okay, we know you gotta have a restaurant or a bar in your boutique hotel because that's, that's table stakes, but we're not gonna fee that up on you because we know how hard it is to make mar margins in that business.

So all of those things I think are acknowledgement of like. What type of asset they are a affiliating with and you know, they're still making good money on them even though that those are the arrangements. And reason is pretty simple. Marriott's 250 million Bonvoy customers that they have at their digital fingertips to advertise to want to come stay only in Marriott properties, whether it is an extended stay property, 'cause that's where they need to be, or it's, you know, a Ritz Carlton.

dan-ryan--he-him-_2_09-10-2025_161834: Well, let's just, I, I want, 'cause I have a piece of data I heard on an earnings call, um, a while ago. I don't, it may have changed a little bit, but if you looked at a standard select service or even a full service hotel, the percent that the brand would take [00:35:00] off of the revenue, like is there a, a rule of thumb for what that is?

squadcaster-38j0_1_09-10-2025_161834: Yeah, I mean, for standard select service, Marriott's basically at a franchise fee of five to six,

dan-ryan--he-him-_2_09-10-2025_161834: Um.

squadcaster-38j0_1_09-10-2025_161834: and then you've gotta call it another four of marketing, kind of just brand related fees. So I, you know, if you looked at a courtyard, you're probably anywhere between, you know, 10 and 11% of top line

dan-ryan--he-him-_2_09-10-2025_161834: Top line. Wow.

squadcaster-38j0_1_09-10-2025_161834: That goes to Marriott.

Now again, some of those fees are working for you. IE I'm paying Marriott a marketing fee, so I, therefore I don't have to pay,

dan-ryan--he-him-_2_09-10-2025_161834: A sales department or whatever. Yeah.

squadcaster-38j0_1_09-10-2025_161834: I don't have to pay as much in marketing. So it's,

dan-ryan--he-him-_2_09-10-2025_161834: Hmm.

squadcaster-38j0_1_09-10-2025_161834: know, that's the biggest thing that I have learned from doing independent hotel that wasn't franchised. I, I, I will tell you that you, you look at it and say, oh, I'm at 11 here. And now I'm at four, so I'm saving seven. Alright, let's just take that as like, oh, I'm gonna go completely independent and I'm just gonna charge,

dan-ryan--he-him-_2_09-10-2025_161834: I.

squadcaster-38j0_1_09-10-2025_161834: Whatever [00:36:00] fee to, to the management company. And look at all this money I'm saving, I need to go spend more on marketing. I'm paying a hundred basis points, larger in credit card fees. All a bunch more of my business is OTA generated, which I

dan-ryan--he-him-_2_09-10-2025_161834: Lower margin. Hang on.

squadcaster-38j0_1_09-10-2025_161834: commissions to as opposed to the negotiated. So you really have to go look at, okay, what am I also saving versus being an independent hotel when I go to the brand? And then compare that to what they are. And then also, well, now it's easier to get a bank loan.

It's easier. So that's, uh, that's been the most eye-opening thing for me and as a, as a business owner of saying, okay, what's the net cost of being in the, the brand system? And, and is it worth it? Right?

dan-ryan--he-him-_2_09-10-2025_161834: So,

squadcaster-38j0_1_09-10-2025_161834: opposed to just looking at it nominally

dan-ryan--he-him-_2_09-10-2025_161834: so let's say you have that 10 to 11% or nine to 11% of top line revenue for a select serve. What about just a, a full service Hilton or Marriott? Um, and some. Secondary, tertiary [00:37:00] city, like what is it? Is it a similar top line percentage?

squadcaster-38j0_1_09-10-2025_161834: Probably could be a little less, especially if you have a deal where they're just charging you on revenue that they generate, right? Let's just say the brand says, okay, we'll charge you, you know, 6% fees, but it's only on revenue that we generate and we end up generating 60% of the revenue at your hotel.

So net net you'll be in maybe seven to eight. Now that's on a full service hotel. That's gonna be in a much larger number.

dan-ryan--he-him-_2_09-10-2025_161834: Yeah.

squadcaster-38j0_1_09-10-2025_161834: But yes, I think generally speaking, you will probably be in, on a percentage wise, less at full serve.

dan-ryan--he-him-_2_09-10-2025_161834: Okay. Hmm.

squadcaster-38j0_1_09-10-2025_161834: That Fuller's margins are lower, obviously, right. You know, they, they, you can make more money, but it's a lower percentage margin

dan-ryan--he-him-_2_09-10-2025_161834: Okay. Okay, so now on the independent or lifestyle, you're, you said it's about it that's, it's about 4% of gross.

squadcaster-38j0_1_09-10-2025_161834: Well, independent, let's just say you have a brand. I mean, if you just have a management company and you're [00:38:00] going completely independent, it's zero.

dan-ryan--he-him-_2_09-10-2025_161834: Oh zero. Okay. But

squadcaster-38j0_1_09-10-2025_161834: yeah, yeah. yeah. Soft branded, um, you're, you know, soft brandeds, kind of like the full serve, it's the same thing. It's 6, 7, 8. You

dan-ryan--he-him-_2_09-10-2025_161834: Okay.

squadcaster-38j0_1_09-10-2025_161834: you're, if you're doing it with one of the major brands,

dan-ryan--he-him-_2_09-10-2025_161834: Okay. Because, and that's even with the split, like you, you, that's net after if you market and you get your own guests to stay there, you're not paying any fee on that. Correct?

squadcaster-38j0_1_09-10-2025_161834: right? No, you're talking about in a soft brand

dan-ryan--he-him-_2_09-10-2025_161834: Yeah,

squadcaster-38j0_1_09-10-2025_161834: Yeah. Unless it's, unless the, the, the brand itself is so established that they are charging you that, but like, when you look at it from an independent basis, it's again, zero.

dan-ryan--he-him-_2_09-10-2025_161834: independent is zero, but I meant on the soft. The reason why, the reason this is my long way around getting here is like I heard on this earnings call, and again, the numbers may have changed in my aging brain, but I. If I'm hearing you correct on that, select serve or full serve, you're probably in that, I don't know, eight to 10% of top line.

And then you're probably on the [00:39:00] smaller, on the soft branded. You're, you said like six to seven.

squadcaster-38j0_1_09-10-2025_161834: Yeah, I mean I would say that you are, whether you're doing complete, full service, like I would say if you're a full service hard

dan-ryan--he-him-_2_09-10-2025_161834: Mm-hmm.

squadcaster-38j0_1_09-10-2025_161834: just say lifestyle, hard brand, call it eight to 10. If you are select serve, you're probably nine to 11, and if you are soft branded, you're probably like seven to eight. That that's probably where it is. Now, again, if I looked at any of these and were netting it against being independent at quote zero, it would lower the effective rate because you're getting a bunch of things by being in the system that you would not get if you were independent.

dan-ryan--he-him-_2_09-10-2025_161834: But this helps me because for that soft branded property, you're basically 25% less than.

the, the full service of the select service plus or minus. And what was crazy on this Hilton call I was listening to a while ago, they said that the luxury and lifestyle segment accounts for less than 10% of total [00:40:00] rooms,

squadcaster-38j0_1_09-10-2025_161834: Mm-hmm.

dan-ryan--he-him-_2_09-10-2025_161834: but more than 20% of their total fees coming in.

So that must have to do with like the rate. There's no rate cap and there's, they're charging a premium, but it's, that's unbelievable

squadcaster-38j0_1_09-10-2025_161834: And I mean,

dan-ryan--he-him-_2_09-10-2025_161834: That's crazy.

squadcaster-38j0_1_09-10-2025_161834: lean more and more into this because the, these, these hotels, when they get them right, when owners get them right, the revenues can be tremendous. And, and you're just seeing the ability to get rate. And obviously, you know, we're in a weird time in the economy as we, you know, it seems like some people are struggling, but like the top of the market. Which is more geared towards lifestyle hotels, that's who they're geared toward, is seemingly has like no limit and, and people are spending and spending and spending. So, um, yeah, it doesn't, it doesn't shock me that that's the stat.

dan-ryan--he-him-_2_09-10-2025_161834: So, and I love also like talking about lighting up, like as you build these properties, you're in it for the long term. Right. And if you think about the shifting traveler or person [00:41:00] who's spending money on experience or vacation, like what role long-term do you think these lifestyle hotels will play in shaping brand loyalty, right.

As with the younger ones, but also like they get the points, right? But they probably value the experience more. So do you think that this is also a way to get ahead of like a changing demographic shift so that Yeah, the points are there, but really they want the experience more than the points? Is that, that's my thesis.

squadcaster-38j0_1_09-10-2025_161834: it's a great thesis, and I think what you're actually gonna see is that the loyalty that they earn at these places will actually be redeemed, not only for room nights. And I think you're already seeing this, I, I don't think, I know you've already seen this, but for experiences the markets in which they're traveling, I, instead of just taking my 50,000 bonvoy points and getting three nights free, I'm getting one night free and a bourbon experience in Louisville with a cool [00:42:00] person or, you know, a, a, a private dinner, or there's gonna be more collaborations locally with these hotels, with cool local experiences.

And then the customer. IE you know, the, the, the, the, the Bonvoy guest or the world of high guests is gonna then redeem them for that. And I think that's how they're going to cater to the younger generation of travelers that truly care about the whole experience. Which is why, you know, we're gravitating here anyways.

Obviously the older generation doesn't care as much. They're, they're more okay with select serve and the tried and true. But the younger you go, the more kind of, um, choosy they are and the more they want.

dan-ryan--he-him-_2_09-10-2025_161834: So they can get a, uh, it might also include an avocado toast with a farm raised poached egg from their, their chicken named Sally in the, in the coop.

squadcaster-38j0_1_09-10-2025_161834: Exactly. Exactly. And I think that's what you're gonna, you're gonna see and what you're already starting to see.

dan-ryan--he-him-_2_09-10-2025_161834: as you're making this shift and building [00:43:00] success and runway on the boutique side, the, soft branded boutique side, I don't even know what boutique means anymore. But anyway, the soft branded experiential side, um, is it also, is it harder? I know you mentioned earlier that your LPs trust you and they go, but has it opened up like a new.

Um, segment of investors in these deals are, are, what are you finding there?

squadcaster-38j0_1_09-10-2025_161834: Yeah. I would say like jury's still out. I think there are more people. Let me just say it this way. I don't have a long list of our investors that have gone to the Hampton and in Tallahassee that we built, but I have a extremely long list of investors that have gone to Camp Town and Hotel Genevieve, and so they still need to make money and all of that is important.

But I do think that that has been an interesting factoid. Uh, you know, we've built all these hotels and, you know, no one's really gone to them and they, they, they've gotten their check in the mail and that's been great, [00:44:00] but almost, I mean, I can't tell you how many have been to, to hotel Genevieve and Campton and, you know, we even have one person that's gonna be having their wedding there. And so, you know, it's that kind of stuff that I think is really cool. And I think that's why they wanted to be involved to begin with, or part of the reason they wanna be involved. And I, I, I think with hotels especially, and, you know, we're a fund that does. Non-hotel stuff and I think when you asked the mix before 75 25, I think more important for us is the amount of non-hotel kind of quicker return stuff that we intermix with these lifestyle boutique hotels that we know and are very honest about will take longer to get to where they ultimately are still a great deal, but you know, it takes a little longer to get there.

dan-ryan--he-him-_2_09-10-2025_161834: Love it. And then I want to kind of pull on that, um, investor thread again, like obviously interest rates are high. Um, there's a lot of uncertainty in the [00:45:00] markets. Um, jobs aren't being created. You know, you read the newspaper, you think the world's gonna end tomorrow, every day.

squadcaster-38j0_1_09-10-2025_161834: Yeah.

dan-ryan--he-him-_2_09-10-2025_161834: If capital suddenly got tighter, Is there a place where you would kind of really put the brakes on a lifestyle project or instead of the whole project, where would you cut back severely on a project that's already like, ground broken and you're going, like, what?

How do you pivot in the messy, in the messy middle? If we hit like some kind of, um,

squadcaster-38j0_1_09-10-2025_161834: Yeah, yeah,

dan-ryan--he-him-_2_09-10-2025_161834: liquidity crisis, like envision hitting the brakes on?

squadcaster-38j0_1_09-10-2025_161834: middle during construction, you gotta finish. So that's it. But I will say that we, I think we were in this messy middle over the last two years, and, um, while there's still some more uncertainty now than there was two years ago, the, the cost of construction and the interest rates have been a huge barrier.

We all know this, and so that they're gonna come down and I expect that they'll come down. Five basis points next week. And I don't think Powell will go 50. 'cause I don't think he'll [00:46:00] give Trump the satisfaction of that, but I think they'll go down 25 and I think we're going to see a kind of hundred basis points movement over the next six months, at which point I think it becomes easier to do a lot of these construction projects.

And, and that's what we've been waiting for over the last two years. And so these three projects have been in the work, so to speak, for a couple years. And we've waited and, and now we're, we're moving forward. And we also have tax credits uh, these projects,

which is

dan-ryan--he-him-_2_09-10-2025_161834: Oh, because they're adaptive reuse or,

squadcaster-38j0_1_09-10-2025_161834: uh, two of them are historic buildings that we're redoing and one is, uh, at the site of a former, uh, mill and like it's a remediation project of, of an, a former asbestos plant.

And

dan-ryan--he-him-_2_09-10-2025_161834: oh, wow.

squadcaster-38j0_1_09-10-2025_161834: We get, we get tax credits there. So those, those are, I think you're gonna see that. I think you're gonna see people looking for that little. on top that, that it's in an opportunity zone, that type of stuff to kind of tie, break the tie to [00:47:00] do the development and, and coupled with interest rates coming down a little bit and ultimately whatever, you know, I see all the time like, oh, record setting construction for hotels.

And it's like, but no one's doing. Like people are announcing and doing a lot of things. I think everything is just gonna happen slower and it's just been harder. It's gonna be harder and harder to do, but we try to keep not too many projects going at one time so that we feel like if we've committed to it, that we're gonna get it built.

Because

dan-ryan--he-him-_2_09-10-2025_161834: Hmm.

squadcaster-38j0_1_09-10-2025_161834: at the end of the day, if, if you're in an environment that's harder to do anything and you can do the thing within your budget, you're gonna probably be better on the other side of it. And we that that's a true 20 year horizon view on development.

dan-ryan--he-him-_2_09-10-2025_161834: Great. Um, I want to talk about that a little bit more as far as the uncertainty in the headwinds. So I have this metaphor 'cause in my business of. Whether it's a new build or a renovation, I would say most of what we do over the past 10 years or more is renovation work. 'cause not a lot of new hotel [00:48:00] inventories come on for providing custom guest room furniture.

Um,

squadcaster-38j0_1_09-10-2025_161834: Right.

dan-ryan--he-him-_2_09-10-2025_161834: I, since COVID, especially just before COVID, I think we were 10 years into a seven year real estate cycle, maybe nine years into a real estate cycle. So like we'd already kind of gone past the cycle as it pertains to hotels, then COVID happened. And what I was seeing before COVID was renovations were happening, then COVID happened, it flooded the market with, um, cash.

Hotel owners were allowed to deplete their CapEx reserves. Um, and brands got a little less stringent about doing renovations and

squadcaster-38j0_1_09-10-2025_161834: Yeah.

dan-ryan--he-him-_2_09-10-2025_161834: the ho, the ho that each hotel had reduced housekeeping, everything else. But needless to say, since 2020, I think that there's just. been a real delay and lag on CapEx being deployed from a renovation perspective.

And now you throw in these head, so [00:49:00] imagine this like dam or a lake of deferred maintenance and renovation work and uh, repositioning of hotels and other deals. It's this lake is being held back by a dam of high interest rates, high construction costs, uncertainty of tariffs, trade, et cetera, et cetera, et cetera.

But at some point that dam has to break. And I know you mentioned like a 25 or 50 basis point chip away. Like that's probably the biggest one. What do you think the biggest contributor to that dam is? And do you see, I know nobody knows anything about telling your future, but do you see that dam breaking in the next year, two years, three years?

Like what, what's your kind of macro take on it?

squadcaster-38j0_1_09-10-2025_161834: Gosh, it's a tough question because politically it, it's so volatile given, you know, Trump's volatile state of being,

dan-ryan--he-him-_2_09-10-2025_161834: Yeah.

squadcaster-38j0_1_09-10-2025_161834: and, and kind of he flies off the handle and does one thing or the f but ultimately I think interest rates [00:50:00] have been the biggest reason, right? Like the cost of construction is, is been high. It, we kind of know what it is. Some of it is leveled, like materials have leveled, but, you know, labor is expensive. it really, the, the, because you've gotta look at how hotels are financed, right? Or, or, or real estate is financed. They're financed to do a deal at a certain rate. Okay, well, 10% has been a great return, right?

10 percent's a good return. Well, as as we've looked at interest rates being at seven to eight and, and, oh, the cost of construction's a little higher and so now we can't get 10, we can get nine. It's like all of these banks, if they're doing a deal these days, are basically getting as good, if not better returns the equity investors taking all the risk.

And the banks obviously get paid back first. And so a, a turn down a hundred basis points to call it, 5%, we can do a deal. Now not the days of like three point a quarter. They have bank loans for your house, they may not come back. I mean that historically is incredibly low. [00:51:00] So if we look at five, which is still historically low, um, five and a quarter, you now are able to do all of the asset classes, right?

You can build something that is a lower cap rate, six point half 7%, put five and quarter debt on it, and it's positive yield. You can do a hotel at trying to get to eight or nine with. So that leverage now means something. People were using bank loans just 'cause they had to do deals because their developers and they've got money to put to work and they're doing the deals. Now that creates a world where there's real leverage and real meat on the bone for the cash investors and then the general partner that's doing the deal, the developer. And so I think if you get that movement down in rates, if everything else stays equal and there's not some other lever that gets worse, IE and inflation runs amuck and tariffs go crazy and therefore mitigate all that gain you got from rates, think you're gonna be able to see much more development happen.

And look, kept them where they were because they, inflation was outta control and [00:52:00] they, you know, didn't want all of this development to happen. There's a reason they've kept 'em there. And I think, know, despite the critiques that the president gives him, if you look at like what PA Powell has done and what he's navigated from COVID to now and not letting the US economy fall off the rails, it's, it's actually pretty

dan-ryan--he-him-_2_09-10-2025_161834: Oh my God. I think it's remarkable. I, it reminds me of those stories. I was just a little kid, but of Paul Volker and my parents buying houses with like, at an 18% interest rate, like in the early eighties. It's, how do you make anything pencil? It's like that risk-free rate of return. Now that hurdle you were saying, like if you wanna show 15, 20% return, you could just pa you, I I was just listening to the radio the other day.

You could park money in like a 20 year muni, tax free muni fund, like a direct bo uh, bond from a town and get like 6% on it, like tax free, which is really probably like a eight or 12, eight or [00:53:00] 10%, normal return. And it just, I just, I just want this dam to chip away. I just don't know when it happens.

squadcaster-38j0_1_09-10-2025_161834: Yeah. No, and I, I, I think it's, again, I think it could start next week, this big, this next, the next a hundred basis points are the, kind of the most important, in my opinion, to This new development and like, as we've said, you don't wanna wait too long to go. And so I think we're pretty happy with like the starts on the projects that we're doing now, um, because obviously if we are getting debt financing that's floating rate and we're plugging it in at six and a half today, but it ends up being five and a half, like that's gonna be accretive for the project and,

dan-ryan--he-him-_2_09-10-2025_161834: Hmm.

squadcaster-38j0_1_09-10-2025_161834: and all the things.

So yeah, that's where I think we are. But it, it's just really, it's a difficult world to be a real estate developer and it's a difficult world to be a hotel developer, but you know, we, we, we do it anyways.

dan-ryan--he-him-_2_09-10-2025_161834: But it's also that messy middle, right? And, and it's like the, the high interest rates the high interest rates are also a barrier to entry, right? Because if, if you can make a pencil out at this time and build a open, a [00:54:00] successful property, like, wow, that's like gravy as rates start coming down too.

squadcaster-38j0_1_09-10-2025_161834: 100%. 100%. I, I completely agree.

dan-ryan--he-him-_2_09-10-2025_161834: Um, I like the forward looking view from you also as far as like, uh, on the luxury lifestyle thing, in the sense that you're in it for the long term. And with that sense, and thinking about the, the evolving, um, demographic and the, the guest, like that younger guest that wants the experience, do you think that the luxury and lifestyle space will evolve beyond rooms and f and b and that initial experience?

Like, do you think they'll become more like cultural hubs for neighborhoods, or do you think it'll pretty much stay primarily guest focused? Like, how do you see that evolving with all of us?

squadcaster-38j0_1_09-10-2025_161834: Yeah. No, I, I, I think that the best ones will be some of those hubs and obviously the best restaurants and hotels are the ones that also are frequented by locals. I mean, we, camp town, [00:55:00] Costa Susanna is open on Tuesday nights now, which generally speaking is a, is the locals night and we're having some of the best Tuesdays we could have imagined.

We were nervous to open an extra night 'cause it was the middle of the week. We don't always have eye occupancy, but it's now turned into the night where a lot of other restaurants and the Catskills aren't open. And all of the f and b people that have off work are coming to caa, Susanna to, to have dinner.

And so I think. If you can create those spaces where locals and guests can commingle, it's always to your betterment. And, and it's just very difficult to do because sometimes you have the locals who are like, I'm not going where the tourists are because it's too crowded and I don't want that. So I, I think the best ones will do.

And then you obviously have these like member clubs slash hotels with, with soho House that like is this mix of, of guests and locals and creative thinkers and you know, it's just so many of those have kind of. Not made it profitably, monetarily. And so it's hard to know where, where [00:56:00] those go long term.

But I do think that it's primarily guest focused. I mean, that's, you know, that's who's coming and paying your bills. The rooms are where your margins are, so the locals aren't, you know, generally speaking, staying in your rooms. But if you're doing a proper lifestyle hotel, you're doing something where locals often, you know, come and you know, to use bunkhouse as an example, like Hotel St.

Cecilia is exactly that, right? It's got local members that come and frequent the restaurant in the pool, and then you have guests from all over the world that are coming to Austin and staying there. And it's this like perfect symphony of a hotel that does both, that tends to be the exception and not the rule, and it's difficult to do.

dan-ryan--he-him-_2_09-10-2025_161834: Um, on the f and b side, I remember being in Shanghai 15 or 20 years ago, there's this amazing, it used to be the Regent and I was talking to the general manager there and they had one of the, you know, these crazy. Asian buffet, like from everything from sushi to the omelet station to fresh [00:57:00] fish and noodles.

And it's one of those insane buffet experiences. And I remember I said, he said, you know, he said to me, you know what I would do to make this hotel like the most profitable or any hotel the most profitable, get rid of all f and b. Right? And, but this place was amazing and it, but it did draw. It was like over the top.

I don't think that hotel exists anymore. Um, but I've heard from like a, a standard full service hotel in like a, a primary or secondary city. Um, I don't know the numbers, but IF and B can contribute 10 to 15, eight to 16% of revenue. I'm just making up a number. Um, but I hear that some independent or some luxury lifestyle and even independence, that FMB component could be.

And sometimes they model it to be as high as 50% revenue contribution. Like,

and, and it,

squadcaster-38j0_1_09-10-2025_161834: the issue with that [00:58:00] is if it's 50, it's sometimes maybe 5% or 10% of your profits

dan-ryan--he-him-_2_09-10-2025_161834: it's so hard to run.

squadcaster-38j0_1_09-10-2025_161834: because it's so hard to run. And so I think finding the right mix of that is an incredibly important that I didn't appreciate. And that's when I said to Louisville, we had too many f and b outlets, right?

If it's 'cause you're just like, all of my people on a given night, I might do 15,000 in f and b revenue, but I'm doing it across four outlets. And, and instead of, all would've come to my rooftop. And

dan-ryan--he-him-_2_09-10-2025_161834: Yeah.

squadcaster-38j0_1_09-10-2025_161834: Easier thing to manage. And so I think understanding how staffing an f and b model then hits your margins. I think is more important than how much revenue you're gonna do, because once you do the thing, there is a fixed cost to run the thing, and you're doing that part to make money hopefully. But more importantly, you're doing it as an amenity, a, a real important thing to your desk. So understanding what it costs to keep it running [00:59:00] well the more important analysis before you go in and do your hotel than to think, okay, can I make $5 million of revenue from it, or 3 million in revenue from it?

dan-ryan--he-him-_2_09-10-2025_161834: I love it. I, I, so this conversation has been really illuminating for me, and I'm hopefully for a lot of my listeners as well. Um, is there any question about this space or, or your path that you wish I would've asked?

squadcaster-38j0_1_09-10-2025_161834: Um. No, I, I think you've done a good job going through it. I think it's been interesting to have this conversation with you, like, as I was like wide-eyed and bushy-tailed four years ago, or three years ago. Like, oh, we're gonna open these things and they're all gonna like, do a hundred percent the first week and everybody's gonna love 'em. And so, and then now and saying, gosh, it didn't really go that way. But we do have a lot of people that love 'em. We have a Michelin key in Louisville and Hotel Genevieve. We have a chef that's, uh, you know, been nominated twice for a James Beard in Camptown. And so there's been all of these successes, um, and, and [01:00:00] we're on a long road of getting to where we're gonna go.

And I think it's just always reminding yourself that, you know, it's not, it's not a short-term business. This is a long-term business. And if you're saying that to investors and you're saying it to banks, then you better practice it in you operate and how you look at your asset.

dan-ryan--he-him-_2_09-10-2025_161834: Cool. Um, I actually have a question, um, that I didn't think about where you signed on with bunkhouse before the Hyatt acquisition? Correct.

squadcaster-38j0_1_09-10-2025_161834: Yeah.

dan-ryan--he-him-_2_09-10-2025_161834: Okay. And then now you're Hyatt acquired. You're, you have bunkhouse, you have, uh, JDV,

squadcaster-38j0_1_09-10-2025_161834: Yeah,

dan-ryan--he-him-_2_09-10-2025_161834: and it, it's always hard to. Kind of manage an acquisition like that and, and merge cultures and, and you've seen a before and after as far as it goes with Hyatt.

Like what do you appreciate the most about Hyatt as compared to your experience with other brands that you might have?

squadcaster-38j0_1_09-10-2025_161834: Well, I, you know, I, our relationship is very personal and [01:01:00] I think Hyatt, if they're, if you're looking at the three brands, the four brands, you, you know, you've got IHG in America, you know of Coors obviously, but Marriott, Hilton, think Hyatt, and then Hyatt is really about like this personal touch and really understanding, and they've always been smaller, the small, the small, the small brother or the younger brother in the room.

And so. Whether you're having polite conversations or hard conversations or whatever they may be, they always pick up the phone and they always answer and they always, you know, try to get it done. And I, and look, I'm not saying Mar and Hilton don't do that, and so I've, but in this process where I was in this unique position of having done a bunch of Hyatt's, been a developer of the year for Hyatt, and then having, choosing them to do the Louisville deal and done it with Bunkhouse and then all of a sudden end up back with Hyatt, um, they could have treated that situation very differently and said, you know, you chose not to do with us.

But they, they don't, they, they are about people and they're open armed. And so, you know, we have [01:02:00] navigated that transition and I think the hotel's in a much better spot now than it's ever been. Um, and we're excited about it.

dan-ryan--he-him-_2_09-10-2025_161834: Awesome. Um, I've enjoyed this conversation so much. Like I said, um,

squadcaster-38j0_1_09-10-2025_161834: you.

dan-ryan--he-him-_2_09-10-2025_161834: I know all of our listeners have, if people wanna learn more about you or your projects or company, what's a good way for them to get in touch?

squadcaster-38j0_1_09-10-2025_161834: Um, www.mountainshoreproperties.com uh, is the website. They can email me there or hit me up on LinkedIn, Steven Wendell. Um, and yeah, I would love to talk to you and you know, I was just talking to some folks that reached out to me randomly on LinkedIn yesterday that are doing similar kind of camp Towny hotels and, you know, he said, I have a, I'm doing a hotel in Virginia in Waynesboro and I wanna pick your brain about Camp Town.

And we had a 30 minute conversation about that, so I'm always happy to chat with folks.

dan-ryan--he-him-_2_09-10-2025_161834: awesome. Uh, thank you. Thank you, thank you.

squadcaster-38j0_1_09-10-2025_161834: Thank you.

dan-ryan--he-him-_2_09-10-2025_161834: And thank you to all of our listeners. Hopefully, if you have a chance, go back and [01:03:00] listen to our first one and kind of see how I've changed and how Steven's changed.

And I think that would be cool. I think I want to go do that again, uh, once this published and look and just see how it goes. But, uh, if this has changed your thinking on hospitality or the built environment, please pass it along. We grow mostly by word of mouth. And we love your feedback, so don't forget to like, subscribe, leave comments and all that good stuff.

Thank you all very much and we'll catch you next time.