 Depatie Kimpton |
San Francisco–Kimpton, already a major player in the boutique market, has made a strong move to help it pull away from the pack.
 Long Kimpton |
Kimpton Group Holding LLC, parent company of Kimpton Hotels & Restaurants LLC, closed on its third institutional real-estate fund for $246 million in early April.
The proprietary, discretionary fund will be used to acquire more than $800 million worth of hotels in the next three years.
Mike Depatie, c.e.o., said the fund is a testament to Kimpton's dominance in the boutique hotel market.
"People see us in an exciting niche and a leading player in the business," he said.
While credit woes are infiltrating all hotel investment conversations, Kimpton was able to close on its largest fund to date.
The company takes its role as fund sponsor seriously, said Joe Long, executive v.p. of development and construction.
"If you look at the funds that invest in hotels, most are part investors in [real-estate investment trusts] or hotel chains, or bigger guys like Blackstone, or smaller funds that are real-estate focused," Long said. "It's very unusual where investors will entrust their money with an operator."
Acquisitions will continue to be located in major urban markets such as Los Angeles, New York, Chicago, Boston and Washington, according to Depatie.
"We are also looking at major resort locations, but we're not likely to be the major resort anchor," he said. "We would have a boutique hotel in a resort location."
Kimpton's Sky Hotel in Aspen, Colo., was cited as one of its resort-area success stories. "Aspen is a ski market, but our hotel is much more contemporary," Long explained. "We really hit the cover off the ball in terms of performance."
Kimpton has three targets for acquisitions:
- Acquire non-hotel buildings that can be converted to Kimpton hotel properties.
Renovations of historical buildings can deliver tax credits to developers, Depatie said. "There are lots of benefits if you're willing to do the heavy lifting. Many times you need all those things to make a project economical."
Long said adaptive reuse typically occurs in high barrier-to-entry markets, where a renovation would cost less than to build from the ground up.
"We do reuse in many tight urban markets, where we think would it be great for a hotel and there's already a building there."
- Acquire existing hotels that either fit the Kimpton model or are underutilized, and reposition them as a Kimpton hotel.
"We're principally set up to buy existing hotels that might fit what we do already or can be repositioned to Kimpton," Long said.
- Build new boutique hotels in targeted urban and resort areas in North America.
Depatie said Kimpton recently has done more of this.
"New-build is a new thing for us, an evolution of boutique," he said. "We used to think of a cutesy inn, but now boutique is any alternative to the chains that happens to involve a fair amount of design and a well-developed restaurant concept."
