Leading the way in hotel management
Business View Magazine interviews Pres & CEO Chris Cargen and COO David Berger of Hospitality America for our focus on the U.S. Hospitality Industry
Hospitality America, Inc. is a third-party hotel management and asset management company, operating from offices in Nashville, TN, Greenville, SC, and Miami, FL. Since its founding in 1995, the company has been associated with 40-plus properties, and now manages a healthy portfolio of 16. For many years, Hospitality America has ranked between #60 – #75 by total revenue as one of the Top 100 Hotel Management Companies published annually by Hotel Business and Hotel & Motel Management. In the last survey reporting such details, Hospitality America ranked #23 in occupancy, #19 in ADR (average daily rate), and #16 in RevPAR (revenue per available room). The total value of Hospitality America’s current managed assets approaches $600 million and produces just over $100 million per year in total revenue. Impressive numbers achieved through a legacy of knowledge, experience, and ambition, with a soupçon of risk taking along the way.
It’s a classic tale of the master and his prodigy. Old school meets new school. In essence, the success story that Hospitality America President & CEO Christopher Cargen has created and that COO David Berger is now helping to build upon. Cargen began his career in the hotel business as a teenager. He reflects, “All I’ve done in my whole life is hotels. I started as a dishwasher on the New Jersey shore when I was 15 years old, and then I did a number of successive hotel jobs in the hotel industry, applied to Cornell’s School of Hotel Administration, got accepted, graduated from there, and continued to pursue my career. In the early 1990s, from relationships I had forged over time as an employee for other hotel developers, I founded Hospitality America in my attic with a cell phone, a fax machine, and 25 credit cards in rotation. I put three mortgages on my house, built a company, dug out, and now I’m debt-free.”
David Berger has nothing but praise for his mentor. He relates, “I was a young guy of 22 years old when I met Chris Cargen, a career hotelier from Cornell grad school who took a chance on me. I started out as a General Manager, left the company for a while to spread my wings, and 20 years later I’m a minority partner in Hospitality America. Over the last eight years, we’ve grown this company together and I couldn’t be more proud.”
Berger initially joined the company in 2002, as General Manager of a 157-key Hampton Inn in Ft. Lauderdale, FL, Hospitality America’s largest hotel at the time. He departed four years later to work at Turnberry Associates, where he managed a 290-room, full-service Marriott hotel in downtown Orlando, adjacent to Amway Arena. Berger also had management roles throughout the state of Florida with Turnberry Associates. Then, he moved to Thayer Lodging to expand his hospitality knowledge. Here he operated a 400-room Sheraton Executive Conference Center in Miami, with 22,000 sq. ft. of executive meeting space and annual hotel revenues exceeding $22 million.
In 2013, Berger rejoined Hospitality America’s executive team as Vice President of Operations and is responsible, primarily, for directing operations of the Windsor Aughtry hotel group portfolio. Currently, Hospitality America’s portfolio consists only of Hilton and Marriott-branded, franchised hotels. Hilton brands operated by Hospitality America include Hampton Inn & Suites, Embassy Suites, Full-Service Hilton, a Home2 Suites in construction and pre-development of a Motto by Hilton. Operated under the Marriott brand are two Courtyards by Marriott, one Residence Inn, and two AC by Marriott properties that are in the pre-development stage.
Hospitality America’s financial track record of results and performance dates back two and a half decades. “One of the things I’m most proud of is during the financial meltdown of 2008, we didn’t have a single hotel that had a foreclosure problem,” says Cargen. “All our hotels funded their replacement reserve accounts, which in the hotel business is what you keep on your balance sheets so you can periodically renovate your hotel every five to seven years. We funded all of those and every single investment group got some return on their investment – 2009 was considered the worst since 1933 and we didn’t have a single failure. Part of that is because I’m pretty restrictive on what we take on.”
Hospitality America investigates about 25 potential new opportunities each year, of which two might be converted to contracts. According to Cargen, “We’re very careful in our litmus test and which projects we decide to engage with. From our expertise and ability to read financials and feasibility studies and look at the market, we as a company can project that to an owner to help them forecast what their profitability would be.” The company’s 850 employees span the active hotels operated by Hospitality America, plus two licensed Starbucks locations – one in Kansas City, Missouri in the Hampton Inn & Suites, and one in the Courtyard by Marriott in Baton Rouge, Louisiana. A notable highlight, the Kansas City location is the first fully-licensed Starbucks store in any Hampton Inn in the U.S.
Windsor Aughtry, a leading commercial real estate developer and brokerage firm headquartered in Greenville, South Carolina, has developed 25 to 30 hotels in the last 25 years, many of which Hospitality America manage on their behalf. Paul C. (Bo) Aughtry, III, Windsor Aughtry Chairman and CEO, formed a business relationship with Christopher Cargen 25 years ago. Today, Bo is responsible for all commercial development and investment within Windsor Aughtry and is also a partner of Hospitality America and an award-winning developer of Hilton properties. That strong bond between Cargen and Aughtry continues to enhance and benefit the success of both the men and their companies.
Continued collaboration and trust with its hotel owners over more than two decades garners new opportunities for Hospitality America each year. Cargen believes that his firm’s level of involvement in the hotels it manages separates it from the pack. “Typically, a third-party management company won’t come online until a TCO (temporary certificate of occupancy) is obtained on the building and a general manager is hired, which is typically four months out from opening,” he notes. “We’re working on pre-development projects that have not even been approved yet and funded by the development company. We’re involved in those decisions, providing analysis and strategy, flag, site selection, market selection, etc. Most management companies aren’t expected to be involved in the pre-development process, but we’ve been doing all those things for over 25 years for the ownership group to make sure the projects will be successful.”
Hospitality America grew without any true advertising strategy. Rather, it was the strong internal credibility and overall relationship with Marriott and Hilton and the way projects were executed that proved to be the company’s advertising arm. “We only take on those projects where we can deliver what we promise,” says Berger, “and if we feel there’s a flaw to a project, we’ll share it with a client early and often on the front end; whereas, with many management companies, it’s not in their best interest to provide negativity that could potentially derail a project. That’s why our portfolio has performed as well as it has.”
As a group, occupancy is just slightly under 80 percent, and as a portfolio, Hospitality America properties consistently run significant premiums over the system-wide average for those brands. Berger admits, “We may say it’s not in our best interest as a management company to encourage ownership to divest an asset, but if we see a market that is becoming overbuilt, or the fundamentals of that market are changing, we may come to the owner and say, ‘We think it’s time to sell the hotel.’ Several hotels we’ve been engaged with since 1995 and our average length of a management contract is 10.5 years. But along the way, we’ve sold many assets for clients.”
Because of the outstanding reputation Hospitality America has built over the years with the Marriott and Hilton chains, it is constantly afforded opportunities for new business development. In 2019, Hospitality America forged new relationships that have yielded development projects in the Mid-west and the Southeast within the Hilton and Marriott brands. With that, Hospitality America has hired a Director of Operations, Ben Campbell, who oversees a portfolio of three Hilton and Marriott properties in Greenville, SC and Kansas City, MO including two Starbucks retail stores, as well as pre-opening operation responsibilities for new hotel developments. Ben has over 10 years of hospitality experience while serving in roles as Revenue Manager, Director of Sales, and most recently General Manager where he opened the 138 room Residence Inn by Marriott in Greenville.
Another new position, Vice President of Operations, was taken on by Scott Reid, who oversees a portfolio of 11 Hilton and Marriott properties located throughout the southeast including 2 Starbucks retail stores. He has 20-plus years of combined hospitality experience as General Manager, Director of Training & Human Resources, and VP of Operations, most recently with Crestline Hotels & Resorts and LBA Hospitality. Revenue management, one of the most important organizational structures within Hospitality America, is all done inhouse – under the dynamic leadership of Leigh Holloway, Vice President of Revenue Management. Before joining Hospitality America, Leigh was part of the Revenue Management team with the Procaccianti Group out of Rhode Island.
Hospitality America also has a special relationship with Sizzling Steak Concepts, the largest franchisee of the well-known Ruth’s Chris Steakhouse brand. The partnership began in 2006, when the company opened a Ruth’s Chris restaurant at a Hospitality America-managed Hilton in Columbia, South Carolina. “The synergy with them is great,” says Berger. “They’ve handled all our breakfasts, our dinners, our banquets, as well as all the political gatherings and University of South Carolina business, where we’ve hosted presidents and presidents-elect. In 2016, we opened up a 156–room Embassy Suites in Greenville, South Carolina and we partnered with them again on another Ruth’s Chris Steakhouse.”
In January 2017, Sizzling Steak Concepts opened UP on the Roof atop the Greenville Hilton, featuring modern American eats, craft cocktails, and scenic city views. “That venue has been wildly successful,” Berger enthuses. “It’s the place to go in Greenville to get a good view: from the skyscrapers, to the rivers, to the mountains, to the baseball stadium – you can see it all from UP on the Roof.” Two more UP on the Roof restaurants are presently in development with Hospitality America at prominent hotel locations – one in the Shenandoah Valley of Virginia.
In 2022, Hospitality America will celebrate a 30-year anniversary with two of its original developer partners, a great source of pride for Cargen and his team. He notes, “When you’re in business and somebody is trusting you with hundreds of millions of dollars in investments and assets, that speaks volumes about what kind of company we are and what kind of results we’ve been able to deliver. From a growth standpoint, we want to grow smart and be strategic where we’re growing with owners that will continue to provide the tools to be successful. Our business is predicated on service and product and so we need to continue to have those resources to be successful. In return, we’ll drive significant profits to the bottom line.”
In a nod to the bright future ahead, Berger pays homage to his mentor in the hotel business – Christopher Cargen. “Chris has mastered the art of being a professional hotelier. He has taught me that details matter, and you have to have backup for your gut feelings… he has always had science behind his decisions. The reason he has built Hospitality America so successfully is that, as a leader, he is one of the most compassionate people you’ll meet. If the managers and the assets and the employees are doing well and are recognized, that’s his reward. As a management company, your motto to your ownership group has to be to protect and increase the value of the asset every day. Looking ahead, we will continue to build the company on word of mouth and all the results of hard work; not smoke and mirrors.”
Indeed, with Cargen and Berger at the helm – the voice of experience and the eager and intelligent pupil – Hospitality America is poised to thrive and excel in the years ahead.
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AT A GLANCE
What: Third-party hotel management and asset management company
Where: Nashville, TN; Greenville, SC; Miami, FL