Giri Adds Hampton Inn and Homewood Suites in Peabody to Growing Hotel Empire

Giri Bar Harbor Kebo Inc. and Giri Peabody 57 LLC have acquired two Hilton hotels - the Hampton Inn and Homewood Suites in Peabody, Massachusetts. The two hotels combined have 205 guest rooms. The properties are located right off major highways US-1 and I-95, providing convenient access for travelers. Their proximity to attractions like Salem and major employers like hospitals and corporations in the area is a selling point.

By owning both hotels side-by-side, the new owners can likely gain operational efficiencies by combining some back-of-house operations and staff. The purchase expands Giri's portfolio to 8 Hilton-branded hotels total. A partner at Giri, Sagar Malavia, expressed excitement about the prime locations along Route 1 that can provide an "exceptional guest experience" for short and longer-term guests.

My analysis: This seems like a smart acquisition for Giri. Owning multiple branded hotels in one cluster allows for economies of scale. The Boston area market remains strong for hotels, especially those catering to the medical/corporate crowd during the week and leisure travelers on weekends. Being affiliated with a major brand like Hilton is also advantageous for marketing and guest loyalty.

The property locations right off the highway seem excellent for capturing drive-by travelers. And their proximity to demand generators like hospitals and companies provides a steady base of corporate customers during the weeks. Overall, it appears to be a well-situated asset in an attractive regional market for Giri to expand its Hilton-branded portfolio.

Market Performance and Outlook

The Boston metropolitan area hotel market has experienced a strong rebound since the depths of the COVID-19 pandemic. According to data from STR, the greater Boston market saw occupancy levels recover to 71.5% in 2022, up significantly from just 39.3% in 2020. Average daily rates (ADR) have also surged, reaching $208 for the market in 2022 compared to $147 in 2020. This dramatic RevPAR (revenue per available room) growth has been driven by a combination of leisure travel rebounding, the return of corporate and group demand, and limited new supply growth.

Looking ahead, the market outlook remains positive. Major economic drivers like the area's concentration of universities, healthcare, technology, and financial services companies provide a consistent base of commercial hotel demand. The meetings/convention segment is also expected to continue recovering. On the leisure side, Boston's historic attractions and coastal New England location should keep it a popular destination for domestic and international tourists alike.

While supply growth may tick up modestly, it is expected to be disciplined and absorbed by the market's demand trajectory. Overall, with Boston's economy highly diversified across sectors, the hotel market appears poised for continued RevPAR growth over the next few years as it establishes a new post-pandemic peak.

Renovation and Repositioning Plans

As is common with many new-to-owner hotel acquisitions, Giri has plans to invest significant capital into renovating and upgrading both the Hampton Inn and Homewood Suites properties. Specific plans include:

Hampton Inn

• Full guestroom renovations including all case goods, soft goods, and bathroom updates
• Lobby and public space renovations with updated furniture and design
• Enhancements to the breakfast area and food & beverage facilities
• Addition of a outdoor patio/courtyard space for guest use
• Investment in modernizing building infrastructure and increasing energy efficiency

Homewood Suites

• Complete overhaul of guestrooms into the Homewood "suite" concept
• Reconfiguration of lobby to add more lounge/living room spaces
• Upgrades to pool area, fitness center, and guest laundry facilities
• New kitchen/dining venues for preparing/purchasing meals
• Capital for upgrading mechanical systems and improving sustainability

The goal is to reposition each property to meet Hilton's latest brand standards and amenities that will maximize guest satisfaction and revenue potential. The renovations are expected to be completed in a phased approach over 12-18 months.

Integration into Existing Portfolio

This acquisition of the Hampton Inn and Homewood Suites Boston Peabody expands Giri's existing portfolio to a total of 8 Hilton-branded hotels. Their current holdings are a mix of focused service and extended stay properties spread across the New England region, Mid-Atlantic states, and Texas.

From an operational perspective, Giri plans to apply many of the same management principles, technological systems, and corporate policies that have proven successful at their other hotels. This includes revenue management, marketing, accounting, procurement, and training platforms. By folding these two new hotels into their existing infrastructure, Giri can leverage significant economies of scale and scope.

Additionally, Giri plans to implement cross-promotional marketing strategies to drive revenue across their full portfolio. This could include offering special rates to guests booking multiple stays, generating leads from their database of past guests, and marketing packages that combine stays at city-center hotels with the suburban extended-stay option in Peabody.

There may also be opportunities to achieve cost efficiencies through centralized inventory management, accounts payable, and other back-office functions. Giri's asset management team will analyze best practices to optimize the performance of this new two-hotel cluster.

Environmental and Sustainability Initiatives

As part of their corporate responsibility goals, Giri is committed to implementing various green and sustainability initiatives across their full portfolio of hotels, including these newly acquired Boston-area properties. Specific eco-friendly programs include:

• Transitioning to high-efficiency HVAC equipment, Energy Star appliances, and LED lighting to reduce energy consumption
• Eliminating single-use plastics for amenities and replacing with sustainable alternatives
• Implementing updated linen and towel reuse programs to conserve water and resources
• Installation of high-efficiency water fixtures in guestrooms and public spaces
• Integrating smart building controls to optimize energy management
• Improved recycling and waste diversion programs
• Using environmentally-preferable cleaning chemicals and products

Beyond operational changes, Giri also plans to engage both hotel associates and guests in supporting environmental efforts. This includes training team members on sustainable practices, as well as educational messaging and opt-in programs for guests interested in participating in conservation initiatives during their stay.

From an investment standpoint, reducing energy, water, and waste translates into significant utility cost savings over time. But equally important is demonstrating a commitment to environmental stewardship that aligns with growing consumer and corporate demands for sustainable hotel practices.

Source: Hotel Management