Behind Shaner’s move into the Middle East

DUBAI – The world is vast, but the hotel development
universe can be surprisingly small. Such was the case when State College, Pennsylvania-based
Shaner Hotels President Plato Ghinos was approached a few years back by
Marriott International’s President for EMEA Satya Anand, who suggested he meet
Dubai-based The First Group CEO Bob Burns, who it turns out is a Penn State
graduate, where Ghinos has taught and been on the hotel school’s advisory
board.

“The Penn State connection worked at the end,” said Ghinos
of the recently announced alliance between Shaner’s Italia division and The
First Group.  As part of a strategic alliance, The First Collection at
Jumeirah Village Circle, a Tribute Portfolio Hotel, will be the first of many
similar projects the partnership will seek to expand its portfolio. This is the
first hotel to debut under The First Group’s lifestyle hospitality brand, The First
Collection. The 491-room upper-upscale, 40-story hotel also marks Marriott
Bonvoy’s Tribute Portfolio debut in the Middle East.

The partnership will enable both organizations to benefit
from the cross-pollination of proprietary operational systems and hospitality
experience which will accelerate the expansion of First’s portfolio of managed
hotels and F&B assets. Shaner will focus on specific operational aspects of
the business, including branding, revenue management, F&B and more, according
to Ghinos. The operating entity will be based out of Dubai.

The new alliance will also promote hotel management
agreements (HMAs) throughout the Middle East, North Africa, Greece and
Cyprus. Hotels will operate under the First Collection, Tribute Portfolio
and the Marriott international family of brands.

The First Group has developed 19 hospitality projects with
over 55 F&B outlets. Ghinos told Hotel Investment Today that Shaner will come
in with its expertise to help First improve its operations and get them into
the franchise and branding part of the business. “They converted one of their
properties and four more are going to convert to The First Collection by Tribute.
The plan is to take that model throughout the Gulf states and the region.”

Ghinos said it reminds him of what they did in Italy 17
years ago. “Branding and franchising is a brand new concept for that part of
the world,” he said. “We want to bring that value proposition to existing hotel
and resort owners in these parts of the world…We’re giving an option to
existing owners or developers to take the franchise road where we become the
operator of their assets – doing everything from A to Z.”

How big the HMA opportunity is depends on the locations,
Ghinos said. “There’s a lot of new development going on in that part of the
world. So, the pipeline is pretty robust. It includes new projects or existing
independent projects. There’s plenty of existing supply and new supply coming
in.”

He added that deal terms will take on different forms,
including opportunities to take equity stakes with developers. “Our
expectations are pretty high for the first year, and especially with the first
one that converted, where we expect the results to be pretty impressive,”
Ghinos said.

Shaner in Italy, U.S.

On its own, Ghinos said Shaner Italia is performing much
stronger coming out of COVID and is getting ready to sign a fourth deal in
Tuscany (a residence that will be branded under Marriott’s Homes & Villas
brand) in partnership with a local family. “It’s much harder to do deals in
Italy than in the rest of the world… So, we’re going to grow at a slower pace
there due to the structure of the market,” he added.

It’s just good real estate investments and then operations comes in and it’s all about the yield. It’s a long-term play.

Plato Ghinos

In the U.S., Shaner is expanding its portfolio again only in
great locations, building a few properties a yearwith existing development
partners as part of its long-standing strategy. It has also sold a few assets
to recycle capital.

They are opening a Tribute-branded hotel at the University
of Cincinnati, as well as a TownPlace Suites in Hershey, Pennsylvania. “These
projects have taken years to get done. But it’s local relationships, both with
developers and lenders. And it’s back to basics – location, location. If the
deal is good, you can make it happen.”

Shaner has also acquired a few properties, including
Homewood Suites in Daytona, Florida, and Columbus, Ohio. “We’ll purchase
properties that geographically and marketwise make sense,” Ghinos added.

It’s simply about waiting for the right deal at the right
time, Ghinos continued. “Being private, we are lucky enough not to have the
pressure to grow earnings. It’s just good real estate investments and then operations
comes in and it’s all about the yield. It’s a long-term play.”

Bottom line, Ghinos said, Shaner simply looks for stable,
quality growth with the right partners. And sometimes it takes a great
introduction that connect State College with Dubai.