Home2 Suites Debuts Brand in North Carolina

A communal table in Home2’s Oasis encourages guest interaction.

It takes a special kind of hotel company to develop a new brand’s first property, like the Home2 Suites by Hilton that opened yesterday in Fayetteville, NC. Alabama-based LBA Properties, a 35-year-old, vertically integrated developer and operator with 60-plus properties in eight states in the Southeast, developed the first Home2 on behalf of Apple REIT Cos.

Home2 Suites by Hilton are four-story buildings on about two acres of land with 108 suites.

“Whether it’s an existing brand’s prototype or the first property in a new brand, there are always challenges associated with this kind of project,” says Barry Kraselsky, president of LBA. “But we have a team with the experience to make them happen. We develop three or four hotels a year, and we have a general contractor that’s done 45 or 46 projects with us.”

And LBA is stocked with in-house expertise to handle project management, purchasing, pre-opening services and other functions. Flexibility, says Kraselsky, is a function of the company’s broad range of expertise. Project change orders, typically the bane of most real estate projects, are handled swiftly and efficiently because of the firm’s internal capabilities and its relationship with the contractor.

LBA broke ground on the hotel 14 months ago, which Kraselsky admits is a longer-than-normal build cycle for a hotel of its size (118 rooms). “We had some last-minute challenges with the project, which we solved at the time instead of addressing them after the fact,” he says. “We want the project to be complete at opening. We believe when you open a hotel you have the last chance to make it as good as it will ever be.”

The guest units are built both for comfort and sustainability.

LBA acted as a developer, owner and operator until about 2006, when management saw the lodging cycle beginning to shift. It sold some of its assets and struck a relationship with Apple in which the REIT buys LBA’s pipeline of properties as they open. The shift has enabled the company to continue developing during the recent downturn. It uses corporate equity and a line of credit to fund construction of new properties.

“With Apple’s take-out position and our lines of credit, we really don’t need to worry about financing,” says Kraselsky. “And in fact, there’s no way we would be developing today without that relationship.”

Heart of the guest unit is the working wall, which stretches the length of the suite and includes the kitchen components, a 42-inch flat-screen TV, workspace and nooks and crannies for storage.

LBA has achieved success with other extended-stay properties and with other Hilton brands. But Kraselsky particularly likes the Home2 concept and design. “The public space [the Oasis] is very guest-friendly and creates a welcoming feeling,” he says. “I like the suites because they offer a number of functional areas: for sitting, eating and relaxing. The room gives the extended-stay guest the feeling of both a home and an office.”

LBA has four other properties in various brand systems under construction and three more “in some state of due diligence.” Kraselsky says due to a number of reasons—balky landowners, tougher licensing requirements and more—it’s tougher than ever to develop new hotels. As he says, “It seems like every project has some unusual conditions associated with it that we must work through to get the job done.”

Just about two years ago, Hilton announced Home2 as its entry into the midscale extended-stay segment of the business. Six other properties are under construction with openings expected soon in Baltimore, San Antonio and near Salt Lake City. About 30 development deals have been signed and another 70 are in the works. The brand expects to have 100 properties open by the end of 2014.

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