Larkspur Looks to Grow
Karl Hoagland isn’t your typical hotel executive. He didn’t start as a bellman or working behind a front desk. He fell in love with the industry while working as an investment banker, helping raise millions for his hotel company clients. But he found himself more interested in their properties than his job, so after turning 30, he quit and started his own company.
Larkspur Hotels & Restaurants isn’t your typical hotel company. What would you expect from the investment banker-turned-hotelier who drives a car fueled by vegetable oil and lives in a home powered by the sun, but doesn’t believe in the USGBC’s Leadership in Energy and Environmental Design (LEED) rating system? Hoagland now has 23 boutique hotels along the West Coast, most located in the San Francisco Bay area, the same place where his role model Bill Kimpton started.
After leaving Montgomery Securities, Hoagland founded Larkspur Hospitality Development & Management in 1996 and built 11 Larkspur Landing hotels during the late ’90s in California, Oregon and Washington. They were all-suite extended-stay boutique properties, high on technology, comfort and what he calls “genuine hospitality.” After surviving the bursting of the dot.com bubble, Hoagland shifted gears and eventually sold the real estate to the 11 properties to Starwood Capital, but his company still manages them and provides the franchise name.
The new strategy became one of acquisition and conversion. Hoagland bought underperforming hotels in urban locations and turned them into more traditional four-star boutique properties. There are now eight in the premium Larkspur Collection.
Along the way, Hoagland found another opportunity: the three-star boutique hotel. Larkspur Hotels, another new brand, debuted in 2007 with the Larkspur Hotel Union Square in San Francisco and was followed this year in California by the additions of the Larkspur Hotel Mill Valley and the Truckee Tahoe Lodge, which kept its Best Western affiliation.
His goal is to have more than 50 properties on the West Coast within five years, and expand to markets like Phoenix. Denver and ultimately the East Coast. Hoagland is again pondering another new development push and possibly a new brand. I recently chatted with the Brown University graduate and one-time Goldman Sachs employee on a variety of topics, from Larkspur to sustainability to the economic collapse.
Where did you start in 1996?
The company (based in Larkspur, CA) was kind of inspired by Bill Kimpton and the boutique concept and trend he was creating. The opportunity we saw was doing unique, customer-driven and more guest-driven hotels in suburban properties. The Larkspur Landing concept was for high-tech suburbs, as boutique themed, Craftsmen, upscale and limited-service extended-stay hotels. It was an odd hybrid, but at that point there were only five extended-stay brands.
Then you got away from new construction?
Beginning in 2003, we kind of changed our strategy and started acquiring hotels, really more traditional boutique hotels. We created a sub brand (Larkspur Collection) to fit those assets. In total we bought 11 hotels from 2003-2007, and we sold 11 (the Landing properties) in 2007. We knew it was a frothy environment, a great time to be a seller in retrospect. But we also bought a few in 2006-07, too.
How did the Larkspur Hotels brand come about?
It fits into the three-star bucket because some of the real estate we bought was Best Western or Holiday Inn Express quality and could never be a four-star hotel, but it was still attractive and had management upside and could be positioned as a boutique. A lot of these are like 20-year-old hotels, kind of tired, maybe they lost or never had an edge, but they were often in good locations. Buying and repositioning these has great upside.
Mill Valley, CA is a good example?
It’s an affluent area, real barriers to enter for new hotel supply. It was a Holiday Inn Express in a great commercial location, so we bought it and when the franchise agreement expired we put $3 million into a renovation and repositioned it as a Larkspur Hotel, really embracing the setting and local community.
Why did you keep the Best Western affiliation at the Truckee Tahoe Lodge?
It’s the best of both worlds. Best Western is more of an affiliation than a brand, it’s an annual agreement, not a huge commitment and not a cookie-cutter chain approach. We get that affiliation and the reservation exposure from the Best Western system, but with the flexibility of a hotel that can be unique and have its own identity as a three-star boutique.
So is it almost time for another new brand?
Yes, I think that’s possible. It could be a new build, maybe a hybrid between a Landing and a Larkspur Hotel. We’re going to build new and start with a blank sheet of paper, we need to maximize our potential as independents with unique product attributes.
Will you continue to move forward with the other three brands?
We’re in a position to do it all, so we could do any. In terms of a new program or initiative on new builds, it’s not yet been hatched. It’s a gleam-in-the-eye kind of thing.
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