Since debuting in 2002, Horst Schulze’s West Paces Hotel Group and its “super luxury” brand called Capella have been well received, but slow to grow. Wednesday, the former president and chief operating officer of Ritz-Carlton announced a new name, capital partner and aggressive plans to add five properties in the next year and double the size of the company within two years.

Horst Schulze

Now called Capella Hotel Group, the luxury hotel management company will provide mezzanine lending, sliver equity and other investment opportunities, including outright acquisition, through the backing of minority partner and private equity firm Stoneleigh Capital.

“Because of the new economic reality, every hotel owner and developer wants some kind of financial connection with the operator,” says Schulze, the founder, chairman and CEO of the Atlanta-based company. “Each wants participation financially and there were many opportunities I couldn’t respond to before. I’ve found someone interested in making exactly those types of investments.”

Stoneleigh Capital, whose recent investors include JP Morgan Private Equity Limited, formed Stoneleigh WP Partners LLC to make its investment in Capella Hotel Group.

“Capella Hotel Group is the luxury hospitality thought leader and has established the global standard in service quality,” said Gary Engle, chairman and CEO of Stoneleigh Capital, in a release. “The company’s innovative vision and drive for the highest level of personalized service coupled with the strength of the company’s brand were the key reasons for our investment decision.”

Schulze’s company manages five Capella-branded properties, one Solis-branded property and eight independent hotels globally. Capella, he describes as “six stars,” positioned above brands like Four Seasons, Ritz-Carlton and Mandarin Oriental. Solis sits at five stars and competes with those brands. The growth will come through all three avenues, he says, and five properties are set to open by 2013.

The name change to Capella Hotel Group was a simple decision. “[The brand] has resonated with owners and guests,” Schulze says. “It’s positioned so far up, it’s a new dimension. The unheard of customer satisfaction and excitement prompted the change.”

Setai Fifth Avenue

With current properties in Dusseldorf, Germany; Cabo San Lucas and Ixtapa, Mexico; New York (the Setai Fifth Avenue); and Sentosa Island, Singapore, Schulze says the product is best served with just 100 rooms in only gateway cities. Five more are under construction or in development.

“The hotels are quite small, so we can deliver, from room size to service quality,” he explains. As examples, there’s no check in or out time, no charges for anything in the stocked minibars. “There’s a very high rate, but we don’t nickel and dime you. There are no hours of operation: You tell us when you want to eat and we’ll serve you.”

The lone Solis-branded property is in Ireland and another is slated to open in Shenzhen, China next year. Capella Hotel Group also manages independent properties like the Founders Inn & Spa in Virginia Beach, VA, Hotel 71 in Chicago and the Ayanna Resort & Spa in Bali, Indonesia.

Schulze says he’d be happy to add the Capella or Solis brand to independents, but only “if it makes financial sense. I’m here to create value for the owner, not just put a brand name on the hotel.”

The property in Bali was formerly a Ritz-Carlton, and Schulze says this has been its most successful year ever. An opportunities like that is the exact reason he sought a capital partner.

“Because of these tough economic times there are thousands of hotels underwater,” Schulze says. “We have proven we can turn around hotels dramatically, like the one in Bali, and that brings more deals to us. A number of five-star hotels have come to us, but we needed money to go after them.”

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