• With the general trend in hospitality being for an asset light strategy, why has Cycas decided to acquire two of the Staybridge Suites properties it operates – what are the main pros and cons of ownership?
“Our core business at Cycas is being a hotel management company, focusing on extended stay hotels in both new-build properties and dual branded hotels. To grow our management portfolio, we will sign management contracts, long lease contracts or, in appropriate cases we will purchase properties. However, we will only purchase if the properties fall within our core sector, being extended stay hotels. If we do buy a property usually we prefer to team up with partners although we could also buy for our own account.”
• How are you financing the acquisitions?
“We never disclose the details of financing for a separate property but, as stated above we like to team up with partners and we will utilise the entire panoply of financing options.”
• Have you got your sights set on further acquisitions?
“We are extremely active in expanding our portfolio and we have a substantial pipeline of properties on which we are working. Most sites are leases, but there is a possibility that some could be acquisitions.”
• Would you consider taking on the development risk for properties in the future rather than acquiring them from the original owner?
“Although most transactions with which we are involved are new-build properties, we are first and foremost operators, not developers. Our ambition is to grow a pan European portfolio. To do that we always team-up with local developers who have the local knowledge and connections. In these ventures our role is to provide the knowledge of the extended stay hotel product, operator requirements and the brand connection. And, of course, we will take the commercial risk of running the hotels. We expect the local developer to take the construction risks as he has all the knowledge of the regional construction practices and cost implications as well as having longstanding connections with local governments. We would never be able to build up such connections across Europe, but teaming up with local developers has been a proven success.”
• Do you think we will see more serviced apartment/extended stay operators acquiring properties or is Cycas in a unique position?
“Serviced apartments and extended stay hotels are becoming understood more widely and we are seeing increasing investor interest in the sector. We believe that this will result in more of these assets being traded at similar yields to traditional hotels. We also believe that, eventually, serviced apartments and extended stay hotels could even trade at lower yields than normal hotels, because they are less volatile in their trading. This means that there are still significant opportunities in this sector.”
• Cycas Hospitality has increased its portfolio significantly this year. How are you supporting this growth in management terms?
“In October when we announced the Starwood Capital Group deal to manage its four extended stay hotels with 640 studios and suites, Cycas Hospitality will become the second largest operator of serviced apartments and aparthotels in London. We have followed this with announcements of our deals in Newcastle and Slough. However, we have also been adding depth to the senior management team. During 2016 we have added seven partners to our company and they each bring with them leadership and technical skills that will ensure that Cycas can sustain its growth and develop further. ”
“Hidde Rijntjes, financial director; Ingrid Van Veen, regional manager; and Jelle Martens, general counsel, join Asli Kutlucan, director of hotel development; Jane Kendrick, director of hotel openings; Janet Roberts, culture coach and Wayne Androliakos, director of operations; formalising their commitment to the business. They have all been selected as accomplished leaders of Cycas. Each partner demonstrates the leadership skills that John Wagner and I believe can help us to accomplish our goals to grow the company.”
• Do you have more plans for expansion in Europe and how will you achieve this?
“We certainly do have a very proactive approach to expanding across Europe. We see ourselves as pan-European extended stay specialists. We have been active in the UK since 2008 when we spearheaded the launch of the extended stay hotel sector into Europe for IHG. But now we want to diversify our portfolio more across Europe. We will achieve our ambitious development plans using our ongoing relationships with Marriott, IHG and Hyatt as well as new partners. The first property to open is the dual branded hotel in Amsterdam, which will be operated under Moxy and Residence Inn brands.”
www.cycashospitality.com</p
