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Business As Usual

Aimbridge Management Team To Remain In Place Following Shift In Majority Ownership

Friday, January 11, 2019
Dennis Nessler
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Third-party management giant Aimbridge Hospitality announced earlier this week private-equity investor Advent International had signed a definitive agreement to acquire a majority ownership in the company from Lee Equity Partners and General Atlantic.

As part of the deal, which is expected to close in February, the senior management team with Aimbridge will continue to lead the company and retain a meaningful equity stake in the business. Hotel Interactive® caught up with Aimbridge Chairman/CEO Dave Johnson to discuss the deal.

HI: What, if anything, will change for Aimbridge as a result of the changed ownership structure?

DJ: It’s business as usual. The management team rolled quite a bit of equity into the new deal. In addition to that, Lee Equity is rolling some equity forward, a significant amount. We’re just excited to partner with Advent. It’s a very large platform, I believe they have almost 40 billion in assets under management in their portfolio so we’re really excited to partner with a quality group like them. I think it just sets the runway for our continued meteoric growth.

HI: How did the aforementioned deal unfold?

DJ: We launched the process during the summer of this past year; we didn’t want to run a large process. When you partner with private equity -- which we did with Lee Equity a little over five years ago-- at some point there’s going to be an exit. We just want to reiterate that the nice thing about this is our existing partners love the management team and Advent was insistent on the management team staying in place and rolling equity. That’s a great compliment and we’ve been very vocal about telling our owners and partners that management team stays 100 percent in place.

HI: What are some of the things you think attracted Advent to Aimbridge?

DJ: They love the space. They think there’s great fragmentation and a lot of white space for growth. You continue to see owners go to third-party management versus brand management and I think they see that trend, if anything, accelerating. We love the brands and they are our friends and our partners, but the reality is there’s a lot more flexibility and accountability to ownership out there as it relates to us being aligned with them.

HI: How would you describe the strategic vision of Advent International?

DJ: I think from a strategy standpoint they really looked to the management team and we’ve had obviously numerous discussions. We recently moved on Aimbridge Hospitality into Canada...I think Advent would really like to see us get an international footprint. I would say from a strategic standpoint that would probably be the change we’ve been looking for for some time, but we obviously want to have the right opportunity to move into Europe. Also we’ve got a pretty sound resort business and they see an opportunity to really invest in what we’re doing there. Lastly, it would be tech enablement. Our ability to continue to invest in technology because our scale allows us to have the capacity to invest in technology to continue to improve performance for our owners.

HI: What’s your vision for how the company can gain a presence in Europe?

DJ: What we want to do is to ideally acquire a world-class platform. We don’t necessarily care about the size and scale of it. We just want to have what we think is a best-in-class management team over there versus building it organically. We’ve had two different opportunities under LOI (letters of intent), but they’ve fallen out of LOI because we couldn’t agree on valuation and some terms. But we’re still talking; we’re still friendly. I would hope to have something in place by the end of this year.

HI: How would you describe the third-party management and overall industry landscape right now?

DJ: If you really look at the three pillars in our industry you’ve got the hotel owners, brands, and operating companies. I think we’re going to see continued consolidation in all three. If you look at LaSalle getting acquired by DiamondRock, RLJ acquired Felcor, those happened within the last 18-24 months; obviously Marriott’s acquisition of Starwood. I continue to see the big getting bigger. In our space when you’re a small management company it’s tough to have the tools that really benefit your owners. With our investments in technology, revenue management, talent, marketing, etc., we’ve just got so much more capability to bring benefits to our owners. I was small 10 years ago, it’s not that long ago that I remember what it was like to try to duke it out with the big boys and girls. You’re going to continue to see consolidation in all three because scale really matters in today’s world.

Dennis Nessler    Dennis Nessler
Hotel Interactive®, Inc.
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