7/8/2015 | By Sarah Borchersen-Keto
SoTHERLY owns a portfolio of full-service hotels primarily located in the high-growth markets of the Southern United States.
Group travel has been a catalyst for growth at SoTHERLY so far this year. Sims discussed factors behind those gains.
“The overall U.S. economy is improving and we think that’s certainly helping,” Sims said. At the same time, Sims noted that SoTHERLY has been able to improve the quality of its group bookings by being more selective.
“Because we have high occupancy rates right now we can kind of pick and choose which groups we want to take. As a result, the average daily rate (ADR) is really moving up quite nicely for us,” he observed.
Sims also discussed initiatives to maximize organic growth from SoTHERLY’s existing portfolio.
The REIT plans to renovate about one third of its portfolio in the next 12 months and much of that work is already in progress, Sims said. In Jacksonville, Fla., for example, SoTHERLY is converting a Crowne Plaza property to the DoubleTree brand, which increases the potential for higher rates, Sims noted.
In the suburbs of Washington, D.C., SoTHERLY is converting a Holiday Inn to a DoubleTree. In Atlanta, SoTHERLY is undertaking a total room renovation at The Georgian Terrace hotel, “which when completed will allow us to price more competitively there,” Sims said. Meanwhile, SoTHERLY’s Crowne Plaza franchise in Houston expires next spring, allowing the property to be converted into an independent hotel.
Turning to acquisitions, Sims described the current market environment as “pretty heated.”
“We’re going to remain disciplined to our underwriting standards. On balance we’re going to be acquirers but it’s going to be in a disciplined way,” Sims said.