The Hotel Man

The Hotel Man

HOSPITALITY by Dave Szymanski | Tampa Bay Editor

Lou Plasencia left brokerage Grubb & Ellis to start his own hotel advisory firm in Tampa in 1993. It now has several offices nationwide.

Lou Plasencia was five years old when his family left Cuba and came to Tampa. Fidel Castro had nationalized industries and took his father's tobacco farms.

They moved to a two-room home in Ybor City. He had one change of clothes.

Fast forward 45 years. Plasencia is founder, chairman and CEO of The Plasencia Group, a Tampa-based company that advises hotel owners on how to improve their properties. It also helps sell or buy hotels for different owners.

After starting with three employees in 1993 and one office in Tampa, the company has 11 offices and 25 employees. And after beginning with a Florida base, now only 5% to 10% of its business is from Florida. The rest is from other areas of the United States, Canada, Latin America and the Caribbean.

That's why Plasencia, 50, is on the road three to four days a week. His brother, a banker from First Union, Orlando Plasencia, chief administrative officer, sees to the day-to-day operations of the company.

The last five years have been "booming" years, as Plasencia describes it. The firm, which did $100 million in transactions its first year, did nearly $2 billion last year.

How did it do it? By buying and selling hotels, raising capital and placing debt. It has three main lines of business:

• Transactions: with institutional owners and high-net worth people. The Plasencia Group sold almost $1 billion in real estate for Incontinental Hotels. It serves as an advisor to Ameristar, Wyndham and Hilton Hotels.

• Capital Markets: It raises equity for firms that want to expand.

• Consulting services: It provides development management consulting. For example, it may help a company convert an office building into a hotel.

As part of its strategic advisory services, it took a run-down family-owned Holiday Inn valued at $20 million, renovated it and sold it for $75 million. "We do a lot of that kind of work, changing management, enhancing value of the property," Plasencia says.

Well-respected

"He is extremely well thought of in the industry," said Larry Richey, senior managing director for the Tampa office of Cushman & Wakefield, a real estate brokerage which has acquired a New York firm that does hotel brokering. "Lou's reputation is exemplary throughout the country and even internationally."

Ray Sandelli, senior managing director for CB Richard Ellis, a commercial brokerage in Tampa, serves on the University of Florida's College of Real Estate board with Plasencia. He says Plasencia has succeeded because he does the two key things a commercial real estate professional needs to do: develop good contacts and develop a successful process in a niche.

"I don't know him personally, but professionally, he carries a great deal of respect," Sandelli says. "In real estate, when you talk about Bill Eshenbaugh, you know what he does: land. Dave Conn does retail. For Lou, it's hotels. It's that kind of reputation that serves these people well."

The company has had opportunities in Europe and Asia but turned them down because it didn't think it could serve clients there adequately.

"There's the amount of travel and unless you staff up heavily, you do clients there an injustice," Plasencia said. "Spending time in Asia, China takes time, effort, concerted focus, hiring the right people, meanwhile your bread and butter is suffering."

That's why The Plasencia Group has limited itself to Canada, the United States, Latin America and the Caribbean.

Beginnings

After growing up in Ybor, Plasencia graduated from Our Lady of Perpetual Help Catholic School, then Tampa Catholic. He then earned a bachelor's degree in psychology and telecommunications from Loyola University in New Orleans, then a master's in education from Indiana University. His career goal was to become the dean of student affairs at a college.

"I loved the campus environment," Plasencia says.

St. Joseph's University in Philadelphia hired him as dean of student affairs. He later found that the pay was not great for raising a family. A good friend at Hyatt Hotels asked if he wanted to work for Hyatt, so Plasencia came over and went to work for Hyatt in sales and development in New Orleans in 1982.

He stayed with Hyatt and moved to Washington, then back to Tampa, overseeing the development of the Hyatt Regency Westshore.

Although his wife Jennifer was from southern Indiana, they did not want to leave Tampa. Westshore was booming in 1986 so Plasencia began leasing and selling office space for Grubb & Ellis.

He eventually expanded the company's hotel services group. When Grubb & Ellis decentralized in 1981, a number of clients grew restless.

Four clients, Prudential, Equitable, Travelers and Cigna suggested that Plascenia start his own firm.

"They said they wanted your loyalty and focus. I listened to them," Plasencia says.

So he started The Plasencia Group in 1993 with an office in Carrollwood. The firm outgrew that space, then moved to downtown Tampa, then to the airport Marriott. Now it's in an office across from Raymond James Stadium in Westshore.

Did Plasencia ever think the business would grow as it has?

"Not even an inkling," Plasencia says. "We're doing 60 to 70 deals a year. One transaction sometimes involves selling a bunch of properties."

Why do people sell?

About half of hotels are owned by institutional owners, such as advisors to pension funds. The advisor has money from pension funds or insurance companies. He will buy a hotel, enhance the value and sell at a profit. The profits are there for the pension funds to distribute to the person who had the pension, or his widow.

Twenty years from now, a teacher looking at a monthly pension check in Pennsylvania may not realize that a piece of that check came from a hotel sale in Massachusetts.

Institutional owners and private individuals like to see appreciation in the hotel properties. If not, owners will say that they'll buy something different, Plasencia says.

When he's not working, Plasencia and his wife are with their three boys, Nicholas, Christopher and John. During football season, they have been traveling to Boston to see their son Nick, a sophomore tight end for Harvard. The family has a bass boat near their home in Carrollwood.

Even though he travels three to four days a week, Plasencia tries to get home every night.

"It's important to sit down and have dinner together," he says.

Plasencia volunteers a lot for Jesuit High School, where his son John is a junior. He is on the boards of Jesuit's foundation, the Convention and Visitors Bureau and the College of Real Estate at the University of Florida.

Company vision

Plasencia's vision for the next year: add more services and more people, get into a couple of new business lines.

"The industry fundamentals are very strong," he says. "This financial instability related to residential mortgages has affected real estate. But it's the fourth inning of a nine-inning game."

In the Tampa Bay area, 41 hotel projects are in construction, on the drawing board or somewhere in between, according to Lodging Econometrics, a Portsmouth, N.H., lodging real estate research firm.

Announced projects include new upscale chain brands such as Starwood's W Hotels in Tampa and independents like Grand Bohemian in downtown St. Petersburg and Sandpearl on Clearwater Beach.

Clearwater developer Sandip Patel is working on what would be Tampa Bay's first five-star hotel: a Ritz-Carlton on the site of a Radisson on Rocky Point once owned by George Steinbrenner.

In the next five years, Plasencia sees The Plasencia Group acquiring another company or merging with another firm with exposure in Europe or Asia. It will add employees and leverage their experience. The average tenure of a Plasencia Group employee is 13 years.

"Our one-year goal is not to market real estate, not to place debt or raise equity," Plasencia says. "Our goal is to have very satisfied clients. They are driving the bus. To us, they are our partners."

Its competitors include New York investment banks, UBS, Jones Lang Lasalle and Cushman & Wakefield. "We are sitting here in Tampa, Florida," Plasencia says. "When we compete with someone on Park Avenue in New York, we're not brokers. We provide strategic investment advice."

So far, the advice seems to be sound: Revenue growth since 9-11 has been about 15% to 20% per year.

THE SYMBOL

If you look closely at The Plasencia Group Web site, you'll see a symbol that looks like a cluster of four pale-colored leaves, something that almost looks like a flower.

It is actually a grouping of tobacco leaves. Plasencia's family was in the tobacco business back in Cuba, where Lou Plasencia, the CEO, was born.

"It was designed as a tribute to my dad," Plasencia says.

The family was from the western province of Cuba, known as Pinar Del Rio. Plasencia's father, Sabino Plasencia, now 89, owned tobacco farms that Fidel Castro took when he nationalized businesses on the communist island.

A group of attorneys has approached Sabino about reclaiming his land in Cuba. But after all this time, Sabino and his wife Oilda Plasencia, who live in Tampa, do not want to displace the current families farming the land.

REVIEW SUMMARY

Company: The Plasencia Group

Industry: Hotel advisory services

Key: Help hotel owners and investors maximize their investments.