High-tech Hotelier

High-tech Hotelier

HOSPITALITY by Dave Szymanski | Tampa Bay Editor

Tampa-based eSuites Hotels plans high-tech amenities and upscale touches for a new chain of hotels

for executive business travelers.

Gulf Coast executive Jerry Ellenburg got the idea for eSuites Hotels from years of weary business travel. There were rooms with slow Internet hookups. There were clunky and crowded airport shuttle vans. Beverages consisted of soda machines.

That will change in about a year when the first four eSuites Hotels open in Tampa; Jacksonville; Raleigh, N.C.; and Phoenix. The Tampa groundbreaking, next to the Hilton on Lois Avenue near Tampa International, is scheduled for next month.

The hotels will feature a number of high-tech touches, including in-room PCs, T1 line Internet speed, free copy service, surround-sound speakers, high-definition televisions, iPod docking stations, luxury SUV airport pickup, imported wines and micro-brewed beers.

And it all started with Ellenburg, 58, scribbling business idea notes on cocktail napkins in airports, thinking about his needs, but really the needs of what he calls the Generation X and Generation Y business travelers, someone who wants to be online in their room and wants to print out copies and have the hotel run them up to their room.

"Someone staying at the Ritz-Carlton will want to stay with us," he says. "This is a full-service hotel. And it will be much more functional."

Ellenburg is not a hotelier. He is an accountant and mobile home park owner who moved to Florida from San Francisco to manage that business. He liked the winter weather, water sports and the lack of a state income tax.

Since then, he has raised his children, sold the ski boat and raised about $162 million in private investment and financing to establish the corporate office for eSuites and begin its four initial hotels. He founded company in 1999.

And he has hired a team of hotel industry veterans to help him manage the company. Those include:

• Sam Winterbottom, president and CEO. Winterbottom, a veteran hotelier, was executive vice president for development at Carlson Hotels and was president of ITT Sheraton Franchise;

• Bryan Langton, vice chairman. Langton was chairman, president and CEO of Holiday Inns Inc.;

• Ian Rogers, CFO. Rogers was CFO of Taulk World Discovery, a Norwalk, Conn.-based luxury tour operator.

Quality control

To control quality, eSuites will not sell franchises domestically. It may do so if it expands overseas.

"I can't have a guy who owns three Hamptons and a couple of Courtyards also owning and managing an eSuites and expect him to duplicate our quality," Ellenburg says. "We want to maintain a quality standard. We want to be a self-contained brand."

Despite the number of competitors, including Eaton Hotels in Hong Kong with a high tech niche, this is a good time to be building a hotel because of the available investment capital.

"The hotel industry is on fire," said John Stone, principal and director with real estate brokerage Colliers Arnold in Clearwater. Certain segments will stand out, because it's their turn."

In Florida, a number of condominium sites, especially many in Miami, have shifted to hotel projects. Originally, condo developers outbid hotel builders for land.

Now hotel developers are getting another chance to do projects. And banks and investors are ready with cash, Stone says.

"The fact is, hotels are a favorite choice today for investment," Stone says. "Every kind of investment has their time. Others have cooled. When 9/11 happened, hotel stock fell like a rock. It was not a good time to be hotelier. But then we all figured out we can live with it."

Eventually, eSuites would like to expand domestically with about 300 locations, Ellenburg says.

Similar features

"Many hotel people now refer to themselves as e-friendly," Stone says.

He traveled earlier this year to Berlin, Dublin and London and enjoyed state-of-the-art tech accommodations.

"Every hotel tries to be something different than the guy down the street," Stone said. "Just like every apartment complex tries to do that, 95 percent are the same. For most hotels, the only difference is how much do you pay or how many pillows do you get."

Ellenburg disagrees. That's why he created eSuites. He didn't jump in, instead spending years researching it.

"My friends and business associates told me that the hotel offerings were far short of what they could be," he says. "This has been well thought-out."

Stone notes that the amenities in eSuites are attractive, but he questions if guests will notice the difference.

"The executive flies in and out and all hotels become alike," he says. "You close your eyes. There's no difference between a Hilton and a Sheraton. Some have the gone extra step to be a little more elaborate. You don't see hot tubs in most hotel rooms.

"This is just another twist," he adds.

Realistic use

eSuites offer of PCs in rooms is attractive, but many business travelers already have laptops with Internet cards or use wifi connections, Stone notes.

"For eight out of nine people, it's all in the laptop," he says.

Hotel fitness centers are also nice, but many busy executives don't use them.

"Half the time, by the time you're eating and drinking, not going to work out," Stone says.

Because many business hotels are similar, the differences get down to price and convenience.

And that is where eSuites will also benefit because it will be in major business travel markets, such as Seattle, San Francisco, Dallas and Atlanta, and not secondary cities.

"You will not see us in Plant City," Ellenburg says. "It is very much urban, highly driven by business travel. But I think we'll also do well in weekend non-business travel."

And it will offer more amenities for the same rates as other full-service hotels, Ellenburg says.

"What's the difference between Sheraton and Hyatt?" Stone asks. "At the end of the day, it does get down to price. The business traveler will go a certain hotel because it's closer to the office and airport. Price and convenience. They go hand in hand."

Travel habits

Stone admits that business travelers like the amenities that eSuites is offering and that it's Tampa location makes sense.

"We want cocktails, we're tired, we loved to get picked up from the airport," he says. "They're going to be in the Westshore business district. They've got the airport right there."

Regular business travelers who visit a city repeatedly tend to gravitate toward one hotel or a new one. Newer means cleaner. As older properties slip into the shadows, they'll start to compete more based on price. It's a very competitive business and rates can change daily.

Despite the predictions on the impact of teleconferencing, business travel continues.

"It's like the prediction of computer and less paper use," Stone says. "Or email increasing our ability to communicate. You still need to pick up the phone and call a guy. You still need to see people in person."

For example, Stone is off to Boston for a business-related cocktail party on an upcoming weekend and flying back to Tampa that same weekend.

"It's meeting people, pressing the flesh," he says. "No matter how good the electronics are, you need to see them flinch. You need to see body language. Where he sits for dinner, tells you a lot about what he says, who's in control."

"We have conference calls every day, even in the same building," Stone adds. "But especially when you're in negotiations, you want to see the whites of their eyes."

Tampa Bay land broker Bill Eshenbaugh likes the eSuites concept, but wonders about the impact of the economy on business travel. Some of his customers are cutting back on travel and other discretionary spending, like football tickets.

"I'm working four times as hard to get deals done these days, because of the capital markets," he says.

Too good to be true?

Eshenbaugh likes the idea for eSuites. He even likes the price even more: $140 to $160 a night.

"It is a great value," Eshenbaugh says. "You pay that rate now at other places and they don't offer all of these things. It almost seems hard to believe."

Stone agrees. "I don't know if they can do at $150 a night," he says. "How can you give twice the amount of square footage and not have it cost you more? The competition doesn't do it because they cannot afford to."

For example, most hotels do not want to run airport shuttles because of the cost and liability. "Most don't want to," Stone says. "It is horribly expensive to run those, plus there's liability. You enter the transportation business."

All of the special features eSuites offer carry a cost, Ellenburg says.

"We answer that with very efficient building," Ellenburg says. "There is value-engineered construction."

The eSuites rooms are 468 square feet. For 224 rooms, that equals 151,000 square feet. There also is 70% guest room vs. common area square footage ratios, which is much higher than most hotels. Most hotels spend a lot of money on banquet rooms. eSuites doesn't. That helps eSuites control costs and maximize revenues.

Each hotel costs about $20 million to build. They should bring in $10 million to $12 million in revenue annually.

Ellenburg, a CPA, also notes that he and his management team crafted the business plan and honed it for more than six years. It has owned the Tampa property for about that long. And if money talks, then the investment community is shouting by endorsing the business plan with more than $160 million in financing and investment.

"They believe in the concept," he says.

Stone said that's significant, but investors abound.

"There are no shortage of buyers," Stone says. "There is a shortage of things for them to buy. All the banks have a lot of money. It's sitting in bank accounts and money market accounts. Aside from hotels, there are no good options. For most investment brokers, if you can't make a cash offer, you're not in the game.

"Most institutions are extremely well funded," Stone adds. "There are millions of dollars. The hotel industry is a good one to get in at the ground level. Even if it's a similar concept, at least investors have a place to put their money. Getting financing is not hard either."

eSuites has proved that.

Special touches

Here are some examples of unique features eSuites Hotels will include:

• Oversized guest suites, including some with spas and athletic equipment in select rooms

• Tech-savvy meeting rooms in the lobby and on each floor

• A tech concierge to help guests with the latest technology available on free high-speed wireless and wired connectivity throughout the hotel

• Built-in water purification system in each suite

• Lincoln Towncars and Navigators for free airport pick-up and delivery and at the disposal of guests for local transportation

Source: eSuites Hotels Inc.

REVIEW SUMMARY

Company: eSuites Hotels Inc., Tampa

Industry: Hospitality/hotels

Key: Separate from the pack to get the upscale, tech-savvy business travelers.