One yr in the past, the executives at Soul Group Planet had been attempting to construct consciousness round their small however rising firm. Now, a strategic three way partnership has offered a multimillion-dollar funding that can enable the corporate to develop its model and lodge portfolio.
Soul Group Planet, a holistic hospitality firm primarily based in San Juan Capistrano, California, owns and manages 4 properties within the U.S., three of which function below the SCP model.
Previous to the pandemic, the corporate’s principal goal for 2020 was to ascertain a progress platform, co-founder and CEO Ken Cruse mentioned. Their potential avenues had been by way of placing funding in place to take the corporate public or establishing funds by way of Cruse’s non-public fairness funding firm, Alpha Wave Buyers, devoted to SCP.
SCP then shifted gears and looked for a public firm to amass and primarily do a reverse merger into that firm to develop. It’s by way of that course of that SCP met its joint-venture investor, main officers to determine the general public firm they had been concentrating on wasn’t the appropriate match. SCP didn’t disclose the identify of the investor, who needs to stay non-public.
“We realized there was a extremely sturdy alignment of curiosity between us and our new investor,” Cruse mentioned.
The 2 sides negotiated what Cruse referred to as an settlement that gave SCP full funding for the expansion of the model and administration firm in addition to full funding for the expansion automobile for actual property. The $210 million devoted to actual property coupled with the appropriate debt may give SCP roughly $500 million to develop its portfolio.
The lodge business is a mature area with some nice firms which have completed nicely over time, Cruse mentioned, however his workforce discovered an alternative for progress within the unmet wants of acutely aware customers. These vacationers are involved about their private wellness, social good and sustainability, however there isn’t a lot illustration of those core values — particularly on the higher-priced finish of the spectrum — within the lodge business.
With these values in thoughts, SCP developed its first properties over the previous couple of years, reaching sturdy index efficiency, having sturdy stream throughs and receiving optimistic visitor opinions. Cruse mentioned it has been an amazing proof of idea.
“That resonated very strongly with our companions, and I believe it’s according to loads of the way in which these institutional funding funds want to do their enterprise,” he mentioned.
The workforce at SCP has been within the lodge business for a very long time, permitting them to see what will get completed nicely and what wants some recalibration, Cruse mentioned. Inside the U.S. lodge business, there are model firms, administration firms and possession firms, and, for probably the most half, these three disciplines are impartial of one another.
The business developed this fashion as a result of each requires a unique ability set, he mentioned.
“Since we have been within the business for a very long time, we are able to pull collectively a workforce that has nice expertise and excellent observe data,” he mentioned. “All three of these ability units are well-represented inside our group.
“Our view is that we are able to keep away from the inefficiency and, finally, the conflicts of curiosity that happen when you might have these three completely different events which might be sort of pulling in barely completely different instructions or, in some circumstances, distinctly completely different instructions.”
The umbrella group, SCP Hospitality, owns the model, the administration facet and the actual property, Cruse mentioned. That group permits the corporate to be extra environment friendly and versatile, and faster in making choices and course corrections, as a result of there aren’t a number of events pulling in numerous instructions, he mentioned.
As SCP Hospitality appears to be like to develop its portfolio, if the corporate is branding a lodge, it would at minimal be managing it as nicely, he mentioned. The plan normally is to personal the actual property as nicely to have the specified stage of oversight, however executives are open to working with homeowners who embrace SCP’s core values. Given the present state of the business, there probably are homeowners of distressed properties who could be nice companions.
“We will deliver within the capital in that scenario,” he mentioned. “We will renovate and reposition their belongings to be Soul Group Planets. In that case, very probably we’d find yourself in a situation the place we now have a third-party proprietor however we’re the model and the supervisor. We’re open to a broad vary of inventive options at this level.”
The 4 inns in SCP’s portfolio are fairly completely different from each other, Cruse mentioned. The SCP Colorado Springs is a 176-room motel in Colorado Springs, Colorado. The SCP Redmond is a 49-room boutique lodge in Redmond, Oregon. The SCP Depoe Bay is a 14-room eco-surf lodge in Depoe Bay, Oregon. The Salishan Coastal Lodge is a 204-room property in Gleneden Seaside, Oregon, below the SCP Hospitality umbrella however not at the moment a part of the model.
“Our view is all 4 of these completely different product varieties lend themselves fairly nicely to Soul Group Planet,” he mentioned.
Having this selection in property varieties offers the corporate the flexibleness to department out past having set necessities for room counts, particular areas and sorts of development, he mentioned.
“The power of the model is within the consistency of the core values themselves, and the way these core values are represented and embodied are sometimes going to be fairly completely different,” he mentioned. “It offers us loads of flexibility, and we predict it truly strengthens the model having that market-appropriate positioning from one asset to the following.”