StepStone Hospitality Formed To Provide Third-Party Management To Upscale Independent Boutique And Branded Hotels

Providence, RI - An elite group of senior hotel and restaurant officials with more than 90 combined years of operating and asset management experience today announced the formation of a new third-party management company to operate upscale boutique and branded hotels and resorts. Called StepStone Hospitality, the company is a sister organization to Hotel Asset Value Enhancement, Inc. (hotelAVE), one of the nation's largest hotel real estate advisory firms specializing in hospitality asset management and due diligence.

StepStone will focus on hotels of up to 400 rooms, with an emphasis on urban and premium suburban boutique and branded properties located in the eastern half of the United States. StepStone currently operates The Hotel Providence, a luxury, Four Diamond, boutique hotel in the heart of Rhode Island's state capital and has had management oversight of luxury to three-star properties in Boston and New York. The company distinguishes itself from other third-party management companies with a strong emphasis on strategy and asset management and unparalleled, in-depth restaurant expertise.

The company's three principals are:

• Thomas Russo, CEO and president, a 45-year hospitality veteran with extensive experience in hotel, resort and restaurant operations, ncluding boutique hotels, major hotel chains and leading restaurants. He has developed and operated numerous award-winning restaurant concepts and is widely regarded as one of the industry's most creative and strongest operators. Russo is a member of the board of directors of the National Restaurant Association and Vice-Chairman of the Leadership Round Table. His career includes leadership of both private and publicly held companies. He is a graduate of Fordham University and holds a Doctor of Business Administration in Foodservice Management Honoris Causa from Johnson and Wales University.
• James McGrath, chief operating officer and partner, with a 25-plus year career as an hotelier overseeing the operations of more than 250 hotels, both branded and independent. He most recently headed up hotel operations for Lodgian, Inc.'s 40-property portfolio. Previously, he held executive operating positions with Interstate Hotels, Meyer Jabara, Oceans Resorts and Bristol Hotels. He also has been responsible for maximizing returns on more than $1 billion in hotel investment projects. He is a graduate of the School of Hotel Administration at Cornell University.
• Michelle Russo, partner, brings a strong background in asset management and strategy with experience in hotels valued at more than $2 billion. She is president of hotelAVE and previously managed a $500 million hotel portfolio for John Hancock Mutual Life Insurance. Russo is a former hospitality and real estate financial analyst at Deutsche Bank. She is a past two-term president of the Hospitality Asset Managers Association. She is a graduate of the School of Hotel Administration at Cornell University.

"We created StepStone to respond to specific requests from a number of institutional and private investors who wanted strong, hands-on operations by senior leadership, world-class strategic asset management and food and beverage expertise to generate the highest possible hotel investment returns in all phases of the economy," said Thomas Russo. "The missing ingredient in most third-party management is a strategic mind-set. In addition to on-site management, which focuses solely on day-to-day operations, every StepStone-managed property has a highly experienced regional support team that focuses on strategy. That team oversees only a limited number of hotels, and each team has an asset manager who is a true owner's representative. That person is responsible for benchmarking and constantly seeking new ways to further enhance the operation and returns." The company has the ability to co-invest with owners, as well as bring multiple tranches of equity to projects.

Combined, the senior management team has been involved in the operations of more than 2,000 hotels and restaurants in the U.S. and Canada. Hotels under their leadership have won numerous awards for operating excellence under such premium upscale brands as Marriott, Hilton, Sheraton, Radisson, Doubletree, Crowne Plaza, Embassy Suites and Wyndham, as well as numerous highly regarded, independent boutique hotels and resorts.

StepStone is one of only a handful of management companies with in-depth expertise in the successful operations of restaurants, including concepting, menu design, operating systems and chef selection. Restaurants operated by the principals, both in-hotel and free-standing, have won numerous individual unit and chain-level awards for excellence. The company's Aspire Restaurant at The Hotel Providence currently reigns as Best Bar Restaurant in Rhode Island. The company's operating culture treats restaurants as discrete profit centers rather than a hotel amenity.

"Restaurants, historically, are treated as a loss-leader by most hoteliers," Tom Russo said. "We take the opposite view and believe a hotel restaurant should stand on its own as a meaningful profit center. Most hotel operators don't concentrate on restaurant basics, like creative marketing or closely monitoring the food costs for each meal period. Margins are obviously not as high in hotel restaurants as they are in the rooms division, but with quality management, they can earn a meaningful return on investment. We provide that management."

As a full-service hotel management company, StepStone will offer a complete range of services such as brand relations, technology, legal, risk management, purchasing, accounting, sales and marketing, revenue management, human resources and capital expenditures. "This is a pivotal time for hotel owners," McGrath said. "This year will be the toughest in decades, with forecasters projecting a double digit decline in revenue. During uncertain times, hotel owners and investors seek seasoned operators to oversee their assets, managers who have the right combination of strategy and tactics to generate revenue while controlling costs and increasing market share. Our in-depth operational expertise with a strong emphasis on strategic asset management gives us a meaningful competitive advantage."

SOURCE: StepStone Hospitality