The Picassso Boutique Serviced Residences in Salcedo Village, Makati City is one of the properties managed by HII
Hospitality Innovators Inc. (HII) is a property management services company that specializes in lodging operations—primarily hotels, condotels and serviced residences. With tourism in the country still enjoying continuous growth—tourist arrivals were up 12.7 percent in the first half of 2017 compared to the same period the previous year according to the Department of Tourism—the company is poised to ride the wave for the foreseeable future.
“There’s no question that tourism is on the rise and that it has been for several years now,” says Luis Monserrat, founder and CEO of HII. “So yes, the past years have been really good.”
Monserrat, who founded HII in 1999 after a career as an executive in the beverages sector, is quick to issue a cautious reminder, though, about the fickle nature of the business.
“When there’s perceived growth and demand, everybody jumps in and so supply goes very fast, too,” he says. “One of the ways we try to achieve sustainability in the face of that is to make sure we select properties with real potential, properties that, in terms of location, execution and quality, are good enough such that all they really need is good management. And we believe we can provide that.”
There’s only a handful of local property management companies—particularly those focused on hospitality—in the country today as many of the country’s biggest hotels and serviced residences are owned and operated by international corporations. This makes HII a leading figure in the segment.
Luis Monserrat, founder and president of HII, shifted from a career in food and beverages to hospitality in the late 1990s
Starting out with one residence hotel—Parque España in Alabang, Muntinlupa—HII now counts a portfolio of 19 properties across the country. Some of their more notable partners include The Picasso Serviced Residences in Salcedo Village, Makati; Crosswinds Resort Suites in Tagaytay City; The Exchange Regency Residence Hotel in Ortigas, Pasig City; Hue Hotels in Puerto Princesa, Palawan and Boracay; and Paseo Verde in Las Piñas City.
“We also have another 11 properties that are in different stages of discussions,” Monserrat adds. “It would be unrealistic to think that we’re going to be able to sign them all, or that they would all pan out. I don’t want to sound arrogant, but we also need to be selective at this point. We’ll see.”
As a property management company, HII’s primarily role is to manage and operate all the key functions of the hotel or lodging business. From making sure that the property has guests or residents (sales and marketing) to managing guests’ satisfaction throughout their stay (operations) to ensuring that the entire business is profitable (management and finance).
“In the end, we’re accountable to the owners, who are (looking) at the bottom line,” Monserrat explains. “And of course, we’re also responsible for ensuring that the assets that the owners have invested their money in are properly looked after and maintained.”
The company earns through management fees. “Those management fees are essentially tied to the revenues and the profits of the business. We have a small, minor component on the revenue side and bulk of our fees are really on the profit line. So I can basically look our owner-partners in the eye and I can say that we’re in a real partnership because if they’re not making money then we’re not making money.”
HII’s business model also allows for some of the unit owners in the properties they manage to earn extra income by joining a rental pool in the building and allowing the company to manage the unit on their behalf.
HII's portfolio of properties range mostly from hotels and condotels to serviced residences
Hue Hotel and Resort in Boracay opened in 2017
“Our proposition to them is that if they bought the unit for investment purposes, our business model is far superior to conventional leasing,” he says. “Normally if you buy a condominium, and you don’t really plan to live in it, you’re buying it so you can rent it out. But when you rent it out, you have to put up with the travails of dealing with brokers, dealing with tenants, maintaining the unit. There will be periods of vacancies, et cetera. You have all that to contend with. We basically take all those hassles and worries away. And, with our track record, we can basically say to the owners that we expect to be able to generate high returns (for you) compared to what you would get if you leased it out yourself. And we can do it without causing you any consternation, headaches or hassles.”
The convenience they offer to the unit owners—maintenance and care of the unit as well as guaranteeing revenues even if their unit is occupied or not—is one reason Monserrat isn’t concerned yet of the effects of the sharing economy on their business.
“Yes, there will be people who might say they want to try AirBnB first,” he says. “But I don’t think the AirBnB model is necessarily hassle-free for the owners. There’s still some degree of involvement and engagement. Some owners would like that. But some owners would prefer not to have to deal with that. I think there would still be people who appreciate and will be drawn to our model, but there will be others who would go the other way.”
In terms of growth, Monserrat says that HII is targeting three avenues. The first is to maintain their current trajectory, which is to manage and operate third party-owned hotels, condotels and serviced residences, and keep an eye out for future opportunities in this track.
Precisely because all of the properties in their current portfolio are third party-owned, HII’s next goal is to manage, market and occupy an equity position in an HII-branded property.
“This is definitely something that we have been working on for a while, for the better part of 2017, and I don’t want to jinx it, but let’s just say we’re very close to attaining that aspiration right now,” Monserrat says.
For this track, the CEO adds that they are exploring it with a dormitel concept.
Monserrat says HII plans to expand by opening a co-working space this year
Lastly, HII is soon venturing into co-working spaces, which is fast-becoming a high-growth sector with the ever-increasing number of startups and freelancing careers in the country.
“That business has similarities with respect to our core competencies but may not necessarily be purely lodging,” he says. “So we’ve already set-up a company and brought in partners for it. If everything goes according to schedule, we will probably have something by the second quarter of 2018.”
Paul John Caña is the managing editor of Entrepreneur PH