In the fall, Atlanta-based Davidson Hospitality Group promoted Steve Contos to a newly created role of executive vice president, managing director – luxury & international. The appointment was part of the company’s plan to strengthen its presence in the luxury segment and advance growth in international markets.
Another major part of that plan is the launch of a new vertical—the company’s fourth—that will focus exclusively on luxury hotels. The launch comes almost exactly 10 years after the company launched Pivot, its lifestyle division, and five years after the launch of its Resorts vertical.
“Luxury demand continues to be strong and there’s an opportunity for a third-party management company to capture this space,” Contos said. The new vertical, he said, is a continuation of the company’s strategy to “provide expertise in specific hotel segments” that focus on the most “complicated and robust assets” compared to having a broader scope, he explained. “Our platform is designed to provide support in maximizing individual hotel performance with significant regional and corporate support that leads to best-in-class results.”
Davidson already has experience in the luxury segment, particularly in its Pivot and Resorts verticals, Chief Investment Officer Jason Rabidoux noted, adding that the team considers both where it makes sense for them to be, and where a new vertical might fit in their overall infrastructure. “We have the talent on the team that's done it already, so we've got a great foundation to be able to execute against it.”
Hotels in the vertical, Contos said, will be “clearly part of the luxury space,” but could include branded, soft-branded or independent properties. At the same time, current Davidson assets may move from one vertical to the new one. “As we define our minimum standards and luxury attributes, we’ll go through an evaluation process to see if any existing hotels meet the standards where they can be clearly in the luxury space,” Contos said, noting that those properties “may need to modify their staff-to-room ratios or product to meet our criteria. If they do, we will consider inclusion.”
Pivots
Davidson has pivoted several times in the more than 50 years since it was founded. The company started out as an owner-operator, managing only the hotels it developed, CEO & President Thom Geshay said. But as it sold assets to other companies, the new owners often asked Davidson to stay on and manage the property. “Twenty years go by, and you look at your portfolio and realize … you don't have any ownership interest in half the hotels in your portfolio,” he said. “It's almost flipped on us. Now the company doesn't have equity in any of the hotels that we manage.” The team, he added, aims to “create value for the owner—and management is a big part of that.”
While Davidson transitioned from one role to another, the leaders determined that they were best suited for “complicated assets, the full-service upper-upscale to near luxury assets,” Geshay said. “That's really where we rebranded the company, if you will, in creating our operating verticals, so we could dedicate experts in that space—people that had a unique skill and a unique gift to drive that type of asset.”
As the company expanded its reach and added verticals to support different businesses, the company added resources that could be shared among them, such as sales, the accounting department and Davidson Restaurant Group, a dedicated vertical that supports the other three. “We want great restaurants at Hiltons, Marriott, Hyatts and our boutique hotels and our independent hotels, so they're agnostic to what division [the hotel is] in,” Geshay said of the Restaurant Group. Rabidoux said that having a dedicated division focused exclusively on food and beverage within hotels helps to put “a spotlight” on a property. The company has expanded the vertical over the years to include procurement, design and concepting as well as working with executive chefs to help them focus on the “day in, day out” execution at the property level.
Team members from each vertical also shared best practices from each that could be applied to others. “There will always be distinct differences,” COO Jason Reader said. “That's why the verticals exist.” But the ability to let verticals be “symbiotic” with one another gives the company an advantage, he added. As an example, he recalled how Davidson’s check-ins with owners were different from vertical to vertical, with some connecting weekly and others monthly. When one vertical launched a weekly email for owners, it proved helpful. “We're adopting that through all of them, because why not?” Reader said. “If it makes sense in that vertical, it'll make sense in all of them.” Sharing best practices, he said, “just makes us that much more effective.”
Beyond pivoting from owning to operating, the company also has changed hands. In late 2024, Nautic Partners acquired Davidson from an affiliate of KSL Capital Partners—a move that CFO Harris White called a “new chapter in a wonderful book.”
“We've had, really, five different generations of ownership,” Geshay said, adding that the Davidson team worked with KSL to select the new owners. “We wanted to find a financial buyer that believed in the mission that we had, that believed in the strategy.” Maintaining the company’s trajectory was a priority, he added. “We didn't have ideas to come in and completely change the strategy we’re doing. … Not every buyer is made for an investment like that. Some people want to buy you, combine you with two or three other groups, cut large groups of people out of the business and/or change the structure.”
Adjusting and Adapting
Over the course of more than 50 years, Davidson has adjusted to a wide range of shifts in the hospitality industry, and Geshay said the team is ready to adapt to disruptions. “When there is a shift in the economy to the downside … we go to our contingency plans as quickly as possible,” he said. The team works together to make sure they are monitoring and managing expenses—but also protecting both the guest and team member experiences. “Because we've got these dedicated teams, we can be a little more heavy-handed to ensure we do it quickly,” he said.
When revenue per available room is relatively flat, hoteliers and operators need to look at every aspect of operations to see where they can find more value, Rabidoux added. White noted the need to remain focused on factors that can be controlled rather than distracted by those that can’t. “As an organization, the finance team is playing a big, big role in making sure that we are as tight with expenses as we possibly can [be] without negatively impacting the guest experience.” Reader said the team has been looking for opportunities to grow revenue at the property level. “If you go into a hotel and there's an empty space or underutilized space, what is something that we could do that would create more revenue for the space but also enhance the guest experience?” he said.
Finding new ways to improve revenue can be risky, but risk is a core value at Davidson, Geshay said, noting that the company’s vertical model allows them to adjust and try new things quickly. White agreed. “If we don't innovate, we risk falling behind,” he said. “There are risks in innovating, but the costs of not innovating at all are much greater.” That said, White emphasized the need to prioritize. “You have to really step back and think about what opportunities can impact the organization the most, and really try to prioritize those,” he said. “If you try to do too many things, you're probably not going to get anything done.”
“When we’re making decisions today, we have to think about it from a scale standpoint,” Reader said. “Are these decisions affecting not just our business level today, but will [they] affect what it looks like if we add 10 or 15 or 20 hotels?” Ultimately, he added, the best way to grow is to outperform with the existing hotels in a portfolio. “The single greatest thing that operations can do to influence growth is perform.”
“Our top priority always needs to be creating value in everything we do,” Geshay said. “The only way we can grow is to continue to deliver great results for owners. If we don't, they won't hire us again, and we won't have a track record to go sell and get new deals. So all we can sell is performance. We don't control our growth. We do control performance. If we perform well, we will grow.”
This article was originally published in the January edition of Hotel Management magazine. Subscribe here.