Starwood Capital Teams with Hersha Hospitality, Taking 49.9 Percent of the Hotel Management Firm

With Starwood Capital at its side, HHM plans to expand its management contracts across the U.S., in a move to propel itself toward the top of the list of national hotel management concerns.

June 7, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user MoToMo

Commercial real estate players are eager to capitalize on the market’s recovery and all it takes is money, which Philadelphia-headquartered Hersha Hospitality Management has just gained access to by joining forces with Greenwich, Conn.-based Starwood Capital Group. Just how much money the third-party hotel management company gains by selling a 49.9 percent ownership interest to the real estate-focused investment firm is being kept under wraps–but apparently it’s enough for HHM to make strategic investments in turnaround and opportunistic select- and full-service hotels.

Gobbling up hotels–specifically, select-service properties from one end of the country to the next and full-service assets in particular suburban markets–for the opportunistic and short-term hold advantages they present is just part of the partnership’s goals. With Starwood Capital at its side, HHM plans to expand its management contracts across the U.S., in a move to propel itself toward the top of the list of national hotel management concerns. Currently, HHM operates over 70 hotels in metropolitan Boston, Connecticut, New Jersey, New York, Philadelphia and Washington, D.C. Now the entire country is its oyster.

Both HHM and Starwood Capital bring desirable proficiencies to the table. Starwood Capital will provide deal flow and enterprise-building expertise that, combined with HHM’s keen operating skills, will lay the groundwork for the creation of a leading hotel management and investment entity. The new partnership, however, will not alter some of the basics; both entities will maintain their headquarters in their respective current locations.