SVN Hotels CEO Sanjay Mundra has been involved in the hospitality business for more than 30 years. As a former owner, developer, and operator, he has made a natural transition to broker.
“The idea came about after dissecting the marketplace,” he says. “There’s anywhere between $30 to $40 billion per year for hotel values, but I could not find more than a handful of companies that are doing the transactions.”
Mundra stopped to reflect on his own business dealings, asking himself who he’d bought his own properties from. “It was two or three firms,” he says, “because there really wasn’t anyone else. It’s a niche business.”
Sanjay Mundra, CEO, SVN Hotels
In fact, the $40 billion annual hotel brokerage market is controlled by fewer than ten large players, including CBRE Hotels, JLL Hotels, HWE, Hotel AG, HREC, and Hunter Hotel Advisors. As consolidation was taking place in the U.S., there was a void that could be filled by a mid-market firm that could play on the national level.
“I needed a platform,” he says, “and that platform was SVN."
SVN is Sperry Van Ness International Corporation, a national broker network in Boston. Because they weren’t very active in the hotel space at the time, Mundra had the idea to create SVN Hotels. Teaming up with one of the Triangle’s best-known commercial real estate businesses, Howard Perry and Walston Commercial and Hotel Group (HPW), they created a specialty company that brokers hotel deals between buyers and sellers nationwide. “I told SVN to create a new brand and give the rights to HPW. That’s what took us a year to convince them of, but if your annual revenue is only three percent from hospitality, you have nothing to lose.”
SVN Hotels is based in Raleigh, North Carolina, and steered by Mundra and fellow real estate veteran, Don Walston, as CEO and chairman, respectively. Mundra is also CEO of HPW Commercial and Hotel Group. Walston is founder and chairman of Coldwell Banker Howard Perry and Walston, the Triangle’s largest residential real estate agency.
This partnership also shows Mundra’s propensity to see the bigger picture. SVN International has 190 offices across the U.S. “If I have licensing in the entire country,” he says, “and we can get 2.5 percent of the market space, that’s $800 million to $1 billion. Our goals are not high, two to three percent of the marketplace is a very fair and achievable goal.”
I expect a good two years for the hotel business. We may be in a peak, but the peak continues.
They transacted 42 hotels in past 12 months, in 18 states. He is quick to credit his partnership with HPW for the success. “Having a local company for over 40 years, Don being my partner is tremendous in helping promote the brand.”
Being based in North Carolina means there is very little competition close to home. And Mundra has a lot of faith in the local market. “Especially with the Triangle and of course Charlotte, which is the financial capital of the South, those two markets never slowed down. There’s been steady and consistent growth—Wake County is one of the fastest growing counties in the country. We’re only two and a half hours from the coast, and two and a half hours from the mountains. It’s a good place to migrate to, with a good business environment and a stable workforce. Markets always adjust up and down a little bit, but I am bullish for North Carolina.”
He’s also optimistic about the rest of the country. “Having attended a number of conferences last year,” he says, “the sentiment is still very positive.” He’s seeing quite a bit of cautious optimism, but, he predicts, “The hotel business will continue to remain strong this year and into next year. A low-interest rate environment has helped fuel this for us and also for real estate.” He pauses for a moment. “There are pockets of markets where supply may become an issue, with lots of hotels being built,” he says. “It will take some time for absorption, but I haven’t heard anyone being too concerned. I expect a good two years for the hotel business. We may be in a peak, but the peak continues.”
By Ashley Atkins
Image courtesy: SVN Hotels