LeClaire: What spurred you to create the partnership with Stoneleigh?

Horst: Over two years ago we took over the Ritz-Carlton in Bali. This year the hotel has seen the best results it has ever had. It is now independently run. It’s not a Ritz-Carlton anymore.

Those types of opportunities come constantly to us. The hoteliers want us to turn the hotel around. They like what we are doing. They trust our team. But they want us to put some skin into the deal. That is something I could not do.

There is deal flow happening not only in the U.S. but also in Europe right now, and I realized this is a time to create a partnership where we can take advantage of what is going on. You have to be opportunistic when you see things happening all around you. That’s why the relationship with Stoneleigh.

LeClaire: Why Stoneleigh? Why not another private equity firm?

Horst: Frankly, these types of relationships today are a dime a dozen. That’s of course exaggerated, but when you discuss these types of relationships, the operator always becomes the employee. That’s not how it is with Stoneleigh. Stoneleigh is a minority partner. They have full membership on the board. But I am still doing what I like to do best in my life—running the hotels. That was important to me, so it all works out perfectly for us. I knew one day would be the right time to have a financial partner, and I know it’s right now.

LeClaire: What do you see as challenges as you venture out into this expansion and getting some skin in the game?

Horst: The real challenge is to stay strategic and not only opportunistic, frankly. That is the downfall of any leading hotel company—I don’t mean size … I mean leading in quality and excellence. I don’t see a downfall if you stay true to yourself. The enemy is always within. My opinion is that the enemy in the hotel industry is this: Compromises are made.

LeClaire: And where do you see the biggest opportunities?

Horst: The luxury market is growing pragmatically and realistically. Unless there is a major set back, it’s estimated there may be 200 million room nights in a few years from China only. That doesn’t exist today. A few years ago no one had a Russian customer. Today the best paying customers are Russian customers.

LeClaire: How will you compete with the major brands for that opportunity?

Horst: The top market is vibrant. The large companies, the Hiltons, Hyatts and Sheratons, would be really silly to go into that business because 1,000- or 2,000-room hotels are in a way easier to run and make much more money. If the large hotel companies go into this area they will run it from the same mindset. We are concentrated on the global customer. Now, we have a financial partner who can help us grow more rapidly and reach that customer globally.