CHICAGO—Waterton Associates LLC has decided to combine its wholly owned apartment and hotel management subsidiaries, Waterton Residential and Ultima Hospitality. Effective immediately, Waterton Associates and the two subsidiaries will operate as a single entity, Waterton, a move that illustrates just how close the multifamily and hospitality sectors have become these days.
"Apartment residents have begun to demand higher levels of service," Waterton chief executive officer and co-chairman David Schwartz tells GlobeSt.com. "They increasingly look for better technology, package delivery services, valet services, concierges, and great fitness centers. "And all of these things have been part of the hospitality industry for a long time."
Schwartz co-founded the Chicago-based real estate investor and operator with Peter Vilim in 1995, and says that in recent years apartment operators looking to upgrade customer services have found it beneficial to recruit employees from the hospitality side. By combining its operations, Waterton can "cross-polinate talent and recruitment." This will also help on the construction side when the company repositions an apartment community, since much of the best design talent works within the hospitality sector, where operators typically have extensive, and high-traffic, common areas that need frequent renovations.
"We have been making baby steps for about one year to consolidate operations," Schwartz adds, a process that is now complete. The company will also greatly increase its efficiency by switching to one benefit system, one payroll system, and one human resources system for its roughly 2,000 employees.
At the executive level, Mark Zettl, a 25-year hospitality veteran who helped develop the Holiday Inn Express brand and previously served as chief operating officer at Ultima, was appointed to serve as Waterton's chief operating officer in 2014. In that role, he is responsible for property management across Waterton's apartment and hotel portfolios, overseeing design, construction and operations, as well as sales and marketing efforts.
As part of the realignment, Waterton will leverage Ultima's procurement platform to generate savings across its portfolio of more than 50 rental communities, using the same supply chain for furniture, fixtures and operating equipment that can be purchased in bulk through Ultima's established relationships with hotel suppliers. In addition, Waterton has retained a new head of design and construction who will oversee all capital improvement projects across the company's apartment and hotel properties.
Waterton acquired its first apartment community in 1996 and, a decade later, broke into the hospitality sector. A typical apartment property for the company is a mid-tier luxury development like the 1980's-era Presidential Towers, one of the first major apartment complexes built in Chicago's West Loop area. "Our rents are hundreds and hundreds of dollars cheaper than the newest luxury communities in the area," Schwartz says, "but we try to provide great value with luxury-level amenities." Today, it has a $4 billion portfolio that includes about 20,000 rental units and 13 select- and full-service hotels across the US, including some branded as Sheraton, DoubleTree, Hyatt Place, Westin and Aloft.
The ultimate goal for these hotels is for guests to get the same home-like atmosphere that Schwartz says Waterton creates for its apartment communities. The company has trademarked this overlap between residential and hospitality 'Resitality." Apartment operators for Waterton typically learn the names of its residents, for example, and "we hope our teams at the hotels will be able to learn our guests names as well."
"This convergence is more than just a name change. In breaking down the barriers between our apartment and hotel divisions, we become more nimble in everything from acquisitions to property management, allowing us to boost profitability on behalf of our investors and better position ourselves for growth in the months and years ahead."
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
