Azul to Manage 1,600-Key Pinnacle Hotel Portfolio

By Barbra Murray

Hyatt Regency North Dallas

Azul Hospitality Group’s management portfolio just increased by 1,600 guestrooms. Azul recently inked a deal with Pinnacle Hotels USA to take over management of eight properties in Southern California and Texas.

The new agreement marks a turning point for Pinnacle, which had been managing its own portfolio. A Pinnacle spokesperson told Commercial Property Executive that “Pinnacle will be using third-party management for any future acquisitions.”

In the Golden State, Azul will oversee the operation of Marriott Riverside at the Convention Center in Riverside, as well as four San Diego-area properties, including Four Points by Sheraton San Diego Downtown, Comfort Inn & Suites San Diego–Zoo/ SeaWorld Area, Courtyard by Marriott Del Mar/Solana Beach in Solana Beach and Days Inn Encinitas Moonlight Beach in Encinitas. The hotels falling under Azul’s domain in Texas are Hyatt Regency North Dallas, Doubletree by Hilton Austin University/Downtown Area and Doubletree by Hilton Austin Northwest Arboretum, which Pinnacle purchased in March 2018, three years after the hotel was converted from a Holiday Inn.

Azul will manage the assets—which, aside from a recently purchase property, comprise Pinnacle’s entire portfolio—under a long-term contract.

Third-party players

Pinnacle’s decision to turn over all management responsibilities to third parties is not an unusual move in the hotel industry these days. “One trend that we have seen in the past few years is that many owners have decided to focus their energy and attention to developing/acquiring assets and expanding their portfolios, but removing themselves from the day to day management,” a spokesperson for Azul told CPE.

A hotel services, management and operations provider, Azul has been landing its share of outsourcing contracts. The company was onboard as manager for the Sheraton Redding Hotel at the Sundial Bridge in Redding, Calif., when the 130-key property made its debut in January of this year. Azul also secured the contract to manage The Guild Hotel, a 163-key boutique property scheduled to open in downtown San Diego in 2019. And the list goes on.

“I think [owners] are realizing that the operational side of the business requires a platform and human element that is unique, and in many ways very different from the real estate side of the business,” the Azul spokesperson added. “Then you factor in the multitude of lifestyle nuances and operating trends associated with the newer brands and current traveler preferences, and owners realize they cannot be part time operators. They understand that a strong operator will drive asset value much better than they could on their own, which is their ultimate goal with their hospitality assets.”

Image courtesy of Pinnacle