June 15, 2010 / 2:07 PM / 8 years ago

NY hotel owner sheds brands, attempts solo ride

NEW YORK (Reuters) - At a time when many hotels are vying to be part of a major brand, one lodging company has chosen to go at it alone.

Apple Core Hotels, which owns five properties in New York City, has stripped well-worn banners off two of its hotels and hopes to do so for all of them by the middle of 2012.

“You control your destiny in more ways than one,” Apple Core President Vijay Dandapani said in an interview.

This month, Apple Core removed the Red Roof Inn brand from its hotel on 32nd Street near Fifth Avenue after the franchise agreement expired. It renamed the property “nyma,” which stands for New York Manhattan Hotel.

Apple Core’s move runs counter to the global industry. More companies are looking to be part of top companies like Wyndham Worldwide Corp, Marriott International and Starwood Hotels & Resorts.

So far, Apple Core has spent $4 million to renovate the nyma hotel and aims to complete a $1 million revamp of the lobby by the end of the year.

By refashioning the hotel as a more upscale property and shedding the budget hotel image typically associated with Red Roof Inn, Dandapani hopes it can command higher rates.

He projects revenue per available room at the nyma will jump by 25 percent by mid-2011 as it also benefits from an expected upswing in the hotel market.

Franchised and managed hotels benefit from name recognition, an established brand’s reservation system and loyalty programs that bring vast networks of frequent guests. But these hotels can spend 10 percent of their revenue to belong to a brand.

“At the end of the day, the long-term trend is going to continue to be toward branded product,” said Robert W. Baird & Co analyst Andrew Wittmann. “Along the way, there’s going to be entrepreneurs that try to come up with a plan to slow that down.”

TIMES SQUARE SUCCESS

Hotel experts agree that New York is a market particularly suited to boutique and independent hotels because it is such a popular destination. Profits at such properties will undoubtedly increase as they are burdened with fewer fees.

Dandapani is betting that the steady influx of tourist and business traffic in New York each year and its advertising efforts will keep rooms full at his independent hotels.

Apple Core also saves cash by not advertising on online travel sites. Instead, three people at the company spend all their time making sure the independent properties gain a prominent place in Google searches for New York hotels.

The nyma is the second Apple Core hotel to undergo a transformation.

In 2008, the company converted its property on West 46th Street from Wyndham’s Super 8 brand to the Hotel @ Times Square. Revenue per available room rose 20 percent over the next year as rates increased by $25.

Apple Core has spent $5 million upending every square inch of its Times Square hotel, ripping out carpets, revamping the bathrooms and adding flat-screen televisions.

The company hopes to strip off the brands of its other three New York properties, a move that could happen as soon as mid-2012, Dandapani said.

Apple Core’s other hotels are a Comfort Inn, franchised by Choice Hotels International; a La Quinta; and a Ramada, another Wyndham brand.

“(Going solo) will definitely boost our rates,” Dandapani said, “And it has at the hotel in Times Square.”

Reporting by Deepa Seetharaman; Editing by Lisa Von Ahn

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