Mr. Winston: Winston Hotels was started in 1994 as a hotel real estate investment trust. We were the third company to come public in the hotel real estate investment trust format. We started out on the limited service side and we've grown and developed into a company focused on upscale hotel properties. We were a company that developed hotels prior to becoming public and today it is a core strength fueling the growth of our third-party business. Twenty of the 50 hotels in our portfolio we have developed from the ground up. By development, I mean: finding the site; performing due diligence; obtaining entitlements; picking a franchise; negotiating financing ' both debt and equity; and constructing and opening the hotel. The management team brings skill sets to the table that have continued to help us grow in this capital constrained environment. Just to give you some background on myself, I started in the hotel business in the late 1980s after leaving Donaldson, Lufkin & Jenrette. I went to work for Holiday Corporation (which became Bass and Promus) to learn the hotel business after having grown up in the restaurant industry. In 1991, at pretty much the bottom of the hotel market I started my own company. I began by purchasing and developing properties eventually creating Winston Hotels through a merger with another company, and took it public in 1994 with 10 hotels, and today, as I said, we're at 50.
TWST: When you look out at the industry today there is some significant
merger and acquisition activity. Give us an independent view from your
strategic position of the good news and the bad news as you look at
mergers and acquisitions within the REIT industry today.
Mr. Winston: I think there are opportunities to merge companies
together, and I think you've seen some of that. Most recently you've
seen FelCor/Meristar merge. There are some economies that come of these
mergers, but I don't necessarily think that our industry is going to go
through a full-blown merger process, as many have said over the past
three or four years. Everybody has speculated as to what the activity
would be. I think in some sense these companies coming together can
help, but not necessarily. What we've done is focus on a niche, really
pushing our development activity and our development skill sets to
create third-party business, which has allowed us to really grow the
company from a service aspect and be less reliant on external capital.
We are also providing mezzanine loans, which fills a huge void in the
hotel construction/development market. We have looked at merging in the
past and are always open to those opportunities, but we feel good about
our ability to grow profitably without having to merge.
Tickers included in this excerpt: WXH
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