Staff Report
Published Feb. 2, 2012

Strand Development Co., a third-party hotel operator based in Myrtle Beach, announced Wednesday plans to expand its operations over the next three to five years into the Midwest and West Coast markets.

In the past 24 months, the company has added hotels in Virginia, West Virginia, Pennsylvania, Maryland, Georgia, Tennessee, Alabama, Mississippi, Louisiana and Michigan to its management portfolio.

“2011 was a breakout year for Strand,” said John Pharr, president of Strand. “We transformed from a narrowly focused company managing hotels in a handful of states to a hotel operator with a geographically diversified, 70-hotel portfolio in 12 states and a solid footprint east of the Mississippi.”

Strand’s goal is to grow by approximately 20% to 30% annually, Pharr said, “focusing on further filling out our managed portfolio east of the Mississippi, especially the Midwest, Florida and the Gulf Coast, and eventually expanding westward, to become a truly national operator.”

Strand’s business model is to remain a “pure” hotel management company, Pharr said.

“Most other major hotel management companies have multiple divisions,” he added.

“Today it is not uncommon for third-party operators to own, operate, develop and even broker hotels. We believe this diversification may be good for the operator but deflects their attention away from the reason they were hired…to manage the hotel. With our business model, I don’t have to worry about paying mortgages on Strand’s hotels; instead I’m able to focus on making sure that our owners can pay theirs,” Pharr said.

Strand’s portfolio focuses on hotels and resorts in the mid-market through upscale range. Future efforts will be aimed at full-service hotels and resorts with 80 to 300 rooms. Strand’s website lists 19 hotel properties that it manages in South Carolina.

Pharr said Strand’s success in dramatically improving revenues and controlling cost has fueled the company’s expansion. The company has seen a rise in lender-owned assets seeking interim management and has taken over 22 real-estate owned properties in the past three years.

“We are quite comfortable acting as both receiver and/or manager for troubled assets depending on the lenders’ needs and the circumstances,” Pharr said. “About 10% of our portfolio currently is lender-owned. Based on conversations with lenders, we expect to see a steady increase in REO properties over the next two years.”