Dolce's Chairman Transforms Company: Conference Center Chain Transitions To Management-Only After July Majority Sale

Dolce International chairman and managing director Andy Dolce this month spoke with meetings management editor Elissa Hunter about the July acquisition of 85 percent of the conference center company by Broadreach Capital Partners, led by managing director and hospitality industry veteran Philip "Flip" Maritz, and Dolce's move to a pure-play management firm.

Meetings Today: How has the recapitalization affected Dolce International?

Andy Dolce: It's only been a couple of months since we announced it, so it's really difficult to say. The previous shareholders were very pleased with the financial results and the fact that we're able to execute a transaction in what could be a difficult market with a niche player. The industry reaction has been, wow, you're really aligning yourself with a great group, particularly with Flip Maritz, who is well-known with high regard in our industry. The other reaction was, isn't that terrific—particularly in Europe—that you now have the financial wherewithal to go back and start investing in hard assets to drive your growth. The real estate broker community has been presenting more deals to us, both in Europe and North America, because of the our involvement with Broadreach.

MT: How does this affect the way the company is run?

Dolce: We now have an investor looking at how it would handle the brand value of the operating company, and they're willing to use the cash flow to invest on building our brand and the strength of our organization, especially our people.

MT: Dolce is transitioning to a pure-play conference center management company. Why was this decision made?

Dolce: We're more brand-oriented, like the Marriotts and the Hiltons. We're putting our capital resources into building the brand, and knowing that if we can, we're going to contribute heavily to the success of our properties that are owned by real estate investors. Our expertise is managing those properties where meetings are the key. Now we can capitalize on that without having to worry about managing the real estate investments—organizing the debts, working on capital improvements and refinancing. Now we're working with owners who have asset managers who deal with that, and rely on us to operate effectively and profitably and create value.

MT: How will that transition occur?

Dolce: The first thing is the attitude: how you look at yourself and who you are. The second is how you organize, in terms of how you deploy resources. For example, we had a finance group that's been very much involved in full-play real estate operations, doing asset management, raising capital and doing lots of reports on behalf of the real estate. That group is now free to focus on providing financial support to the properties—market analysis, statistical analysis and really good direction in terms of our budgets, plans and strategic direction. There's been a shift in ownership, but we're still interested in the successful operation of their properties.

MT: Will Dolce sell the ownership interests it has in its remaining properties?

Dolce: It's all been done. All the 11 assets that were either partnership ventures or 100 percent owned have been sold. The last one's under contract and it should close this month. In Europe, we have a relationship with two capital groups—one an investment group, the other a development company. One's out of Brussels, the other out of Ireland. The Irish group executed and bought three of our assets in Europe. The group in Brussels bought two of our assets. We were able to go to where we had existing relationships and execute a plan. In the United States, we did the same thing. First, we looked at Broadreach, at the real estate investment trust, and they bought two assets. Then we capitalized on existing relationships with a group in Washington and a group in Dallas who were interested in our products and our company, and they bought assets from us.

MT: How will Broadreach's 85 percent majority affect the way Dolce is run?

Dolce: They're helping us with strategic direction and ideas related to creating brand value. Their investment group has really good contacts in Asia and Australia. They're supporting us at a very high strategic level. Flip Maritz, because of his experience with Fairmont, the Four Seasons and Rosewood, has a great deal of knowledge of resort operations and how to create value. The day-to-day operations they're leaving to us to make the decisions and run the company.

MT: How will the deal affect your future and that of Dolce management?

Dolce: I'm excited. They've asked me to stay and continue to provide direction, but at the same time to make sure we have the management depth and build a succession program. They understand the value of investing in strong people.

MT: How does this change Dolce's competitive position, especially regarding other conference centers?

Dolce: We've been very successful in having multiple capital partners and I think this makes us unique in the conference center industry. I don't know that our competitors are out there looking with capital partners to buy assets. I think they're all looking for pure management contracts. We're able to promote because we have capital people who are interested in what we do. That gives us a competitive advantage. We're a very stable and well-capitalized company and we have the capital resources to continue growing, and we're patient. There's a patience in how we ultimately grow our company.

MT: What effect does this have on the Dolce customer? Do they see a difference?

Dolce: I hope that customers are still pleased with the quality of service. We've just invested in a major program called Great Guest Experience, involving making sure we're doing everything we can to satisfy the needs of our guests and our clients. We've invested a great deal of time and money. Hopefully, ownership is transparent from the customer's perspective.

MT: What are Dolce's expansion plans?

Dolce: We're looking for opportunities in the United Kingdom. We have some opportunities we're examining in Amsterdam, Rome and Munich, but we're going to put a lot of energy into the United Kingdom, particularly the London area. In the United States, we've identified key markets we want to penetrate: Orlando, San Francisco, Orange County and Washington, D.C. We have some research we're doing in China and Japan. We've got some relationships there that we're trying to get a handle on. That's where our customers go and that's where they want our product.

MT: How do you see current corporate meeting demand trends?

Dolce: The demand is still strong. Demand for next year and advance bookings look good, but there's a nervousness about the economy, so companies are still aggressively planning meetings, but putting contingency plans in place. How does that affect us? We're being very cautious about signing contracts with cancellation clauses. They're being more cautious and less flexible on cancellation clauses.

MT: Has Dolce been able to drive pricing upward?

Dolce: I think our revenue per available room growth has outpaced the hotel industry. We've done it the last two years and this year I think we're a little ahead. The hotel industry is running about 7 percent. We're running about 8 percent.

MT: Do you see hotels or other conference centers as your main competition?

Dolce: Hotels and resorts in the United States have 90 percent share of the market. Conference centers only have 10 percent. Our objective is to penetrate the 90 percent and try to do a better job of convincing meeting planners that our venue is better than hotels. We could compete amongst other conference centers, but if it's a small part, why fight it out when 90 percent out there is up for grabs?

MT: How do you see future corporate meeting demand and pricing?

Dolce: It's hard to predict. The experts are talking about moderate growth in '08. They're forecasting occupancy to be flat and some incremental increase in prices.

MT: What are your other plans for the company's future?

Dolce: We're looking at some technology innovations. We're reviewing our brand positioning very carefully to make sure it is appealing to the markets we want to serve. Those are the two major things. We're looking at some task force work on what the future meeting experience, from the design perspective. We're engaging in a dialogue on what the conferencing environment should be all about.