Why Trailborn is Betting On America’s Drive-To Destinations
Transcript
Atif Z. Qadir 00:10
Welcome to American Building. I'm your host Atif Qadir. Join me as we explore the skylines and strip malls, the crosswalks and rail crossings, the balconies, the buildings and the boroughs shaping the next generation of real estate. Let's build common ground.
Atif Z. Qadir 00:33
Today, our guests are Ben Weinberg and Michael Weiss of Castle Peak Holdings and Trailborn. Castle Peak Holdings is a real estate investment and development firm focused on creating unique hospitality experiences in irreplaceable outdoor locations. Trailborn is a new hospitality brand bringing those hotels to life in destinations like the rocky mountains of Colorado, the Grand Canyon Mendocino, California and Wrightsville Beach, North Carolina, which we will explore today, designed for modern travelers. Each property blends design local flavors and immersive outdoor experiences. Ben Weinberg is the co-founder and co-CEO of Castle Peak and Trailborn. Before jumping into development, he built his career at Goldman Sachs, TPG. and Sixth Street, working on over $10 Billion in transactions across real estate and private equity. A Middlebury alum and an outdoor enthusiast. He enjoys spending time hiking in the Rockies or fly fishing.
Atif Z. Qadir 01:40
So Michael is his partner and the other co-founder and co-CEO. He started off at Goldman Sachs as well, where he worked with Ben and then built a career in tech, working at Airbnb, Compass and Maple Food. He also started Rise Brewing Company. He's an alum of Cornell and Stanford, and likes hiking and working on his golf swing.
Atif Z. Qadir 02:02
Trailborn Surf and Sound in Wrightsville Beach, North Carolina, is one of Castle Peak's newest projects. It is a fully reimagined beach resort designed for travelers looking for the perfect mix of adventure and relaxation. Guests can hit the waves with surf lessons, explore the nearby islands or enjoy the hotel's amenities. The property features custom designed guest rooms with water views, and will soon debut a signature restaurant, La Duna Paradiso and a cocktail spot, Bar Duna. So thank you so much for being here with us, Ben and Michael.
Ben Weinberg 02:37
Great to be with you, Atif.
Michael Weiss 02:38
Great to be here.
Atif Z. Qadir 02:39
Absolutely. So I know you guys have known each other for a very, very long time. So tell us about how you met and what some of those personality traits and tendencies were when you were younger, and how they have evolved over time.
Ben Weinberg 02:54
You know Mike and I have known each other for a very long time. Our parents knew each other. We grew up nearby each other, and we know each other's siblings, which is a really nice way to start a partnership, because so much of partnership is about knowing each other deeply and knowing each other intimately as you go through the different cycles of building a company. Our job was very different when it was just Mike and I sitting in office. Now we sit in an office with a with 30 people, growing to 40, and everywhere in between. You know, those jobs changed, and Mike and I are constantly jumping into the different openings in the business, where leadership is needed, where diving into the
grain or fixing something is needed, where there's something that's broken that needs to be kind of completely reset.
Ben Weinberg 03:35
And so when you know each other really well, you're able to do that and say, you know, listen, Ben, we got a real problem here, but I don't think you'd be very good at solving it. I, Mike, I'm gonna go solve it, or vice versa. And then I think there just has to be a kind of fundamental trust in every partnership that you want the same things. And that sounds quite obvious, but oftentimes people don't want necessarily the same things. Some people may work really hard. Some people may not want to work very hard. Some people may want just to make money. Some people may want to build a company that they're really proud of, and usually it's some kind of concoction and combination of those things, but understanding each other and really spending time with each other, which Mike and I did a lot of before we decided to work together, is, I think, a really important piece to it. We kind of knew each other through our families and then ultimately reconnected through my brother-in-law, who I'm very close with, who Mike is also very close with, who's also in the real estate business, he's a fantastic guy, reconnected through him a little bit later on in life, and then kind of started chatting, and ultimately decided to work together. But that process is such a kind of important process. When you make that decision, you spend so much time with someone and to go through the throws and the challenges and the magnificent dangers and ups and downs of being an entrepreneur.
Atif Z. Qadir 04:47
Amazing. How about you, Michael?
Michael Weiss 04:48
I think the two things I would add is that even though we knew each other going into the partnership, we spent a tremendous amount of time talking about what it is that we cared about. What it is, because you can. Know someone personally, but working with someone day-in and day-out to try and build something, it's a different type of relationship. And so we really invested up front in making sure that we're on the same page on what it was that we wanted to do, what impact we wanted to have in the world, how we want it to work and and what kind of company we wanted to build. So we spent a lot of time up front. We thought we knew everything then, and we only knew about 20% of the story. And over the last five years, we've really gotten to know ourselves and gotten to know each other much, much better. We're at a point now where I can kind of guess what Ben is going to say, and vice versa. I know where Ben's going to be overly aggressive, I know where Ben's going to be overly conservative, and we can kind of naturally push and pull each other to get to the right answer.
Atif Z. Qadir 05:37
That's an amazing starting off point as entrepreneurs working together, because so much of the success is based on intuition and making decisions without complete information, so that well of experience is super valuable. So, Michael, I want to dig into that process of creating Castle Peak, because your company is unique in that it's a real estate company, as well as an operating business. So I'm sure the process that brought you here was an interesting one. So tell us a little about that.
Michael Weiss 06:06
We spent a lot of time making sure that we were pursuing a thesis that we were both passionate about, where we thought we had a competitive advantage, something that was going to be durable through any cycle, any state of the world, and something the world really needed. And that kind of led us down the path of identifying the opportunity that we are now pursuing, which is we saw the same thing over and over again, these iconic outdoor destinations, national parks, beach towns, ski towns. We saw a lot of select service hotels. We saw mom and pop hotels that were not consistent. And we said, there's an opportunity here to build a brand and to build a product that creates consistency, design-forward experiences. And the way to pursue this is by building a brand, building a management company, and owning the real estate, which allows us to control the guest experience, control the product, and make sound investments along the way. So we spent a lot of time researching what are the markets we wanted to go into. We've since expanded upon that research. We've been lucky to get into a handful of really good markets with our existing portfolio, and we have a lot of exciting opportunities that we're evaluating. I'll see if Ben wants to add anything to kind of the starting point.
Ben Weinberg 07:15
Listen, I think we saw two opportunities that I think needed to be attacked separately. As Mike mentioned, one is a real estate opportunity, where we're going to markets where millions of people are going, where you can't really build hotels anymore, and where people are looking for a four star product that they can't find. And then a product opportunity, which is that four star product that you can't find, you have to, when you start a company and you have a mission and a vision for that company, you have to be very specific, and this particular opportunity set warranted and justified two companies, one that's a brand and operating company, which I'm sure we'll get into, and one that's an investment development company, and both have different goals. Castle Peak is driving real estate return and yield and value creation. Trailborne is doing that, but they're doing that by creating guest experience and ultimately a product that Castle Peak and other owners will want to sign up for.
Atif Z. Qadir 08:04
So as you were going through the research process and developing what you wanted to build, could you talk about some of the things that you saw in other hotel brands or independent hotels from your stays and your travels across the country that you wanted to pick up on and some of the things that you wanted to distance yourself from or try to do something a little bit different?
Ben Weinberg 08:26
One of the observations that we had, Atif, was that if you talk to people who have the choice of going really anywhere that they wanted to go, and staying anywhere they wanted to stay, and you ask them about their favorite moments and their best memories. A lot of those moments are not in the highest, most expensive luxury settings. And we thought that that insight and observation was quite interesting, and that really sort of guided us in a number of different ways to this four star product, where we feel that we can deliver something really unique, experience based and design-forward, but not have both the operating cost structure and the build out expense of trying to deliver a five star product to maybe a market that doesn't need it. We want to give people something that they want, not something that we're trying to impose on a market.
Ben Weinberg 09:13
So we want to go to a market and say, what are people here looking for they don't have, and how do we pair that with a real estate opportunity? But I think being thoughtful about what does a market actually want, and being thoughtful about how to create and be in the memory making business, which we talk about a lot, and create those memories without spending enormous amounts of money that in many cases, people don't even want, I think, is is really important. And we hadn't seen that done at scale. We had seen that done in different independent boutique hotels around the country and resorts around the country, with people who had really kind of dug in and figured that out, but we hadn't seen that done at scale necessarily, and wanted to deliver that at scale in a unique way that was unique to each market, where we sat between a hard brand and a soft brand, where we said, Okay, we want when you go to Wrightsville Beach, you need to feel like you're at a North Carolina coastal gem. We want you to feel when you're in Mendocino, California, that you're at a California kind of coastal gem. We want you in the Grand Canyon to feel like you're on route 66 in that kind of American retro, right? We want you to feel have the consistencies of Trailborne, but also have the differences.
Michael Weiss 10:14
Yeah. I think the two things I would add that we have focused on that I think have helped us along the way, are focus and durability, and so the only things that we do are acquire, manage and brand products in iconic outdoor destinations. We spend zero time on a 400 key urban asset, right? Like, that's just not what we do. We wouldn't be the best group to manage that. That's not like, it's not our expertise, because we spend every day thinking about what is the customer that wants to travel to an iconic outdoor destination, What do they want? What do they not want? Who are they and how create the best experience for them? So that focus has been really helpful. The second thing is durability. When, when building Trailborne, we wanted to create something that not only people would want to come back to multiple times in a year, but want to come back to throughout their lifetime, right? There's a lot of great brands, a lot of great hotel brands that we draw inspiration from. There's some cool things happening in the outdoor accommodation space that I think are a piece of the puzzle. Alternative accommodations is something that is out there. There's a that's a product that we think is interesting and serves a need. But for us, we wanted to build a more traditional hotel product because we thought that is something that will keep people coming back, right? There's, I think there's only so many times people want to go glamping in their life. We wanted to build a product that people can bring their kids to, the people who go to for corporate outings, that people will want to travel to with their significant others. And that's the product that we've aimed to build.
Atif Z. Qadir 11:36
Amazing. Ben, you'd said earlier about being in the memory making business and you had said in an earlier conversation that at the end of life, people would pay anything to spend more time with loved ones. Talk to me about some of the experiences you've had with your family, like in and around hotels, that help to inform that type of an experience.
Ben Weinberg 11:56
I think, as it relates to moving through my 30s, as it relates to seeing my parents get older, I myself and see them and having kids, I have two young kids. You know, the value that if you're a family person, which I am, the value that you put on spending time with people that you love and holding on to those memories is astronomical. It can't be bought and it can't be recreated. And I think to have the bar of we need to create those moments for every single guest, at every single turn, every single time they come stay with us. Is unrealistic and not feasible, but to say that we're taking shots on goal, really good shots on goal, every time a guest walks in, and, you know, we give their son or daughter a teddy bear, and we offer them a drink from the bar to bring them out back where we have kind of a s'mores and our custom s'morelier pulling something together for them. You know, to try and take shots on goal on those experiences that people hold on to for extremely long period of time is part of our job and part of what we do and and that's what I'm talking about when I refer to the memory-making business. I just think, as I've gotten older and I see my parents as well, the value that all of us put on that is astronomical, in a way that that just can be replicated.
Atif Z. Qadir 13:09
So I want to dig more into the customer segments. I'm going to ask this of Mike. As you continue to develop these hotels, are there certain types of customers that you're imagining as the focus as you're developing your product, and if so, tell us more about those segments or personas?
Michael Weiss 13:28
Sure, we have a handful of personas that we think about with every single product. Now, like Ben mentioned before, we want to create something that is authentic to the place, and so the people traveling to some of these markets, there's definitely overlap. And so we think about who is our primary persona that we're designing for. But then, every time we design a hotel or work on a hotel product, we think about, in addition to that primary customer, what are all the different segments that come in? And so I think for the Trailborncustomer, more broadly, the psychographic is someone that wants to get outside, wants to go experience adventure, and wants and cares about beautiful design, cares about something that feels like affordable luxury, effectively.
Michael Weiss 14:08
And then within each market, there's segments that we kind of design for depending on on who's going to that market. So in a place like Rocky Mountain National Park as an example, there's a ton of families that are traveling there. And so we think about all those families. How do we create a product that they're going to want. When we go to Mendocino, California, that's a big wedding market. And so do we have an event space that people are going to want to book their weddings at? When we think about the Grand Canyon and Route 66 there's a lot of international travelers coming there. It's a bucket list type adventure, and we want to make sure they're getting that authentic Western experience, and the food and beverage options, the bar, the whole experience, kind of mirrors that. So that's how we think about it. We get a lot of data on who's traveling to these markets before we start our design process and make sure we're serving the guests.
Atif Z. Qadir 14:56
Amazing. So let's turn towards the Surf and Sound in Wrightsville, North Carolina. How did you guys come across this property, and what was the acquisition process like for it?
Speaker 1 15:10
So we've felt that there was kind of a few concentric circles here in the Wrightsville Beach market. Number one is that Wilmington, North Carolina is growing incredibly fast and in an incredibly compelling way, and so that kind of tipped us off to this area generally, when we started to go spend time down there four or five years ago. And in addition to that, what we were tracking was where folks from Raleigh-Durham, which is a very compelling, one of the best forming major measures the last 10 years, you know, where were folks going when they live in Raleigh-Durham and they want to go to the beach, and they want to go to the mountains, and Wrightsville Beach kept coming up. And, you know, we were kind of going all the way from the Outer Banks down to Wrightsville Beach, through Carolina Beach and even south of there.
Ben Weinberg 15:52
And we went through our process, which is very much kind of anecdotal based initially, but very much data-driven, kind of once we're onto something. And so once we started to kind of find these concentric circles that really circle down Wrightsville Beach, where we felt that this compliance rates and barriers to entry were there, where we felt rev power was high enough, where we felt we could really draw people. We started to talk to the Baggett family through kind of a handful of cold calls, basically. And really started to talk to the four siblings in the Baggett family about what they might think about potentially, you know, selling the asset to us, which they had thought about at various periods of time, but to our knowledge, really hadn't taken it very seriously.
Ben Weinberg 16:31
And so we spent a lot of time with them to help them understand who we were and what we envisioned for the property, that we were not going to knock it down and turn to condos, which a lot of people had wanted to do, or we were not going to knock it down and down and turn into a JW Marriott, which obviously wouldn't work, but that we wanted to take what was such a historic property and really be the steward of sort of the next chapter of that hotel, and complete some renovations which they had not been able to do and chose not to do, which we felt were necessary to really bring it up to the potential from both a cash flow perspective and a guest experience perspective, to really be a center of gravity for Wrightsville beach that I think they wanted it to be. And I think ultimately they sensed that, that we were honest and straightforward people. And while there would be kind of a some level of discovery as it relates to what exactly the renovation be, that our goals were generally aligned with their goals, and that, you know, we could be the next stewards to the asset. So Bill and Mary Baggett in particular were fantastic in sort of helping us through that process. And obviously we've stayed in touch.
Atif Z. Qadir 17:29
Tell me about, you mentioned data in that process of evaluating different possible investment areas, and specifically this hotel, could you talk about some of the data points that you really value and how you source that information?
Speaker 1 17:43
Sure. So the first layer of it is hotel data. So how are other hotels performing? You can get that in two ways. Some, you know, switch on research star gonna give us, you know, some basic level information, but oftentimes it's very surface level. What we're doing is we're talking to other hotel owners and getting information from them around how they're performing. I mean, these heavily supply constrained markets, it's a good thing for new supply to be upgraded over time. We're not adding new rooms. We're simply raising rates on existing rooms and investing in the assets. So a lot more owners than you might suspect, are excited to talk to us and excited about what we're doing. And so that's kind of the first layer to it. The second layer is demographic data, a little bit what Mike was saying. Who is coming here? How much money do they have? Do they have a mortgage? Do they have a Netflix subscription? It's a little bit terrifying, but also really powerful. How much information you can get on where people are coming from.
Ben Weinberg 18:29
There are various different services to do it that we use. One of them is called Buxton, but there's a handful out there you can use to really understand who the customer is, who's coming because you can really make mistakes and these hospitality renovations for positioning when you think a higher paying customer is going to market than is actually going there. When you upgrade a hotel and the same customer saying, I was perfectly fine with a hotel that was here, I don't really feel like paying more for what you've now renovated to recreate, which is always a huge problem. So we got to make sure that the customer is here and coming here. We're not trying to convince someone who has never come to Wrightsville Beach to come toWrightsville Beach for the first time and pay, that the people who are coming here have the disposable income and have the means and have the level of interest to really spend more on a hotel that charging more in a much, much nicer product. You can do that by, you know, partially looking into the demographics and understanding where they come from and their kind of earning power, but also by looking at other hotels nearby and saying, you know, we would be an alternative to that, and how do we stack up versus the other?
Michael Weiss 19:23
Yeah, I think the only thing I would add to that is sometimes the information is right there in front of you. In today's world, online reviews are so readily available. Customers can tell you directly what they like and what they don't like about a product. And then staff. Like our GM at Trailborn Surf & Sound has been the GM there for almost 20 years, and he has lived through everything at that property. He knows what guests have said to him over the last 20 years. He knows all the things that he's envisioned wanting to do, and he's our partner in figuring out what that property is going to look like moving forward.
Atif Z. Qadir 19:55
I was smiling because that process is so familiar for me when I worked at Extell. So big portion of what I did was hotel acquisitions, and some of the most interesting conversations are with the building super, the head of the cleaning staff. That's where you're going to find a lot of where the troublesome parts or the opportunities lie. So that's so much of the fun. And I think particularly the Four Seasons Vail was one of the properties we acquired, and that was one of my favorite due diligences for many of those reasons.
Ben Weinberg 20:24
There's always trouble. You just gotta find it.
Atif Z. Qadir 20:26
Yep, you gotta know where to find it.
Ben Weinberg 20:28
You gotta know what you're looking for and where to find it.
Atif Z. Qadir 20:30
Yep. I am really interested. So this you described Wrightsville as being a one of a kind, high demand beach destination with a lot of local character, and that your focus is making sure that your hotel properties reflect that. So let's talk about the design and the construction process, and what the steps were along that process, and who all you decided to bring in in that in terms of designers, interior designers, FMB consultants like that.
Michael Weiss 21:03
We start with the research. We start by talking to staff, talking to customers, living at the asset, watching people experience the property, to start to figure out what exactly we want to do. We as a brand, have a set of brand standards that we follow that to create that thread of consistency across every single property, the way in which those brand standards will come to life will be a little bit different depending on the property. We go through the property with those branch standards and say, what are all the things we need to do to turn this into a Trailborn. We then find a design partner that reflects the vision of what we want to try and create. Unlike a lot of other companies, a lot of companies will wait for that designer to put together a concept package and present it to us. In order to speed the process along and make sure that our vision is coming to life through the design, we actually brief in our design teams with basically a concept deck of ourselves, of our own that says this is what we think should be done here. We don't want to stifle any of your creativity. We want to get the juices flowing for you and make sure this is moving in the right direction. We were very lucky at this property to work with Post Company, who is a fantastic design firm that was really aligned with what we wanted to do at this property. And so we went through basically a long process with them of presenting them their ideas, then they came back to us with their ideas, and they're really are partners through the entire process.
Ben Weinberg 22:20
I would just add that the magic happens here in finding great partners who understand our ethos as it relates to renovating repositioning, which is that if you have unlimited budget, you can of course, create something special and something unique and something that's one of one. We have a very specific view on budget and how much we have to spend to basically take this to the right place and position us to really outperform on top line, on rate and occupancy. But the real magic happens where you find ways to create something special, create something that's one of one without spending enormous amounts of money and doing that, partially based on all the renovations we've done today, partially by bringing in design partners who are really thoughtful and understand that and partially just by execution and getting in every detail and understanding like what actually matters and what doesn't for the guests.
Atif Z. Qadir 23:07
So when you're doing the furniture and the fit out, that's a lot of the experience that the guests will be able to touch and feel, talking about some of your favorite pieces of furniture or other interiors, items that are included in the hotel you feel really tell the story of Wrightsville.
Michael Weiss 23:24
Yeah, I think, well, just to share with you a little bit of our approach and kind of what our scope was there, which will start to bring out some of what you're asking is, to Ben's point, we tried to make a few very select moves that will be the most impactful moves for beach property. This property had a ton of character and history and fantastic bones. We didn't want to change any of that, but we wanted to bring some consistency, some quality to that, and really enhance the things that are most unique and special about this property. So this property sits between the surf and the sound. It's one of the only properties along the east coast that has water views on both sides, and on our sound side, we have docks that you can go and take a boat out, take paddle boards out, take kayaks out. On the surf side, we have a beautiful Great Lawn. We have a pool, a pool and beach bar, and then direct beach access. And we wanted to celebrate those things.
Michael Weiss 24:15
And so one of the moves that we made, when you walk in the lobby today, there's a brand new arrival experience that makes it a much more welcoming entrance. And then the second you walk in the lobby, there's now a set of doors that you can see through that take you directly out to the beach, which is the main selling point for the property. Before you have to have to take a circuitous route to get outside. Now you're drawn immediately out to the main event, which is the Great Lawn and the beach behind you. So that was one of the big moves that we made. Another big move that we made is the bar used to be located in the back of the restaurant. We're 151 key resort. And so if it were a slower season or a slow night, and you wanted to go and have a drink and have a lively bar experience, you'd have to walk through a oftentimes, you know, less than full restaurant, and sit in the back of the bar, and it just didn't bring any life to the lobby. It didn't bring any life to the bar area. So we moved that bar area to sit in between the lobby and the restaurant, so there's constant flow going through that bar. It is now kind of the new central hub for that property, where people will have drinks, have coffee in the morning, have drinks in the evening, and it creates life at both the bar, our external promenade and our restaurant.
Michael Weiss 25:23
And so really celebrating those moments, we have one of the only restaurants in Wrightsville beach that has indoor outdoor seating where you can sit and literally hear the waves coming in. And so we made the restaurant. We created a new set of doors at the restaurant, redesigned the whole restaurant space to feel like the Mediterranean coast meets the North Carolina coast with indoor outdoor seating. Those are kind of some of the big moves that we did on the interior. On the exterior, we took a beach and pool bar that existed, we've named it The Blockade Surf Bar, in celebration of the prior Hotel's name, and rebuilt it so that now there's gap you can sit, you know, 270 degrees all around that bar, and that's going to become more of a gathering place, both for our hotel guests, but also locals that want to gather near the beach at a fun bar. So those are some of the big moves that we made that really kind of pulled out experientially, some of the things that that we thought those properties should celebrate.
Ben Weinberg 26:21
Yeah, you know, when we do what Mike is talking about in terms of the public spaces, what we're trying to do is we're trying to create a center of gravity that's multi-dimensional. So when we create a center of gravity, it's about what you see, it's about what you hear, it's about what you smell, and it's how you feel when you walk into this lobby. And that's how we create a real center of gravity where everyone from town who has been going to Wrightsville Beach for 50 years wants to be and as soon as you walk in as a guest, you say, I want to stay here and I want to go get a drink at that bar that I can see directly, which was used to be hidden, that Mike was mentioning, that you can see directly from the lobby. We have this phrase, something fun is happening here. You have to feel that when you walk in. And that's very difficult to, well, it's actually not that difficult to instruct, but it's difficult to be consistent and you have to be very thoughtful about it.
Ben Weinberg 27:06
And then you have to be multi-dimensional. So we have The Blockade Surfer, which is an ode to the prior name of the hotel. We have Bar Duna inside. We have the restaurant La Duna Paradiso, which is our kind of Italian coastal seafood concept. It has to be multi-dimensional for people to come for two to four days, and really feel like they're getting a full experience versus just coming to a hotel, they're really coming to a resort.
Michael Weiss 27:25
Yeah, and just a couple more things on your original question, from a furniture standpoint and a design standpoint, in our lobby as an example, we have a mix of custom furniture and vintage furniture, right? This place has been here for a very long time. We don't want it to feel like a cookie cutter, sterile product, and you walk in and that mix of custom design furniture, plus some some real old vintage pieces have really kind of given the property the character we were looking for. Fun things in the room. Like we have a fun color on the headboard, and we have style that has a pattern in it, has some fun color in it. And so really mixing this idea of fun with beautiful design is kind of what the essence of what we're trying to pull through.
Michael Weiss 28:05
Another way in which we do that is through the artwork, right? So rather than just taking stock photography and putting stop photography on the walls, we really spend a lot of time, our creative team spends a lot of time thinking about, what are the stories and narratives you want to tell through that artwork? How can we celebrate some of the history of the property? How can we celebrate some of the history of what's special about this market? And we try and do that in creative ways through the artwork that we're putting in the rooms and in the hallways.
Ben Weinberg 28:29
Yeah, so much of these projects is the last on a $75 million project, the last $100,000 can be so meaningful, right? And so figuring out having the right creative team and having the right vision and clarity to go to the property and put those finishing touches on to each space, particularly the public spaces, but also in the room, is can be really, really powerful, a little bit what Mike's referring to.
Atif Z. Qadir 28:51
Yeah, I think that last bit, it's not in the last 20%. It's probably the last like 2% maybe math is a little different, but whatever, the last final percent. But I think that makes the difference between hotels, at least for me, that I particularly remember, like the Drayton in Savannah, or hotels I stayed at in Morocco, or Izmir in Turkey, it's all of those final things that get baked in over time, or those really critical last decisions. So we talked earlier about the importance of having the operating company as well as the property company, be in sync with each other. So to execute on such a beautiful narrative and a beautiful vision, you have to have amazing staff there to actuate all of these things. So tell me about what the process was for staffing up for your hotel and how Trailborn structurally interacts with Castle Peak as a company.
Ben Weinberg 28:51
Yeah. So Trailborn and Castle Peak are structures, two independent companies, two independent companies that, of course, work very closely with each other, but two independent companies, nonetheless. Mike and I are co founders, co CEOs of both, and have kind of different roles and responsibilities. In each so we divide it pretty clearly. But on the Castle Peak side, the goal is to raise external capital from everyone from endowments and pensions to family office and OCIOs, and allocate that capital and deploy that capital in a very unique and specific way, where we are again going to markets where millions of people are going, where you can't really build hotels anymore, and people looking for four star products that they can't find. And we buy three star product and convert it to four star product. What that allows us to do is generate some really unique yield and return that is really kind of what we view as fundamentally asymmetric, as in where things don't play out exactly as we thought, returns are still quite interesting, and when they do, they're very much outsized for the real estate world.
Ben Weinberg 30:40
Now, hospitality is is a tough business that requires enormous attention and detail, and that's why we have part of the reason we have our own operating company to execute on generating that yield in return. But when you move over to the Trailborn side, Trailborn is a kind of chosen property manager and brand that Castle Peak has said, we've looked at these properties, we think Trailborn can generate the most attractive yield and most attractive return by delivering what Trailborn delivers, which is this four star outdoor adventure product. It's everything from design and creating the space to actually executing on it operationally. So their kind of structure is two independent companies that, of course, work extremely closely together.
Ben Weinberg 31:19
To move on to your question of how we deal with kind of labor and staffing on the property, at TrailbornSurf & Sound, which is in Wrightsville Beach, we have the enormous benefit of being near Wilmington, which I mentioned, is one of the fastest growing cities in North Carolina, and as a result, have a fantastic labor base there. And what we found a lot of these hotels that we buy is that there's kind of cultural inroads toward these hotels, where people have worked at these hotels for decades, and culturally, the Blockade Runner, which is the prior name of the hotel, employed hundreds of people who had been coming there for a very long time. And when people were in college, they knew that they wanted to, or aspire to a job as a Blockade Runner to make some extra money during the summer and peak season, or maybe to work it after they graduated. So you've got these kind of cultural connections and and cultural infrastructure that leads people to work at these hotels.
Ben Weinberg 32:06
Now, some of these hotels that are, you know, we're taking that are on the lower end of three star to turn into four star, and there's less of that cultural infrastructure. It becomes harder, and in which case you have to find the right GM who can really be that leader and really attract people and be a magnetic force to get people who are working at a flagged hotel, who maybe feel it's a little bit less interesting than working on a Trailborn, and we offer the same pay and the same benefits. We always pay on time, and we have the right benefits package for that person specifically. Maybe they're single, maybe they have a family, whatever it might be, and we can deliver on that reliably if they can deliver to us reliably, which is going through our brand trainings, going through our property trainings, and showing up on time and and really kind of committing to delivering a full Trailborn experience.
Atif Z. Qadir 32:47
as you're training and getting employees familiar with Trailborn, the hotel specifically. What are some of those, those training processes that you're doing to get people aligned? Tell me about some of that stuff.
Ben Weinberg 32:58
Yeah, I'll speak to a little bit. I think we do all of your standard kind of more operational training, which is by function. I think what makes us a little bit different is we're telling a story to our guests. We're also telling a story to our team on what we're trying to create. At the end of the day, we can spent all the time in the world sitting here in an office talking about what we want guests to experience, talking about what we want the hotel to look like, talking about what we want it to feel like, but if the team on the ground who's actually executing on that is not as up to speed as everyone sitting here in the office, we failed, right? So the only way to do that is to put together really compelling materials that share the vision of what we want this to become.
Michael Weiss 33:36
You know, like Ben mentioned, there's a lot of people that have worked at the Blockade Runner for a long time that are great employees that we want to be there for a long time, but they're used to living in that product in one state of the world, we're trying to create another state of the world that celebrates some of the capital that we're putting into these properties and the investment that we're making. And if we do all of that, and the lobby is not set up the right way, or we do all that, and beds aren't made the right way, the guest is going to walk in there and say, well, this doesn't feel like what I thought it would be. And so we have to train on the brand so people know what the brand is all about. We have to train on what we want the guests to feel when they walk in there. And then we actually go through some examples. And our ops team is working through examples, kind of role playing different situations, to make sure that the things that we want the guests to experience they're actually experiencing once we open up as a Trailborn.
Atif Z. Qadir 34:25
So what I love about that is there's a narrative about the way that you are staffing up and operating the hotel. There's the really strong narrative about the acquisitions of the hotel, and then there's a really strong narrative about you as a company, and there's a through line between all of them. I'm sure they all inform each other. Congratulations on the partnership with Marriott. So this is bringing a very large organization with perhaps a different narrative to the way they operate and how they execute and now in partnership. So tell me about how this came to be, what the goals of the partnership are, and how you hope to capitalize on that relationship.
Ben Weinberg 35:10
Yeah. So this relationship is a really nice, sort of complimentary relationship, because Marriott has 219 million Marriott Bonvoy members who are looking to redeem their points and to earn points, in some cases, on product like ours. And Marriott as a company, setting us aside is focused on, you know, bringing more of the outdoors into their product and kind of into their offering, and what they have from a distribution perspective and from an infrastructure perspective, we of course, don't have, and they don't really aspire to do at all what we do, which is creating these very unique experiential boutique hotels and these different destinations with that kind of thread of consistency. So I think you know, if you were to talk to them, they would view it as a way to add product that their Bonvoy member is looking for to the Marriott Bonvoy Platform while, you know, we're doing the hard work to create that product. But of course, we get the benefit that Marriott has done such an amazing job creating, which is their massive Bonvoy base, who is very loyal, and we view as most compelling reward system that exists. And we've just, you know, we've really enjoyed working with the Marriott team. They're they're sharp, they're impressive, and they're on it, and we've really enjoyed kind of figuring this out with them, and ultimately, kind of getting this launch. The goal is for us to continue to add Trailborns to their system, and continue to add them and create real scale where we can really offer, you know, something, a number of keys that's much, much larger than what we have today over time to Marriott Bonvoy members, where the Marriott Bonvoy can benefit from that offering and scale that offering, and we can, of course, benefit from the distribution system and our partnership with them.
Atif Z. Qadir 36:52
So currently for the hotel in Wrightsville, could you give us an estimate of the amount of business that comes from direct sales versus OTAs, or from other channels, and how you think that might change now with the relationship with Marriott?
Ben Weinberg 37:08
Yeah, so over time, what Marriott has really proven is that, you know, for most Marriott Hotels, a much, much smaller percentage than for an independent hotel versus a Marriott Hotel would come from the OTAs. So I can't quote exact numbers, but it's a very small percentage that would come from the OTAs. Much, much larger percentage will come from a combination of both direct and the Bonvoy platform, which has proven to be incredibly powerful. As I said, you know, the Marriott team knows what they're doing, and they've created, you know, a funnel that is unbelievably powerful.
Atif Z. Qadir 37:40
I'm curious as to you mentioned the growth strategy, and now this relationship with Marriott will give you the an audience of 219 million customers. As you grow and accelerate the company's acquisitions, talk to me about the places that you would like to take your company. Where are some of those destinations that's the next Wrightsville or the next Mendocino.
Ben Weinberg 38:06
Yeah. So as you can tell, Atif, you know, we're in the business of finding the hidden gems that regionally are enormously popular, but nationally are much less popular. And that's interesting to us for a variety of reasons. Number one is that for the regionally popular but not nationally popular destinations. You don't have real estate capital allocators focused on it. So we have a playing field that's much more attractive. Number one, and you know, we can usually buy things at a price that are that are much more interesting. And the number two is, you have demand that exists, even if it's not national, that's very much regional. And is drive to versus fly to. And so through over the years, these drive to destinations have performed very well because people tend to get in their cars in just about any scenario the world and they want to go to these places.
Ben Weinberg 38:48
But as it relates to, you know, places that that we'd like to be, I'll just give you one example. We feel that Whitefish, Montana is extremely interesting. We've been spending a bit of time up there. That is destination that sits at the entrance to Glacier National Park. It's one of the most spectacular places in the world of the summer, but also has skiing in the winter and is very, very difficult to build in. So you'll almost definitely never see another hotel built there again, which means you have to work with the existing stock, which is why I'm talking about it. We haven't done anything about it yet. It's very difficult to buy a hotel there, for the extent you can get into that market and offer people such a high quality experience in a place like that, where, you know, Rev par is high, you've got Kalispell next door, which serves your labor base, and you've got a ton of demand that, you know, really compresses, where more people who are able to go there want to go there. You know, it becomes really quite interesting.
Ben Weinberg 39:38
The thing I'd add to that is, like, zooming out a little bit for like, the vision and goal for Trailborn as a brand, we want to become synonymous with outdoor travel, right? Anytime someone thinks about, I want to go get away with my family, get away with my friends. Be outside. See something new, experience something new. Be with the people that I love in the outdoors and like a healthy, fun place that they're going to turn to Trailborn and say, let me, let me see what else Trailborn is offering, because I've had a good experience at a Trailborn before. I know the type of product they put out there, and I know that they're a different type of stay in the outdoors. And so that's where I'm going to start my search.
Ben Weinberg 40:13
We're on the path to getting there, but we have a ways to go. But that's the goal of where we want to we want to get to. And to even add to that, put it even more simply, like there's a lot of people who want two things. They want boutique and they want outdoor adventure. And Trailborn puts both of those together and brings you to places, some of which you've heard of, you've gone to for 20 years, and some which you've never heard of, but all should be equally spectacular, really special and unique. And give you those moments that you're looking for, whether it's sitting around the fire, having s'mores, as I mentioned before, or, you know, going on a hike that is a little bit The Road Less Traveled than most people haven't heard of in Rocky Mountain National Park. Or it's, you know, getting on the train and driving through the Grand Canyon. It's those unique experiences that you remember that we really want to deliver people.
Atif Z. Qadir 40:53
Given that you both have known each other for a really long time. Are there any particular outdoor destinations that you went to as kids, that you would love to build hotels in or to operate hotels in?
Ben Weinberg 41:08
That's a good question. Not as kids. There are places that we've spent time together in, especially in the early days of the business. You know, we have Trailborn in the Rocky Mountains, but Mike and I have spent a lot of time together in Colorado, in the outdoors, so that one is special to us. We were spending a bunch of time in the early days of the business trying to acquire hotel in Gatlinburg, Tennessee, which is the gateway town of the most visited national park in the country and is often a completely overlooked and forgotten market by most real estate investors, has close to 16 million people going there a year.
Atif Z. Qadir 41:39
Is that the Smoky Mountains you're referring to?
Ben Weinberg 41:41
Exactly, exactly, yeah. So, you know, Mike and I spent a lot of time down there testing out all the moonshine that they have. So we remember that fondly. But another thing to talk about on this podcast, yeah. So, yeah, you know, we have some different places, not as kids, but really in the context of this business.
Atif Z. Qadir 41:58
Amazing. Some of the ones that I thought of, if I were to answer that question for myself, it's South Holding Greenport on the North Fork of Long Island. So went there to my aunt and uncle's house in the summers. I grew up in Bellport on the South Shore. So there's Ho Hum Beach, which is a Fire Island beach across which is really, really stunning. Bar Harbor, so Acadia National Park River, definitely great. That's a great one. I went for a vibe, very seasonal, but great market. Yeah, totally. That was my 10th birthday. And then I would say, of more recent ones I mentioned to Ben in a previous call, West Virginia, I think, as a state, is widely overlooked for many different reasons, but I think particularly in terms of outdoor destinations. So in and around Harpers Ferry in Charlestown, and then also Morgantown within the Northern Panhandle too. Like wheeling. Those are the hats that I'll throw in the ring for you guys.
Ben Weinberg 42:50
Mike, Atif was telling me about some of his travels in West Virginia. I was like, mining him for range. I was like, tell me more what it was like, Dude, I just mentioned to him passing, my God. But yeah, I was really curious about that.
Atif Z. Qadir 43:05
Yeah, there's, I think you guys had mentioned earlier in the episode, is that the care and effort that you take in order to drink that moonshine at the location right next to Smoky Mountains, like you can't really replace the drive-in stay experience that's important in making that decision of where to acquire. Because I think the other version of it is that being a PE company that just flies into a place for a day or two, makes a decision on the proforma and then tries to make money on the capital stack, I think is something that's a very, very different experience. And it feels like the way you've approached it is a much more humane way, and actually much more, much more fun way to do it.
Ben Weinberg 43:48
Totally, totally, yeah, we're up at six o'clock in the morning. We're flying in row 38 and driving four hours in a questionable rental car, like we're it's real. I mean, it's is, you know, but that that's part of this business, that's what we like, and that's what we enjoy. I think from the beginning, we've always wanted to be specialists, right versus saying, you know, we focus on hospitality, or we focus on real estate, we are focused on Trailborn. And that is it. And that allows us to really be tight and thoughtful and make the right judgment calls the real estate side, and then very, very granular and who our customers make sure we're solving for that customer. In some cases it looks like us. In some cases it looks nothing like us. But you got to kind of approach that with a really, a really honest lens.
Atif Z. Qadir 44:31
Amazing. So building and renovating and operating hotels takes a lot of money. Tell me about as you started the company, how you capitalized both businesses and where you are currently, and what you're planning for the rest of this year, the next year, in terms of fundraising and capital deployment.
Ben Weinberg 44:54
Sure. So when we started the business, we had the good fortune of the support of people who we had either worked with or had known for a very long time, who were kind of ready to support us in our entrepreneurial endeavors. And Mike and I had some that overlapped and we had some that were separate. We were very fortunate to get some large family offices and and former colleagues who were supportive of us and that also kind of expanded, ultimately, to endowments. Endowments are our customer of ours from an investment perspective, and view us, you know, as an emerging manager where, you know, they can get some little exposure now and then gross over time, to the extent that we do what we're saying we're going to do, which is, you know, make the money and generate our target returns and and are honest and straightforward people, which I certainly hope they feel that we do, and hope they feel that we do today, and they've continued to support us over time.
Ben Weinberg 45:40
What we're working on now is a new larger vehicle. We raised about $100 million to get the business started, and we're working on a new larger vehicle with kind of the same audience, family offices and endowments and larger pools of capital who are who have kind of seen what we've been able to do and seen what we've created, and are saying, you know, I'd like to be a part of this for the next chapter. And so we're in the process of raising another vehicle that will kind of support our upcoming projects that we have. We have a pretty significant pipeline that we'd like to capitalize and so we're, we're finalizing that over the course of the next kind of several months here.
Atif Z. Qadir 46:14
Amazing. And you mentioned also that you are growing your team from currently. You said 300 staff total, and you're looking to grow from there. Could you talk about some of those key roles or key areas that you want to grow your staff in order to bring your company to the next level?
Ben Weinberg 46:32
Yeah, so we kind of have two groups people that work incredibly closely together. One is, was a corporate across Trailborn, we're about 30 today, and we're building that out. And what we're doing is, as we acquire more hotels, both our operational infrastructure and our marketing infrastructure needs to grow. We need more people. The team we have has done an excellent job, but we need to add resources that so that primary on operations and marketing is kind of primarily where we're focused. And then sales as well, where weddings, corporate retreats are a huge part of our business. And we continue on hotels, there's more, more groups we need to be in, be chasing to kind of book those groups, especially kind of in the shoulder season, which which really helps us.
Ben Weinberg 47:07
And now on property, you know, as we acquire each hotel, we largely keep staff in place for the reasons I mentioned to you on the example I gave in Wrightsville Beach, you've got these kind of cultural inroads that bring people to these assets and keep them there. And so what we like to do, typically, is, when we buy these hotels, we don't change anything. We are humble students and observers. Have our view on what the business plan is, how it's going to take and what needs to happen. But in the beginning, we just kind of watch and observe and and just sit down and talk to people and really try and understand and go deep on how the hotel works and how it moves. You have to get a feel for how a hotel moves by just spending time there. How the labor works, how guests flow. Where do they typically go? Where are they not going? You know, what can we fix? What can we not fix? All these different types of things, and then really spend time in leadership. Because, you know, these larger resorts, you've got GM leading a team of 150 people. It's a significant operation. These GMs are very high quality, and can really sit down and kind of explain to you what's happening. Really growing the corporate team from a marketing and sales and operations perspective, and then, of course, growing the property teams as well as we continue to acquire hotels.
Atif Z. Qadir 48:09
Given it's March now, folks might start planning for their summer getaways with their families. Could you talk about three or four of your hotels that you would recommend people consider visiting this summer if they're looking for an outdoor destination type resort hotel?
Michael Weiss 48:26
Yeah, we've talked about Trailborn Surf & Sound quite a bit, and our restaurant there is opening as we speak. And so that's a really exciting one I would send people to. It's a great beach resort. Trailborn Highlands, which is also in North Carolina, but it's in the Blue Ridge Mountains. We've got a great property there with a Nordic Spa, completely renovated, and a beautiful restaurant in an old historic log cabin called Highland Supper Club. And so if you're in and around the North Carolina area, or the Wilmington airport is bustling and adding flights every single day, so you can fly into Wilmington to get to Wrightsville Beach, those are two great options. Tromo Grand Canyon just recently opened. And so if you haven't yet checked off that bucket list, trip, I'd recommend going out the Grand Canyon, staying at our property there, and thenTrailbon Rocky Mountains is also a great summer destination. Rocky Mountain National Park. There's a ton of different experiences, both inside the park and in the town of Ulster's Park, which is where our property is. So those are the four that I would I would guide people too. And if you come, please tell us what you think the good, the bad, the ugly. We want to hear all the honest feedback
Ben Weinberg 49:27
Exactly.
Atif Z. Qadir 49:27
Because the reviews are a key part to both acquiring hotels as well as making sure they run very well.
Ben Weinberg 49:33
Yeah, exactly.
Atif Z. Qadir 49:35
Thank you, Ben, thank you, Michael, for your time today to talk about Castle Peak and Trailborn, and all the amazing work that you guys have done and that you will be doing going down the road. So I appreciate it.
Michael Weiss 49:47
Thanks so much.
Ben Weinberg 49:48
Thank you, Atif.
Atif Z. Qadir 49:52
I'm Atif Qadir and thanks for joining me on American Building. If you enjoyed this episode, be. Sure to Subscribe on your favorite listing app and leave a rating and review. America's housing crisis is one of our greatest challenges. But what are the real solutions? Hear from the developers and other industry experts driving meaningful change. Get our exclusive guide: Housing in America, Eight Ways We Can Solve Our Way Out of a Crisis at americanbuildingpodcast.com.