Aaron Katz, president/CEO of Washington, DC-based Modus Hotels, is happy to be considered a bit eclectic, proffering a personality that reflects the company’s collection of lifestyle hotels.
Modus Hotels, a subsidiary of Cafritz Interests, has added six new hotels in as many years under Katz’ watch, in gateway locations such as Baltimore, Chicago and Washington, DC.
Last year, the company broke ground on DC’s first Pod hotel in the District’s Chinatown and is the sole developer, owner and operator. It also infused some $11 million to renovate five of its full-service hotels.
A lodging industry veteran, Katz previously served with Choice Hotels International, overseeing core brand management and strategy.
With a JD and MBA under his belt from Georgetown University, Katz also has taught finance at George Washington University and is an occasional guest lecturer at American University’s Washington College of Law.
How would you characterize Modus Hotels in how it’s shaping its portfolio? Modus Hotels is experiencing an exciting time both in growth and overall change based on what is happening in the industry. Travel trends are changing as Millennial and younger generations take over as the predominant generations traveling. In an effort to meet the changing needs, Modus is developing the first Pod Hotel outside of New York, as well as working with Abdo Hospitality managing The Hive Hotel in [DC’s] Foggy Bottom.
Modus Hotels has lifestyle properties concentrated in Washington, DC. What makes this market so attractive? In 2014, DC welcomed 20.2 million visitors, which was a record for the city. The potential growth in the marketplace is there and affords us greater opportunities to develop as well as manage properties in a thriving market. As a company based in DC, we also are able to keep our guest experiences authentic and work toward connecting our guests with unique experiences in the city.
Modus Hotels also has expanded to Philadelphia (The Windsor Suites); Chicago (Comfort Suites); Baltimore (Brookshire Suites); and Arlington, VA (Virginian Suites). Why are these markets good fits? We are a lifestyle brand… Our properties in these key cities provide authentic experiences and an opportunity for guests to embrace the city. For example, in Philadelphia, we are working with the Franklin Institute and, at our hotel in Baltimore, we feature murals by Michael Owen, creator of the Baltimore Love Project. Both of these are very dynamic markets and easily accessible from New York and other East Coast cities.
Is Modus Hotels being more opportunistic or more strategic in making these distribution decisions? Both. We are being more strategic at looking at market and travel trends to identify what’s important for today’s traveler. We’re looking to diversify our portfolio and also innovate with our new properties. By developing the Pod, we are able to tap into a new market for us; it is also a market that is growing rapidly… With more well-rounded opportunities, Modus can continue to grow and be at the forefront of the lifestyle-hotel movement.
What was appealing about the Pod project? Pod offers something wholly different to complement our existing portfolio of hotels, and the opportunity to develop guestrooms that are cutting edge was highly appealing. In addition, we are looking to create bar and restaurant space that will further re-energize the up-and-coming Penn Quarter neighborhood where the property is located.
Modus Hotels also is planning to open a so-called micro hotel, The Hive, another first in DC. What exactly is a micro hotel? A micro hotel brings innovative designs to small spaces, while also offering lively communal public spaces that appeal to social travelers and connect them with like-minded people. This ties back to the Modus philosophy of offering immersive experiences that are authentic and leave indelible memories of a destination with our guest.
Are suites a “sweet spot” for Modus Hotels? Are you looking to do more in that segment? Modus Hotels was built on the residential-style experience, thereby offering guests large suites with kitchens and workspace… Going forward, we will develop more efficient, experiential guestrooms, smaller in size and offering guests different types of amenities, such as community space, dynamic F&B and rooftop experiences.
Does Modus Hotels or its parent, Cafritz Interests, own and/or have equity (sliver or otherwise) in some hotels? We own the majority of our hotels, and the benefit is that as owner and operator, we are able to establish our brand more clearly and have greater control on the future of growth and development of our company.
What do you consider Modus Hotels’ comp set and how do you see the company differentiating against the competition? Kimpton Hotels, CitizenM and Moxy Hotels all are brands with which we identify. We are very nimble as a brand, and we maintain a thoughtful approach in our growth, carefully selecting the right project to augment the Modus brand. We are also very conscious of maintaining the local identities of our hotels and working to deliver experiences that speak to the destination where our hotels are located.
Where do you see opportunity ahead for Modus Hotels in terms of advancing the brand (e.g., technology, social media, F&B), and what’s the vision for the next, say, five years? We are working on bringing in local, unique partners across all arenas—from F&B to health and wellness—to connect our guests with local experiences to ensure their lifestyle needs are met when traveling. The brand is thriving and growing, and we will continue to look into different markets to seek opportunities to create exceptional and memorable guest experiences, as well as developing new concepts that speak to the ever-changing traveler’s mindset. HB