What We've Learned About Bringing Teams & Companies Together - Roman Pedan, Kasa

[00:00] Josiah (recorded intro): In this week's series with Roman Pedan, CEO of Kasa, we opened up talking about the experience that I had recently in New York at Mint House 70 Pine by Kasa. And I wanted to bring the series full circle and wrap it up by talking about how they brought Mint House into the Kasa family and what was involved in doing that. Now, as you know, the hotel business has so much of this. There's always people and teams and businesses coming together, and I'm always fascinated by what it takes to do that right. So in this episode, Roman shares some really honest experiences of what that looks like, including bringing teams onto new systems and earning their trust. Let's get into it.

[00:46] Josiah (show open): This is Hospitality Daily, the show that helps you stay informed and inspired each day by the most interesting people in hospitality. My name is Josiah Mackenzie, and my goal is to help you reconnect with why you work in this industry and get fired up to go out there, delight others, and reach your goals. Let's get started.

[01:10] Roman Pedan: We are relentlessly unsatisfied with ourselves, so we're constantly feeling like we can do better. And also, when you look back, we are proud of how we approached the Mint House transaction and what it can mean for other transactions like it.

That was very intense. We had really meaningful time pressure to do that deal in order to honor the Mint House team. I basically wasn't sleeping from Thanksgiving to the end of the year, through Christmas. Luckily, I'm Jewish, although my wife's family, which celebrates Christmas, maybe didn't appreciate that I was doing some work to get that over the finish line during the holidays.

And then we transitioned the systems in 28 days in January. Basically, it went from everything operating on the previous Mint House systems to going onto the Kasa platform in 28 days, which included going to every property and training them in person. And so our training team was on the road and didn't come home for 28 days.

A huge, huge appreciation to everyone at Kasa and on the Mint House side who was involved in driving that forward. It was a Herculean effort, truly. What we learned, to your point, is that in many other situations, the systems integration is the hard part, and that was not the case for us. We moved it.

Now, there were challenges, but we generally fairly seamlessly moved it from the Mint House disparate set of systems to the Kasa integrated operating system. The hard part was the culture and the people and the human service parts. And a lot of that was around listening, earning trust over time, sharing our values very directly and saying, "Look, this is how we operate now. We're Hall of Fame hosts. Hopefully that resonates, but maybe it doesn't. And if not, then this isn't the right place."

We invest in our training systems and built Kasa Academy, a custom training system for that situation. And now we apply it everywhere. It's kind of a smart training system, which looks at what you are demonstrating real competency in as an individual. So how you're using our systems in the back end, it looks at that data and then suggests modules for you. So we did all of that, and still it was challenging to ensure that we integrated people and culture into Kasa while honoring what Mint House did.

Nonetheless, to your point, we were very validated by the results that we drove. Before and after, direct bookings across the system dramatically increased, and Kasa has just a lot more traffic to kasa.com. That went up by six X, literally six X. Some of that was cross-network traffic, like 5% to 10% of the overall demand, not of the direct bookings, which is great, and quite quickly, so that will hopefully ramp up.

[03:50] Roman Pedan: We saw same-store RevPAR up well into double digits. Same-store reviews went up a standard deviation or two. And we surveyed the teams. This is a little bit softer. We surveyed the on-site teams on how they liked the Kasa system versus the previous system, and we surveyed them twice, because we took their feedback. Initially, a majority of folks liked it, but it wasn't an overwhelming percentage. And then we incorporated their feedback, and three months later it was an overwhelming percentage, which was great to see. And of course, there were some meaningful G&A synergies.

The reason this was validating is the only change we really made was the operating system. We kept the buildings the same. The operating layer really changed. And the Mint House team was solid, passionate, hardworking. They had good systems. They used Mews as their PMS. I respect what Mews has built. I think the difference is it wasn't fully integrated, and the system wasn't utilizing the latest capabilities of AI, and didn't have as much scale.

There's always a benefit to scale, and they were in that middle range that I articulated, and so there was a lot of industrial logic to the deal. I would say, to zoom out, our approach to a deal like that, if we were to do a hotel management acquisition or an acquisition of another brand, is to honor and keep the ethos and the leaders on board, and to give them power, the motor below the surface of the duck paddling, and maybe jet engines, to mix metaphors, so that they can go faster, lower costs where they need to, and deliver differentiation.

[05:31] Roman Pedan: And so our approach, where the management team wants to continue building, is to empower that and help them do so without the constraints of being stuck in the middle of that barbell. And I think there will be more consolidation in the hospitality space. It just needs to happen. Consolidation happens from pressure, and that pressure is coming from what I articulated in the Fortune article, around the barbellization of the whole economy and within hospitality. You can certainly feel it when you're in any one of the conferences or rooms with operators or brands.

[06:03] Josiah: This is the moment for what you're building. I think there's a huge opportunity ahead, and it's really remarkable to see what you have built and are building, Roman. It's always a pleasure to talk. Thanks for making the time.

[06:13] Roman Pedan: Yeah. Thank you.

[End of episode]