HPT is externally managed by The RMR Group Inc. (Nasdaq: RMR). RMR is an alternative asset management company that was founded in 1986 to invest in real estate and manage real estate related businesses. RMR's business primarily consists of providing management services to four publicly owned real estate investment trusts, including HPT, and three real estate operating companies, including TA and Sonesta. As of December 31, 2016, RMR had approximately $27.2 billion of total assets under management, including more than 1,400 properties, and employed over 450 real estate professionals in more than 30 offices throughout the United States; the companies managed by RMR collectively had over 53,000 employees.
The initial public offering of HPT occurred in May of 1995 as the company began investing in select service and extended stay hotels with the acquisition of 21 Courtyard by Marriott properties, a time when institutional investment in select service assets wasn’t as common as it is today.
HPT believed owning lodging properties that have lower fixed costs compared to full service hotels would provide a stable base of cash flows for HPT to increase its cash available for distribution from a dependable and diverse group of operators allowing it to periodically raise dividends over time, an objective that exists today.
In 2007, HPT began investing in full service travel centers, or truck stops, located principally along the United States Interstate Highway System. HPT’s travel centers are leased to TA, one of only three travel center brand owner operators in the country with interstate highway located truck stops of national scale. The travel center industry has experienced consolidation in recent years and this has allowed certain fuel fundamentals to improve, an important factor in the profitability of HPT’s travel centers.
Since 2007, federal regulations have decreased the number of hours a professional trucker can drive in a 24 hour period and we believe this has resulted in increased sales of non-fuel products and services at our travel centers.
We believe that being managed by RMR is a competitive advantage for HPT because of RMR’s depth of management and broad-based experience in the real estate industry. As one example:
The RMR Group lodging asset management team partners with seven hotel operators, several of whom are the largest and most experienced in the world, to maximize revenues, net operating income and guest service at our leased and managed hotels. These seven operators manage portfolios ranging between 11 and 94 properties(1). This unique perspective enables RMR Asset Management, within appropriate legal bounds, to collaborate with operators in an informed way to compile business and service plans.
(1) Data as of December 31, 2016.
Leveraging the scale and expertise of RMR managed entities and employees respectively, HPT is able to realize benefits associated with:
We believe RMR provides management services to HPT at costs that are lower than we would have to pay for similar quality services.