Investor FAQ
Should Icon
Hospitality Services be of interest to you?
Icon Hospitality Services (IHS) was created to link private equity with full-service, select-service and extended-stay lodging assets that produce positive cash flows and appreciate in value. IHS employs a balanced scorecard approach to drive profit and fuel future growth. We pursue organic development, acquisition, and joint venture opportunities.
Will investing in an IHS-managed lodging LLC make sense for you?
Each individual must, of course, carefully evaluate his or her investment portfolio. Most financial advisors recommend a diversified portfolio, which might include ownership of commercial real estate. If commercial real estate ownership makes sense given your personal investment portfolio and preferences, then IHS-managed lodging LLC’s are worth a close look.
Who is the IHS founder and what is his background?
Larry Guest is the founder and Chief Executive Officer for Icon Hospitality Services. Prior to founding Icon, he served Hospitality Partners in Bethesda, MD, initially as Director of Operations, and later as Vice President of Operations & Corporate Services. He led Hospitality Partners during the economic recession that began in early 2001, then through the challenging aftermath of September 11 to achieve the highest sales in company history.
In April 2005, he was named President and Chief Operating Officer for Donohoe Hospitality Services, a wholly owned subsidiary spun off from Hospitality Partners as a new division of The Donohoe Companies. He crafted a strategic direction for the new division, built a corporate team while streamlining and decreasing the cost of corporate infrastructure, improved unit-level financial results, enhanced owner relations, and oversaw the on-time/on-budget opening of the Hilton Garden Inn in Tysons Corner, Virginia.
Prior to Hospitality Partners and Donohoe Hospitality Services, Larry was Vice President & General Manager at Smith Corporate Living, the corporate housing subsidiary of Charles E. Smith Residential Realty. He restructured operations in Chicago and Washington, D.C., and wrote a comprehensive acquisition-based growth strategy designed to deliver 4-fold growth.
Larry launched his hospitality career with Marriott International. Over the course of 24 years, he served as General Manager of U.S. and international hotels, including the Tysons Corner Marriott in Virginia, and the Marriott Plaza Hotel in Buenos Aires, Argentina, an 85-year-old historic landmark and Marriott’s first hotel in South America. He spent several years in human resources at the corporate level where he held progressively responsible executive positions, including 5 years as Senior Vice President of Human Resources for Marriott Hotels, Resorts and Suites.
What qualifies the founder to manage your lodging investment(s)?
His 30+ years of experience and demonstrated past successes in:
Who is the Managing Member and what is his role?
The company's founder serves as Managing Member and owns 20% of each LLC through a "promoted interest." The Managing Member sources and qualifies each deal, prepares the Letter of Intent, negotiates the detailed Sales and Purchase Contract, conducts Due Diligence, secures qualified investors, arranges the equity and debt, as well as selects and supervises the management company. The Managing Member may also invest in an individual project as an Investor Member, thus owning a pro rata portion of a particular deal in addition to the previously described promoted interest. At the discretion of the Managing Member, selected individuals may receive one-time only or periodic payments in either a flat sum or as a percentage of the Managing Member's share of an individual LLC.
How can you participate in ownership of IHS hotel(s)?
Each hotel is owned by a limited liability company (LLC) created for the sole purpose of owning that particular hotel. The minimum investment in an LLC is one (1) membership unit, valued at $25,000 each. For IHS planning purposes, a signed commitment to fund "qualifies" one as an Investor Member, with actual funding required in sufficient time to ensure a deal can close. Generally speaking, funding will be required three weeks prior to a scheduled closing date. (Note: Investor Member funds are not used to support IHS administrative or corporate activities.)
What is the role of Investor Members?
Investor Members provide 100% of an individual project's required equity and own 80% of the deal. Investor Members are typically high-net-worth individuals who desire to invest in hotels without the responsibility for managing. Investor Members generally have an investment horizon of 5-10 years, after which a hotel is typically refinanced or sold.
How do Investor Members receive a return on their investment?
Investor Members receive a cumulative preferred return on their investment starting from the time their money is transferred to the LLC. For any given year Investor Members will receive their preferred return first, after which the balance of available cash is distributed on an 80%/20% pro-rata basis to the Investor Members and the Managing Member. The preferred return varies for each hotel, and is set and agreed to as part of the deal structure for a particular hotel. If Investor Members fail to receive their preferred return for any year, the shortfall is accrued. Upon the sale or refinancing of a hotel, Investor Members receive any accrued preferred return first, then their original equity, with any remaining balance split on an 80%/20% pro rata basis between the Investor Members and the Managing Member.
What are Investor Member Distributions and when are they paid?
Investor Member Distributions are periodic allocations of preferred returns.
Investor Members are responsible for paying income tax on these
distributions. An annual K1 will be
generated to report any distributions.
What is the typical investment term?
As noted above, participation in an IHS LLC typically involves an investment horizon of 5-10 years. At the end of that term, the property is sold, the LLC is dissolved, and the remaining capital and proceeds are distributed to the members. An “early exit” might occur if the total membership or individual members were prepared to buy you out should you desire to exit prior to sale of the hotel.
Who decides whether IHS targets a hotel for acquisition?
The Managing Member for IHS-managed assets determines whether a hotel is an acquisition target and invites individual investors to participate in an LLC created for the purpose of owning that hotel. Hotels will typically be “targeted” or found through a variety of brokers, referrals, and unsolicited offers. I am currently evaluating a number of hotels, and always have an active investment pipeline
How will IHS acquisitions be financed?
Acquisitions will be financed via sources with which the Managing Member has established general business and banking relationships.
How will IHS keep you informed about your investment?
Communication will occur primarily through Quarterly Membership Reports. In addition, the Managing Member for IHS-managed LLC’s will be readily accessible for consultation regarding your investment.
Will you be required to invest in every IHS lodging LLC?
No. IHS will invite you to consider individual investment opportunities as they arise.
Are there downside financial scenarios you should consider?
As with any investment, it's important to understand the possibility of downside
scenarios. A cash call to investors due
to insufficient operating cash flow is one such scenario.
Who will be invited to invest in IHS hotels?
Friends, family members, acquaintances in the industry, and high-net-worth
individuals.
Can you recommend an investor to IHS?
Yes, of course, and I hope that you will.
If you have questions, what should
you do?
Please
email Larry Guest at glarrya@cs.com or call him at
(240)-498-3218.