A hotel company leading with a mantra of Soul, Community and Planet (SCP) might seem a little outré in the relatively conservative world of hospitality but Ken Cruse is taking on the challenge with his rapidly-expanding SCP Hotels brand.
The concept is building a purpose-driven brand embracing sustainable, healthy and socially responsible travel. Among the ways it walks the walk are a net zero waste policy, a commitment to charitable giving and an innovative fair pricing protocol.
Cruse, a hospitality industry veteran, started SCP Hotels in 2017. Its first property, a former Knights Inn, opened in Colorado Springs, Colorado the next year. The umbrella company, SCP Hospitality, has purchased seven properties to date. Aside from Colorado Springs, it owns, operates and manages two hotels under the SCP moniker in Oregon and one in Hawaii. Also part of the roster, although not yet rebranded, are the Salishan Coastal Lodge in Oregon and the Laguna Riviera Beach Resort in California.
At the end of 2020, SCP announced a strategic joint venture with a large institutional partner to facilitate growth opportunities. The investment, coupled with property-level debt, gives SCP upwards of $500 million to grow its portfolio, which it plans to grow to 25 within the next couple years. While currently operating solely in the United States, expansion plans include offshore markets, such as Costa Rica, offering access to nature and outdoor adventure. Most of the growth will come from recycling existing hotels with 75 or more rooms. That said, Cruse is willing to pick up something as small as 12 rooms if it is located near a larger SCP property.
The SCP Proposition
SCP Hotels seem to be all over the map in terms of pricing, though, with rates, according to Cruse, “calibrated to the experience offered and to the specific market.” While pricing may range from about $200 to $800 a night, “what all the hotels will share,” said Cruse, “is the consistency of our values, although that will look different from one location to another.”
So, what about those values? First, the company supports a range of causes aligning with its vision through its Every Stay Does Good program, donating five percent of profits to environmental and social organizations. To help the environment, SCP promises to plant one tree for every guest in unnaturally deforested areas, and it is committed to a net zero waste policy. The move to a 100 percent vegetarian menu will also help reduce SCP’s carbon footprint, while promoting healthy dining.
Adding to the wellness equation are SCP’s signature Peaceful Rooms. Designed to promote a restful sleep, features include non-toxic, plant-based bedding and other elements that can enhance the sleeping experience. What they do not include are connected electronics like television sets, alarm clocks and phones.
Then there’s that fair trade pricing concept, an unorthodox approach to room rates. People can pay their own price, based on their experience. Guests do make reservations based on suggested rates, to help deter freeloaders, but they can pay a different price upon checkout, based on the quality of their stay. It seems a risky proposition, but to date, said Cruse, “98 percent of the time people have paid the market rate.” Those who have paid less, he says, have had legitimate reasons for doing so. How is it that more people have not taken advantage of the policy? “SCP Hotels has an upfront alignment with our customers that doesn’t exist in a more traditional customer relationship,” noted Cruse. “Our customers are on board with our value-based movement.”
Ownership Model
Currently, SCP Hospitality and/or Cruse's Alpha Wave Investors, owns all of its real estate and manages all of its hotels. This makes for better efficiency and flexibility, said Cruse, allowing for rapid decision-making and course corrections.
In most cases, an owned and managed model is the plan, but Cruse says he is willing to work with owners who embrace SCP’s values. “We’re open to a broad range of creative solutions at this point,” he said. However, he added, that, “it’s tricky to run a purpose-driven franchise company and ensure purpose and values are initiated in all properties.”
As SCP Hospitality continues to grow, it is looking for properties meeting several screening criteria. They include whether the destination is conducive to SCP values; whether SCP can add value through rebranding; and whether the hotel can charge an average daily rate of $200 or more. Furthermore, it is looking for opportunities that will result in a minimum 17.5 return on investment.
As for what’s next? "We're spending time thinking about what the next iteration of SCP will look like. It could be a public company or it could be partnering with a private equity firm. But first, we've got to put more scale into the portfolio while raising the bar on social responsibility,” said Cruse.