Hotel developer Sam Hardage's office, filled with memorabilia, is a reflection of a man of eclectic interests. The 182-pound blue marlin mounted on the wall opposite his desk was reeled in by Sam Hardage, the sports fisherman. "It was my first marlin, and it’s the biggest I’ve ever caught," recalls Hardage. A former Air Force pilot, he keeps a model of a jet on display, as well as a pen from former President George Bush, a memento from his activities in the Republican Party.
    But it is a small acrylic-encased announcement, unobtrusively sitting on a shelf, that says the most about Sam Hardage's future — an announcement that Nomura Asset Capital Corp., the U.S. subsidiary of Nomura Investment Co., is providing up to $486.5 million for a major expansion of Hardage's Woodfin Suite Hotels.
    Under the deal, disclosed this spring, Nomura Asset Capital purchased 35 percent of Hardage Suite Hotels for $81.5 million. Nomura also is providing a line of credit of up to $405.5 million for construction, acquisition and permanent loans to increase the number of hotels operating under the Woodfin Suite and Chase Suite monikers. The Woodfin deal is the latest for the San Francisco investment company, which has financed about $7 billion worth of hotels in the past five years.
    The Nomura financing galvanized the expansion program of Hardage Suite Hotels. The San Diego-based property and development company started adding almost immediately to its current inventory of six Woodfin Suite Hotels and one Chase Suite Hotel as well as nine Residence Inn franchises. The company’s $300 million in assets are expected to reach the $1 billion mark in a few years. Nomura money can be used either to acquire existing all-suite hotels and convert them to Woodfins or to build new ones.
    Seven hotels are currently under development. In May ground was broken for two new all-suite hotels: a 202-suite Woodfin Suite hotel in Emeryville, and another with 156 units in San Diego’s Sorrento Mesa. The latter will be the first in Hardage's hometown. Construction will get under way in September on a 140-suites Woodfin in Austin, Texas. Meanwhile, the Woodfin development program is active in Poland, where a 100-suite Woodfin is under construction in Lodz. Work will begin in the fall on another 100-suite hotel in Gdansk. Woodfin's development group has set a goal of acquiring 18 new U.S. hotel sites by the end of this year. "Every 30 days on average, a Woodfin will open," Hardage says, noting that his all-suite hotels already operate in 11 states.
    To Nomura Capital Assets, which has begun investing in hotels again following the recession of the early 1990s, Woodfin looks like a winner. "We were attracted to Hardage and Woodfin by its excellent track record in generating revenues, even during difficult years," says Dan Abrams of Nomura. "The company has high-quality assets and management. Its industry niche — high-end, limited service hotels — is particularly attractive because of limited competition and potential for rapid market share development."
    Jerry Morrison, a San Diego hotel consultant, sees other reasons why the investment firm would sink hundreds of millions into an all-suite hotel business. For one, economic conditions are favorable. For another, he says all-suite hotels are relatively cheap to build. "They are frame and stucco, and they go up really quickly," he says, adding that regular, full-service hotels take far longer to open.
    Hardage is poised to orchestrate the stepped-up pace of business at his three companies, all headquartered at his Del Mar Heights office. (He is the founder, chairman and chief executive officer of each.) Hardage Suites Hotels functions as the owner of the hotel properties, Woodfin Suite Hotels is the service and operating company and Hardage Construction Corp. acts as general contractor for building Woodfin Suites Hotels in the United States and Poland.
    But the all-suite entrepreneur is finding time for another passion: politics. Having chaired the San Diego County Republican party from 1995 to 1997, he is serving this year as South Coast chairman of the Dan Lungren for Governor campaign, helping to raise funds for the GOP candidate. When Hardage remarks, "I’m going to try to bring (former president George) Bush to San Diego," he has the credentials and connections to make it happen. During Hardage's years as both businessman and political figure, he ran for U.S. Senate in 1978 and for governor of Kansas in 1982. He had served on the finance executive committee of the Republican National Committee and as a member of President Gerald Ford's advisory committee. He was a delegate to the White House Conference on Small Business in 1980. During the Reagan years, the president appointed Hardage to his Commission on Industrial Competitiveness.
    A San Diegan for the past decade, Hardage, 58, lives in Rancho Santa Fe with his wife, Vivian, and four children, Briarly, Adam, Chase and Samantha. Tall (6'4") and silver-haired, Hardage prefers casual dress to tailored suits. He has a wry wit and pokes fun at the conservative trappings of business. Asked if he owned a corporate jet, he replies," I gave it up for a bigger one, a 747. Of course, I don’t fly it, and I share it with a lot of other people."
    Hardage is a pilot, however. A native of Mississippi, he attended the Air Force Academy, earning a degree in engineering science. Later, in the Air Force, he became a captain and aircraft commander for the Military Airlift Command, flying around the world and performing combat support missions in Vietnam. "I saw places I didn’t even know were on the map," he says. "It was a great education for a boy from the Deep South." Destined for a business career rather than a lifetime in military service, Hardage eventually earned a post-graduate degree from the Harvard Graduate School of Business Administration.
    Before founding Hardage Suites Hotels 16 years ago, he was president of Hardage Enterprises Inc., a real estate development, construction and management company that built hotels, high-rise office buildings, apartments and warehouses in six states. He also was president of U.S. Communities Inc., a major developer of mobile home parks around the United States.
    Hardage found his current niche in El Paso in 1981, when he says he became the first Residence Inn franchise holder. Early on, he recognized the potential of the fledgling all-suites concept. The suites won favor especially with business travelers, who were more interested in a comfortable living space and business-friendly amenities than in hotels with huge lobbies and numerous restaurants.
    Over the years, the Woodfin Suites Hotel concept evolved, with the first one opening in 1985. The upscale all-suites accommodations feature complimentary breakfast buffets served on china, evening social hours with beverages and snacks, a business center open to guests 24 hours a day, seven days a week. Each suite has two phones, two televisions and a VCR. Free videos are available at the front desk.
    Extensive market research gave the company insight into what business and leisure travelers expect from hotels. Hardage notes, for instance, that surveys showed women felt uncomfortable with suites that had the bedroom and living area in one open space. They preferred a separate sleeping area. To incorporate the need for privacy with a sense of spaciousness, Woodfin rooms were designed so that the sleeping area could be closed off whenever the guest wanted.
    Other amenities offered in the hotels also related closely to research findings. At one point, the company hoped to please its business clientele by putting faxes in their suites. But when the concept was tried in two of the hotels, the results were surprising: Business travelers, as it turned out, did not use the faxes enough to justify that investment. Hardage says it was sufficient to make fax machines available in the hotel's 24-hour business center.
    Hardage is confident the all-suite hotels will prosper, with leisure as well as business travelers, because they offer more amenities and space at a price competitive with standard hotels. Woodfin rates range from $79 to $175 a night. "You’re going to see that all-suite hotels will continue to take market share from regular full-service hotels," he says, predicting they will capture even more business from the traditional sector when the economy fizzles.
    According to Smith Travel Research, Woodfin already is doing well, showing a 78.9 percent occupancy rate in 1996 compared with the competitive market's average of 75.9 percent and the U.S. average of 65.7 percent. Last year, Woodfin's occupancy rate rose to 77.7 percent, while the national average sank to 64.5 percent.
    As for San Diego, Hardage envisions that the new Sorrento Mesa Woodfin will be the first of four or five that eventually operate in the county. And although Sorrento Mesa is a high-tech area, Hardage says not all of the hotels necessarily have to be in places with high concentrations of business travelers. His research shows that all suite hotels do well just about anywhere, not just in business meccas. "The all-suite appeal," he says, " is pretty universal."

    For San Diego’s hotel industry, 1998 has been sweet. Nomura Capital Asset Corp.'s announcement that it will invest $486.5 million to expand San Diego-based Hardage Hotels was only one sign of the good economy and booming visitor industry.
    San Diego’s prime hotel properties have been snapped up like ripe plums. LaSalle Hotel Properties, a newly formed real estate investment trust, recently paid $73 million to buy the Princess Resort from VVH Resorts Ltd. Renaming the hotel the San Diego Paradise Point Resort, the company plans to spend up to $8 million to renovate its new property.
    Robert Rauch, managing director of InterBank Brener Hospitality, a New York-based investment firm with 130 affiliate offices, says other REITs — among them two giants, Starwood Westin and Patriot American Hospitality — have gone shopping for San Diego properties during the past two years. He notes that Patriot American, for instance, has acquired the Wyndham Emerald Plaza Hotel downtown, the Del Mar Hilton and the Golden Door, while Starwood Westin bought Marriott Suites and is currently in negotiations for one of San Diego’s coastal hotel properties.
    Rauch says hotel investors have been competing aggressively in an effort to get into a San Diego hotel market considered tough to enter. "There are very few high quality products remaining on the market," he says. With little for sale, he predicts more money will be available for new hotel construction, currently anticipated to add about 5,000 new rooms to the existing countywide stock of 45,000 rooms. In his view, San Diego’s hotel industry is healthy enough to absorb that number without repeating the overbuilding situation that arose in the late 1980s.
    Not everyone agrees. Hotel consultant Jerry Morrison says San Diego’s hiatus in local hotel building in recent years has helped the hospitality industry build up a high demand for its existing supply, sending its occupancy and room rates soaring. Statistics from the San Diego Convention & Visitors Bureau show that countywide, hotel occupancy averaged 70.8 percent for the first quarter of this year, the first time hotel occupancy surpassed 70 percent for each month of the first quarter since 1981. During the same period, the average room rate was $98.26, a 16.4 percent increase over the first quarter of 1997.
    What happens if San Diego embarks on another round of hotel construction? Morrison notes that other cities — among them, Denver, Atlanta, Dallas, Minneapolis/St. Paul and Anaheim — are all paying the price for building too many hotel rooms. Their occupancy rates are down, he says. "There's too much of an increase in supply and not enough increase in demand," Morrison says. He fears that San Diego could easily suffer the same fate if thousands of new hotel rooms start hitting the market.

—Lynne Carrier