When Aimbridge Hospitality embarked on a business-critical financial restructuring, CEO Craig Smith was only a few months into the job.
With a challenging macro-economic backdrop, high rates of inflation, pressure from hotel owners, and a highly leveraged balance sheet, did Smith feel like he was facing the perfect storm?
“You had cashflow and liquidity pressures. In the context of attracting and marshalling capital, how did you do it?” asked Larry Kwon, managing director, Moelis, during a session at IHIF EMEA 2025 in March.
When the refinancing closed in January 2025, Aimbridge, the world’s largest third-party hotel operator, had converted $1.1 billion of debt into equity, plus raised $100m in capital.
Smith said that one factor in the success of the deal was his rigorously honest approach when speaking to Aimbridge’s lenders.
“I even said: ‘Hey, I’m six months into the job and here’s what I haven’t done well.’ Tell them what you’re good at but also what you’re not good at. It made our bankers say: ‘This is believable.’”
Secondly, AlixPartners served as financial advisors to Aimbridge and gave a “stamp of approval” on the company’s finances. In addition to AlixPartners and Moelis, there was a whole raft of external advisors.
Thirdly, Smith added: “Probably most importantly we said: ‘Here's what the future could be, but here's what needs to happen.’ We laid out that we had built a strategy for the company and had a very crisp and clean plan on how to get there.”
Investing in people
Aimbridge manages more than 1,000 hotels and works with 300 ownership groups and 80 brands. Smith previously oversaw global operations at Marriott International, so he is no stranger to high level management and complex deals.
Kwon was curious to know how Smith made the investment pitch for Aimbridge when the company’s key asset is people, and not real estate.
Smith said one part of it was showing the banks Aimbridge’s existing contracts but also highlighting the continued investment in its people. This means retaining skilled managers while at the same time recruiting new talented growth-oriented players.
“As much as you'll focus on the financial side of these transactions, there's the real human side of the transaction, and that requires confidence and trust in the team,” said Smith.
Major changes create fear and uncertainty, he admitted, so employees needed a lot of reassurance. Aimbridge engaged employees and managers in conversations about their long-term prospects, reinforcing why staying with the company would be better for their careers.
As the major hotel brands – Marriott, Hilton, Hyatt – continue to exit from management and operations, a “huge opportunity” is opening for third-party players like Aimbridge, Smith said.
“You can go somewhere else for 10 percent more, or hang with us for a much greater opportunity,” he told managers. Those conversations, he believes, prevented a wave of people leaving that could have undermined the entire deal.
“We had a lot of conversations, especially with mid-level managers, about playing the long game for their career, because we also knew that once you have a little bit of migration of talent, you can have a drove of people walking out the door, and it becomes very dangerous as a company,” he commented.
Don’t ditch the day job
Another crucial element of getting through the financial restructuring was to establish a “two railroad system” that kept the day-to-day operations of the business separate.
“Don't lose sight of the fact that you still have a business to run,” he advised. From his previous role, he remembered that when Marriott acquired Starwood, senior management were very worried that employees would be distracted by the merger and performance would suffer.
Notwithstanding what is happening elsewhere, it is important to continue to set challenging targets and push teams to better their performance, he said.
In the end, despite the involvement of more than 50 stakeholders, the financial restructuring concluded in just four months. Continuous and open dialogue helped move things along, said Smith.
“After the deal, we made sure people had a break; those who had been working every weekend for the four months,” he said.
For the company that started life in 2003 from a single hotel room with a filing cabinet in the bathtub, the deal means a new, more disciplined future.
“We’ve been given a gift,” Smith declared. “That gift can’t be squandered. We went from probably the sickest in the industry to one of the healthiest.”
He added: “We have doubled down our focus on individual hotels and hotel owners. I think we, as a company, had lost the focus on hotels in our angst to grow. You can either eat too much at the buffet and get sick or eat just enough to be healthy. We have the capital now to leverage internally and externally when needed, but to do that with discipline and remind ourselves that it isn’t all our money, right? It's somebody else's money that that we need to be prudent with.”
All quotes taken from the IHIF EMEA 2025 panel: ‘Sealing the deal: key advice from recent transactions.’ Session moderated by Larry Kwon, managing director, Moelis.