Scaling the 'unscalable'

Call it a diamond-in-the-rough complex; Jesse Baker has a keen eye for spotting potential in the unrecognizable. As founder and CEO of JET Hospitality, he has his sights set on scaling the unscalable: converting roadside motels and RV park campgrounds into boutique hotels and destination resorts. Here, he shares why he’s able to move faster, price risk more accurately and avoid the handoff gaps that often derail traditional projects.

—Interview by Jennifer Glatt, edited by Bianca Prieto

What are the biggest benefits of taking a fully vertical approach—handling acquisitions, rehab, rebranding and management in-house—compared with a more traditional model?

The biggest advantage is clarity before we ever close on a deal. We earn equity value on any deal we do at close. Because we handle every facet of the acquisition, we are earn on the bird-dogging, deal structuring, acquisition, rehab, rebranding and both operations and asset management. As the property marches to stabilization, we have an idea of where value is going before we’ve gotten there, allowing us to extract value on time and implement the appropriate hold or exit strategy.

When we’re underwriting a deal, we’re not guessing at renovation budgets or outsourcing vision to a third party to give us numbers later. We already know our target acquisition price because we’re also responsible for the rehab scope, the rebrand and how the property will operate day-to-day. That lets us move faster, price risk more accurately and avoid the handoff gaps that often derail traditional projects.

Urban travelers are increasingly seeking nature-adjacent stays. How do you design experiences that appeal to this audience while maintaining operational efficiency?

We have a lot of opportunities to be different and curate the type of appeal you’re describing. The pre-stay is all about tech and generating emotional draw. When it comes to the on-site experience, it's all about our people; with the right innkeepers, the hospitality comes with the territory. We offer beautiful real estate and unparalleled flexibility in the industry. The check-in beer. The fire pit. The innkeeper. Come as a stranger, leave as a friend. Does it get any better?

Bottom line: Outdoor spaces bring people together in a way no check-in kiosk ever will. You swap stories around a fire pit or pool deck, not under fluorescent lights, so the organic design and a living, working project to share a drink around offer a new appeal that has been considered foreign or taboo prior to the pandemic, flipping the industry on its side. We are just happy to be along for the ride.

How do you balance preserving the unique character of each property with creating a consistent, scalable brand experience?

We start by respecting what’s already there. If a property has history, you don’t erase it; you let it lead. For example, the mural walls at the famed Sacajawea Inn—we left those elements of original property charm.

At the Historic Virginian Hotel in Medicine Bow, Wyo., an asset that is listed on the National Historic Society Register, our work focused on restoring the landmark while drawing on the living-breathing slice of Americana that is just out there on the Lincoln Highway. We recognize this property as a beacon of hope, and it's our responsibility to carry on a tradition of preserving history while doing our best effort to give the guests a life-changing experience. 

What stays consistent across the JET portfolio is that organic feeling. Guests should recognize hospitality with a heart—welcoming, unfussy and deeply tied to place—even if no two buildings look alike. That balance is what allows us to scale in a way that is different from how other companies do it. It doesn’t have to be perfect; it has to be real.

From deal sourcing to professional management, what’s one lesson you’ve learned about building value in independent properties that most owners or investors might overlook?

You make your money on the buy. You have to know what the asset is really worth before you buy it. Fight for as much movement off that number. Know what it could be worth based on an understanding of market dynamics and the value equation. Value = NOI/Cap Rate. It’s that simple. What drives your NOI? Improving revenue and optimizing expenses. Finally, strive for consistency while getting 1% better each day. It’s tough sledding to do both, but when you have both of them working together, that business model is going to thrive nine out of 10 times.

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Mint Pillow is curated and written by Jennifer Glatt and edited by Lesley McKenzie.