Jan. 17, 2022

This paid piece is sponsored by The Ramkota Companies Inc.

Here’s as clear a sign as any that a hotel company is back in growth mode: The portfolio is expanding.

As 2021 came to a close, Sioux Falls-based The Ramkota Companies Inc. acquired a Holiday Inn Express in Rapid City through a newly formed partnership.

Leading the deal were the company’s two newly elevated executives: Josh Schmaltz, who became CEO on Jan. 1, 2022, and Tom Morris, who became executive vice president and chief financial officer.

“They did a superb job,” said Bob Thimjon, who transitioned from CEO – a role he’d held the past five years – to an “untitled employee” and board member.

“We’re back in growth mode when we’re acquiring hotels.”

Schmaltz and Morris also oversaw the equity raise for the Rapid City expansion, which generated significant interest.

“Knowing that it’s Ramkota made the equity raise a lot easier,” Schmaltz said. “Our investors know we’re a 56-year-old company with a tradition of strong leadership.”

Generations of leadership

Gather the former leaders of Ramkota Companies in a room, and it’s clear they’re all still invested in the company’s success – not only in a literal sense through ownership in partnerships but also emotionally as those who helped build a culture that continues today.

“I think the industry is back alive,” said Dave Sweet, who transitioned out as board chair about five years ago and helped build the company as CEO from the time it had just two hotels and a vision for more.

“I see people are traveling more in the U.S. than they have. There was so much pent-up demand for travel that our last year was incredibly good, with the exception of meetings and conventions. People really were traveling and wanting to be in our resorts and parks. I just watch from the outside, but places like Deadwood, places where we have resorts on lakes or run park systems, they really got a lot of business.”

For Sweet and his generation of leaders, achieving a portfolio of more than 40 hotels and nearly 5,000 rooms never was the ultimate goal, though.

“It was just kind of natural growth from trying to be profitable,” he said. “It’s fun to do things and expand, and where we saw opportunities, we tried to jump in and answer it.”

There continue to be such opportunities, added Greg Schjodt, who is transitioning this spring to a board role after serving as CEO of U.S. Hotel & Resort Management, a Ramkota subsidiary.

“We’re putting the ball back in the court of the new leaders to bring those opportunities to us as board members going forward and with the strength we’re showing as a company,” he said.

“Tom is well-versed in development, and Josh has done a heck of a job himself, so we’re relying on them. Dave and I might have had ahold of the steering wheel, but those guys were holding the map giving us directions.”

Combined, the two have more than five decades of experience with Ramkota or its affiliated entities. In that time, they’ve fully absorbed and championed the culture that has been built, all involved in the transition said.

“Everybody was doing what is best for the company and best for our investors, and that was always the focus,” Thimjon said. “It was a lot of hard work, but working smart as well.”

Work ethic and trust have been key, Schjodt agreed.

“There were no secrets,” he said. “Everything was discussed in the open, and we knew we’d done our homework, and we made sure we had everyone on board. And that’s a culture that’s transitioned with us.”

The senior leaders continually mentored, said Schmaltz, who began his career at a Radisson in Fargo while still attending NDSU.

“You always knew where you stood with these guys,” he said. “They supported me as I made mistakes and learned from them, and that was very helpful in growing my career.”

A pivotal year

Ramkota emerged from the disruption of 2020 thanks in large part to its diverse portfolio, Schmaltz said.

“That’s been the case throughout our history, but we’ve definitely seen it come into play in the last two years,” he said. “We offer limited service, boutique, full-service, state parks, destination resorts and convention centers, from franchises to independent hotels.”

Behind the scenes, key financial changes in 2021 helped solidify the company’s future success.

“First Premier Bank became our lender, and with that, the bank allowed us to make payments to our noteholders – the ones who allowed us to become an ESOP,” Thimjon said.

“So we are now current on payments to our shareholders, we’ve made up all our ground from 2020 and early 2021, and our hotels by and large are doing well.”

Additionally, with financing from First Bank & Trust, a Ramkota-headed partnership, Regency Midwest Ventures, accomplished a significant refinancing “that put that partnership in a much better situation to move forward post-COVID,” Morris said. “It gives us a lot more flexibility.”

Ramkota Companies transitioned to an employee stock ownership plan in 2017 as a way to offer a significant additional benefit to qualifying employees and to create and provide liquidity for longtime multigenerational investors.

“It’s a way for us to give back to the employees who play a pivotal role in our success,” Schmaltz said. “In 2021, we had such a strong year we were able to provide a bonus to our employees who are part of the ESOP, and we’ll continue to do that as long as the company is able.”

The true benefit of an ESOP, though, is long term. So in the short term, Ramkota also is looking at how to further become an employer of choice.

“Workforce is at the very top of our priority list,” Schmaltz said. “We’ve done pay increases, but we’re looking at other ways we can offer additional benefits to our team.”

The hope is that group travel, especially business-related, rebounds in the year ahead.

“It has started to show up again,” Sweet said. “I’ve talked to people going to meetings at Ramkota Companies’ hotels, so we’re seeing it go alive.”

The focus for the future “is to build upon the solid foundation and reputation as Ramkota continues to grow,” Morris said.

“It’s a legacy that Dave started and Greg continued and I took through the ESOP years, and now we’re in a position where we have a management team that can look to the future and grow with the company,” Thimjon added.

“And they’re not new to the company. They might be new to the positions, but they understand our culture and have a good vision for where we’re going.”