EMJ creates hotels division in Chattanooga

EMJ creates hotels division in Chattanooga

October 23rd, 2011 by Mike Pare in Business Around the Region

Doug Martin, EMJ Corp.'s executive vice president, and Alex Grace, EMJ Corp.'s vice president of hospitality, right, speak about a new hotel construction division EMJ is creating.

Photo by Dan Henry/Times Free Press.

Chattanooga's biggest construction company is trying to rebuild its own business by crafting a new division to better tap into the growing hotel industry.

"The hospitality industry is unique and requires a more focused approach as compared to other markets," said Jay Jolley, the chief executive for EMJ Corp.

EMJ has named a hotel building veteran, Alex Gracy, to head the hotel division with a goal of generating $20 million or more in revenue for EMJ over the next year. EMJ Executive Vice President Doug Martin said Grace and the new division will bring an everyday focus on the hospitality market and he hopes the division can generate $40 million a year in revenue by 2013.

"EMJ Hospitality may be the difference maker," he said about efforts to boost overall company revenues.

The building contractor could use the boost after the downturn in building cut its business by more than half from the $1 billion revenue peak of 2007.

Jolley, named CEO in mid-2010 after serving as president of the company his father started in 1968, said 2011 revenues are projected to hit about $487 million. Although up from 2009, EMJ revenues remain depressed amid the worst commercial construction slump in at least three decades.

The effect of the 2008 financial meltdown are still being felt. For the 400 biggest contractors in the world, including EMJ, building revenues in 2010 fell by 10.8 percent to $259.4 billion, according to Engineering News-Record, a McGraw-Hill trade publication that tracks the industry.

U.S. revenues for the top 400 contractors fell by an even steeper 11.5 percent last year to $208.16 billion.

EMJ managed to outperform many of its peers in 2010, ranking as the 141st biggest building contractor in the ENR rankings, up from 158th in 2009.

Building on all foundations

Martin said EMJ's drive into the hospitality segment is similar to the company's focused attention on retail building projects.

For most of its 43-year history, EMJ has been linked with another Chattanooga-based company, shopping center developer CBL & Associates Properties Inc., and shopping center ventures of those who formed CBL.

EMJ has built more than 200 shopping centers across the country, including many CBL malls such as Hamilton Place.

EMJ officials said retail last year was about 30 percent of its business as it has taken steps to diversify.

EMJ's diversification has taken a variety of forms relating not just to projects but size, client type and publicly and privately funded work, according to the company.

For example, EMJ worked with Detroit-based Walbridge on a contract to install electrical, plumbing, heating and air conditioning and other work at the Chattanooga Volkswagen plant's training center. EMJ also won a job from the city's Industrial Development Board for construction administrative services related to the auto plant.

In recent years, the company has built the new Majestic movie theater downtown as well as East Ridge Elementary School.

EMJ also has branched out into the alternative energy sector with subsidiary Signal Energy, a designer and builder of solar and wind farms.

Last year, EMJ bought Inman Construction in Memphis to expand into medical, university and public school projects.

In 2009, it started Accent Construction Management to help contractors with project development and financing.

The Hotel Drive

Grace, the newly named vice president of EMJ's new hotel unit, said EMJ and its five offices across the country provide a strong foundation for building the hotel construction division.

"We'll have the resources of EMJ," he said.

EMJ already has sunk footings into the hospitality segment.

It recently finished working on the Hampton Inn & Suites in downtown Chattanooga and is currently helping raise a Spring Hill Suites by Marriott along the Tennessee River.

But Jolley said its hospitality clients expect a dedicated team with specific industry experience and tenure.

"The team that we have assembled exceeds that expectation," he said.

Grace, 34, said each hotel owner has design standards with the aim of ensuring that its places are alike.

"It's pretty detailed to make sure you follow their construction process," he said.