Greatest American Hoteliers: from Franchisees Hammons to Marriott
NEW YORK CITY — Hotel consultant, franchise expert and prolific author Stanley Turkel speaks with the Blue MauMau community about former franchisees who occupy positions among the sixteen greatest hotel leaders. Each of these sixteen movers and shakers accomplished the incredible. Besides building icons to the hotel industry, one spearheaded the first trans-continental highway, while another created a railway over swamp and ocean from Miami to Key West.
These are revealed further in his newly released book, Great American Hoteliers: Pioneers of the Hotel Industry.
In this, the final interview of a two-part series, hotel and franchise guru Stanley Turkel discusses such flamboyant hoteliers like Conrad Hilton and steady-paced J. Willard Marriott.
BMM: Of the sixteen hotel greats, is there anyone still alive?
TURKEL: There's only one, and that is an absolute genius of a franchisee, named John Q. Hammons. He doesn't put his name on hotels but he has developed over the years almost two hundred hotels around the country.
I spent four days in Springfield, Missouri at his headquarters to interview him. He was 87 years old. He is now 90. He has developed hotels, remarkably, in secondary and tertiary locations. He never builds in a primary location.
If you don't know about John Q. Hammons, and you are in the hotel business, you should read my chapter about his innovations. You will be astounded by what kind of man he is, and what kind of development he does. He develops hotels, where he emphasizes carrying out feasibility studies himself, with his senior V.P., a man named Scott Tarwater. They always build near demand generators, such as state capitols, airports, interstate highways, universities, golf courses, corporate headquarters, and state parks. But never in primary locations. There are no Hammons hotels in New York, Chicago, San Francisco or in any other mega-city. He will build in places like Boise, Idaho or Bloomington, Illinois. He builds hotels off the beaten path, and his hallmark is building their public space larger than expected. He specializes in Embassy Suites, Marriott franchises, and occasionally a Marriott Courtyard.
So in downtown Springfield, Missouri, you will see that he has built a hotel with an atrium. It has 35,000 square feet of meeting space. Nobody else would have done that.
He has had great success with his hotels. He is a remarkable genius.
BMM: That strategy of building big in tertiary markets reminds me of retailer Sam Walton, who founded Wal-Mart. Walton created a department store that thrived in markets that were too small for large, national competitors.
When Hammons builds a hotel, the hotel becomes the class act of the community. And he attracts other businesses. Local politicians love to have him come.
Have you ever heard of Branson, Missouri in the Ozarks, which is the motor coach capital of the world? There are more theatres in Branson than there are in Broadway, New York City. Branson is a place where lots of bus traffic goes and people from around the country go to spend their vacations. All the hotels there are less than three stars. I mean by that they are small, economy lodges. Some have brand names. Maybe the most elaborate is a Holiday Inn, a Comfort Inn or a Hampton Inn. That is until Mr. Hammons came along.
Mr. Hammons decided to build a five-star hotel, without a brand name on it. It is there. He built it. It is called Chateau on the Lake. It sits on the top of a mountain in the Ozarks in Branson, Missouri. If you ever get near that town, stay in it. The five-star hotel is managed by a former Four Seasons hotel manager.
Mr. Hammons could not get financing for it when he built it. No bank would spring for the money. That was a problem for him even before the credit limitations of this current recession.
So he financed it himself. In short order, three years later he was running at 90% occupancy. By then all the banks were then eager to finance him. He subsequently got all the financing he wanted at the rates he wanted to pay.
Hammons is a one-of-a-kind.
BMM: Hotelier Carl Fisher [featured in Part 1 of this interview] rode the tide of economic boom and then came to a halt after personal tragedy, hurricanes and the Depression hit him and his investments. Are these titans in the right place, with the right vision, at the right time? That is to say, are there any great American hoteliers who manage to climb out of adversity no matter what is thrown their way?
TURKEL: Conrad Nicholson Hilton is such a man. He started out owning a hotel in Texas, the Mobley Hotel. He only bought it because the person who originally owned it wanted to leave it to go into the banking and oil business. There was a boom in oil.
Conrad went from that humble beginning to a person who ultimately owned the Plaza Hotel in New York; the old Palmer House in Chicago; and ultimately the Waldorf Astoria in New York City, which the Hilton Company still owns to this day.
Towards the end of his life, Conrad said he had made three major mistakes in his life. Each one reflects on his career.
Conrad said that his first mistake was selling the Plaza Hotel in New York when he was bedeviled by the government because they said he had a monopoly in New York City. He ultimately sold that hotel to A.M. Sonnabend. That was the founder of the Sonesta Hotel Corporation, which is still in existence. He should have found a way to keep the famous Plaza Hotel as a Hilton.
Conrad loved big, famous hotels. It gave him a kick. Post-World War II, wherever he went, if he had the means, he would buy the biggest and best hotel in every city, and call it a Hilton. He thought the Plaza, which had been built in 1909, was the best hotel in New York. He just was sorry that he had to give it up, and that he could not keep it as a Hilton hotel.
He ultimately bid on and obtained the Waldorf-Astoria hotel. The Hilton Corporation still owns it to this day. So that was not one of his mistakes.
He said his second mistake was selling Hilton International. He created HI post-World War II by making deals with foreign governments, and building Hilton International hotels in San Juan, Cairo, Madrid, Tokyo, Paris and London. He negotiated management contracts and/or leases with those foreign governments. The governments of various countries funded them because they wanted an American hotel post-WWII in their capitols.
He did not merely build an "American" hotel in those cities. It was called Hilton. But he hired local people. I mean by that he created restaurant themes of local food. He tried hard to incorporate local culture into his hotels, both in design and service. No one could say that the terrible Americans came, built an American hotel, but it was not in keeping with local standards. He matched those standards and surpassed them, everywhere he went.
These were not small, boutique hotels. They were large hotels with lots of meeting space, lots of banquet space, bars, and restaurants. Many of them still stand. He had great success with them, from Athens to Paris. Even in Havana, he built a hotel, pre-Castro, of course.
These hotels were enormously successful, so successful that in 1964 he received an offer from Trans World Airlines, who wanted to buy his hotels. Because Hilton needed some ready cash, he sold the Hilton International brand and name to Trans World Airlines. TWA owned HI for eighteen years, then sold it to United Airlines for a short time. UA sold HI to Ladbrokes, a British gaming conglomerate. Three or four years ago, Stephen Bollenbach as president of the Hilton Corporation was able to buy back Hilton International.
Hilton was precluded from putting his name on any hotel outside the United States. That was really a downer for worldwide expansion. Hilton knew it and said that decision was his second major mistake in his life.
But he said his third mistake was marrying Zsa Zsa Gabor, a Hungarian movie star and bombshell.
A man named Curt Strand, who was the president for Conrad Hilton, president of Hilton International, who is a friend of mine, told me that the first two mistakes of Conrad were real. However, he thought that Zsa Zsa Gabor was not a mistake because everywhere that Conrad Hilton went to negotiate for a new hotel with a government official somewhere in the world, he took Zsa Zsa with him. When she sat in the room with some of these government officials, she looked so beautiful, so sexy, so blond, that they were bedazzled by Zsa Zsa. Curt said that Hilton was able to make better deals.
Conrad was a flamboyant guy.
BMM: You have been speaking about the innovations of these leaders in the hotel industry. Did any of the great hoteliers add any innovations to franchising?
A few of the greatest hoteliers did. Perhaps the earliest was Howard Johnson. Howard Johnson motor lodges are still in existence, and are now owned by Wyndham. At the height of Howard Johnson's productivity, he realized he could not expand his restaurants and hotels except if he had investors help him. By virtue of that need, he created a franchise system where he would create the [operating] standards. But other investors would pay to own the restaurants and hotels.
Kemmons Wilson, who created the Holiday Inn Corporation, also realized that he did not have the funds to develop a nationwide motoring company. But if he created the standards, other investors could build the hotels, and he could provide them with a reservation system. And ultimately, that is how franchising went.
Bill Marriott's father, who was the founder of the Marriott Corporation, was a franchisee of A&W Root Beer stands. He ultimately used that franchising know-how to expand the Marriott Hotel Corporation.
BMM: In your book J. Willard Marriott started an A&W Root Beer franchise and didn't seem to be hurt by the Great Depression. Where the Depression ruined hotelier Fisher, Marriott continued to grow. Tell us more about that.
TURKEL: The story of J.W. Marriott is a fabulous American story. One could say that they are now the emperors of the world, they are so successful. They perform such great research that lets them know, for example, [the wisdom of] creating a Courtyard by Marriott, or acquiring the Ritz-Carlton hotel company. They are smart and flexible in not muddling a brand in the market placement, not to confuse it with a Marriott Hotel. They kept Ritz-Carlton pristine, luxurious and five star. You have to give Bill Marriott a lot of credit for that. They are extraordinarily good business people.
I tell the story about how Bill Marriott responded to a request by a mayor of the city of New York and built the Marriott Marquis in Times Square in what was then a very rundown and dilapidated Times Square. It is not now. It is a lot better. But it was the Marriott Marquis that served as the foundation that revived midtown New York.
Bill Marriott went to the well and sprung for the bucks. Bill Marriott had the foresight, and the Marriott Company the means to back it up. He deserves every bit of the benefits, credits and profits that he makes.
BMM: Some great hoteliers were franchise owner-operators. Was there something about being a franchisee that helped shape their business genius? How important was being a franchisee to the blossoming of these great hoteliers?
TURKEL: J. Willard Marriott, who started his career as an A&W Root Beer franchisee, ultimately gave his name to one of the largest hotel franchisor companies: Marriott International which lends its various brand names to more that 3,000 properties worldwide. Franchising opened up a financial funding mechanism wherein he could get other people to fund and build these hotels. As franchisors, he would reap benefit by collecting franchise fees. It was a way to get bigger, faster.
The founder of Holiday Inn, Kemmons Wilson, certainly did that too with the Holiday Inn Corporation. Nowadays, the Holiday Inn name is owned by the Intercontinental Hotel Group. They are in the process of expanding and upgrading Holiday Inns all over the country. They created the Holiday Inn Express, which is a very big success. But the chain owes its success to the business format of franchising.
Read Part 1: Greatest American Hoteliers: from Fisher to Statler
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Related Reading:
- Buy the book at www.GreatAmericanHoteliers.com
- Stan Turkel's blog
- Franchise topic:
