I
t is generally assumed that much like in the boardroom on his hit TV show, The Apprentice, famed real estate mogul Donald Trump is intimately involved in all aspects of the business at the Trump Organization. Indeed, the dealmaker has built the company from the ground up and continues to be the driving force behind its growth.
In fact, the mere mention of the company’s recently acquired Doral Golf Resort & Spa in Miami and its massive renovation plans for the property gets the chairman and president all “fired up.” However, he also is quick to acknowledge that when it comes to the Trump Hotel Collection, it is “their baby” in reference to his three children, Donald Jr., Ivanka and Eric, who oversee the portfolio of luxury properties. To be sure, the trio is no less excited about the growth of that portfolio and its impact on the luxury segment.
Up to eight hotels and counting—with one in development in Washington, DC—Donald acknowledged the increasingly important role of the business, which he estimated as representing roughly 10% of the Trump Organization’s overall revenue.
“Right now, it’s a small part, but it’s going to be a major part of it eventually. We have very big plans for the hotel company. That 10% could be 50% in four or five years,” Donald told Hotel Business.
In fact, according to Ivanka, who serves in the role of EVP/development & acquisitions for The Trump Organization, the company has outlined a goal of having some 30 properties in the Trump Hotel Collection by 2020. “We think that’s a very achievable goal. It allows us to grow how we want to grow, which means strategically, not jumping on every opportunity. We’re a young hotel brand, but we’re actually very large in terms of the luxury set,” she said, comparing the brand’s image to well-established luxury flags such as Four Seasons and Ritz-Carlton.
Jim Petrus, COO of Trump International Hotels Management, LLC, the operating arm of the Trump Hotel Collection, reinforced that message. “Our vision is to be the pre-eminent luxury hotel brand in the world, and we’re taking that one step a time,” he said.
In 2007, the company formed the Trump Hotel Collection, which includes the Trump International Hotel & Tower New York; Trump International Hotel & Tower Chicago; Trump International Hotel Las Vegas; Trump International Tower Hotel Waikiki Beach Walk; Trump SoHo New York; Trump Ocean Club International Hotel & Tower Panama; the Trump International Hotel & Tower in Toronto; and the Doral Golf Resort & Spa (which will soon be officially renamed to include the Trump brand). The company—which is also planning to build a major hotel in Aberdeen, Scotland, to accompany its recently purchased golf course—has management deals in place on all the aforementioned properties as well as equity in select properties.
Donald Jr., EVP/development & acquisitions, noted that while the company has clearly defined its goals in terms of numbers, it continues to pursue only those options that are a good fit. “I do think a lot of it is organic. We travel the world looking at real estate deals,” he said.
Donald, who said he places an emphasis on top-of-the-line locations, enjoys the fact that he can take an opportunistic approach. “I’ll come to the office having no concept of what I’ll be doing that day in terms of an acquisition, and by the end of the day, I may have
bought a great hotel someplace,” he said.
He believes the Doral—which he regularly visited as a child with his parents—represents just such a deal. In June, the company acquired the hotel for $150 million, considerably less than the roughly $500 million Morgan Stanley paid for it six years earlier. However, that’s just the beginning, according to Donald, who has grand plans for the nearly 800-acre property.
“I could spend anywhere from $50 million to $200 million, but I’ve chosen $200 million because we’re going to make it the finest resort anywhere in the U.S.,” he said, noting the lion’s share of the renovation dollars would be invested in the guestrooms, grounds and public spaces with a smaller portion to be spent on the golf course itself.
WATG and Wimberly Interiors have been retained for the architecture and design services for the hotel, which includes some 700 guestrooms, vast ballrooms and meeting facilities, and a sprawling spa. Donald added he expects the renovation to be roughly a two-year process.
Another project the company is excited about is the conversion of the Old Post Office Building in Washington, DC. Earlier this year, the Trump Hotel Collection was selected by the U.S. General Services Administration (GSA) as the preferred developer of the iconic building erected in 1899. The company partnered on the proposal with Colony Capital, which will co-invest in the project. Ivanka called it the “most coveted hotel opportunity in the country” and believes the company’s track record was key in securing the bid against as many as 18 competitors.
“I think one of the things that resonated with the GSA about our proposal, in addition to how comprehensive it was and our plans and our track record with historic renovations, was the fact that the buck stopped with us. We weren’t a developer who said we have a promise for the commitment, for the money, and we have a letter of intent that’s not worth the paper it was written on. They knew they’d be getting Trump’s equity, Trump’s expertise and track record and Trump’s brand and Trump’s operation,” she said.
Plans include more than 250 guestrooms, penthouses and presidential suites; world-class restaurants, a café, and a bar and lounge; extensive banquet, ballroom and meeting facilities; the Spa at Trump; and a library. For his part, Donald is particularly excited about the location. “That’s on the best block in Washington, DC,” he said.
With the Miami and Washington, DC markets now secured, Ivanka pointed to other U.S. locations the company has on its radar, such as Los Angeles, Boston, Dallas and San Francisco, to name a few.
Ivanka detailed how the company would likely be entering these and other markets going forward. “Right now, we’re doing mainly conversions because that’s what the market domestically wants. I mean the reality is you’re going to make a better deal buying an asset than you will building an asset today in the U.S.,” she said.
Donald Jr. further noted that new-builds are far more financially feasible if they are part of mixed-use project. “I think to do luxury the way we have to do luxury for our brand, today having a saleable component of real estate allows you to build luxury that you wouldn’t necessarily, logically build from the ground up without having that to de-frame the cost of construction,” he said.
While the majority of hotel brand companies have taken to franchising to attain their lofty numbers, Ivanka was adamant the company would not consider that as a means of accelerating growth. “We’re both involved in the development side and in the operations, so we’re the ones facing the customer. That’s why we would never franchise because it’s fully passive,” she said.
While the company’s reputation as a developer is unquestioned (going all the way back to its days of developing casino hotels in Atlantic City, NJ) from an operations standpoint, its commitment to service has been a key point of differentiation. Ivanka maintains the training program is critical and was on hand at Doral for a recent program.
“It’s two days, it’s exhausting. We give a presentation on our brand mission, our brand values, what’s important to us, and I showed them a presentation of the uniforms I designed specifically for their positions. So we always try to have a family member there at these events,” said Ivanka.
Petrus further expanded on the impact of the training program on the overall performance level of employees. “What we have focused on is making sure the effort in the first 72 hours of employment is absolutely flawless and exceptional. If you tell people what your vision is, what your mission is and have them really fully understand what your direction is, after they go through a thorough and comprehensive orientation, if they know that and feel that and believe that, their ability to execute is at a level that’s exponentially greater than anything else.”
That execution has been evident in markets like Chicago, where the Trump International Hotel & Tower Chicago has performed extremely well. According to Petrus, it does over a 125% market share “against a pretty good competitive set.”
Eric, EVP/development & acquisitions, noted that such performance has not been unusual for the brand. “I think you’ve seen that in Chicago, and you’ve seen that in so many of these markets. We were open for three years [in Chicago]and we had the number one hotel in North America, number four in the world,” he said.
Ivanka attributes much of that success to the company’s broad skill sets, and positioned the company as something of a throwback—not unlike family companies such as Hilton and Marriott many years ago.
“A real point of differentiation for us as a company is that we are a brand, we are a developer, we are a manager and we are a family. Traditionally, the great hotel companies were built as family organizations. That really isn’t the case anymore. They’re larger companies or the family has really minimal involvement on a going-forward basis. So we really represent the one true family hotel business in the luxury realm,” she said.