Chicago Is The City To Invest In, Says High-End Hotelier Laurence Geller
Laurence Geller is the chairman of Geller Capital Partners which owns the Conrad Chicago Hilton and Waldorf Astoria in Chicago. With more than 50 years of experience in the hotel industry, Geller opens up on what it takes to be successful, why he's sinking $150 million into Chicago and the lessons he's learned along the way.
What was the most difficult business lesson you had to learn?
LG: When you have to pay back bank guarantees that you've signed, for hotels that didn't work-out as you planned, that's a serious lesson. One day you've got a balance sheet that says you're worth $30 million, and the next day you're broken. That's it!. Life is a roller coaster.
How do you pick yourself up from that?
LG: The only failure is not picking yourself up, and not trying. I can go from failure to failure without the loss of any enthusiasm. Hopefully along the way, I'll learn something.
Knowing what you know now, what advice would you give to your 18-year-old self?
LG: I would have been bolder earlier. It really took me until I was 31 to get the testosterone to go out and try it for myself. Give up the large, fancy corporate title, the perks and the guarantees of income. Give all that up and risk it. But do it early and be bold. Don't worry about the consequences and don't compromise. Give all of yourself. If you fail, get up and do it again. That’s the way to learn.
What makes your properties stand out?
LG: What makes our properties stand out from others is very simple, we research what goes on in the marketplace. This isn't just about my taste and what I think is nice. It's also not about what the consumer wants. Before we start, we look at everything that’s being built and what’s already open. We investigate our competitors. We then marry that with our consumer research and try and design around what is not being done.
If you look at the Conrad Hotel, and the new restaurant opening at the Waldorf Astoria, no one will have what we have. The quality, design and amenities are curated to be one-of-a-kind. You will remember our hotels.
We create a feeling, based in delight, that stays in your memory. That memory, will bring you back. It's just very simple business. The cost of acquiring a new guest is about 12 percent of a guest revenue. It costs 3 percent or 4 percent the next time, so we want you back. It's better business, and that's why we spend so much money on consumer research and creating an experience that’s designed to bring you back.
What kinds of concept is most successful?
LG: I've been in the hotel business for more than 50 years, and what I've seen is that trends come and they go. The hotels really making money are the ones that are timeless and made to withstand the evolution of time. Our hotels are built for the next 50 years.
What factors led you to invest in Chicago?
LG: [Chicago] has a very educated base with more 100,000 students coming each year, and many of them staying after graduation. [O’Hare Airport], despite my frustrations, is probably one of the best airports in the world. It certainly is the easiest to connect to from east, west, north and south. The city has a very wide facet and range of different industries. Next to London and perhaps New York, Chicago has one of the best theater districts. The city is the epicenter for foodies, anywhere in the United States. This is a city that seems to think it can do anything and I believe it.
When I left and sold Strategic Hotels, I could have gone anywhere. I thought I wanted to go to New York but, after analyzing the marketplace, I realized Chicago was probably the best kept secret amongst major American towns. It has everything going it from a tourism potential. I decided I wanted to go to a city that was underestimated but had the potential for greatness, especially if city leaders were prepared to invest in it. Chicago was that city.
The city has grown exponentially, and will continue to do so. It has problems, but so does every other city. What separates Chicago from those other cities is an energy teeming with possibility. This is a city that wants to see its people succeed. It helps build people up, and that's why I came to invest here.
The market is pretty good now, but I think it can be great.
What does Chicago need to reach its full potential?
LG: Infrastructure. What do I mean by infrastructure? Millennium Park, Maggie Daley Park, the River Walk and Navy Pier are all great examples of infrastructure. The Ricketts family has done that at Wrigley. They created an amazing tourist magnet there. The more of those we have, the more there is infrastructure and the more the city will boom.
I see my role as being a prod. I want to prod people to build more infrastructure in Chicago.
How do you compete with Airbnb? If at all.
LG: Airbnb, it's a fabulous, technology-enabled company, but there’s nothing new there. People have been renting out their rooms, their houses, their holiday cottages, since I guess, for a lot where Jesus was born some stably rented out.
This is not new.
Airbnb gives you a place to sleep. I’m providing an experience to live-in. My rooms have what you want in them. Everything in our hotel is designed to meet the needs of our guests, specifically the female traveler.
Our bathrooms are very unusual. They’re long and thin with lots of counter space. They’re designed for women to put their make-up and get ready in.
Women shower washing their hair with their elbows out. Men don’t.We uncovered this in our research and designed our showers around this fact. You don’t get that at an Airbnb. That’s not a standard, limited service at Hampton Inn, Holiday Inn, Marriott. This is, we design special. We design unique.
How to avoid the pitfalls of following trends?
LG: W Hotels is a good example. They were very trendy and now they’re just another brand. They’re nice but old-fashioned and outdated hotels. They’re trying to repeat the same gimmicks from 20 years ago. They are trying to modernize, but the image and identity of the brand, in people's mind is what it was 20 years ago.
On the other hand is Properties, SoHo House and Ace. All of these are very specifically designed for today's trends. But they forget one of the absolute facts of life: people grow older. They change.
Your habits when you are a young, footloose professional single and dating, are very different from when you're schlepping around two babies and thinking about paying for school fees.
The cost and elegance of what I do is such that I won’t design for a transitory trend. I know the millennial today, who stays at an aLoft, is going to be want to stay at the Four Seasons in two decades. If I design for the future, I get that millenial for the next 25 years. Thank you, I'll take it.
How do you market to a wide array of people?
LG: It's harder and harder today, than it's ever been because there are so many avenues. E-commerce, digital marketing, social media and PR are my medium today for brand identity. Driving people to a website is really crucial. What I have to do is know that I can't be all things to all people.
We focus a digital or e-marketing campaign, plus whatever print or editorial we can get around a specific topic. It's very targeted, very bespoke, very intense.
We pay close attention to our consumer research and find out what groups want what, what corporate people want to go where and then we knock on their door and get them. The product sells us.
We can't afford to go for the mass marketing. Our approach is very focused, digital or e-commerce.
What communication tool do you put the highest value on?
LG: For me personally, but I'm old fashioned, I put a very high value on PR. If you can get the right PR, I think it's wonderful, because it's very focused, very targeted, unpaid editorial that becomes word of mouth. From there you can take the editorial opportunity, if it's print, or even if it's video, or whatever it is, and put it through the social media networks itself.
Now you can't control what's gonna be said. But, it is unpaid editorial, and people value that more than an ad. PR transmuted it from its source into various social media channels really works.
How did you get to where you are today?
LG: When I was 23 I was given a choice - be London's youngest general manager or go into the corporate office and start at the bottom.
It was then I realized, I didn't necessarily want to be in the hotel business, I wanted to be in the business of hotels.
I worked my way up and when on the main board I met young multi-millionaires. I asked them how they made their money. I figured out it was the real estate side that I had to be in. I didn’t want to be just another guy building a hotel, I worked to make sure every square foot made more [money] than anybody else’s per square foot. That's how I built my career.
A condensed version of this interview ran on Entrepreneur.com Tuesday, June 20, 2017: Why You Shouldn't Build a Trendy Business.