Hotel Management — February 2012
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Profile
The Trump Organization’s
DONALD TRUMP
The real estate mogul and his family turn their “labor of love” into a global hotel development
The hair. The endless self-promotion. The ubiquitous catch phrase—“You’re fired!”
These are often the first things we think of when Donald Trump’s name comes up. But while Trump has been vocal about promoting his celebrity on “The Apprentice” and during his short run for the Republican U.S. presidential nomination, he has been quietly growing the hotel side of his real estate empire.
Now, with a strong team of developers behind him—including eldest children Ivanka, Don Jr. and Eric—he is focused on turning what he calls his family’s “labor of love” into a global luxury hotel and resort company.
Hotel Management caught up with Trump and his hotel development team at the Americas Lodging Investment Summit in Los Angeles last month.
GLOBAL DEVELOPMENT
It’s well-known that Trump’s roots are in New York City, where he opened his first hotel, the Trump International Hotel & Tower New York, 15 years ago. In 2007 the Trump Hotel Collection launched, and today the portfolio also includes the Trump International Hotel Las Vegas, Trump International Hotel & Tower Chicago, Trump International Hotel Waikiki Beach Walk, Trump Ocean Club International Hotel & Tower Panama, Trump SoHo New York, and the latest, Trump International Hotel & Tower Toronto, which opened in late January.
All in all, the seven-hotel portfolio comprises 3,280 guestrooms.
But that’s not enough for Trump. Asia is top on his current wish list. “We have a wonderful partner in India and a great location in Mumbai,” he said. “We think that will happen fairly soon. I see many opportunities here. We’re also looking in China; we have different [projects] planned in different parts of Europe, including London.”
All in all, the company has about 10 deals currently under negotiation outside the United States, all in major gateway cities or resort destinations.
Officially in the works are Trump at Cap Cana, signed in 2007; Trump Scotland, alongside Trump International Golf Links, at Menie Estate in Aberdeenshire; and Trump’s fall purchase of the ailing Doral Golf Resort and Spa in Miami out of bankruptcy for $150 million. The sale is pending U.S. Bankruptcy Court auction on Feb. 27.
Despite the rapid pace of openings since the company launched its hotel collection, Trump has felt the economic pinch too, even if he’s a little slow to admit it. The company’s proposed Trump International Hotel & Tower Palm Jumeirah was officially cancelled by joint-venture development partner Nakheel in 2011, thanks to the global credit crisis that struck just as development was beginning.
Most recently, the company is facing problems with its Trump International Hotel Scotland project. Trump owns the land and has already built one golf course, with a luxury resort and villas planned. The project has drawn ire from its Scottish neighbors, and Trump himself is fighting a proposed 11-turbine wind farm development slated adjacent to the property.
He assured us the development deal in Scotland will happen. “It’s already done,” he said. “We don’t want the wind farm to go by our course or any others. It’s inappropriate.”
Despite his larger-than-life persona, he too feels the same lending issues other big-name developers face. “Banks have let the hotel industry down,” he said. “They’re not there for you when you want to do a hotel project—even for developers that have good records with hotels.”
At the same time, he doesn’t think private equity is the panacea, either. “They’ve been stepping in to a minor extent—to buy and to try to acquire. They’re not stepping in much for development though. The banks will be key.”
BRAND MANAGEMENT
But even with a few hiccups along the way, Trump and his team are focused on getting the right product in the right markets—and controlling every step along the way.
That’s why Trump will never enter the franchising business.
“Definitely not. Absolutely not,” said Serena Rakhlin, VP of strategic planning and hotel business development for The Trump Organization, when asked if Trump would ever become a franchise brand. “Hotel management is key to the guest experience. When you start licensing that, it becomes difficult to maintain that quality of service.”
The Trump Organization has varying degrees of ownership in some of the portfolio but manages every property (for example, it owns the Trump International Hotel & Tower New York 100 percent, but only has a management agreement with Trump SoHo). Rakhlin was quick to point out “there is no Trump hotel that we will not manage.”
To that end, she said the company is cautious when it comes to sharing details about forthcoming projects. “We need to know that all approvals are in place and all relationships in place before we announce anything,” she said.
In the U.S., Rakhlin said conversions are the company’s current strategy. “There are very good assets out there; we’re targeting them for acquisitions and for rebranding,” she said. That strategy may involve repositioning a non-hotel asset into a lodging property. “There’s a lot of flexibility with the brand,” she said.
Still, that singular focus also means Trump wants to stick with his sweet spot—luxury. “I want to stay at the upper tier,” he said. “We’ve just hit this market and we seem to be doing well. Certain brands do a very good job at [launching lower-tier brands] but we’re not looking at that market.”
While each property is distinct in its design, architecture and construction, Trump is adamant about one thing—his brand name and what it means around the world.
He said developers like the Trump brand “because we do very high-end work. They know it’s going to get done, get done with quality, be beautiful and be successful.”
Sure, his legendary persona has something to do with branding that the average hotelier may not share, but Trump did share some useful advice on the topic: “I’ll only put my name on something that can really be the best and be at the top of its game,” he said. The brand’s calling card is “premium location, landmark architecture and captivating views,” he said.
FUTURE PLANS
Even though the brand’s most recognizable properties today are decidedly urban, resort is a big part of what Trump and his team see as the future of the brand, especially given Trump’s golf course development division. The company has ten public and private courses operating now with more in development.
“We’re very much looking at key resort destinations,” Rakhlin said. “We’re looking at a number of projects that would have a golf course, a hotel and a residential component—that’s the new type of resort destination.”
While the brand’s essence remains the same, from urban locations to resort destinations, Trump recognizes that his customer set has changed.
“The luxury customer is looking for a better deal than they were five years ago,” he said. “They want a better product and a less expensive price point.”
Now that Trump’s children are involved, they will have key roles in translating the Trump brand name to a new set of luxury travelers.
“You’re seeing a lot of other brands trying to create a lifestyle,” Rakhlin said. “Ivanka, Don Jr. and Eric—they can put lifestyle into a luxury product. There is so much value in the name and they are able to help the product change with time.”
DONALD TRUMP
The real estate mogul and his family turn their “labor of love” into a global hotel development
The hair. The endless self-promotion. The ubiquitous catch phrase—“You’re fired!”
These are often the first things we think of when Donald Trump’s name comes up. But while Trump has been vocal about promoting his celebrity on “The Apprentice” and during his short run for the Republican U.S. presidential nomination, he has been quietly growing the hotel side of his real estate empire.
Now, with a strong team of developers behind him—including eldest children Ivanka, Don Jr. and Eric—he is focused on turning what he calls his family’s “labor of love” into a global luxury hotel and resort company.
Hotel Management caught up with Trump and his hotel development team at the Americas Lodging Investment Summit in Los Angeles last month.
GLOBAL DEVELOPMENT
It’s well-known that Trump’s roots are in New York City, where he opened his first hotel, the Trump International Hotel & Tower New York, 15 years ago. In 2007 the Trump Hotel Collection launched, and today the portfolio also includes the Trump International Hotel Las Vegas, Trump International Hotel & Tower Chicago, Trump International Hotel Waikiki Beach Walk, Trump Ocean Club International Hotel & Tower Panama, Trump SoHo New York, and the latest, Trump International Hotel & Tower Toronto, which opened in late January.
All in all, the seven-hotel portfolio comprises 3,280 guestrooms.
But that’s not enough for Trump. Asia is top on his current wish list. “We have a wonderful partner in India and a great location in Mumbai,” he said. “We think that will happen fairly soon. I see many opportunities here. We’re also looking in China; we have different [projects] planned in different parts of Europe, including London.”
All in all, the company has about 10 deals currently under negotiation outside the United States, all in major gateway cities or resort destinations.
Officially in the works are Trump at Cap Cana, signed in 2007; Trump Scotland, alongside Trump International Golf Links, at Menie Estate in Aberdeenshire; and Trump’s fall purchase of the ailing Doral Golf Resort and Spa in Miami out of bankruptcy for $150 million. The sale is pending U.S. Bankruptcy Court auction on Feb. 27.
Despite the rapid pace of openings since the company launched its hotel collection, Trump has felt the economic pinch too, even if he’s a little slow to admit it. The company’s proposed Trump International Hotel & Tower Palm Jumeirah was officially cancelled by joint-venture development partner Nakheel in 2011, thanks to the global credit crisis that struck just as development was beginning.
Most recently, the company is facing problems with its Trump International Hotel Scotland project. Trump owns the land and has already built one golf course, with a luxury resort and villas planned. The project has drawn ire from its Scottish neighbors, and Trump himself is fighting a proposed 11-turbine wind farm development slated adjacent to the property.
He assured us the development deal in Scotland will happen. “It’s already done,” he said. “We don’t want the wind farm to go by our course or any others. It’s inappropriate.”
Despite his larger-than-life persona, he too feels the same lending issues other big-name developers face. “Banks have let the hotel industry down,” he said. “They’re not there for you when you want to do a hotel project—even for developers that have good records with hotels.”
At the same time, he doesn’t think private equity is the panacea, either. “They’ve been stepping in to a minor extent—to buy and to try to acquire. They’re not stepping in much for development though. The banks will be key.”
BRAND MANAGEMENT
But even with a few hiccups along the way, Trump and his team are focused on getting the right product in the right markets—and controlling every step along the way.
That’s why Trump will never enter the franchising business.
“Definitely not. Absolutely not,” said Serena Rakhlin, VP of strategic planning and hotel business development for The Trump Organization, when asked if Trump would ever become a franchise brand. “Hotel management is key to the guest experience. When you start licensing that, it becomes difficult to maintain that quality of service.”
The Trump Organization has varying degrees of ownership in some of the portfolio but manages every property (for example, it owns the Trump International Hotel & Tower New York 100 percent, but only has a management agreement with Trump SoHo). Rakhlin was quick to point out “there is no Trump hotel that we will not manage.”
To that end, she said the company is cautious when it comes to sharing details about forthcoming projects. “We need to know that all approvals are in place and all relationships in place before we announce anything,” she said.
In the U.S., Rakhlin said conversions are the company’s current strategy. “There are very good assets out there; we’re targeting them for acquisitions and for rebranding,” she said. That strategy may involve repositioning a non-hotel asset into a lodging property. “There’s a lot of flexibility with the brand,” she said.
Still, that singular focus also means Trump wants to stick with his sweet spot—luxury. “I want to stay at the upper tier,” he said. “We’ve just hit this market and we seem to be doing well. Certain brands do a very good job at [launching lower-tier brands] but we’re not looking at that market.”
While each property is distinct in its design, architecture and construction, Trump is adamant about one thing—his brand name and what it means around the world.
He said developers like the Trump brand “because we do very high-end work. They know it’s going to get done, get done with quality, be beautiful and be successful.”
Sure, his legendary persona has something to do with branding that the average hotelier may not share, but Trump did share some useful advice on the topic: “I’ll only put my name on something that can really be the best and be at the top of its game,” he said. The brand’s calling card is “premium location, landmark architecture and captivating views,” he said.
FUTURE PLANS
Even though the brand’s most recognizable properties today are decidedly urban, resort is a big part of what Trump and his team see as the future of the brand, especially given Trump’s golf course development division. The company has ten public and private courses operating now with more in development.
“We’re very much looking at key resort destinations,” Rakhlin said. “We’re looking at a number of projects that would have a golf course, a hotel and a residential component—that’s the new type of resort destination.”
While the brand’s essence remains the same, from urban locations to resort destinations, Trump recognizes that his customer set has changed.
“The luxury customer is looking for a better deal than they were five years ago,” he said. “They want a better product and a less expensive price point.”
Now that Trump’s children are involved, they will have key roles in translating the Trump brand name to a new set of luxury travelers.
“You’re seeing a lot of other brands trying to create a lifestyle,” Rakhlin said. “Ivanka, Don Jr. and Eric—they can put lifestyle into a luxury product. There is so much value in the name and they are able to help the product change with time.”
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