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Denihan’s Longtime Focus on Customer Service

Denihan’s Longtime Focus on Customer Service

LODGING caught up with Patrick Denihan, co-CEO of Denihan Hospitality Group, at the 40th Annual NYU International Hospitality Industry Investment Conference in New York. There, he says, the mood among both presenters and attendees was decidedly upbeat, confirming his own impression of the industry landscape. “I knew from my own experience that the market was still good, but it was nice to hear that repeatedly here,” he says. Denihan, who runs the business with his sister, Brooke Denihan Barrett, also shared memories of their father, Benjamin “Bud” Denihan, who, back in the 50s, with a pregnant wife and another child on the way, turned down a job offer to open an upscale dry-cleaning chain before moving into hospitality. He always understood the importance of customer service (something that still defines Denihan over five decades later); he was also an innovative businessman, whose strategy of pricing his dry-cleaning services by zip code was a forerunner of the technology driving hotel room pricing today.

What’s your own background in the hospitality business?

My family has been in the hospitality business for the past 55 years. Although our legacy was predominately confined to the New York market, when my sister and I bought out our brothers and sisters in 2006, we began to expand into other areas of service and parts of the country. Our first acquisition beyond New York was in Chicago, where we purchased a hotel that we have since repositioned and sold. We later acquired the flagship James Hotel there, along with its talented management and operations team, which also provided our company with added expertise in development and paved the way for us to change our business model to include third party management.

Today, we have our own management company, and we are experts in revenue management, purchasing, and human resources. We also own and operate luxury and boutique/lifestyle hotels, including The James and Affinia Hotels & Suites brands, as well as the Manhattan independent boutique hotels The Benjamin and The Surrey. Our role with every property depends on the deal we make with the buyer. Brooke now leads the operations of The James and Affinia brands and Denihan’s luxury independent boutique hotels, and I head up the real estate and investment arm of our business, which just announced a deal with Trammel Crow and KochSmith Capital to bring The James brand to Washington D.C.

How did your father’s business sense affect yours?

Our father was quite a character and a wonderful teacher. He didn’t have a business background, but he believed in himself and our mother believed in him, too. As it turned out, he was a very forward-thinking entrepreneur. He didn’t go right into hospitality. He started a dry-cleaning business for which he developed the early revenue management practice of pricing services according to zip code. Our father was one of the finest dry cleaners in Manhattan. Back in 50s and 60s, he served all of Park Avenue, but he also bought up brands and served customers in other wealthy areas such as Greenwich, the Hamptons, and Palm Beach.

Dad insisted on handling the pricing himself; it was based not only on charging wealthier clients more but also meeting higher expectations, delivering value. For example, he could justify charging a Park Avenue customer $300 to clean a gown that he might charge $175 elsewhere because he could “save” those expensive garments. He stood behind the quality of his work. What he did was make us look at our business differently and see things from an owner’s perspective. We pride ourselves on being very good owners of upscale properties.

What have been the high points of this meeting for you?

I’ve found some of the sessions especially interesting, including the comments of David Kong, president and chief executive officer, Best Western Hotels & Resorts, who spoke of the need not just to respond to disruptors like OTAs and Airbnb, but to be disruptors ourselves, and he’s 100 percent correct. If you look across our business, you will see that, over the past few years especially, we have been positioning our company for the next 50 years, by making strategic new hires and integrating technology, design and amenities into our properties that guests covet.

We need to continue to challenge our organization, our executive team, and entire teams to think about what we can do differently to continue to stand out. Think about it—companies like Google, Amazon, Airbnb, they just want technology and data on people, not to interact with them. We, on the other hand, are in the business of customer service and interacting with people.

What do attendees get out of meetings like NYU?

This is a great way to focus our team, and get a sense of what’s going on in the industry. There’s also the opportunity to connect with potential strategic partners to help us grow and better serve our partners, as well as update the industry about our new strategic initiatives. It was great that a topic of conversation at the Conference was our recent announcement to fuel long-term growth by building out our hotel management business.

I would also add a shout-out to the American Hotel & Lodging Association, which was a sponsor. We’ve been members for six years and are so happy with the work they’ve done around OTAs and Airbnb. Also, we are especially impressed with the work they’ve done with the government.

What’s keeping you up at night?

I don’t exactly lose sleep over it, but I want to make sure we take advantage of our recapitalization and timing while the debt market is still hot. Otherwise, we’re just trying to find partners that have the same mentality as my sister and I, so we can continue making good long-term investments. It seems everyone wants something they can sell in three to five years, but we prefer to focus on longer term investments that fit our business model and have proven to grow wealth for the business over the years.

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