Originally a restaurateur, Mike Whalen, principal at the Heart of America Group, entered the lodging industry accidentally. The company’s original Machine Shed restaurant on the outskirts of Davenport, Iowa, was located next to a small, somewhat unsavory motel. Whalen knew the motel could negatively affect his thriving restaurant’s business, so he decided to take matters into his own hands. In 1986, he tracked down the bank that owned the property and found out it was in foreclosure. That’s when he decided to add it to his portfolio. “It was purely a business decision at the time, but once I started in the lodging industry, it gave me such a rush,” he describes. After taking over the property, his company decided to rebuild it from the concrete up, turning it into a Comfort Inn that opened to the public early in 1987. Whalen sold the property in 2014, but it is the only hotel to date that the Heart of America group has sold.
Whalen’s story of crossover success isn’t the only one. Business owners with profitable ventures in other marketplaces are making the switch, bringing with them a new point of view for the lodging industry. One of the major draws is the massive demand the hotel sector has experienced after rebounding from the Great Recession. According to the November STR U.S. hotel pipeline report, there are 3,803 hotel projects under contract in the United States. That is a lot of properties. While long-time hoteliers are capitalizing on the booming market, the health of the lodging industry is also attracting new blood.
Since first dipping their toes in the lodging pool, Whalen and the Heart of America Group have seen immense growth. The company is in the process of building its 15th and 16th properties. Additionally, about half of these hotels also incorporate one of the group’s restaurant concepts, which include The Machine Shed, Johnny’s Italian Steakhouse, The J Bar, and Thunder Bay Grille. Whalen says the restaurant piece of the property can have a very positive effect on the hotel’s overall revenue. “By tying our restaurant concepts to our properties, we can bring in even more business, because a lot of these restaurants drive business,” he says.
Whalen also explains that he structures his hotel operations around the idea of, “one product, one team.” He has done away with the idea of having separate food and beverage and rooms departments. Instead, all of his staff members have a comprehensive knowledge of both the restaurant and the rooms sides of the business. This approach has paid off for Whalen in spades. “We’ve found that the intense customer focus that you have to have in the restaurant business—because it’s so fast-paced and you only have so long to make an impression on the guest—translates extremely well to the lodging industry. Our staff is very well-equipped to handle any guest request quickly and efficiently, and as a result our guest satisfaction scores are very high,” Whalen explains.
The Experimental Group, founded by Romée de Goriainoff, Olivier Bon, and Pierre-Charles Cros, is also a recent convert to the lodging industry. Formerly bar owners and restaurateurs, the Experimental Group opened the Grand Pigalle Hotel in March 2015. Marketed as a “Bed & Beverage,” the Grand Pigalle draws guests in with handcrafted cocktails and a wine bar, and is described by the group as a place to “house all of our concepts—wine, cocktails, food—under one roof with the added bonus of a chic place to sleep.” The group adds that opening a hotel came as a natural next-step after launching bars and restaurants. The company has two more properties in the pipeline, one opening in London this spring, and another in Paris opening in 2017.
The Experimental Group believes its competitive edge comes from putting a unique and unconventional spin on the term B&B, which has drawn guests from all over the world to the Grand Pigalle. “Having a temporary ‘melting pot’ in your hotel is actually quite thrilling. At any given moment the hotel may have 50 people from 15 different countries under its roof. And all of those guests may have
a different idea as to what luxury is and what to expect from a Parisian hotel,” Experimental explains.
A common thread that joins all new hoteliers together, regardless of what industry they come from, is that the best way to learn what works for a new hotel is by doing. Those breaking into the industry for the first time will go in with a game plan and strategy of how things are meant to run, but rolling with the punches is a vital part of opening a hotel for the first time, the Experimental Group says. When Heart of America Group began to branch out into the hotel industry, its first full-service hotel was modeled to reflect a more traditional hotel management style, including an F&B department and a separate rooms department. It was only after running the hotel for a while that Whalen realized his experience in restaurants would be an asset to his new hotel’s processes and changed his management plan completely. Out of that change emerged the “one product, one team” concept and it has stuck ever since.
New hoteliers learn early on that there’s no one-size-fits-all, magic recipe for success. Building a sustainable, profitable business takes time. Just like Whalen, industry newbies have to plow ahead and adjust the key ingredients until they achieve a winning formula.
