Hotel Online  Special Report
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The Global Hospitality Advisor

Richard Kessler's 
Grand Theme Hotels


Interview with GHG Chairman 
Jim Butler
Richard Kessler is a dynamo. He worked with Cecil Day to build and sell Days Inn and is well underway in building a new themed hotel empire. He is looking for top people, capital and locations. With eight Grand Theme Hotels, he is expanding to the West Coast, New York and other key locations. 
 
Jim Butler: Tell us about your financial success with Days Inn and some of the things you have done since then that have led up to your Grand Theme Hotels.

Richard Kessler: Well Jim, after building the Days Inn chain and selling it in 1984, I created a $50 million personal net worth at 39 years of age. I then used some of those resources and follow-on successes to create a bank management and franchise company, ten de novo banks, a 1,000-acre industrial and commercial park and a 500-acre PUD in my hometown (for the benefit of the area), and bought and sold some timber land. 
 


Richard Kessler
President and CEO 
The Kessler Enterprises, Inc.

"There are two major challenges in this industry - finding the best people and finding capital. Experienced developers can always find excellent opportunities."
From these experiences, I learned a great deal about hospitality, banking, real estate and business, but, most importantly, I learned more about myself. I learned that I enjoyed large-scale programs better than small. I don't like government regulated industries with rigid rules and inexperienced business people in powerful control positions. I realized that what I missed most in all of these endeavors was the ability to use my own creative energy to build value. I also realized how much I enjoy inventing colorful entertainment and hospitality environments. 

So in 1993, I decided themed boutique hotels would be my new quest. At the end of my term as CEO at Days Inn, I had experimented with creative themed lodging, and - completely separate and apart from the Days Inn product - we designed and built an "old Savannah"-themed, 134-room boutique hotel full of antiques, fireplaces and old paintings. Our success with it convinced me in 1993 that there was a growing discontent with expensive vanilla "commodity" hotels. In the upscale market, customers wanted something new, creative, different, personal and entertaining. 

Butler: So that is when you started the Castle in Orlando?
 

Kessler: Yes, Jim. The Castle in Orlando was the first of my new creative and entertaining hotels. It was 1993. The hotel industry was finally coming out of the recession. I wanted to create a new direction, a new company, and a new program, so I bought land in Orlando and built my first Grand Theme Hotel - the Castle. It was a 216-room fantasy, a Disneyesque castle full of original art and music. The hotel opened in May of 1995. People loved it, and they still do. Every 

The Doubletree Castle Hotel
Orlando, Florida
year has been a record year. I am sure that in 2000, it was one of the best performing hotels in all of Orlando. It's magical!

Butler: Richard, you are one of a few visionaries who have focused on boutique hotels. (Kimpton and Schrager also come to mind in the boutique genre). What is your approach on this niche? 

Kessler: Yes, Kimpton also began experimenting in this niche in the 80's as I did. They seem to focus more on smaller, urban projects with more renovation of existing buildings. Ian Schrager has focused in the high intensity urban locations (New York City in particular) and creates a very contemporary style of boutique hotels focused on the "young and beautiful" or "hip" market. 

Our approach in Grand Theme Hotels is different. Each of our hotels has a theme. We adapt each theme to the particular location and market. We develop entertainment themes for the upper-end tourist markets, and boutique and Grand Bohemian themes mainly for the upscale business market. 
 

We have found that all ages and all nationalities enjoy the hotels we have developed. We believe the themed hotel niche will continue to grow and profit. The marketplace for hotels and resorts is getting more sophisticated, more demanding, and is reaching for the high-quality, unique experience that our themed hotels offer.

Butler: Your eight Grand Theme Hotels are now located almost exclusively in the Southeast (particularly in Florida and Georgia). What are your expansion plans?

Kessler: We are presently looking  

The Celebration Hotel
Celebration, Florida
"Classic boutique" hotels with fewer than 150 rooms, and which have a unique, personally - inviting warmth and personality - an example is the new Celebration Hotel in Disney's new town of Celebration. It is a 115-room, 1930's "old - plantation" Florida-style. It is 4-star in service and product. A French chef cooks the best grits in Orlando!
for opportunities in primary and secondary cities around the United States. We look at both buying existing hotels for renovation into 3- or 4-star properties as well as ground up development in "A" locations in strong hotel markets. Such locations include some obvious locales on the West Coast such as Los Angeles, San Diego, Santa Barbara and San Francisco as well as New York, Washington D.C., Atlanta, Miami, Tampa, San Antonio, Charleston and Savannah just to name a few.

We look to replicate our success to date with good locations, excellent product design, consistent high quality service, creativity and attention to detail. I have built a very capable team of "Grand Performers" that carries our projects from concept through operations. 

Butler: You engineer your own successes with creativity and relentless attention to high quality. What are the challenges you face?

Kessler: There are two major challenges in this industry - finding the best people and finding capital. Experienced developers can always find excellent opportunities. That is not the problem. 

Building and developing a team of the best people is probably the most difficult, particularly if you have high operating standards as we do. But close behind that challenge is finding adequate capital to control the real estate. 

In our current structure, we are real estate investors. Our typical deal size ranges from $10 million for a 100-room, 3-star boutique to $50 million for the 250-room Grand Bohemian. With 20% to 30% equity (and more) required for each project, a private company like ours consumes equity very quickly in our expansion mode. We are presently working through our investment bankers to secure investment partners to invest with us in our expanded development and acquisition program.

Butler:  What lies ahead?

Kessler: I am always looking to the future to find new ways to satisfy my interests and creative drive. I must admit I have an intense passion for what I do. The organization, development and operational skills needed tax even a 30-year veteran like myself. Creating unusual and profitable concepts is the most enjoyable aspect of my work. Working with architects and designers to make an idea come alive is a very exciting experience. As I look to the future, hopefully my son and daughter, who will graduate from Cornell University Hotel School this year, will one day play an important role in continuing to meet the travelers' needs in highly creative and unique ways. One day soon, I want to develop in California and New York, and later, theme resorts and then international hotels. America is a great place for opportunity, and I look forward to a continued exploration of new ideas to meet the travelers' needs and create happiness.

Butler: You also have a reputation as something of an art collector. How did this get started and where does it all end ... opening an art gallery?

Kessler: Yes, I've been a collector since childhood, but I began serious collecting of furniture, art, clocks, sculpture, glass, etc. in my mid 20's. It has served as a great learning experience and an opportunity to meet some very interesting people. In general, some of my most intriguing acquaintances and friends are artists. Their creativity certainly has encouraged me in my development of unique hotels. 

Since I have collected sufficient art (my wife would say "excessive") for our home, the hotels are my venue for continuing my collecting and putting the beautiful collection to a practical use that I can share with our hotel guests. It also allows me to sponsor some very good regional artists. The hotels are my art galleries!

The Global Hospitality Group(r) is a registered servicemark of Jeffer, Mangels, Butler & Marmaro LLP

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For more information:
Jeffer, Mangels, Butler & Marmaro LLP
web site: http://www.jmbm.com
Email Jim Butler at [email protected]
Or contact 
Jim Butler at the Firm
 Jeffer, Mangels, Butler & Marmaro LLP
  2121 Avenue of the Stars
 Los Angeles, CA 90067
     Phone: 310-201-3526 
The premier hospitality practice
in a full-service law firm
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Also See: Stephen Rushmore's  Industry Trends / Top Markets, Predictions & Opportunities  / Jan 2001
Outlook 2001: A Roundtable Discussion The Global Hospitality Advisor / Jan 2001
Perspectives on Hotel Financing in 2001; Jim Butler, JMBM's Global Hospitality Group Chairman, Interviews Two Active Players in Hotel Finance / Jan 2001 
Robert J. Morse: Millenniumís New President / Interview with GHG Chairman Jim Butler / Nov 2000 
Special Reports / Jeffer, Mangels, Butler & Marmaro LLP

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