Hidden Hospitality: The Untold Story of African American Hoteliers

Glenn: Everybody, thanks so much for tuning in to No Vacancy Live, and thanks for spending time with me today. I’m Glenn Haussman and I’m excited because today is going to be a really cool story, because one of the things that I like sharing when I’m on the road, doing speeches, doing whatever it might be, is how we can all make money and focus on doing the right thing. Those things don’t have to be mutually exclusive. We can bring them together. That’s kind of one of the things that really turned me on about this hotel company. So we’re going to be talking about SCP hotels where I might I wish I was at right now, but I think Ken Cruise is there right now. Ken, how are you, man? It’s great to see you.

 

Ken: I’m doing great, Glenn, thank you for asking. And I do love that background. That is that is from our Laguna Surf Lodge just up the street from where I am right now.

 

Glenn: Yeah. Please don’t please don’t tell anybody. I just grabbed it from the internet. All right, so SCP hotel Soul, community and planet and the whole idea of conscious capitalism and how we could appeal to people, make people feel like people again, and still somehow make money at the same time. So I think this concept is really cool. Ken. Right out the gate.

 

Ken: Yeah, yeah. Thank you for saying that. I couldn’t agree more. And typically when I do these things, I’m doing them with my wife, Pam, who’s on the road today. One of us has to get out there and and actually work. So I get the fortune, the good fortune of joining you today. And Pam’s not with me, but the genesis of soul community planet was just as you said. We took a career in hospitality, learned.

 

Glenn: You were like CEO of Sunstone Hotel Investors, massive company and other stuff as well.

 

Ken: Oh yeah, we had a lot of fun doing that. Learned a lot in that experience, too. I like to actually spend a lot of time talking about all the lessons learned and mistakes made to. I think that’s probably more interesting to your audience, so we can maybe spend some time on that one from all those lessons learned, you know, throughout our careers. We sat down back in 2018 and said, hey, let’s let’s figure out, okay, what are we kind of good at? Or what are we at least learned from? What is the industry needing right now? What are we passionate about from a value system? And let’s form a business around that. And the concept which we later realized is very well described by a Japanese concept called ikigai, which is about, you know, following more or less working and following and living your passions. And so we formed the business around that.

 

Glenn: We also girls called me in high school ikigai.

 

Ken: Ikigai. That was that was different spelling, I’m sure.

 

Glenn: Yeah.

 

Ken: The general idea behind the business was exactly as you said. It’s. What do we love to do? What are we passionate about? What do we know a little bit about? And this passion project around it, which today is now ten hotels and certainly has significant scalability to the extent that, we pursue additional growth, which my whole view is, yes, let’s continue to grow. Pam’s like, why would we do more than ten hotels is a nice number. Yeah. But it’s you know, it’s serving this growing constituent right of of modern consumers. People have more flexibility, more financial wherewithal, in spite of what the headlines all say. People are doing pretty well right now, and a lot of folks now are looking to travel outside of that substrate of our industry, which is the business road Warrior Travel and the convention business. That’s not going away. That’s going to continue to be strong. But people now have more ability to get out there and travel on their own accord and travel in ways that advance their own personal value system that help them do self improvement. They’re seeking experiences with more depth and meaning and personal resonance and what we like to say take home value. And that’s where we’ve oriented our little niche in in our industry.

 

Glenn: I like that phrase take home value because when you’re having these kinds of trips, experiences, that sort of thing. That’s really at the end of the day, what’s about what are you taking for your soul and what are you taking in terms of general bragging rights? And hey, look what I did to your, you know, your friends out there, because that’s always going to be a component as well. But yeah, I got to say, Ken, before we get any further into it, I would be remiss as somebody who’s been to 200 plus plus fish shows, they have a song that trade lead singer wrote for his private band called Soul Planet, and the lyrics are kind of got the same vibe. So I highly recommend that you you check that, you check that out when you have a chance.

 

Ken: Bouncing around the Room is one of my go to songs, is one of my favorite, favorite tunes by fish. And I totally agree. They like the jam bands. It’s it’s what we’re about. We we have this. In fact, I think we’ll talk about this in a little bit. We have this new expression of SCP, which is a much more nostalgic vintage sort of cool concept called Wild Free. And we’re hoping to have fish at our grand opening in Colorado.

 

Glenn: That would be hysterical. And you’re going to have to make sure that I get on that that you’re in. All right. Woo! Finally, we’ve got something accomplished for the good of me on this this podcast. But so tell me a little bit about, like, how you think you’re going to be able to expand this company. It sounds like you’re going to be. Are you just going to be investing in your yourselves, or are you bringing in other people because you’re really hitting on all of those right notes, fun, eclectic places that you could bring back to life in a lot of instances and really connect it to not just people, but of the place of which it was born from.

 

Ken: Yeah, yeah, thanks for asking that question. And I hope that thinking about your audience, I hope that this in particular inspires some folks to get out there and start their own, their own gigs. And we’re in a world where it’s never been easier to to become an entrepreneur. I think Entrepreneurism is sort of the new, the new form of patriotism. In many ways. It’s one of the things that that that truly makes America great. And we’ve just got this amazing back backdrop for folks who want to start a new business to do so and do so successfully, and do so without the expense and the time and the education, all those things that used to be required to do the type of things that we’re doing. I’m I’m not the brightest guy in the world. I don’t have the greatest, you know resources or anything like that. And yet we’re having so much fun building what we have.

 

Glenn: Well, it’s really a lot of it is about that passion and, you know, having the wherewithal to do it. And with your decades of experience, you know, you really know how to pull all of these things to together. What for you, though, personally, was the inspiration of this because I get the sense, without knowing you that, you know, you really cut your teeth doing a lot more traditional stuff, and this is more about what your passion is and what your vision is for how you would want to stay when you for sure.

 

Ken: So the backdrop I look, I’ve sort of lived my career a little bit backwards. Maybe. Maybe not in as much as had the benefit of working for Marriott International, a company that used to be called Host Marriott. That’s now a host. Hotels with the whole gang. Chris, who’s now CEO and global mucky muck at Hilton, and a bunch of the guys from from that side of the equation, a ton of just amazing players in the industry and got to be involved in some incredible transformational projects that as you said, you know, enabled me to to learn a lot, cut my teeth, learn from, you know, mistakes, and learn that business is about taking calculated risks and moving forward. The genesis of soul community, as I touched on a moment ago, is a lot about the values that my wife and I stand for, but it’s also about what we’ve learned about our industry over the last few decades. I’m a grizzled veteran, as I like to say. And what is not being provided. So we have an incredible industry and it. Serves, you know, provides hospitality in a wonderful way. But what hasn’t Where the industry hasn’t kept up with trends is that modern consumers are looking for experiences that go beyond just points. They’re going again, as I said, experiences that actually resonate with their own personal value systems and enable them to continue on their personal, whether it’s a wellbeing or social good or environmentally friendly, or hopefully all three of those while they’re traveling. The way we’re growing our business, I think, is also a bit of a throwback to how the industry used to be. And as much as we’re a vertically integrated company, so you think about our industry as being sort of trifurcated. You’ve got the real estate owners, and I came from the real estate ownership side. You’ve got the management companies who are in between, and then you’ve got these really amazing brand companies who have now evolved to the point where the brand companies are about net unit growth. They’re creating concepts again that hopefully.

 

Glenn: They’re very different from the roots of which they started. Kind of like where you are now.

 

Ken: Yeah. Kind of like where we are now. And the reason that we did it this way is because coming from the world on the real estate side, we looked around the room and said, all right, this is great that we’re working with. Pick the name, you know, Marriott, Hilton, Intercon, etc. it’s great that they’re working on their flagging the business. They’re helping to market it. They’re doing all that great stuff. They truly do provide a great deal of value to a hotel owner. And then we’re also working with the third party operator, who’s also providing a great deal of value. If in no other reason, they’re taking on all the headaches of having all the human capital and so on, which is a big deal. And then we were just sort of the passive owners of the real estate, which is fine, because there’s a unique skill set associated with each one of those three verticals, but where it becomes not so fine. And you see this out in the out in the public space today is when the economic transfer becomes inequitable between the three different buckets. And so what we found over several decades on the real estate side is that what was left over after everybody got their their, you know, contractual payments and the like was not a whole lot. And a lot of the value that was actually created around the real estate, which arguably could be attributed to the brand and in part certainly attributed to the management company. A lot of that value, though, did actually get transferred to those entities with not so much value residing back at the real estate owner. So we formed our company to be vertically integrated. We have the brand, the management company, and the real estate all under one roof. And then not only does that eliminate this instance of maybe disparate interests and a little bit of economic leakage, it also gives us a great deal of control over decision making, changing things around learning from, you know, what’s working, what’s not working. We don’t have that bureaucratic, you know, framework that we have to.

 

Glenn: There is one drawback. The headache medication budget probably goes up a little bit, is my guess.

 

Ken: I like I like to say that I get up in the morning and there’s at least a hundred fires burning, and I just pop three fires.

 

Glenn: And that’s kind of like the Steve Jobs approach to getting stuff done. Yeah, right.

 

Ken: Absolutely. There’s going and that’s we forget that that is part of the fun of it. Life would be super boring if we didn’t have a whole lot of stuff to solve. I think we’re all kind of geared in that way. We want to solve problems. Yeah, sometimes there’s more problems than we than we have the ability to solve, but it’s just all part of business.

 

Glenn: I don’t mind having to solve problems. I just hate when the problems find me, when I’m not in a problem solving mood. And you have to do stuff like, you really got to pull it together and, you know, yeah, grow up and deal with it. So I’m curious you said you’ve learned a lot from mistakes and stuff like that, and I do want to learn about that. But I’m curious, was there something in your life that frightened you that you thought was really going to be hard, that you had to focus on overcoming? For me, it was multiple things. Getting into groups and talking to people, learning how to be a public speaker, things that really petrified me. And then I said yeah, whatever. And I managed to get past it. So give me an example of something that you had to do that’s helped you in your life and or career.

 

Ken: I love it. I can tell you’re not a people person at all. You you seem extremely introverted.

 

Glenn: I am like, after we turn this off, as soon as I hit stop, I, you know, I’m going to put on a t shirt and go lay in the backyard and just go, I don’t have to talk to anyone.

 

Ken: That’s so true. Yeah. I like to tell people I’m the most extroverted introvert or extrovert. Not sure which what it is that I’ve. That I’ve ever met because I’m the same way. Love, love my personal time. Also love, love the connectivity and being around other folks. I would say in my personal Life. The biggest thing that sort of inflected my my career was as a, as a youth. And this is a broad. Don’t get me started on the education system or the process that that.

 

Glenn: Our.

 

Ken: Society is, is, is, is subject to. We have four daughters and they’re all kind of in that, that system, if you will, where you go from elementary, junior high, high school. And there’s just kind of in the production line on through college and beyond. And in my experience, I grew up from a very middle class family. I like to describe my parents as sort of Ward and June Cleaver, which nobody listening to this would know who that is because I’m I’m that old. But yeah, there was an old I.

 

Glenn: Can’t even make like I can’t even make a modern reference that anyway.

 

Ken: Yeah, you’re right if you think of modern

 

Glenn: I was thinking like Modern Family, but completely the opposite.

 

Ken: Yeah, yeah, but we just had this amazing, you know, wonderful, loving parents and family. Heart right in the middle of the middle class. You know, there was always somebody who had a lot more than we had. And but we always still so felt super fortunate for what we, what we did have as well. As a result, I didn’t really even spend a lot of time thinking about what’s what’s going to happen with college. Where am I going to go? There’s this whole glom of us. That all said, we’re going to go to the same college. And it was perfect for me. State College and, you know, in-state with virtually no tuition. And that’s good because I also had no idea what I wanted to be when I grow up. I’m still sort of learning that now. But after I got through undergrad and actually got out in the working world, I realized, okay, I kind of like this hotel business. I like working with people, I like that I don’t love the idea that I’m working on Christmas Day and New Year’s night and all that stuff. That takes a very special person to really thrive in that type of an environment. And I realized, well, if I.

 

Glenn: Could just be Jewish like me, and you always volunteer to work Christmas and everyone.

Ken: My first job was in South Florida. And so the Christmas, you know, holiday was just the hotel was jam packed with everybody coming from New York and so on. But but what I learned is, okay, great. I like this industry. And if I want to orient, you know, my career path around what I actually want to do, I’m going to have to buckle down and actually start to start to really, you know, develop the toolset and, you know, volunteer for more, you know, duties. And I remember working in a hotel and I’d always volunteer to come work in the kitchen or do the, do you know, night audit or anything that I could learn a little bit more about the hotel and that, I think provided even more momentum in my, my, my career choices. So I think it was just realizing that the more we put ourselves out there, the more we challenge ourselves to do more, the more we’re able to accomplish. And I don’t think I ever had that appreciation for how much more we actually can do as individuals, how much more innate productivity we’ve got within us. When I was younger, I was sort of having fun being directionless for, for, for for the first chapter of my life and getting out of school and realizing, jeez, I can do a lot more if I apply myself. Was was probably the wasn’t a one event or anything, but it was a gradual realization.

 

Glenn: Yeah. And you just kind of realize that if you get out of your shell and you get out there and allow the world to happen, good things can happen if you recognize it, you know.

 

Ken: And good things can happen. And it’s also a lot of it comes down to mindset a lot. There’s so much that we can see and read today that says how bad the world is and how the world is conspiring against us, and how success is not going to happen for us because X, Y, and Z, you can always you can always compose a narrative in your own head that says, here’s why I can’t succeed and what’s I think what what worked for me quite well is I’ve always been an optimist. I’ve always been a kind of a why not? Type of a person. And I think that, you know, and this idea that we’ll figure it out. We have a saying one of our friends gave me this, this framed picture that said I’m just going to wing it. And then and then the quote, it’s, it’s in the quotations and it says at the bottom, said Ken Cruise about something he certainly should not be winging, but it kind of describes it. We’ll figure it out. And it’s not a comfortable mindset for for a lot of people. But I think if you want to be an entrepreneur, you do have to accept a lot of uncertainty, a lot of lack of, you know, framework rules, bureaucracy, whatever you want to call it. That’s not for everybody. But to me, I found that that’s where that’s a world that I tend to really thrive in.

 

Glenn: I think that’s the world that a lot of people get hung up in, that balancing the risk versus the potential reward. And I think a lot of people are natural inclination is to say, oh, let me take something from that list of excuses that you just talked about, and then I don’t. I could just excuse myself from the whole thing. Instead of taking those chances. But I’m sure you know this. When you take those chances and it pays off, it’s so much sweeter than you even imagine.

 

Ken: It’s so. And when you take those chances and expect that you’re going to stumble a lot along the way, that too becomes it makes the journey that much more impactful, more meaningful. You know, we talk about this a lot. Failure is not a an end. Failure is a lesson learned. It’s a stepping stone. We use the phrase the blessing of a skinned knee is is something that really feeds into our business practice all the time.

 

Glenn: True. So how do you get over the pain, though, of that skinned knee? At first, for me, I would cry and yell mommy for a long time, and then she’d pat me on the butt and I’d go on the way. But seriously speaking, because we all get caught up in that moment and we need to figure out a way to rebuild and move forward. So what’s your process like?

 

Ken: What’s my process like? So somebody described me as having a very high tolerance for pain. And that’s not necessarily the right thing or a good thing.

 

Glenn: Yeah. Just your it’s how you’re wired and how you deal with stuff. It just is.

 

Ken: Yeah. And you just you just plow your way through it. And I like to think describe it as climbing a ladder. Right. We always say here’s, here’s where I’m going to end up. Here’s where I want to. I’m going to end up at the top of this ladder, but you can’t jump to the top of the ladder. You have to do one rung at a time. And sometimes your hand slips off the rung and you have to continue up. So it’s about, you know, incrementality is much of much of the process that that we engage in here. Learning, as I said, if we’re not making mistakes, we’re not trying hard enough. We’re not putting our innovation out there as much as we should. And you know, we’ve got so many case studies in our company, our first hotel, which is now going to be our first SCP wild free.

 

Glenn: Thank you for transitioning to that made my job easier. I was just about to do that too. Yeah.

 

Ken: Because this is a this is a litany of lessons learned that most people and probably if I were well advised, I should have tapped out on as well. But we bought this hotel for virtually nothing in Colorado Springs. It’s just down the street from the Broadmoor and Cheyenne Mountain and all these, you know, kind of iconic locations. And yet it’s a few miles away and a few million light years away in terms of what it is and what our submarket is like. And so, man, that was our first test kitchen, if you will, for Soul Community Planet. Again, we bought it at a low price, but I there’s not a day that goes by that I don’t think, man, we should have given it to the guy with the bulldozer who wanted to build something different there.

 

Glenn: But what you got out of it was a cool piece of infrastructure that would could never be replicated in 2025.

 

Ken: Could not be replicated in 2025. We’ve invested a lot more than we thought we were going to in this part, but it’s become a learning ground for us. It’s a it’s a hotel that, you know, went from almost dead last in the market to number one. It’s now in the number eight, I think in the market and TripAdvisor. And we’re going to do a whole bunch of new investing and re enlivening of that asset to make it what it should be, which is a vintage a celebration of the great American road trip, a vintage motel that. Yep, all these great nostalgic qualities to it. But that also is has this, this substrate of soul, community, planet, this, this common thread of our value system and what, what the soul community planet theme is we’ll it will be loud and clear as well. Within within the new wild free concept.

 

Glenn: Yeah. I think that’s pretty neat to to me, because the soul is the bones of the building and what it tells you, it really wants to become. Right. And then that community is how you’re going to program it to fit in that neighborhood. And then, of course, you have all the the eco sensitive stuff and sustainability behind it that that is doing the right thing for, for the, for the planet. So how did you envision versus what the first iteration was and what were some of those differences? And maybe you had some lucky wins in there too. Besides.

 

Ken: It’s it’s funny, we’re love this question because we’re actually, in the case of the wild free expression, which we’ve now broken our brand into three different.

 

Glenn: I wasn’t sure if that was if that was public yet or not. So yeah.

 

Ken: I think we hopefully it is. But if not, you’re you’re you’re here.

 

Glenn: Good news is about today’s news environment. I can just say we’re breaking news and it’s it’s fact. So there you go.

 

Ken: Breaking news breaking news. Soul community planet is now three separate brand right.

 

Glenn: Because it says on this thing pending but scp roam SCP hotels and buy SCP.

 

Ken: Yeah. And roam was the working name and we we landed on this name, Wild Free, which is sort of a neat, neat idea. As I mentioned, it’s a that’s our that’s our vintage hotel, vintage motel interpretation. It’s going to apply to a, as I mentioned, the road road tripping crowd, the younger cohort or younger at mind, you know, cohort a little bit easier price point. And and then there’s Soul Community Planet Hotels which are boutique properties and really cool markets that are proximate to nature. And then there’s the highest end, which is bias, which tend to be these iconic lodges. We’ve got one in Costa Rica and one of the most spectacular natural settings you’ll ever find. We’ve got this beautiful property on the Oregon coast and so on. Those are the bias expressions.

 

Glenn: But I love it. And with with the reimagined vintage motel conversions, I am required to to mention that our friend Craig Sullivan says they need to be called motifs. So he’s. You’re trying to get.

 

Ken: I’m going to use that.

 

Glenn: Yeah it’s a great phrase. So I got to keep he he coined it but I got it. I’m spreading the gospel on it because I really believe in it. And I love what you’re doing with that. You’re playing into nostalgia. But not my nostalgia necessarily, but the sense of what we’re all nostalgic about for that common America kind of vibe, depending on where you are. So that gives you a lot more creative leeway, where you don’t have to follow some specific nostalgic rules. And I think at least 100%.

 

Ken: Yeah, you said it right. And I love this motif. We’ve actually had a fair number of conversations because I keep saying we have to call them motels. We have to call these these properties motels. And and Pam keeps saying that people don’t even know what a motel is. So motif is wonderful. Good for Craig. Thank you, Craig, for coming up with that.

 

Glenn: Awesome. So how are you thinking about making that emotional connection with customers at all of these different concepts. What’s the through line?

 

Ken: Yeah. So the through line is the start is the starting point is the value system itself. And we think about soul community Planet as a community. I love that we started today’s conversation with this idea of conscious capitalism. We 100% don’t believe we know for a fact capitalism, entrepreneurism, risk taking. All those things are what make America truly great and what we love about soul, community, planet, and many of the companies that are out there now that have been sort of products of this, this new mindset we start with conscious capitalism and maybe mindful capitalism is a is a phrase that I’ll, that I’ll work its way into that description as well, inasmuch as we start by saying, okay, what do our constituents need? What do the guests who choose to stay in our hotel? What are they looking for? What need are we addressing through through our the experiences that we’re providing? Similarly, what need can we provide for beyond just a paycheck and a good benefits program and a, you know, place to spend eight hours a day to our team? And how can we kind of form a community that is comprised of ourselves, our team, the guests who, you know, choose to go into our doors. And so we start with this idea of community and shared values and advancing that value system jointly, instead of the more traditional mindset that you see in many businesses, which is sort of almost like an us versus them mindset.

 

Ken: You come in and give me your money, here’s your product and hope you don’t complain, and off you go. We think of our business and hospitality in general as being uniquely positioned to form a true, lasting, authentic relationship between the provider, the hospitality provider and those who choose to become part of our system or our community, if you will. Part of that is done through our loyalty program is very different from the incredible innovation that underpins most of the big, you know, chains today, that the points program, we don’t have a points program. But what we do have is when you walk into our doors, we have this incredible psychological linkage with our guests where we thank them for helping to make the world around us a better place by choosing to stay with Soul Community Planet. Because in choosing to stay with Soul Community Planet, you plant a tree in a naturally deforested area. We don’t hand you a sapling and say, here’s a shovel, go plant it. You know, if we did that, that wouldn’t work out too well. But we’ve planted over a quarter of a million trees so far in our in our young life cycle as a company, as a result of people choosing to stay with us.

 

Ken: We also do some really great work with NGOs. For example, in Hawaii, when we acquired our hotel in Hawaii, we sat down with Hilo and yeah, Hilo, which is I’ve learned to love, love that that whole hamakua coast of the Big Island. Yeah. We sat down with the community. We sat down with the mayor each. If people don’t know, each island in Hawaii has its own mayor. Kind of like a governor. We sat down with the mayor and said, hey, we’re going to we’d love to acquire this hotel. We’re highly sensitive about the sort of the the pushback right now on tourism and overtourism within within the islands. What can we do to quietly help before we even make a decision to invest here and to become part of this community? What can we do to help? And the mayor mentioned that on the big island of Hawaii, that at the southern tip of, of of the island, there’s this beach called Camilla Beach that unfortunately serves as a receptacle in many instances of waste that is coming from this, what’s called the Great Pacific Garbage Patch in some less.

 

Glenn: Right, because the ocean currents, it gets dumped there.

 

Ken: Yeah. It becomes this gyre that’s just full of stuff. And it’s mostly stuff that came from either the mainland or commercial fishing or, you know, mankind’s activities certainly didn’t originate in Hawaii, but some of it ends up hiving off of that, that that gyre and ends up on the southern tip. And it’s such a great reminder that we as consumers have, you know, there’s a lot more we can do to help, you know, minimize that type of impact on our environment. So through that statement, he said, we just need help getting that, keeping that beach pristine. And so we ended up hooking up with the Hawaii Wildlife Fund. And every time a guest stays at our hotel, we fund efforts and we participate as well. But we don’t ask our guests to participate in those efforts. We fund efforts through Hawaii Hawaii Wildlife Foundation to go carefully clean up that beach. It’s very ecologically sensitive. The end result is over £100,000 of waste has been recovered from that beach. Some of it’s going into this waste to wealth program that Hawaii has. And it’s we get a letter from the director every year just saying here’s pictures. Here’s the before, here’s the after. It’s just been such a positive impact.

 

Ken: So those are the types of things that happen when you choose to stay in an SCP hotel. We through our through our every status good program. We truly do help to make the world around us a better place. Not we. You, you. You’re the hero of this whole thing. And that’s a really important element to that. When you when you want to create that sense of community, that sense of trust between a service provider, a product provider, a vendor, whatever it is, and a customer you have to know that that customer is the hero. They’re, they’re they’re the hero of their own story. They’re the hero of our story. And making them understand that we appreciate that and we appreciate them for choosing to stay with us tends to be a really powerful relationship builder that goes way beyond this, this idea of, you know, social relationships that we’re seeing. So not to be cynical or anything, but that we’re seeing in our industry or more broadly in business in general that isn’t really founded on an authentic mutual affinity. It’s more founded on I gave him this, this, this point system, or I gave him this recognition system, and it’s a different idea.

 

Glenn: Ken. Definitely a different idea. And I actually have a note here to talk about said idea as a wrap up. I want to know your opinion on what we’ve been talking about today, the experiential customer versus the accommodations consumer. I think we need to talk a little bit more in our industry about that separation and how they’re really different groups, because I’m I’m both depending on what I need when. Yeah.

 

Ken: Absolutely. We’re all both. And the important point to make too is that the foundational, you know, strata, if you will, substrate of our industry. As I said before, the business transient traveler, the convention business, all that stuff is not only not going away, It’s going to get stronger as we go forward. But we also, in spite of what we read and see and are fed on our social media algorithms about how bad the world is. The fact is, we are all living in a much better world today than we were. And you know, none of us were here 100 years ago, 50 years ago, 30 years ago. You pick a time period. And objectively, the data about whether it’s education rates, prosperity, the amount of time and effort it requires to get the goods and services that our parents had to get, had, had to expend, is vastly lower today for all of us. All that’s leading to a world where people not only are going to be doing the business travel, but they’re also now going to have what you were just describing, Glenn, this, this ability to go out and do experiential travel that’s on their own dime, that’s that’s pursuant to their own personal value system, their own personal journeys, whatever that might be. And that’s the as I said before, that’s the niche where we come in. And that’s going to grow much more rapidly. Our whole industry is, I think, set up for a a fundamentally strong period of prolonged growth. I think the, the this elective experiential travel element is going to grow much more rapidly than the other, the other layers. So yeah.

 

Glenn: And that’s why you’re in it. And I’ve been preaching a lot. And you know, when you look at the upper end of the market, how how, you know, there’s no upper end to the upper end of the market.

 

Ken: Well, that’s that’s another piece. That’s how one of the things that we think through when we’re acquiring a hotel, as I mentioned, we’re vertically integrated. So we have the brand, the management and the real estate. When we buy a hotel, we look at the screening criteria is often, okay, can we acquire this at a, at a discount to, to value? And one of the reasons why we go after boutiques is we can buy hotels, typically at a massive, massive discount to what? An institutional scale hotel or commercial scale hotel. With the same sort of price point and service model would cost. And largely that’s because of lack of economies of scale on the operating front. We can synthetically work our way around that by cobbling together multiple hotels within a market and having sort of a above property management function and so on, and create some of the economies of scale. But then when we get into the hotels, we think about four piece, we think about product. Are we going to create a product that is is squaring with the desires of the folks that we’re looking to serve? You know, in Mendocino we have organic gardens and llamas, and the eggs that you eat in the morning come from the chickens that live on property that you walk by in the morning.

 

Ken: It’s just, you know, it’s all part of this very, you know. Well, yeah, it’s kind of cool. It’s kind of a very well sorted out product and programming system so that the that, that whole the gardens and the proximity to the national state parks and so on are it’s all part of the programming. Promotion is another big piece of our of our value system. Our value creation system, if you will. It’s the third P out of four P’s. I’d like to do things under a simple, easy to remember frameworks. The third P is promotion. But it’s not promotion about what we say. It’s what our guests say about us. It’s our people going home. And are they telling five of their friends what a great stay they had at this little property in central Oregon or in Hilo, Hawaii or Costa Rica? That’s far more powerful than what we as a business can, can, can do or say to, to attract people. And then, of course, there’s what we call earned media. You know, it’s it’s when, when Conde Nast talks about us or or or sunset magazine or Outdoor Outside Magazine, what have you talks about us. That’s a really powerful driver as well.

 

Glenn: Yep.

 

Ken: And then to get to the point that you just made a moment ago, the fourth P in our framework, when we look at how do we position a hotel is it’s actually premium pricing. And this has also been a really interesting thing concept for us to sort of disabuse the team about, hey, you got a discount prices to attract people to come in, and then we’ll work on building the prices up in the future. That doesn’t work when you have people who especially who are choosing to come stay at a property because the experiences and the values that are, that are, that are provided are consistent with what that consumer aspires to be. You are you are actually undermining the process by by offering discount pricing because the perception is okay, there’s something wrong, there’s something that needs to.

 

Glenn: You peg the value of the experience at a lower dollar, and it’s much higher to bring up the prices in the future. So I remember some during some dark days of our cycles always preached and this is, I guess, something that’s similar is, you know, give somebody some more value while on site, maybe give them some drinks at the bar or a meal or something like that where you don’t have to lower the dollar value.

 

Ken: Absolutely, absolutely. So we start with this premium pricing. And I always use the example if you think about you pick any of our of our properties. But Mendocino is a good example. We’ve got a couple of really cool hotels in Mendocino, but there are a lot of really cool hotels in that whole Northern California coast. It’s I think it’s poised for discovery here over the next next several years. But many of the hotels are legacy, you know, owned and operated, oftentimes with sole sole proprietors or just innkeepers. And they just love what they’re doing. They’re not really that focused on pricing or anything else. So if you go to the old fashioned way of searching, which we should get to the new way of searching the old fashioned way, you go to Google and say, hey, I want to stay in a hotel in Mendocino. You get 104, 105 hotels that show up. 100 of them are all priced at the same glam, and there’s 4 or 5 that that actually kind of get what I was talking about and similar product, similar concepts, but there are several hundred dollars higher than the other the other hotels. I’m not saying that that, you know, everybody should do the same thing because certain hotels, they want to operate within that whole value, you know, value based, and that’s totally fine. But when you truly add a significant incremental, as we talked about a moment ago, take home value. Yep. If you don’t assert the value, the price associated with that take home value up front, to your point, you’re not going to you’re not going to get it in the long term. And many people will actually do that search and say, I really want to focus on these five hotels that are priced as outliers instead of the 100 hotels that are all priced the same. It’s a distinguishing quality. That seems very counterintuitive, but it’s absolutely true. When you’re aspiring to create a premium brand, premium service, premium experience, you have to start with premium price.

 

Glenn: It’s also giving psychological cues if you if you come in lower. It’s not the same. I learned this in business. Right. If you price yourself lower, people come into it with the wrong attitude. If you price it higher, they come in with the attitude, you know what you’re doing, things are going to be right. So the mindset shift.

 

Ken: And we further underscore that, that that last thing that you said is super important. People trust that you know what you’re doing. That’s why you’re getting the price that you’re asking. Yeah. We have something called Fairtrade pricing as well that says no matter what happens on your stay and no matter what you think about all the hotels on planet Earth from four seasons on on down, inevitably there will be instances where guests show up and the experience was not what they were expecting. Something happened. There was a bug in the room, the light bulb burned out. Whatever it was.

 

Glenn: It happens.

 

Ken: It happens. We have a system called Fairtrade pricing, which puts all the power in the hands of the guests who choose to stay in our hotels. It’s yet another way to authentically underscore this concept that, hey, we’re on your team. We’re not across the table from you. We’re we’re all part of the same community, and you get to choose the price you pay for your stay based on the quality of your experience. And that’s not a debate. It’s not a negotiation. It’s not a, hey, we’ll give you $5 off. Here’s a free cup of coffee. It’s you tell us what you think is fair, and we honor that. It becomes a really powerful tool in two ways. One, again, it builds that relationship on an authentic level with our guests. And number two, it eliminates dissatisfaction. It doesn’t fully eliminate them. There’s always going to be something that happens, but it it does a great deal to minimize these instances where something bad happened. And if you’re like me, I’ll go to a hotel or restaurant, whatever it is, something not to my liking happens. I don’t see anything about it. I used to pay the bill. I go home, but I’m not going to. Definitely not going to tell five of my friends to go stay at that hotel. Yeah, definitely not going to go online and say what a great place it was. And that’s, I think the big asymmetric risk that we all face if we don’t have some sort of a failsafe a relief valve, if you will, in the system that enables a guest that may be slightly dissatisfied to get there, stay for free or to get a massive discount, you know, on on beyond what they were expecting. We always want to overcompensate. People are very transactional.

 

Glenn: And if the word of mouth then man, it just goes. It just flies because then people will be like, yeah, this happened, but you won’t believe how awesome they were.

 

Ken: Yeah, and I shouldn’t say this out loud, but but look, we want everybody. We want our whole industry to succeed. We track fair trade pricing are both, you know, MBA we got our quant hats on all the time. We track fair trade pricing super, super carefully. It was one of our KPIs. And we feel, you know, fair trade pricing should correspond with guest satisfaction. And so if you have an instance where guest satisfaction is declining and fair trade pricing is declining, that’s actually not a good combination. If you have really high fair trade pricing and low guest satisfaction, that’s a really bad indicator. But we look at FTP, fair trade pricing adjustments as optimally being around 1% of total revenues. Right. So think about that for 1% of total revenues. Way less than what we’d be paying for our third party operator or brand. We’re able to create a relief valve where we honor the, you know, the promise that we made to our guests completely in instances where, you know, there may have been something that’s gone wrong. It works really well where we track way below the 1% typically across our portfolio. But it’s just it’s one of those things that when we announce that or when we instituted that, so many people said, you’re going to get crucified. People are going to show up and say, here’s your nickel. I’m staying. And that’s just not crucified. Crucified. But that’s not what people that’s not what people are about. Especially when you start with this idea that we’re we’re sharing we’re sharing this system. We’re part of the same, you know, value, value, affinity group. It really seems to work quite well.

 

Glenn: Listen, you got you got all of this going on and llamas to boot to boot. How awesome. How awesome is that.

 

Ken: We have monkeys and pumas as well.

 

Glenn: Yeah that’s that’s fantastic. Again again thank you so much for being here today.

 

Speaker3: Yeah. My pleasure I.

 

Ken: Really enjoyed this.

 

Glenn: This was awesome I really appreciate you I appreciate you guys out here listening. We went over so much stuff today. No doubt you’re going to have to download the audio version. Make sure you get that wherever you get your shows, follow us wherever you like. We’re there. I’m there for you. Remember everybody. You’ve got one life. So blaze on and I’ll see you next time. Bye bye.