Richard Kessler
I decided, well, how are we gonna theme this one up? How are we going to make it come alive? And it dawned on me. I said, well, this was a fossil fuel plant. So that oh, okay. That’s my clue. Fossil fuels. So that means mastodons. That means all types of things. No way. And so what we ended up doing is make it made a natural science museum in the lobby of this power plant, which is the lobby of the hotel, And we carried that theme through the whole building and all the rooms and everything. And it we have more traffic now than the museum that’s been in Savannah for over a hundred years.
Sebastien Leitner
Welcome back to The Turndown. Today, we’re diving into the world of a true hospitality visionary, Richard c Kessler. More than just a CEO, Kessler is an astute visionary, philanthropist, a passionate art collector. With over fifty years of experience, he’s not just built hotels, he’s crafted living museums filled with his global art collection, transforming cities like Savannah, Georgia.
From co founding Days Inn at just twenty three to pioneering the art centric Grand Bohemian hotels and launching Marriott’s Autograph collection, Kessler is a risk taker who believes in bringing global art to the masses. Get ready to hear from a man who blends business acumen with an artist’s soul, a true legend in the world of hospitality. Hi there. Welcome to Richard. Richard, it’s a pleasure to have you on the program. Welcome today.
Richard Kessler
Thank you, Sebastian.
Sebastien Leitner
Richard, I’d like to almost start with our traditional question, which is what is keeping you up at night these days? Allow us to indulge ourselves.
Richard Kessler
Well, first of all, is opportunities. It’s amazing how many new opportunities are flowing now. After all these years of building experience and reputation, and the last few years, it’s been incredible. All the new things that come walking in that are real opportunities. Earlier in our, experiences in this industry, you had to go out and search for opportunities. Today, frankly, we have more opportunities than we can hardly handle. We can’t more than we can handle. I wake up at night or early in the morning thinking about, you know, it dawned on me what to do about this new opportunity that hit that just occurred to me while in my sleep. So that’s that’s the biggest thing that keeps me up at night is opportunities.
Sebastien Leitner
So it’s almost you’re running out of time to do all of these things. Is that it?
Richard Kessler
Exactly right. I’m running out of time. You know, I have a few a little bit of gray hair and, you know, it catches up with you after after a while. You’re still thinking twenty nine years old, but occasionally, you get reminded that you’re not. But, yes, I’m running out of time. I have, three three warehouses full of art and bronzes and paintings and antiques and you name it, we have it. And I’m thinking, what in the world am I going to do with these? Because I really, masked all this for future hotels. I said I can’t build hotels that fast now.
Sebastien Leitner
That is amazing. That is amazing. A lot has changed in this industry, and you’ve been in this industry for a long time. So I wanna pick a little bit, you know, your experience. You started, I think, in hospitality at the age of twenty three. Is that correct?
Richard Kessler
That’s exactly right. Yes.
Sebastien Leitner
And now we’ve had probably the most transformational period of time behind us. You know? I almost feel like there is a time before COVID and there’s a time after COVID, and it has certainly accelerated a lot of changes, especially in travel and hospitality. What’s I mean, let let’s start maybe with the last few years. What do you think has changed most in the last few years in terms of hospitality?
Richard Kessler
Well, I think, a lot has changed, and I think you can tie most of it, a a major part of it to COVID. And, really, what happened after COVID, it became a mind shift in people’s minds about what things should cost and what prices they should be. And it’s been a major incremental change. And, what’s that’s caused is caused increase in prices of materials, increased cost of labor, increase of not in construction labor also as well as operating labor. Electricity bills have taken some big jumps. If you look at insurance, it’s taken big jumps, incremental jumps. So it’s amazing. After that, there’s truly been a mind shift about pricing and and how do you price and cost of things. And today is kinda hard to even know what is something worth. Before COVID, it seemed like you could pretty much pinpoint what something would cost, what you should pay for it. But today, I find that’s not the case.
Sebastien Leitner
So as a developer, which you are. Right? I mean, you’re developing new properties and you have been for quite a time. Is is building and, I guess, creating new hospitality businesses becoming out of reach? Is it becoming possible? What’s what’s your perspective?
Richard Kessler
Well, that’s a good question, and I’ve I scratch my head on that one too. The cost has got so high to build, to buy the land, to pay all the, tap in fees and water and sewer and all the utilities, to pay the insurance. All everything has gone up. And then the cost of materials to build what you’re going to build. And then the cities decide they want some big chunks of change, out of higher real estate taxes. So even while you even building and you’re holding the land, you’re paying, some strong real estate taxes.
And you add all that up along with, after you get it finished, all the taxes that are loaded on it that you have to pay, were include all kinds of sales taxes and, special, taxes put on by the city to raise money to do whatever they wanna do with it. It’s just it’s overloaded the cost. And now the cost is really out of balance, frankly, with the rates you can normally get today. The rates have not caught up with this cost.
And if you think about it, all the cost that I’ve just outlined, plus you look at what’s happened to interest cost, and that is a big component. Interest cost has gone from four percent to eight, nine, ten, eleven percent. And when you think about the cost of it, it’s the cost even during construction of interest. And then when you operate, go to operate, you think about your that cost is doubled. I mean, that is a huge, impact to your p and l and to the profitability. When you load all those costs together, that is really a problem given the rates have not moved as fast as that.
That being said, it is clear that people are starting just to say, you know, this is what it costs, so I’m gonna put a price on it. So what was five hundred dollars a night is now gonna be a thousand dollars a night. And let’s just see what happens. And then some people are saying, well, I had a thousand dollars a night. Now we’ll put two thousand dollars a night on it on my product. And some of that is sticky. So, frankly, I think they’re leading the way for what is coming, and that is some higher prices and higher rates, for a product to in in order to be able to pay the expenses and the cost of doing business.
Sebastien Leitner
Yeah. I was catching up with an industry analyst yesterday, and we were talking about that luxury hospitality has broken the barrier of a thousand dollars a night.
Richard Kessler
That’s right. Yep. Consistently. Yes. It’s not only, you know, on peak days, etcetera, but there’s there are brands, there are hospitality businesses in in key destinations that can command such rates. That’s right. Yes.
Sebastien Leitner
So that’s encouraging, I guess. Right?
Richard Kessler
Yeah. That is encouraging. It’s just the question now is how many years is it gonna take for it to really catch up catch up with the cost that has, been put on the industry for construction? Is that is that a two year wait, or is it a four year wait? Is it a five year wait? But I’d say it’s somewhere between two and five years before it comes back into a balance.
Sebastien Leitner
It it was interesting to see during COVID and and the years after, the prices of hotels were always below inflation. Right? It was always or so very close to it. It was never really ahead of the inflation curve. And to your point, construction cost, operating cost increased far greater
Richard Kessler
Far greater. Yes. Than than the cost of, of operating, I guess, a hotel. Exactly right. It’s it’s amazing. And it sometimes it’s hard for me. Like, maybe the last the last hotel we did, it cost us, say, six hundred and twenty thousand a key. If I price that today, it would be a million one a key. And it’s only been, what, three years? So it’s it’s it’s amazing. And you say, yeah. Yeah. You say, it can’t be. I I go back to my construction person, engineer, and I say, you that can’t be right. You missed it. You you have too many zeros here. Go go look at it again. Dig into it and come back to me. He comes back. He said, well, it went up three percent more.
Sebastien Leitner
I assume these are not presidential suites. Right? At a at a millionaire key. Correct? Right? That’s across the board.
Richard Kessler
If you take the total cost from the time you buy the land till the time you furnish that property property and you open the door, it’s going to cost you. Don’t be surprised when it’s a million a key. And we’ve got we’ve run some numbers on another project we’re working on, which I thought would come in at seven hundred and maybe seven fifty a key. Came in a million and a half a key.
Sebastien Leitner
Now let’s fast forward. I’m curious. Right? Okay. As you sort of think about, you know, prices increasing, there may be headwinds to travel. There may be fewer people traveler, traveling. There’s always ups and downs. Do you think there’s an opportunity with, I guess, investors running out of steam and opportunities to acquire, you know, I guess, undervalue? Is there is there going to be opportunities to buy things that are maybe potentially at risk, projects that are at risk?
Richard Kessler
I think there will be some, depend on what really happened to the economy. If the economy stays about like it is and we kinda keep muddling through it, and hopefully with president Trump, we can see a a better America, economically and every other way for everybody. And if that’s the case, I think things will settle down much quicker than what we’ve seen in the last four years, frankly. Once people really get an optimistic view of their life and their future and what’s coming, they loosen up. And they will say, okay. We’re going to enjoy some things now.
It’s when people get scared and when they it’s it’s undetermined what the future looks like or it looks pretty dark. As you know, they withdraw. And attitude, has a lot to do if that person’s gone put out the money to go traveling and enjoy themselves. So it’s it’s that attitude. So if we can get this attitude more positive than than it is today, and I think we will. I think we can through president Trump. I think we go we could see a pretty good year this year. I’m I’m I’m pretty optimistic on twenty five, honestly.
And we see it we see it in our numbers. I was going through, we have a plant Riverside and Plant Riverside. It’s a multi use development in Savannah on the river. And, we have a four hundred nineteen room JW hotel, and we’re looking at, occupancies and what it looks like for the rest of the year. I mean, we’re looking at some fifteen percent increase overall revenue and fifteen, maybe even twenty. So if we can hit those kind of numbers, I can, I’ll feel good.
Sebastien Leitner
You’ll be happy. You’ll be happy with that.
Richard Kessler
Yeah. I hope we can because, thank goodness, I’ve already built this thing, which was very expensive, very difficult to build. If you’ve ever seen it, it’s it’s a multi use. We built five feet from the Savannah River at levels below the bottom of the river. So you can imagine the engineering feats and all that, but, all that is over. Thank goodness. So what we’re really dealing with now is cost of electricity, taxes, to deal with, and then we’re talking about interest rate. But the good news is the interest rates now are coming down slowly. And if they’ll keep coming down another hundred basis points, another maybe even two hundred basis points, it’ll make a huge difference for this industry. Huge for all developers.
Sebastien Leitner
We have to talk a little bit about your portfolio of properties. You have about eleven, twelve hotels. Is that correct?
Richard Kessler
That’s correct.
Sebastien Leitner
I read thirty restaurants, which is amazing. You have
Richard Kessler
We have thirty four. Average operations. Yes. Yeah.
Sebastien Leitner
How would you describe your property or your brand? Right? Because you’re unique. I mean, I looked at the pictures. I looked at the the the design. It’s like, this is unique. This is I’ve not seen anything like this.
Richard Kessler
That’s true. That’s what we do. We do unique inspiring places, as we say. And so what our objective is is that our elevator speech to ourselves is that we want exuberant guest. That’s our mission, exuberant guest. And if we can create that, everything else will work. Because an exuberant guest, they get past the the point of, am I paying a hundred dollar rate or two hundred dollar rate or three hundred dollar rate or fifty more dollars than I think it might have been worth. But if you get a a guest exuberant, they’ll pay what it takes and they’ll go away very happy. And so that’s our objective, exuberant guest.
Do we do that by very unique detailed design properties? Things that are filled with art and music and culture, each cultural experiences. Those things are so important to get a person fired up and say, I’m coming back here. I often go down to plant Riverside here in Savannah, and I I’ll just start check chatting with a person. They may even recognize me and come to me and start talking to me. And I’ve had so many people come to me and they’ll start talking about all the experiences, And they’ll actually start crying telling me about it. They’re so emotionally involved in it, and they’re so excited. I’ve I’ve seen it so many times. It’s incredible.
I’ve never seen anybody have tears rolling down their face talking about a a standardized three star property or even more for even a big box properties. Nobody would get emotionally involved in that. I don’t think. And but you can go to my properties, and I pray you, you start talking to people, the tears will start running down their face because they’re so excited about something they saw, something that reminded them of some experiences in their life.
We try to weave in elements of, learning into everything we do as a as kind of taking the page out of the book of, what Disney does. Even they in the entertainment business, we’re in the entertainment business as we remind ourselves. I think that’s one Disney has done over the years very well is weave in elements of learning and teaching and some of knowledge into that whole entertainment experience, and we try very hard to do that same thing.
And the other thing we work on is is music. We think music obviously sets an emotional feeling to, the experience of being in our properties. And so music is very important. We have Bosendorfer pianos, handmade in Vienna, Austria, in our hotels. Occasionally, you’ll find a a a big Steinway, and and I love Steinways too. But the Bosendorfers are close to my heart, and, they it’s so melodic. They it’s like hearing a harp being played. And we like on Sundays, for example, we play classical music, classical piano music on the system we have in the in the property if the pianist is not there playing. If he’s playing, he’s gonna be playing classical music on Sundays. So we try to think about the days and and reflect on what helps a person relax and what inspires them while they’re there. And so we really put a lot of effort into it. We’re not perfect, but we keep working at it and to make ourselves perfect as possible. To to really create exuberant guests, and that’s what it’s all about.
Sebastien Leitner
Sounds like you’re you’re creating experiences that people wanna talk about afterwards as well.
Richard Kessler
Well, they do. Yeah. I mean, they’ll stop me, and it’s like you can’t quieten them down. They they just keep going about things that they saw that inspired them or things that they’ll never forget or something they learned. I mean, it’s not unusual to have ten minute conversations with these guests that come and start talking to us about it.
Sebastien Leitner
How important is food and beverage in your segment?
Richard Kessler
Extremely important. Actually, we sell half of our revenue in our company is food and beverage. Half. That’s double the industry average. And we put a lot of emphasis on our food, and I think that’s so important because how how do you really create a wonderful experience if you don’t have wonderful delicious food?
Sebastien Leitner
And I I should know this, but I don’t, so I’m gonna have to ask and and and disclose that I did not prepare that error. Are the food and beverage concepts unique or shared amongst your properties?
Richard Kessler
Well, each one is somewhat unique. No. There’s some commonality when we find things that are really highly desired, by people, some particular way we’re preparing food. We’ll share that with, other hotels. But each one has a a a new twist, you might say, a different twist to the menu.
Sebastien Leitner
That’s amazing. That’s amazing. Now this is luxury hospitality. Let’s be real. Correct?
Richard Kessler
Yes. That’s right. It is luxury. Yes.
Sebastien Leitner
This is not where you started. Right? Like, you started on opposite end, if I may say that. Is that fair?
Richard Kessler
But you know what? That was wonderful training because if you think about it from a value point of view, we were creating tremendous value at the time. And that’s why Days Inn took off. It’s not because they were so beautiful or anything else. They’re nice looking buildings. They were, let’s say, a Holiday Inn or an upscale Holiday Inn until when I took over the overall company. I started building mid rise and high rise Days Inns. And when I did that, they kind of put us in a different category. But we always ran occupancies. We’re running eighty percent system wide, pretty much day in, day out.
And so by doing that, we were giving great value. And it was a challenge always. How do you create how do you create a a great value and an experience that people will come back to for a low cost. And that’s what we did. And and it was good training for me because it it makes you think about every dollar you spend in investing in that property. Do you do you buy buy this linen or that linen, or do you buy this furniture or that furniture, whatever? But we always try to do quality the best we could, and we did.
And we were well run company. I mean, the Federal Reserve out of Atlanta, once came into us to see us. And they said, we’re doing studies in all the big companies in Georgia, state of Georgia. And we’d like to know, if we could come in and do a full study on your company and see how you compare to other major companies in the state of Georgia. They came in. They spent, I don’t know, a month with us, going through all of our records, looking how we did things, and we ended up in the top ten best run companies in all the state of Georgia. And that was the Federal Reserve report. So we we we we were very careful about it.
So what that did for me is it it taught me a lot of the basics that you needed to know to run a company and to run it effectively and, create value. No matter what level you’re at, you have to create value. And so we did, and so now I’ve got to do this time around, I got to do my passions. It’s all about art and music and beauty. And so beauty, if most people will describe if you said, give me one word that would describe our property, they’ll say, oh, it’s beautiful. That’s the word they would use, eight out of ten people. And then they’re going to talk about details and what made it beautiful. But for sure, it’s, art and music plays a big part in it. And given I’ve I’ve been a collector all my life and all types of art and artifacts, we can make some very interesting places with, collections that go back thirty, forty, fifty years.
Sebastien Leitner
I wanna talk about your collection because I’m I’m I’m a big fan. And then, but before we go there, I’m interested in talking a bit more about the developer sort of career path that you took. Right? Like, it sounds like you you looked at hospitality more from a real estate perspective than anything else. Is that fair?
Richard Kessler
That is fair. Yes. Because I wanted to be a real estate developer. I graduated from Georgia Tech, have engineering degrees. I got a background, a master’s in engineering from Georgia Tech, and but I never intended to be an engineer. And, I wanted to be a real estate developer. And so I went to Georgia Tech because I was told it’s the most difficult school in the state of Georgia. I said Nice.
Sebastien Leitner
That’s Were they true? Were they was that true?
Richard Kessler
And if you talk to if you talk to most graduate from particularly my era, in your interviewing, they never say I graduated, like, in nineteen seventy. They say, I got out. I got out.
Sebastien Leitner
Wow. Nobody says I graduated. So you got your diploma. You like, you got out. Got out. You didn’t you got out. It’s like Okay.
Richard Kessler
But that’s true. At that time at Georgia Tech, it was extremely, competitive and extremely difficult, frankly.
Sebastien Leitner
But Did it help you in your career? I mean, like, as an engineer?
Richard Kessler
Absolutely. It teaches you, persistence. It taught me persistence and, stickability. You you just never give up. And and and you tackle things that you think are impossible. And and you don’t shy away from difficult things, honestly. Sometimes it’s almost a negative because you’re not afraid of these things that most people say you gotta be crazy. Like people talk to me and said you bought that power plant in the condition it was in. Oh, that would drive me crazy. I could never do anything with that. Well, that was just a waving a flag in front of me.
Sebastien Leitner
I can I can only imagine you talking to a contractor, and he’s saying this is impossible? And you’re just I mean, I I can just see that happening, that moment.
Richard Kessler
We’ve been told many times, that’s impossible. We can’t do that. And that’s, well, you Swatch. We will.
Sebastien Leitner
That’s amazing. So Days Inn has, I guess, really created a brand new business. I mean, when you started at seventy something, seventy five
Richard Kessler
Nineteen seventy, I started. Yeah. When I graduated at from tech.
Sebastien Leitner
The landscape of hotel brands was very different or hotels in general. Than it is today. You helped created what it is now. Right? You created the the model. You created the infrastructure. You created the the blueprint. Is that fair?
Richard Kessler
Yeah. That’s true. Art and music, we brought we brought a lot of things to the industry. When we started loading our properties and building around art and music, there was very few people talking about art, music, and hotels. And about three or four or five years later, you begin to see there’s even art hotels showing up. You know, they’re really picking up on it. And, and other people started putting more emphasis on it. So you’re right.
Is the industry’s changed dramatically. And I think we have brought a lot of that about. Like, we did the first in Savannah, we did the first rooftop bar, in Savannah, and I’m not sure it’s not one of the only ones in the state of Georgia. When I did that in nineteen what was that? Nineteen probably nineteen ninety. About nineteen ninety or so. We did this, rooftop on the Bohemian Hotel. And, it was, it was none none others in Savannah. Today, we built I put four rooftop hotels at Plant Riverside just on that one project. And every one of them makes sense, and every one of them makes money. And then there’s a lot of other people that followed us. It’s probably, it’s probably another four or five rooftop hotels down in Savannah because of what we proved couldn’t work and would work.
We brought the the whole thing of art and music to the forefront in the industry. We brought the whole thing about boutique hotels, really to the industry. It was it was, Marriott came to me, this is probably ten years ago, and said, we’ve looked around the, the United States for boutique hotels because we wanna build a brand, a collection, not a brand, they say. We’ll build a collection of unique hotels, and we like yours the best. Ever traveling America looking, and we would like you to take seven of your properties at least to start, of this collection for us.
And I told them, thank you. I appreciate the compliment, but we don’t need your help. We’re doing fine and so forth. So they went away, and they came back about, I don’t know, two, three weeks later and said, have you thought about it? I said, yeah. I thought about it. And they said, still, no. I’m not interested. I don’t wanna do that. And, we don’t need you. We’re number one in every market we’re in already, so why would I do this?
And then about a month later, they came back, and they said, well, Richard, we’re gonna bring you a offer you can’t refuse. I said, well, now listen. What’s the offer you can’t refuse? And so I’ll be darned if they didn’t make me an offer I could not refuse.
Sebastien Leitner
Okay.
Richard Kessler
I became then the spokesman for what became autograph collection. For the first year, people thought we owned it. They we got phone calls every day saying, oh, I like to franchise one of these. And I said, you had the wrong number. You gotta call Marriott.
But it it was fun helping them, really shape that. And if you talk to them, they will tell you we’re the ones that really shaped that. I went to Washington, and we spent, two, three days negotiating out my agreement with them. And also teaching them and showing them what was important to independence like me if they wanna sell this thing, things you would not put in that agreement and things you would put in that agreement. And because it’s not like franchising a it’s not like franchising a Marriott the standard Marriott hotels. It’s a different mindset of person that comes along and does these independent boutique hotels.
And so we help them shape, and I think they would I’m sure they would confirm the ask the fact. We stayed in a room with lawyers and help them shape that whole agreement. And then we signed our agreement, negotiated our agreement, a deal I couldn’t refuse. So it worked out. I’m good friends and and I’ve enjoyed it. I still like doing my own independence also, and we’re gonna be doing some of both going forward. I’m gonna be doing some independence of our own under Bohemian and the Grand Bohemian name, and we’ll do some autograph collections from time to time also.
Sebastien Leitner
Why does Marriott, in your opinion, need something like autograph?
Richard Kessler
Because it’s a contrast, frankly, to the other brands that they’ve traditionally had. I mean, they’ve been, as you know, generally considered a big box hotel company. Then they brought about, back in the seventies, they brought they created a courtyard courtyard. And that became popular, but that and that’s the first thing that had, you might say, some character that I saw that they ever did. And it didn’t have that much character, but it was it still had some character to it.
What’s so good about this for them and they will tell you today, it is their fastest growing brand they have, is Autograph Collection. Amazing. The fastest. And so what what I helped them do is create a multibillion dollar business, which they have done with that with what we learned and what we what we did, I hope
Sebastien Leitner
But they made you an offer you couldn’t refuse.
Richard Kessler
They made me an offer I couldn’t refuse. I think I should negotiate it a little longer, though. But, anyway, they they’ve been good to work with, and they’re nice folks. And, they had a chairman that, really liked very much, and they’ve got some good people.
And and it’s all about people too. That’s one thing in our industry. We we always have to realize that this business is about people, and it’s choosing the right people to be on the team, working with them. You’ve gotta be productive. You’ve gotta know what you’re doing. You’ve gotta work hard. It takes a lot of work, but it still comes down to people and their interest in working with people, training people. It’s it’s a people business for sure.
Sebastien Leitner
You said something that may resonate with a lot of listeners. You said something, I don’t need you. Right? I’m an independent hotel. I don’t need you. I’m needing. Thank you. Because we have a lot of at Clubbits, we have a lot of independent hotels. They may be smaller. They may boutique, etcetera. And they may get phone calls from larger corporation, you know, join, become part of a brand, etcetera, etcetera. What makes an independent hotel successful in your perspective? Because clearly, you have the track record of for success.
Richard Kessler
I think the first thing is the real of real estate is location, location, location. If you’ve got location, location, location, you probably don’t need a brand, honestly. And if you don’t get it too big, be careful about that because as soon as you get it over, I would say, over three hundred rooms, I always notice your operation changes once you hit a three hundred room hotel. And because all of a sudden, you’ve made yourself go into the group business. Soon as you get in the group business, that means you got a whole group of salespeople, which you have to commission. You need to commission if you wanna keep the good ones. It takes a lot of training. The rates are more challenging to get the rates you wanna get with groups than you can for the for the leisure traveler. It’s all those things that affect it.
To go back to your question, it’s if you have location, location, location, and you do a great job of of a building of facility that basically becomes a brand, if you do it, if you’re a Tesla hotel, a strong market, you’d really don’t need a brand, honestly. Keep it under two hundred and fifty rooms.
Sebastien Leitner
Okay. So both the combination of location and size is critical.
Richard Kessler
Location, size, and then pair it to what you do. Nice. The stronger the character, the better brand you’ve built, and the and then you can withstand anything at that point from a competitive point of view. And that’s one reason we do what we do is that I wanna build something so that no matter whether I’m an autograph or not an autograph, I I wanna build something so that I’m no not too worried about who comes next to me.
Except except the only thing that that’s becoming a problem with that is that these big companies have these dozens of brands now. And I mean, you gotta you cutting us thin difference between so many of these brands that really the customer can’t even figure out what’s the difference. They don’t care because it’s so similar. They don’t care. And so with with the multiple brands, it opens the door for the big companies to come in and put another property on their system right next to you and compete with you, and you just you paid to get into their system. And what you just paid for just went you lost half the value when a a competitor that they produce off of their reservation system that is similar product.
Let’s say if both of them are four star hotels, you just you just lost half of half of what you bought and you committed for twenty years. That is a problem. That is a major problem because if you run the numbers on that, the impact if you did let’s say, if you do a hundred million dollar hotel, Wow. Impact on that could be as much as twenty million dollars of value through that hotel. Oh, scary. Yeah. That is scary.
Sebastien Leitner
That’s that’s one thing that is that’s scary. Yes. It’s it’s hard to protect it also against. Right? I mean
Richard Kessler
And it’s very difficult because you could if they would work with you. They could. You you could say, okay. You can’t we will not put another four star brand within a mile of you or some market radius, whatever it is. But they won’t do that. They say, oh, well, it’s a different name. It’s a different product. Well, till they had customer, if both of them four star products is you’re still losing half of the power of what you just bought. That’s a big danger, and it needs to get dealt with.
And I think it comes down to, they really consider themselves a partner with you. If they consider yourself a real partner with you, they wouldn’t do that anyway because they wouldn’t do it to themselves if they were the one who just signed a fifty million dollar note guarantee with the bank. You alright? No. No. Nobody would do that. So if he sometimes, I think they get so they can get so tied up in thinking because it’s a different name, it’s a different brand, it’s a different product. Uh-uh. Not if it’s you’ve got two four stars, getting reservations off the same system, the same town, and you’re two hundred feet apart. That’s a different deal. That’s a different problem. And I think that’s a sign of bad faith, in my opinion.
Sebastien Leitner
I’ve seen some of these agreements where there was a geographic exclusion or where they weren’t allowed to open the similar product within certain proximity. Proximity. Maybe that’s new.
Richard Kessler
In my recent years, I’ve never seen agreement like that. What they will say is we will not put one in this market area, let’s say, of that name on that brand. But they put another brand, four star, right next to you, and it’s not a it’s very little you can say other than, is this fair or not? That’s that’s some challenges that’s ahead today in our industry.
Sebastien Leitner
Yeah. Sounds like it. I wanna, talk about your collection, Kessler collection. Which one?
Richard Kessler
Well, you tell me.
Sebastien Leitner
I’m curious what motivates you. What inspires you to buy art? Is it to furnish your hotels? Is it your personal connection? How did you get started with this?
Richard Kessler
I just I just have always had a propensity for things that are beautiful. And, so I collect based on beauty, whether it’s a dueling pistol from the eighteen hundreds, whether it is a piece of fabulous jewelry, or whether it is a wonderful painting, I buy it, first of all, for beauty. And if you that’s and it’s it’s it’s really satisfying to me when I go to the property and that these people come to me and say, this is a beautiful hotel. And they’re raving about it, and they’re so exuberant. They have started to cry. That tells me I’ve done the job.
Sebastien Leitner
Because the artwork is original? Because the artwork is real? Because yeah. Everything is so curated.
Richard Kessler
You come into hotels, I mean, just like at Plant Riverside, you probably got, if I had to guess, you’ve got about, over two thousand original paintings, the two thousand important paintings in that hotel. You probably you got sculpture, in Plant Riverside because it’s started out as a, coal fired power plant. I decided, well, how are we gonna theme this one up? How are we going to make it come alive? And, and it dawned on me. I said, well, this was a fossil fuel, plant. So that oh, okay. That’s my clue. Fossil fuels. So that means mastodons. So that means all types of things. No way.
And so what we ended up doing is make it made a natural science museum in the lobby of this power plant, which is the lobby of the hotel, and we carried that theme through the whole building and all the rooms and everything. And it’s, it’s truly it has, it it’s become a museum, and it we have more traffic now than the museum that’s been in Savannah for over a hundred years. We have more traffic just coming through to see the museum in town because it is a natural science museum. We’ve got some fabulous things in it.
We just acquired one piece that came out of, up in Canada. And, it is a mastodon woolly mammoth. It’s, has tusks that are ten and a half feet long. You got the skull, came with it, and and most of the skull is original. So it’s a piece that was appraised at a million dollars. And it’s I mean, it it could belong in the Smithsonian easily. I mean, it’s it’s that quality and that character.
So we have that. We have meteorites. We’ve got Russian ice age bears. We’ve got turtles from three hundred thousand years ago. There’s only two ever been found in Florida, and we have one of them. We’ve got, amethyst crystals that are, eight feet tall and five feet wide. And we’ve got, quartz crystals that are four feet tall. We’ve got, oh my gosh. It just goes on and on. And, it’s truly, it’s truly a natural science museum. And we keep adding to it, and the kids love it. When they come home, I didn’t tell you. I have one more thing. A hundred and thirty five foot dinosaur in the lobby.
Sebastien Leitner
Of course. Of course. Right? I mean, it only makes sense. Sure.
Richard Kessler
It makes sense. Well, you should have seen after I the bankers told me when I was financing it, I had to have a franchise. I said, I don’t need a franchise. He said, well, for us to finance it, we have to have you have to have a franchise. So I called up Marriott. I said, okay. What do you have this four star that I can use to satisfy the bank? They said, well, we have the JW Hotel. And I’m thinking, well, most JW hotels don’t don’t have the image of what I’ve got in mind, but okay. So I said, well, you know, I’m gonna do what I wanna do with it and decorate it. And they said, yeah. And Richard, we know you. And I said, okay. Fine.
So but you should have seen the face when I told them after we we were about ready not far from opening that I was gonna have a hundred and thirty five foot deck chrome dinosaur in the lobby of a JW hotel. I thought they were I was just waiting. I thought they were gonna freak out on me. They said, well, why are you doing that? And I told them, and they said, okay. Alright. But it is a draw. I mean, it brings the kids in now. The kids love it.
Sebastien Leitner
But you say something that is truthful for our industry, unfortunately, which is a banker will ask, you know, what franchise are you going with in order to secure funding. And that’s oftentimes a reality for entrepreneurs and developers that want to start a hospitality business.
Richard Kessler
Yes. You’re you’re right. It’s, they basically require in most cases, but when I was building bill building our company, I never had a franchise. I didn’t want a franchise because I was doing everything so unique, and we didn’t need it. We were running pushing eighty percent. I kept seeing the whole in the whole company. And so I I didn’t need it. I truly didn’t need it until I got to the point I had a mega project, three hundred million, four hundred million dollar project finance. And there was only one company in America that was doing big hotels of that size and big loans of that kind of size, and so I didn’t have a choice.
Sebastien Leitner
I’m getting, though, a better sense for how you’re leveraging arts and artifacts. It almost seems to me, and and please correct me if I’m wrong, that they’re your partners in designing your properties.
Richard Kessler
Yeah. What I do, frankly, is I I’ll think of a a location, and I and I ask two questions when I, when I go into a city. I ask two questions. Many times, I’ll have a, actually organize a group of twenty, thirty people that know that city, grown up in that city, does visit in the city. It could be city planners. They could be architects. They could be mayors. They could be alderman, whatever. And I asked them two questions, and I did when I when just before I started to play at Riverside, I gathered thirty people together in the Bohemian Hotel down the street from where this power plant was.
And I said, I have two questions for you. The first question is, if you own this property, what would you do with it? And the second question I asked them, what does Savanna need that it does not have? And those two questions are, to me, very vital questions. And if you can answer that those, they put you on the right track for what you should do in a development. And it did with us, and I did it twice. I did it there, and, it was an all day deal. We had a big lunch and and flip charts and filling up flip charts with all the ideas and so forth.
And, then, thirty days later, I did the same thing in Orlando and our Orlando office. I asked half of those people back, and then I got another half of new people of of architect more architects and engineers this time. And we took off from where we left in Savannah, and we did. And, we did some more some more charts, and we said, okay. Alright. We’ve we’ve got the idea now. It’s in pieces on these papers.
So I had about thirty people. I’ve I’ve broke it up into three groups, and I put a different architectural group, company in in charge of each group. So I had three architectural companies leading the there’s ten people in each group. And out of that, I said, okay. You got four hours to go. Come back with a plan, and then you can produce it. Then you can get in front of the group, and you can explain why you did what you did and how it fits in with all these things that we’ve said on this chart. So we’re in part part of it.
So they did. They came back, and they made a presentation. The group would critique it and talk about it. And I said, okay. Now that we’ve been through all this, things are coming very clear, I think, what we should do. Everybody agreed? They said, yep. I said so I took one of the architects who was a great design architect and, and a friend of mine. I said, you take them take the group. I will give you one hour to come back with a plan, the laid out plan of this. And he said, okay. So he took them all thirty in a room, and they took everything that they had done, the three groups had done, pulled it together in a focused plan, came it back in an hour, rolled it out. And I looked at it. I said, that’s it. And we never changed from that.
We went in Savannah. We have so many committees you gotta go through. We and the National Historic District and the Savannah Historic District. We went through all that, and it it was amazing. And we we won every different committees. I bet we had twelve different presentations, councils, committees, historic Sure. And we won every single one. Sometimes, even against the recommendation of the staff, this committee still voted for it. So we never lost to one. And it took we got through all that in about a year then to get through all the twelve committees.
Sebastien Leitner
That’s amazing. That’s amazing. You’re an engineer. Yes. At least you studied. So I do need to talk a little bit about tech and hospitality and especially luxury. Right? Because you said something earlier, which is hospitality and hotels and luxury is people. What role does technology play in your opinion when it comes to hospitality?
Richard Kessler
Well, I think it it does several things. It supposedly makes things more efficient. And I say supposedly because sometimes I think it does, and other times I think it does not. I think it complicates things, and I think it’s for some people that are not as tech savvy as maybe the twenty year old, the thirty year old, the fifty year old, or ten year old. I think it it it makes it somewhat uneasy in a sense for them because they feel threatened by it.
We if we get too far out on this technology thing with with with any kind of business, particularly in the hospitality business. In hospitality, you wanna make people keep them comfortable. You wanna give them the warm feeling. You don’t wanna threaten them with something. And so I think we have to be careful not to let technology threaten our guest. That’s the worst thing we could do. And then if it works against you.
And because it’s still a people business, and people like to be recognized as individuals, and I think if we can use technology to emphasize those things we know are important to people, knowing them by name, recognizing them, meeting their knee needs quickly, efficiently, in a time conservative way, I think that’s great. If we don’t do that, if we’re using it too far, we’re pushing the technology too far for our own convenience, then I think we’re not using it correctly.
Sebastien Leitner
What’s next for you? What’s next for Richard Kessler?
Richard Kessler
Well, one thing I’m focused on, today, I had a very interesting meeting this morning. You you know the gentleman named Lee that’s had started something called the roadshow, antique roadshow? Yes. Well, he’s been with me all morning. And, we’re talking about collections, and we’re talking about a program, that he wants he’s doing and wants us to be a part of it with him because he knows we’re a serious collector. And, so we’re talking about all that, and so it’s been a lot of fun.
And so I was talking earlier about new things that are cropping up all the time and things that are opportunities. Well, this is an opportunity, and I just have to sort through this and say, okay. How much time do we really have to deal with this? Because it’s a new it’s new territory. It’s inventing something totally new, but it’s close to my heart because it has to do with collectors using technology in a very and AI in a very interesting way, for collectors. And so that’s close to my heart because I need that technology right now. I have three warehouses full of paintings and bronzes and things I’ve talked about. And so I’ve so before I pass on to the next life, if I leave these three, warehouses full, my kids are gonna hate me forever.
Sebastien Leitner
But are you are you putting the warehouses in hotels, or are you putting it into museum? What’s your what’s your guess?
Richard Kessler
No. Well, the warehouses are in the country, and in the country locations is those items in the warehouse. Many of them and much of it was built for the hotels and and bought for the hotels. And, I could probably I’ve got enough probably to do ten more hotels right now.
Sebastien Leitner
You have enough to expand your portfolio of property significantly.
Richard Kessler
That’s right. So we can do that. So that’s one thing. We will keep doing some property deep keep doing properties, and I I wanna do really creative, interesting properties. Hopefully, will always be our major focus. We’ll do some other things from to test different markets or whatever. But major, I wanna do these high end boutique properties.
And when we started this business, when I first built the first one, actually, it was when I was running Days Inn. I did it in nineteen, nineteen seventy nine and built something called the Mulberry Inn in Savannah, Georgia. People in nineteen seventy nine couldn’t spell boutique. They had no idea what a boutique o hotel was. And I I did it, and we were profitable in the first six months. I said, I’m on to something here. It was it was a four star property, beautiful little property.
And then I laid a bill with another one in front of the convention center in Orlando, Florida, which after that was, it was in the way of a multimillion dollar expansion of the convention center. It got torn down, too bad because of the beautiful hotel. But I knew it too was very profitable quickly, and I knew I was onto something. And it was so after I started my own business, I knew that’s what I wanted to go back to because it was about art and music and beauty. And so that’s what I was wanting to do.
Back to what I’m looking forward, I’ve really I’ve really wanted my I had a professor at Georgia Tech who was a very creative thinker, and I we became very close friends even through tech and after tech. He was one of my thesis advisors. Name was Cecil Johnson. He was quite an unusual person, very brilliant, and very different kind of thinker. And he kept saying he knew I was a collector back then. He said, Richie, one day, you’re gonna have to build your museum for yourself. I said, yeah. Okay. Maybe.
We are now, actually, put together a a concept to build a collector’s museum, and, that’s something I really would like to do. I’ve been trying to acquire a certain building here in city of Savannah, which would be perfect for it. It’s about a hundred thousand square foot building. And, we could do a serious museum for collectors. And I really I think I figured out how to do it financially as well as design wise and concept wise.
And that’s one thing I’ve been talking to Lee about from roadshow antique roadshow and, sharing some ideas with him. He’s excited about it. He said, look. I like to be on I’ll be a consultant to you. I’ll be on your board. Whatever you want, I’ll help you with it any way I can. He said, I’m I’m enthused about it. And so I’ve run it by several people that’s that would could really give some valuable assessment of it. And everyone I talked to that that would have some understanding of it has been very supportive of it and excited about it. Is it whatever I can do to help you make it happen, let’s do it. And I do think it’s something worthwhile doing.
Sebastien Leitner
Well, Richard, I can’t wait to go visit it when it’s ready, when it’s opening. I’d I’d love to be invited to join you and and and see it when it’s opens. In the meantime, I do wanna thank you for sharing your stories, your insights, and, your time with with us here today. Thank you so much, Richard.
Richard Kessler
And Well, thank you. It’s been an absolute pleasure and privilege to talk to you. Well, thank you. I wish you a good day. Take care. Alright. Take care.
Sebastien Leitner
That brings us to the end of yet another episode of The Turndown. Huge thanks for all of you for listening. We hope you enjoyed the conversation. Of course, this podcast wouldn’t be possible without the amazing team behind the scenes. A massive shout out to the producers, Paula Carreirao, Linda Pashaj, Lana Cook, Ricky Schoeman, and Ayleigh Farquharson for the incredible research and preproduction work always keeping us on track. To Paulo Sanchez, thank you for your stellar audio editing and for making us sound so good. And finally, thank you to Ying Liu for her organizational talents and keeping the season on schedule, literally. Remember to subscribe wherever you get your podcast and follow us for updates and bonus content. Until then, take care and stay curious.
