LOS ANGELES-“From the beginning, our attitude and leadership style was that culture was critical and we knew of no successful businesses that didn’t have a culture,” said Sam Zell, chairman of Equity Group Investments at the Americas Lodging Investment Summit. “The optimum scenario is total access. My door to my office has never been closed. As an entrepreneur, the biggest risk I have is getting surprised and if the people that work for you don’t have access and don’t tell you what’s going on, then you get surprised.”
Zell sat down with moderator Dale Anne Reiss, senior consultant at DLA Piper/Artemis Advisors, and Bill Marriott, chairman and CEO of Marriott International, at the three-day conference, to discuss the current business environment, reinvention and leadership style. “Have really smart people and listen to them,” said Marriott. “Encourage them and help them grow in what they do. Take good care of our people and take good care of the customer and the customer will come back.
Marriott, who said that he believes in “the relentless pursue of excellence” talked about the company’s reinvention over the years. In 1964, when he became president, the company had five hotels and was in the food service management business among other things. Today, after having its hand in theme parks, restaurants, airline catering, Marriott is completely focused on lodging. “We continue to establish our brand and reinvent ourselves. You have to keep changing and looking for opportunities,” said Marriott, pointing out that you can’t be scared to make decisions on different opportunities. But he pointed out that it is important to five up on the things that aren’t working for you, “and focus on the things that you do best, and for us, that’s lodging.”
Zell says that his company never really started with a particular focus. “We are in all kinds of different things, but what is important is to set the goals and make sure everyone’s hungry,” he said. “You have to be in a position where the people you depend on are predictable.”
In terms of innovation, Zell said that innovation covers different terrain. “In 1990, we looked at the world and saw that the world as it was structured couldn’t continue the way it was structured and in 1990, we got focused on the public markets,” he said. “We got a lot of blow back on that.” The answer to that, he said, was that “it was the right idea at the right time and it was executed correctly and that is what innovation is all about…you have to not be afraid to take the risk and you have to understand what the risk is.”
For Marriott, the word “innovation” takes him back to 1980 when the company was just building big box hotels in its hotel division and decided to try reaching out and doing some smaller hotels. The company developed the Courtyard Marriott to answer the demand for “a better room at a better price,” and now has more than 925 of them. “That experience helped us explore a bunch of other brands over the years,” he said. “We realized there was a need out there and that the lodging market was changing.”
In terms of lessons learned over the years, Zell said it in only a few words: “Liquidity equals value.” According to Zell, “we all came out of this last few years with a real focus that everything comes down to liquidity, exit strategies, and knowing before you come in, how you are getting out.”
In today’s environment, Zell said, “Although everyone feels better, there has been a very limited solution to the overleveraged industry. There is an enormous amount that has to be done in 2012 and 2013.” But the good news, he said, is that real estate comes down to a simple concept: supply and demand. “Because we aren’t creating supply, we are filling up our existing stuff.”
According to Zell, the real opportunity in the US is to figure out where the demand is. “You make money in real estate by servicing existing demand,” he said. “The good news is that there is very little under construction and I think there will be very little for the next few years, which will result in continuing occupancy in real estate. As we have gone around the world and invested in different markets, our criterion comes down to where the demand is.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
