Lessons from the Past: Be a Part of the Solution

“Focus on the stuff you can make an impact on”

Hear from Richard Born of BD Hotels and Jay Stein of Dream Hotels, speakers at The Boutique Lifestyle Digital Summit by BLLA.

As part of the Investment Track of BLLA’s Boutique Lifestyle Digital Summit, “Lessons From the Past” focused on how experiencing previous crises has helped guide some of the top hoteliers through this year’s extreme challenges. Moderator Jonathan Falik, CEO of JF Capital Advisors, was joined by Richard Born, Owner & Principal of BD Hotels, and Jay Stein, CEO of Dream Hotel Group, to discuss their experience in the current economic downturn versus in previous declines, their reopening strategies, and some advice for up and coming industry professionals. 

Prior to the pandemic, neither Born nor Stein had ever been faced with completely shutting down hotel operations. Of course, they had seen a decrease in business with lower occupancy and rates, but many aspects are markedly different about this current environment than the prior down cycles and crises. Born explained that in the past, “our portfolio was generally under leverage. We weren’t losing money, we just weren’t making money. This is different; this is existential.” BD Hotels’ occupancy and rates went to zero, “and by that definition, you don’t lose money, you hemorrhage money, and when you hemorrhage money, then you have a situation that’s existential. In this situation, we did not look very opportunistically, we looked defensively,” Born revealed. Based on his previous experiences, Stein knew he had to take charge of the situation immediately. “It was clear we were going into crisis mode and needed to execute that style of management,” he reflected. 

Rather than focus on the negative aspects of not being able to operate at full capacity, Born is finding that New York’s street dining is actually beneficial to his businesses. He reflected, “We’re benefitting by being part of the spirited community of the neighborhood, which is how we think of our boutique hotels. We really don’t think about it as bars, we think about it as community facilities and neighborhoods.” Stein has also found success in F&B, and so his F&B operations have been streamlined to maximize profits. Dream Hotels’ bars used to be open 7 days a week, regardless if they were operating at a loss some nights. Now, the managers choose nights where there’s enough demand. “There’s a lot we can do in food & beverage,” Stein noted. “You take the mandates for what they are and the restrictions for what they are and build around it. Put your staffing as efficient as it can be and maximize what people are willing to pay for in a pandemic where they just want to get out and do things.”

This still holds true to the hotel side of their companies. Born is seeing demand with loyal customers who are itching to get away to the city for a few days, or a “staycation” as Stein called it. Stein revealed that surprisingly, the Dream Hollywood is performing the best of any other Dream properties, running at 50% capacity. However, despite these small upticks in business, Born reminded viewers, “The human side is the most tragic part of this all, and reopening – there’s a bittersweetness to it because we’re not bringing 100% back to those properties, we’re bringing 20-30% back. Our real hope is that we can build this over the next 6 or 8 months and bring everybody back.” He speculated, “At spring of 2021, we would be at ground zero of any other recession.”

Both hoteliers offered profound advice to the up-and-comers in the hospitality industry. Born laid out two choices for viewers: from a personal or an investment point of view, they can either be all in or all out, both of which can lead to success. He explained, “If you are all in, meaning you built something conservatively, you have low leverage, you have enough backing and support to be able to carry you through a rough time, you will be fine. If you’re all out, then it doesn’t matter. If things get rocky, it’s not your problem: it’s the bank’s problem. The worst thing is to be in the middle of something.” He elaborated that it doesn’t matter if the company grows quickly or conservatively, but to make sure that “you’re either all in and you can get through the end, or you’re all out and you’re going to ride the crest as best you can.”

Stein left viewers with some very useful guidance he gives to his own employees. “If you waste energy on feeling sorry for yourself or worrying about what [you did] wrong, you’re wasting that energy on things that aren’t going to help us.” He warned. “I want you to take that energy and focus on things we could do going forward and be part of the solution for the company to get us through this…Focus on the stuff you can make an impact on.” 

Article written by Drew Stephenson of BLLA

BLLA members can watch the full session in the BLLA Collective member portal here