Hotel King Reigns Despite Recession
Orlando Hotelier Harris Rosen's Business Philosophy Holds Strong
Mar 6, 2009
Harris Rosen, president of the largest independent hotel company in Florida, spanning 7 properties and 6,500 rooms, is doing what he does best, going against the current.
In a time when many hotel owners are trying to unload their properties, Rosen is in the middle of a multi-million dollar refurbishment plan for several of his Orlando hotels located on the tourist strip, International Drive.
Hotel Business Model: Keep Orlando Rates Low, Occupancy High
Rosen's long time philosophy and business model are likely what's made his company nearly recession-proof during a time when the US hotel industry is looking pretty bleak. His self-named "Rosen Stimulus Plan" reflects perhaps a touch of ego, but more his proactive approach to success. While other hotels are trying to keep their head above water and signage lit, Rosen is optimistic and preparing for when the economy turns. “We want to be perfect when the economy turns around, we will be ready,” he says. ("As Rivals sink, hotelier Rosen is riding high," Mike Thomas, Orlando Sentinel, March 5th, 2009).
Rosen's success is largely due to an unflinching attention to detail at all his hotels, controlling overhead costs and keeping occupancy rates up and prices down. Edwin McDowell in the New York Times article "His Goal: No Room at the Inns" writes, "Mr. Rosen's secret is fairly simple: Much to his competitors' dismay, he openly cuts prices during the day, often to a rock-bottom $29.95 at his lower priced properties, to lure the weary traveler to the last empty Rosen room." He adjusts his rates according to "intuition and intimate knowledge of each property," writes McDowell.
The fact that he remains so competitive during a recession is largely the result of another of his fundamental strategies.
Room to Grow: Maintain Little or No Debt
Rosen has virtually no debt on his properties, only "a minuscule 5 to 10 percent of the value of our properties," he says. This position frees up about $100 million a year to invest in products and services, while his competitors have to charge higher room rates to offset interest on their loans. Rosen credits his Great Depression era grandparents for this business principle. They long ago told him never to borrow any money.
Like most entrepreneurs with impressive staying power, he earned his stripes through sweat equity, vision and, in the early years, desperate times that propelled him into courageous acts. When he purchased his first property during the 1970s oil embargo, the guests didn't come. Rosen slashed prices and did his homework. After learning that motor coach tour companies were still busing tourists to Orlando, he hitch hiked north and convinced the operators to bring people to his discounted hotel. And today, while many high end hotels only allow tour groups during slow times, tour groups account for a large chunk of business for Rosen's hotel management company.
Hotel Visionary: Capitalizing on Orlando Convention Market
In the early 80s when no one thought Orlando could ever be more than a tourist destination, Rosen bucked popular industry thinking. Recalling to students at his alma mater Cornell University, "I remember talking to, I won't mention who it was or what company it was but a very major significant player in the hotel market and they heard me talk about Orlando as a convention market, convention destination and they laughed and said, never happen. Who was the guy who wound up with a parcel on either side of the convention center? I did."
Call him crazy but his brand of insanity pays off. Rosen built the Omni Rosen and the Clarion on either side of the Orlando/Orange County Convention Center, which attracts 2.1 million people a year to 15,000 events.
After college he worked various jobs including one with Walt Disney where he was let go because he wasn't Disney material. "It wasn't that I was doing a bad job for Disney," he explained, "they said I didn't conform. They were right. My inclination is to raise my hand and say, 'But.' "
In an executive profile for the Orlando Business Journal, (October 31st, 2008) Rosen's motto is listed as "Do the right thing." In addition to his many philanthropic contributions, (largely in the area of education), Harris Rosen continues to say 'but' and to do the right thing -- both strategies it seems, are working.
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