An ancient Chinese saying advises that you “borrow a road” to reach your objective. If someone else has access to your customer, then borrow his road to share this access.
Thayer Lodging has successfully run numerous real estate funds focused on owning hotels. They have raised over a $1 billion in equity and every fund has been profitable. “Some individual investments have lost money,” Lee says. “But every fund has made money.” They have produced an impressive and consistent return on investment by real estate standards.
All of this activity for Thayer Lodging gives Lee and Fred a unique opportunity to pursue opportunities few others can.
For example, they began offering online reservations for many of its hotels before others were doing so. The activity grew unexpectedly quickly. One of Thayer Lodging’s hotels in New Orleans was producing over 50 percent of its reservations online. Lee and Fred saw there was an unmet need to enable such online reservations for all hotels.
So they spun out a new company called TIG Global which designs and builds hotel web sites and drives people to the site through affinity marketing and other online tools. Today TIG Global represents about 1,100 hotels and has 130 people in Washington, D.C. and another 60 individuals in India working with it.
Lee and Fred also launched a fascinating new “corporate meetings” business. Since I speak at a lot of conferences around the world, I can appreciate how the wrong hotel partner can complicate such events.
As Lee says, "If you hold a meeting for five days at a traditional hotel, the bill comes in a ‘banker’s box’ because you get a different piece of paper for each fax, pay an extra charge for orange juice, pay $500 to rent the LCD projector, etc." Hotels run meeting services like restaurants run bars. Since you are there for the dinner, they figure you don’t mind giving them an exorbitant margin on the drinks.
To address this, Lee and Fred created EMCVenues. This is a meeting venue, inside a hotel, designed from scratch with the business meeting planner in mind. You pay a flat fee for usage of many things. You get access to orange juice, all you can drink, without having to keep track of and pay for each bottle. The high tech interior makes video conferencing, presentations, and sound systems easy to use. No need to book a lot of hardware ahead of time or for a technician to wheel in a load of black boxes.
Lee and Fred have also gotten involved in a fascinating company called PURE, which uses various technologies to reduce the allergens in a hotel room. They thought the service would be most demanded by high-end hotels, but later found that lower-end hotel users were more willing to fork over the premium to get a “pure” room.
By owning a diverse mix of hotels, Fred and Lee have unusual insight into their consumers’ wants and needs, which they use to consistently better their products. It is part of what makes Thayer Lodging so successful, and it is what makes its founders Lee and Fred into such remarkable outthinkers.
There is so much more I would like to say about this fascinating company, innovating in one of the oldest industries. But, as usual, the opportunities outweigh the time. Ask yourself the questions below to see how you can explore similar tactics.
- What road am I on?
- Is there a road I can borrow (e.g., to reach my customer)?
- Is there someone who would value borrowing my road?