Phill Burgess, vice president of sales and revenue management, discusses John Q. Hammons Hotels & Resorts' $800 million 2012 budget. Founder Hammons stepped down from day-to-day duties a year ago last month.
JQH: One Year Later
As Springfield-based John Q. Hammons Hotels & Resorts puts the finishing touches on its 2012 budget, company executives sat down with Springfield Business Journal Oct. 28 to provide a rare glimpse into the company that has been operating absent its founder for a year. CEO and 39-year JQH Hotels veteran Jacquie Dowdy took over daily operations in late October 2010 as John Q. Hammons fought multiple cardiovascular, lung and pulmonary disorders.
The business Hammons started in 1958 recently ranked No. 8 in the country by Hotel Business Magazine in its list of Top Owners and Developers. But accolades are nothing new for the company. Hammons himself was once named Corporate Hotelier of the World by Hotel Magazine.
Today, JQH Hotels owns 78 hotels with 9,000 employees in 27 states. Its 2012 operating budget is more than $800 million, an increase of 4 percent compared to 2011. Its expenditures in Missouri alone are estimated to total roughly $80 million next year.
Hammons, who maintains company ownership, remains in residence at skilled nursing facility The Manor at Elfindale. Dowdy visits Hammons regularly to update him on big-picture issues, and a group of executives recently spent time with him at Elfindale. Phill Burgess, vice president of sales and revenue management, and Justin Harris, senior vice president and general counsel, discussed with SBJ the economic realities of modern hotel construction and the firm’s efforts to maintain the culture Hammons established.
Much of the conversation revolved around the 92-year-old man that they said loved building hotels and putting his name on things. And though they declined to comment on his current health, the executives reminisced as if talking about an old friend.
“I’m telling you not a day goes by that we don’t share, just everyone up here doesn’t share, a John Q. Hammons story,” Burgess said.
Burgess said Hammons, a former teacher and lover of sports, always approached the hotel industry as a game that could be won.
“His gifting was as a basketball coach,” Burgess added. “He loved sports, and really the way he was a leader here, he was like, ‘Coach.’ He expected excellence, and he had a lot of tenacity.”
Among notable Hammons-isms is a story about shaking rabbit traps. Hammons was known to tell groups of new associates about how he would set rabbit traps when he was young. One morning, he got up only to find that someone had stolen one of his rabbits. From then on, he made sure he got up even earlier. The moral: “Don’t ever let anyone steal your rabbits,” Harris said with a laugh.
Part of Hammons’ charm, Harris and Burgess said, is that he was the same man whether he was talking to a cook in North Carolina or a group of Wall Street bankers.
“A lot of people who come from rags to riches, they forget where they came from. He never did,” Burgess said.
Burgess, who Dowdy recruited back to JQH Hotels in December after a 15-year absence, has been developing a sales training program to introduce new associates to providing service the Hammons way. He’s visited at least 40 hotels this year to talk to workers about Hammons and his approach to business.
“Many of our younger associates who have come on with the company in the last couple of years have never met him,” Burgess said. “Part of what we’re trying to do is to make sure that what Justin and I are talking about, that legacy, is a part of our culture and fabric.”
The new training approach comes at a time when JQH Hotels does not have a single hotel development planned.
After building 12 hotels in the last five years and 21 in the last seven, and having the company’s first known project failure in Colorado Springs, Colo., JQH Hotels is instead spending $20 million during the next 18 months on upgrades to existing properties.
The failure of the $92 million, 300-room Colorado Springs conference hotel is something that Hammons and the company took hard, Harris said. Before Hammons stepped down, Harris said he worked every day for two years trying to secure funding for the project that banks felt was too risky amid the economic downturn.
Closer to home, Harris said the company’s plans for a 240-room Embassy Suites for the 1.7-acre St. Louis Street site next to the Springfield Expo Center remain on hold for the foreseeable future. Harris, a member of the 13-member Convention Attraction Task Force assembled by city leaders to review ways to boost convention business, said the project would require some public investment unless another developer comes forward.
A construction deadline for the hotel had been set for Sept. 30, 2008, and then extended to April 1, 2010, following an agreement between JQH Hotels and the city that ceded the vacant lot to the company with the promise of a full-service hotel. Harris said a second study by Chicago-based Hunden Strategic Partners assessing the economic impact of a public-private development would impact the committee’s recommendations to the city.
“It’s fairly easy to spend $5 million or $3 million and open a small, limited-service hotel where one doesn’t exist and run that with a handful of people. You can still get financing to do that fairly simply. However, to build a $75 million state-of-the-art, full-service upscale hotel with 50,000 square feet of meeting space with all the bells and whistles and hundreds of employees – the kind of money to do that really does not exist unless you’re walking around with a couple hundred million dollars in your pocket,” Harris said.
American Hotel & Lodging Association President and CEO Joe McInerney said the last couple of years have been tough on hotel developers, especially those who build on the scale of JQH Hotels.
“From 2007 to 2008, it was becoming very difficult to get funding out there whether it be a construction mortgage or a full-blown mortgage after construction was completed,” McInerney said.
“After 2008, it became almost impossible for anyone to get funding, and that still is the case today.”
Calling JQH Hotels “one of the premier companies in the United States for development,” he said the company wouldn’t struggle to secure financing in a normal market.
McInerney pointed to a shift in new room supply data the last 10 years. Prior to this year, supply nationwide had risen by 2 percent to 3 percent a year. In 2011, the number of new hotel rooms has increased by 0.7 percent, and next year, it is projected to rise by half-a-percent. In 2013, the room-supply rate is expected to increase by only 0.7 percent.
Harris said the company’s internal focus on operations should improve its cash flow during the next couple of years, and a healthier economy might reduce banks’ risks in commercial lending.
No one would like to see the company building again more than Hammons.
“He lived to build,” Harris said of Hammons. “It was like a drug for him.”
In the company’s eighth-floor conference room, framed pictures of architectural renderings adorn the walls. Harris said Hammons viewed the renderings as family portraits.
“These are like his babies,” Harris said. “Mr. Hammons is big in Springfield for his philanthropy and his development locally, but in the hospitality industry, he’s huge. He’s a legend.”[[In-content Ad]]
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