By Julian MacQueen, Founder and CEO, Innisfree Hotels
In 1992, I bought a hotel I knew I shouldn’t have. In fact, I tried really hard not to buy it. This is that story.
In the early 1990s, basketball stars Kareem Abdul-Jabbar and Ralph Sampson purchased and gutted the Redmont hotel, the oldest hotel in Alabama. They received grant money and spent around $20 million to restore it to all its original glory. (It took them six months to go bankrupt.)
So now it was a beautiful, 14-story Downtown Birmingham classic 1930s vintage hotel – marble lobby, grand two-story entrance, columns, big chandelier … the works. All this, just one block from the financial center of Alabama.
I am from Birmingham. I have a strong connection to the place. I also happen to love old hotels and the idea of owning one. But at the time, we were still building Innisfree from a really small company.
I knew there were a lot of emotional hooks, and so did the broker:
“Birmingham is being revitalized,” he said. “You can be part of it.”
“I’d love to come back and be part of this,” I said. “But I’m not in a position to do that.”
Innisfree had only five hotels at the time. We couldn’t take the risk. So I gave him terms I figured would run him off.
I said:
- I’ll pay $1 million for it.
- I want it 100 percent financed.
- I want the City to kick in.
- I want non-recourse.
- I want a 15-year tax abatement.
And he came back with every single term negotiated.
I walked in to close at a huge long table, the entire surface covered with closing documents. I remember walking into the room, signing all the documents … and walking out completely depressed.
I knew it was a mistake.
It was also during a time we were looking deeply into opening a hotel in a town called Meaux, right outside of Paris, where Euro Disney was built. (That’s another story for another time.)
Back to Birmingham.
The Redmont looked like a scene from the Twilight Zone. As if they put the hotel on ice. It had been closed for three years, yet there was still a cigarette in an ashtray. The kitchen had the highest level of equipment. All the beds were made. It was ready to open the next day.
We closed, I brought in two partners, and we opened the hotel.
We created this very cool bistro called Julian’s, that had the best hamburger in the world – the first sidewalk restaurant in Birmingham. It was also home to the first rooftop jazz venue, which we called ‘Rooftop at the Redmont’. We opened with Leon Redbone, an iconic blues guy. We had a piano that played itself. The place had a very cool vibe, I was super proud of it.
Redbone sang ‘Happy Birthday’ to me. My mom was there. I told her I bought the Redmont, and she started crying. “But you were doing so well … ”
You see, Birmingham had gone down so far. It was the only place in America where McDonalds closed down on the weekends. That’s how empty the downtown was. And we had bought a hotel smack dab in the middle of it.
Several months in, the first day we made money was a football weekend. The Assistant General Manager was counting it. A bellman took the deposit envelope, slid the deposit into a newspaper and threw the newspaper away. He took the garbage out, and he stole it.
Operation New Birmingham was leading the revitalization of downtown. So we were part of the revitalization, but it wasn’t there yet. The first year, we lost $3,500 a day. The next year, $1,700 a day. The next, we only lost $875. We kept improving by 50 percent.
Five years in, I’m eating at Julian’s bistro, having the best hamburger on the planet.
Trying to make light of it, I said to Harlan Butler: “At least we have a great burger.”
He said: “Just remember, that burger cost you $35,000 this month.”
End of story – we sold the hotel after seven years for three-and-a-half times what we bought it for, and we still lost money.
The moral? Check your emotions at the door. Never fall in love with real estate. That’s the big neon sign. My first instinct was right.
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ABOUT ‘BACK IN TOPEKA’
In order to have a great future, we must celebrate and learn from our incredible past. The Innisfree Hotels story began in Topeka, Kansas. So when the folks who were around back then start a story with ‘Back in Topeka,’ we know it’s time to listen. These are tales of the challenges, of the laughter and tears that come with building a company like ours. That’s the sentiment behind this blog series, a chronicle of days gone by at Innisfree Hotels – and a map to get us where we’re going.