017 | Iconic Leadership, Innovation by Necessity, the Human Resource, and Mindset with Mike Leven

Michael Allen Leven, also known as Mike, has served the hospitality industry for more than 50 years. Throughout his career, Mike has garnered nearly every award and recognition one can receive in the hotel industry, and he’s recognized by many as an industry icon and an innovative pioneer. In 2014, AH&LA presented Leven with a lifetime achievement award at the annual Americas Lodging Investment Conference.

LL17-Michael_LevenMike grew up in a modest 3-family home in Boston, and attended a tough, inner-city high school. He went on to earn a Bachelor of Arts degree in political science from Tufts University, and a Master of Science degree in public relations and communications from Boston University. In 1961, Mike landed his first position in the industry as the sales promotion manager of the Roosevelt Hotel in New York City, where he earned $495 per month, free lunch, and the promise of a $40 per month retirement pension after 40 years of service.

After the Roosevelt, Mike moved into the operations side of hotel management with the Dunphy Company. After 23 years in various marketing and operations positions, Mike landed his first presidency with Americana Hotels & Realty in 1984, a position that didn’t last that long because the company sold out the assets shortly after he arrived. In 1985, Mike was recruited to serve as President of Days Inn Corporation, his first long term presidency, and he led the company through a reorganization resulting in significant growth from a regional chain to one of the largest brands in the world. From 1990 to 1995, Mike served as President and Chief Operating Officer of Holiday Inns Worldwide, and oversaw the launch and significant growth of the new Holiday Inn Express brand.

In 1995, Mike founded U.S. Franchise Systems Inc. (USFS), which franchises the Microtel, Hawthorn and Best Inns & Suites hotel brands, and served as its Chief Executive Officer and President from October 1995 to December 2006. Mike then served as Vice Chairman of the Marcus Foundation, Inc. from January 2006 to September 2008, and Chief Executive Officer of the Georgia Aquarium, Inc. from September 2008 to 2009. From there, Mike moved on to serve as the President and Chief Operating Officer of Las Vegas Sands, leading their expansion into the Asia market, where it is a dominant player in China.

One of Mike’s prouder career accomplishments was providing Days Inn funds and resources to co-found the Asian American Hotel Owners Association (AAHOA) in 1989. In 2010, he created the Michael and Andrea Leven Family Foundation, which concentrates on three areas: free enterprise, the Jewish community, and oil independence.

Resources & Links

Mike Leven

  • Email: mleven1937[at]gmail.com

Interviews referenced in this episode

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What do you think makes an effective leader?

I think the most import part is the need to feel responsible, and also the need to respect the fact that, when you’re leading, you cannot be successful unless you help other people to be successful.

And I think, if you want to lead, you have to lead by example, but you must overall have the sense inside that you can’t be successful by yourself. That the people around you are the ones that actually create the success for you, so you better help them.

In any management or leadership job, you have to understand the responsibility and the dependency, both.

You work to understand the individual differences of the individuals that you work for. Everybody has agendas, everybody has situations, and they’re all different. And you have to respect the differences, but you have to spend a lot of time talking about the similarities as well. So, by focusing on what are shared values of people, people will tolerate things that aren’t necessarily what they want to do, but they respect your ability to understand why.

When I tell people to do things, I try to teach them to understand why they have to do things and what’s important about that situation. And, if they understand why, then they begin to respect your decisions, because you’re going to make decision that they don’t agree with. And if they don’t agree, then you’ll never have the commitment. So you gain commitment by teaching and being patient as opposed to by ordering.

Do you think that leaders are born or made?

That’s a troublesome one honestly. I think there’s a genetic and environmental combination that presents individuals with leadership opportunities very early in their life. And, when you have that, and you succeed at it, then you grow in that. If you’re not exposed either environmentally or genetically to be a leader, then you have to be exposed to it in some way that really turns you on to do it. But I do think that the majority of the leaders that you find will probably argue that there’s a certain born component about it and why people get there. And, then sometimes the environment that you’re in creates a leadership role. I think the military is an interesting example of that. My guess is that born is a very, very important component.

I interviewed John Hogan of HospitalityEducators.com in episode 5, and when I asked him for tips on improving your ADR, he cited your (Selective Selling) strategy from back in the 70’s of identifying who is going to be using your hotel and when; determining your busiest day of the week, and finding ways to fill in on low demand days so you can maximize your rate. He said it’s about taking into account the full year and composing a forecast to anticipate trends. Know the WHO, WHY AND HOW. How did you develop such an innovative strategy?

I had the fortunate thing, Jonathan, of having companies that weren’t doing very well. Very early in my career, most of the hotels I worked for or with were not really achieving their goals, and my job in many cases was to find ways to help them be successful. So I had to find innovative strategies to get there, so we developed those strategies because we had to. The big problem a lot of industries and business have is they don’t have to change, they can stay with the status quo, because they feel they’re successful. I couldn’t. So, when I found ways to move segmentation around, we were doing things with a guy named Chris Perks who helped a lot in Americana Hotels, we were doing things like source of business reporting, which is really a pre revenue management kind of thing, where we were understanding what segments could pay, and how they could pay, and when they could pay, and we were moving our rates around to meet those particular customer requirements. And then we were also balancing how many of each we’d take on a certain day of the week to maximize our profitability. So that was kind of innovative in the mid 70’s to do that kind of stuff. And then when we found out that we were empty, we went and found sources of people that could use that facility.

I’ve always felt that, if you’re satisfied with your business, then eventually somethings going to happen wrong. And if you’re not satisfied with your business, you can’t just keep doing the same thing over and over again.

It’s not common for people to be working under stressful conditions. The best thing for me was that almost every organization that I worked for was under stress, so I learned how to survive. To me, the easiest thing you can have is a crisis, because then you can make the changes that are necessary to succeed. It’s much tougher to take a successful company and make it better, than it is to take an unsuccessful company and make it better – because there’s no resistance, there’s no legacy systems that people protect. And when you get into a company where there’s a lot of legacy systems, if you want to make change, it’s really far harder, far more difficult to do.

I also interviewed Vantage Hospitality President and CEO Roger Bloss in episode 13, and he talked about hearing you speak at the Lodging Conference in Phoenix back in the 90’s. He recalls you predicting that the next big thing in the industry was going to be the Internet. Roger laughed saying, at that time, he had no idea what the Internet was. Clearly you were right. The Internet was a game changer – it made OTAs, central and direct reservation systems, and social review sites possible. How did you see that coming?

Mike began by saying “Let me give the credit where the credit’s due.” Mike recalled that he was the President and Chief Operating Officer of Holiday Inn Worldwide at the time (it was around 1992-1994), when the number two guy in the IT Department, Les Ottolenghi, walked into his office. “We had about 500 people in the IT Department and it was run by a guy named Dick Smith.”

Les asked Mike “Do you know the Internet?” Mike said “Yeah, I’ve heard about it.” Les went on to say “Look, we could be the first hotel company to sell rooms on the Internet.” Les explained his vision and said he would need $100,000 to do this. Mike told Les, “I don’t have authority for $100,000, but go do it. I’ll find the money.”

Mike went to see his boss, CEO Bryan Langton, and said “Look, I’m going to spend a $100,000.” Mike explained “We (Holiday Inn) were the first ones to have a real reservation system back in 1955 or 6 – let’s be the first ones on the internet.” And they were.

Mike continued, “So, it wasn’t a question of knowing what to really understand your technology, it was a question of looking at somebody in your organization who wants to change the outcome – who doesn’t want to do the same thing as everybody else. And giving them, and providing them, that opportunity.”

“You know, this may sound really strange; I’m not the smartest guy in the room. When you think that you’re the smartest guy in the room, that’s a big prescription to fail. The smartest guys in the room are the guys around you. Your job is to sort out, hopefully, what’s going to work, or try. By the way, you can’t be afraid to make a mistake. You know, the company will survive if the $100,000 went down the drain.”

So what do you think the next thing is going to be?

I think the next thing in the industry that’s going to be challenged is the cost of branding. I think today, for franchisees and owners, the brands have some real difficulties in terms of justifying the costs. And in a time of an eventual, cyclical recession, when room rates won’t cover those costs, you going to have some very interesting strategies that are going to happen with people who run these big branded companies, as to how they’re going to be successful. And, my guess is, the big brands eventually are going to start putting equity at buying hotels again, like it was years ago. They’ve disbursed most of those ownerships to other people, but I think in the future it’s going to reverse itself – certainly in the large urban hotel areas, and perhaps even in the suburban and airport areas. Everybody’s going to yell with that one, I’m sure, but that’s what I think is going to happen, cause nothing stays the same.

The economic downturn in 2008 has been considered by many to be the worst the hotel industry has ever seen. What do you think hoteliers can do today to set themselves up for success tomorrow so they can survive the next downturn?

Well I think that’s pretty easy. You have to limit your risks. You have to limit your financial capability and you have to not be buying and creating properties on the basis that continuing increase in room rates and continuing occupancy levels are going to continue over time. And the other thing about it is, in order to prepare yourself, you have to watch your supply and demand conditions. Watch where that demand is coming from, and watch what the supply is. Watch how the markets are changing. If you’re in the affluent business, how much more of that is going to happen? If you’re in the middle class business, what’s going to be the pressures on the middle class for travel? Today is a holism time for the hotel industry in the United States. People are doing very, very well. That’s not going to go on forever. And by the way, 2008 was bad, but there were plenty between 1961 and 2008 that were pretty bad also.

I’m very sensitive, personally, to the oversupply condition. I think that has real impact. And so I think that’s something to really watch. As long as supply is in order, and you got many people that predict the supply conditions will be pretty good over the next couple years, you be fine. But I wouldn’t stretch my financing because you never know what going to happen to the economy.

Technology has rapidly changed the hotel industry over the last 20 years. One downside of that that I see is that we lose critical touch points with our guests. Online reservations, kiosks, automated phone systems, etc. are great, but now we’re not interacting with the guests nearly as much as we used to. I think the more you automate, the less interaction you have. Assuming you agree with that, what advice would you give to hoteliers to foster better communication with their guests so they can really ensure they’re satisfying the customer needs?

Well, I’m not 100% in agreement with that. I think the biggest problem we have in the hotel industry is the homogenization of product. You know, you take a product and you put a brand name on it. You take that brand off, put another brand name on it. Take that brand off, take another brand and it’s basically the same. You don’t have a lot of differentiation in product. And, the biggest communication with the guest is the fact that the product is different than the product he’s been in before or she’s been in before. And, that the product communicates. Your touch points in making a reservation and working through stuff like that, you know, you want to make it as easy and convenient for the person to make the reservation. That’s not a human part. That the technical part. Use technology for convenience. You still have to talk to people in a hotel. You still have to talk to people at the front desk. You still have to meet the bellman, if there are bellman. You still have to talk to somebody in room service. You still have to do all those kinds of things. If you’re managing your touchpoints, you’ll be able to do it. But you also have to combine the right product at the right price.

And so, I don’t think technology is the problem as far as touching the guest is concerned, I think the real problem – the real problem is – you can infect, and I use the word infect, the people in your hotel with your personal leadership style as the general manager. That’s how you reach the guest – by the general manager treating his people just the way he wants them to treat the guest is the way you manufacture that. And there are incidents that happen, and the way you handle guest complaints, and guest problems, is critical touchpoint area that should be focused on. And that in terms of not only complaints that are on the property, but complaints that come in through the Internet, through TripAdvisor, through all the other factors. So, I think it’s overworked to say that technology is gone away from the guest. I think technology helps the guest. It’s up to you, the manager, and the people who run the business, to talk to guests when you’re in the property, to see the guests. They check-out. They Check-in. If they check-out automatically, if you make it easier, you’ll be fine. If you handle any complaint immediately, appropriately, you’ll be fine.

You’ve led some of the world’s largest brands, and some of the smaller brands. Do you think, in today’s market, that the independents can succeed and compete?

Oh, I think independents can absolutely succeed. And, by the way, the guest situation in the independents is even more important than in the brands, because the brands are really convenience. The independent really has to stand by itself. It doesn’t have the benefit. If you look at B&Bs and you look at what the Internet has done for independent hotels, phenomenal in terms of that. But, they’re not going to get a benefit of high guest satisfaction if they don’t personalize. The independents have to be far more personal. They have to drive more expectation because they don’t have the benefit of the big systems to help. So there certainly is room, particularly in urban areas, and 7-day type cities, the independents do very well.

What are some of the common pitfalls that hoteliers face today, and what can they do to avoid them?

You know, I’m going to give you a simple answer if you don’t mind.

This business is about the human resource of the business. It’s not about anything else. And that’s the pitfall. When you forget that this is a business about people, and you’re interested in quarterly earnings, and all the rest of the stuff that becomes more important. But it isn’t.

If you manage your human resources appropriately, and I don’t know if you’ve interviewed this guy, the guy you ought to talk to is Harris Rosen in Orlando.

I took a tour of one of his hotels 25 years ago. I’d never seen anything like it before; I never saw anything like it again. What this guy does with his people. If he does nothing else, he’s going to be successful. And he’s probably the most successful single hotelier in the United States of America. He puts the human resource of his business at the number 1 top, and it’s always been there and will always be there.

Walk the back of the house. Watch what he does with uniforms, and shoes, and meals, and scholarships, and whatever. Watch what he does. No one taught him that. He didn’t learn it at Cornell’s hotel school, he didn’t learn it at the Waldorf Astoria where he worked. Somehow or another, he’s a great leader, phenomenal person, great human being. But, the human resource. That’s it.

If you could give advice to the 25 year old version of yourself, fresh out of Boston University, what would you tell him?

Be patient. Don’t move for money, move to build your resume. If there’s an opportunity for you to do something different, to add value to that resume, you’ve got a long time before you have to make a lot of money. You know, it took 25 years of work before I didn’t have to decide which bill I had to pay on the first paycheck of the month. And now, I give away a lot of money, cause I can’t use it anymore. So that’s a long way from there.

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