018 | Service, Employee Benefits, Operating Debt Free and Entrepreneurial Responsibility with Harris Rosen

Harris Rosen is president and COO of Rosen Hotels & Resorts and is Florida’s largest independent hotelier. Founded in 1974, Rosen Hotels & Resorts currently features a collection of seven Central Florida hotels offering a total of more than 6,300 guest rooms, approximately six percent of the Central Florida inventory.

LL18-Harris_RosenRosen Hotels has several subsidiaries that work with the parent company to create a synergy that maximizes operational efficiencies. Founded in 1997 as an internal solution for Rosen Hotels & Resorts, Millennium Technology Group in Orlando is a leading provider of quality IT products and telecommunications services for the hospitality industry. Founded in 1995, Provinsure is Rosen’s insurance agency and risk management consulting company and assists companies in setting up self-insured healthcare programs and primary care medical centers similar to Rosen Hotels’ in-house programs. Rosen Hotels & Resorts has been nationally recognized for its innovative, trend-setting associate wellness and preventative care programs as well as the company’s low-cost insurance and on-site, full-service medical clinic.

Resources & Links

Harris Rosen

Rosen Hotels & Resorts

Interviews referenced in this episode

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Early Career

Born and raised on New York City’s lower eastside, Rosen received a bachelor’s of science degree in 1961 from the School of Hotel Administration at Cornell University. He served for three years in the United States Army as an officer in Germany and South Korea, and then completed the Advanced Management course at the University of Virginia’s Graduate School of Business on a Hilton Corp. Scholarship.

Rosen began his career at the Waldorf Astoria in New York City as a convention salesman. He continued with the Hilton Hotel Corporation occupying various management positions in some of the larger Hilton hotels. He worked as the Director of Food and Beverage Operations at the Pittsburgh Hilton; the Assistant General Manager at the Buffalo Statler/Hilton; the Assistant General Manager at the Dallas Hilton; the Assistant General Manager at the New Yorker Hotel and the General Manager of the Cape Kennedy Hilton.

Rosen then joined the Post Company of Dallas as Director of Hotel Operations and while there was involved in the development and management of one of the finest resort properties in Acapulco. He left the Post Company after several years to join the Disney Company in California as Director of Hotel Planning. He was intimately involved in the design and development of the Contemporary Resort Hotel and the Polynesian Village Hotel both of which opened at Walt Disney World in Orlando in October of 1971.

You mentioned that you attended Cornell right out of high school. Had you worked at a hotel in high school? What drew you to the hotel industry?

That’s really interesting. My dad worked at the Waldorf Astoria [in Manhattan, New York] – We, I must confess, referred to it as the Waldorf Hysteria – and dad was a sign painter. And so, there are all kinds of signs required, and he was a busy guy. He worked out the risk management department, I guess they called it the safety department. So if they needed a sign called “caution wet” or “slippery when wet” or “please bend your knees” or whatever it was, dad was the guy that did the poster. He didn’t do very well financially doing posters, so he had an idea one day and he shared it with me. He said, ‘Harris, I’m going to try to expand what I do and earn a little bit of extra money. I do have nice handwriting, and I’m going to share with the banquet department the fact that I would be happy to do the little place cards at fancy banquets and charge maybe $1 for each little card, and I will handwrite the cards, and then I will deliver them to the appropriate banquet hall and put them around according to a seating plan.’ And the banquet guy said, ‘Jack, let’s give it a shot. We’re printing them now. They don’t look too sexy, so if you can do them by hand, that would be wonderful.’ And they loved my dad’s work.

So on weekends, Dad would say to me, ‘Harris, would you like to earn a little extra money.’ Of course, the answer was always yes. And earning extra money, according to dad, was to help him with the cards. What I did, I would erase the pencil because he would do the name in pencil first. I would fold the card, put them in a shoebox in alphabetical sequence, and then dad and I would get on elevator and go either up to the Starlight roof, or down to the Cert and Basildon Room and Master Gallery, and we would help put the banquet captain put the cards around the table. Now, we would take an elevator either up or down. We met some incredibly wonderful people in the elevator. We met Jackie Robinson, who was a hero of mine. We met Ty Cobb, also a great baseball player. We met General Douglas MacArthur and his family in the elevator. We met Pope John in the elevator. And one day, dad and I walked in the elevator, and standing there is a very tall, distinguished gentleman and a beautiful blonde lady. And I must have been about 9 or 10 years old and I whispered to Dad, ‘Dad, can you introduce me?’ And, he smiled and said, ‘Absolutely.’ He said, ‘Ambassador, I would like you to meet my son, Harris. And Harris, this is Ambassador Kennedy.’ That was the President’s dad, Joseph Kennedy. And then he says, ‘And, I’d like you to meet Marilyn Monroe.’ And I said ‘Oh my God!’ And, she was so sweet; she gave me a little hug. And, they left the elevator, and I said ‘Dad, Oh my God. I don’t believe what just happened.’ And he said, ‘Well, that’s the hotel business.’ From that moment on, I said I gotta get in the hotel business because, if you can bump into Marilyn Monroe in the elevator, that’s gotta be the business for me.’

It was one of those incredibly fortuitous moments. I guess if I didn’t meet Marilyn that day in the elevator, I might now be working in advertising on Madison Avenue.

Your career lead you to several different cities in major hotels and included various management positions in Sales, Food & Beverage, Assistant General Manager, General Manager, Director of Operations, Development, and Director of Hotel Planning. On paper, it would appear that you were preparing yourself for hotel ownership. Was that always the end game?

To be quite honest with you, Jonathan, I never ever, ever, ever imagined that I would ever own a hotel. I thought, the perfect life for me would maybe, one day if I was really lucky, to manage a resort. I thought that that would be the absolutely perfect life. Have a family, live on the resort, manage the resort, and it would be just perfect. I never imagined that I would do it. It was just not something that was on my radar screen. I was aiming high, for me, which was to manage a four star/five star property, and if it was in a resort environment, like the beautiful properties that we have around the United States, that I would be the happiest guy in the world.

And you actually reached that dream, right, with the Post Company?

Well, that’s right. First of all, I was in Dallas managing the Dallas Statler – not the General Manager, the Assistant General Manager, and I received a wonderful offer from the Post Company, from Troy Post himself, who was a very, very successful insurance broker, and he build a hotel in Acapulco [Mexico]. Got to know me because he had a lot of conferences and banquets at the Dallas Statler and I handled them for him and I think he enjoyed working with me. And so he built this little hotel, and he said ‘Harris, if you have a weekend free, I want to take you to Acapulco to take a look at something.’

I had no idea what he had in mind. We flew in a small plane, from Dallas to Acapulco, and he flew over this little property, and he said, ‘That’s what we’re going to be looking at.’ And, I was excited. And, we landed and we had a little car which drove us through the property and it was beautiful. And, he said, ‘Would you like to manage this property when it’s complete?’ And I said, ‘Oh my God! That would be a dream come true.’

So they finished the property, and I resigned from Hilton, and I went to Acapulco and managed the Tres Vidas en la Playa – that means three lives on the beach – and that was a wonderful experience.

The difficulty was that there was an election; a new president was elected in Mexico. He was a socialist, and one of the first things he did, because he said that the nasty Americans are coming in and taking all of our property and real estate, and so we’re going to pass a law, which they did, and the law was that non-Mexican nationals could not own more than 49% of any real property, so as soon as Mr. Post gave up 51% to a group of Mexican realtors, they said goodbye to me. And so I would up driving to California, heartbroken, but picked up the paper the next morning, and the headline was ‘Disney to Expand in Orlando [Florida].’ And so I went to their headquarters in California, and I interviewed, and they were impressed with my background and my schooling and the fact that I had spent some time with Uncle Sam. They said, ‘Harris, we’re not doing any of the final hiring here in Burbank, but if you are interested and we’d love for you to do this, we’re going to have a final interview in New York City.’

I said, ‘Great, that’s where my mom and dad are. I’ll drive to New York City and you’ll contact me and we’ll set up an interview.’ And, they said ‘fine.’

So I drove to New York, spent some time with mom and dad, and got a call from them that they wanted to interview me at some particular hotel. I interviewed, and the next day, they said ‘Harris, on board. We would love to have you. We are building several hotels in Orlando and we’d like you to be head of planning for the hotel division. We’re going to build the Contemporary, the Polynesian, the Golf Resort, and Fort Wilderness which is a kind of a camp site. And would you like to be responsible for that. And I said, ‘Oh my God. That would be amazing.’

They said, ‘Unfortunately, you’ve gotta go back to California because that’s where the architects are working feverishly right now to get all of this planned and we need you there. I said, ‘Fine.’

We opened in 1971, October, and I left in 1973, late 1973, when they informed me that, despite the fact that I’d done a wonderful job, it was clear to them that I wasn’t6 really a corporate kind of a person. That I had a different kind of a personality which might not lend itself to working with the hierarchy at Disney. And so, I was fired, and that was 1973 late, there was an oil embargo, and hotels in Orlando, all of them, without exception were in severe financial difficulty. Occupancies were in the teens, and it was just horrible. People couldn’t get gas, and they couldn’t drive to Orlando, and so they weren’t coming.

But, this genius thought that it was a great time to buy a hotel because things were selling very inexpensively. So, that when I found this little 256 room hotel where my office still is, and June 24, 1974, I actually bought that little motel for $20,000, and I assumed a mortgage and here we are today.

Do you feel like you brought some the Disney and Hyatt Corporation culture into your own properties?

Look, I’m not so sure that it’s a replication of the Disney culture. I think when Disney was a little bit smaller, when Walt was still around, I think the culture was really, much, much more prevalent. I think they’re a giant organization now, and it’s probably a little bit more difficult to infuse that kind of – they call it ‘guestology.’ But, we’re a small company. We have only about 4,000 associates, and we love them dearly. And many of them have been with me for 25-30 years. And we encourage families to work for us, so it’s not unusual in our company to have a mom and a dad and their children all working for us. Of course, at different departments, different hotels, but all part of the Rosen family.

We do love our associates, and we do take really good care of them. We have our own medical center and have had that medical center for 25 years. If you work for me, insurance as a single person is $750, and the most you’ll ever pay for a hospital is $750. So, the most you’ll ever pay if you’re in the hospital and you are a single person is $1,500 a year. If you’re a family, and it could be 3, 5, 10, it doesn’t make a difference how many, $2,500. And the most for an admission in the hospital is $750. So, that’s a wonderful benefit and our folks really appreciate that. And, we of course have our own doctors – we have 4 fulltime doctors, a staff of 38, in our little medical center – it’s a 12,000 square foot center. We have a fitness facility, Tai Chi and Zoomba and fitness. We have radiology there, we do mammograms, on a regular basis. We have our own little pharmacy, and if you work for me and you have generic pharmaceuticals, you would go to Walmart, you would pick them up and not pay a dime. I pay Walmart their cost. And if you’re not generic, we buy from Canada, and we pay, and that’s free, so about 98% of the folks that work for Rosen don’t pay anything for their pharmaceuticals. So they get this incredible healthcare benefit.

If you work for me for three year and you have a child who’s ready for college here in Florida, I pay the tuition. If you work for me for 5 years and you want to take off and go to college, I pay your tuition.

So, a multitude of these wonderful benefits are indications to our associates that we really do love them; we really do care for them. And, I think that’s one of the reasons that our turn-over rate is single digits, where the hospitality turn-over rate ranges from low end, probably 50%, to high end, 100%. We are notorious in terms of high turn-over, but we turn over, as I said, single digits. And, I suspect it’s because of the perception I think our associates have that we really care a great deal about them.

What are some of the steps or recommendations that you could give hoteliers to protect themselves, so the next time we have an economic downturn, they’re better prepared?

I must confess that we didn’t we didn’t miss a beat. The worst, I would say, six months for us was after 9/11, and we really took some rather dramatic measures there and survived that just fine, but that was a very scary time because we never really knew when things were going to get back on track.

2008 was a scary time. What we did is that we decided to begin refurbishing all of our hotels in a very conscientious way and we allocated about $160 Million for that endeavor. And we actually hired more people, put them on staff, it was a refurbishing and construction crew, and we kept about 70-80 people in addition to our normal crew, working on refurbishing and constructing new rooms, new restaurants, and by the time ’09 and ‘10 rolled around, our hotels were really looking fine. And, we decided to continue that initiative because we were so happy and proud of what we were accomplishing.

Now, we survive a little bit more easily than some of our colleagues because we’ve adopted a rather strange philosophy – We don’t borrow money. Now, in the beginning years, we’ve been in the business for 41 years, but in the first let’s say 10-15 years, I didn’t have a choice. I didn’t have the resources to do things. I had to borrow money. But a made a pledge to myself, that as soon as I could, I would pay off all debt. So I would say that we’ve been debt free for about 20 years, or more, and that includes Shingle Creek which we built for a little over $300 Million; no debt. Rosen Centre; no debt. Rosen Plaza; no debt. All of our hotels; no debt. All of our little separate companies; no debt. And so, if you own a hotel, and you have traditional debt, you probably have about 60-70% of debt of the value of the property, and so your principle and interest payments are probably taking about 60, 70 or 80% of what your cash flow would be if you didn’t have any debt. And the return on investment speeds up tremendously of course, but if we are getting between 5-12 years of return on investment for major construction, we’re happy with that, and of course if it’s our money, we don’t have to worry about interest payments.

So, that has been our philosophy. Is it weird? Yes it is. Is it something I recommend for everyone? Well, not everyone can do it. In the beginning, I had to assume mortgages, I had to borrow money, and that’s normal. But if you don’t have to, my advice and suggestion would be, don’t … don’t! If I had normal debt on my properties today, I would be paying an additional between $50-70 million dollars in interest and principal every year. I don’t have to do that. And so, that enhances cash flow rather dramatically.

Do you have any actionable advice for hoteliers to help them improve their profitability?

Well of course, debt free would be something that I would recommend wholeheartedly. I think treating people always with respect; treating them fairly. And always having an open door; always talking to your folks. I meet with our hourly associates on a regular basis and the first question I ask them is, ‘Do you feel respected in our company?’ Because your associates want to feel as though they’re respected. And then offer whatever you can, whatever benefits you can; whatever amenities you can. Understand that some of them are struggling a bit. And, be compassionate, because what you said to me earlier was absolutely true – We are not an industry necessarily driven by real estate, or driven by FF&E, or driven by procedures and processes, or driven by great food. We’re driven by one thing – service. And, if your associates are happy, and if they really love working for you, they will treat guests with the kindness and benevolence you’ve never, never imagined.

And, I think this also – we are a company that does give back. Look, God has blessed me beyond anything I’ve ever imagined – from the lower east side to where we are today. And so, 25 years ago we created the Rosen Foundation, we built the Rosen College, we adopted the Tangelo Park neighborhood, we are involved in multitudes of endeavors in Haiti. We built a Jewish community center. We just adopted another neighborhood where every 2, 3 and 4 year old will go to school free, and every youngster who graduates from high school can go to a community college, a vocational school, or a 4 year college and I pay for everything – room, board, tuition, books, travel, everything. And we’re taking care of hundreds and hundreds of kids every year in high school and in college, and I think our associates appreciate that and know that they’re working for a company that really cares a great deal about folks and is happy to offer a helping hand. That’s important also – if the folks who are working with you, also respect you, and enjoy what you’re doing, I think that helps tremendously.

In 2008, Forbes magazine ranked you the 30th most generous philanthropist in America for having given away over $30 million.

Look, here’s my philosophy. I’m blessed. God has blessed me beyond anything I ever imagined. So, I’ve got this horrible little gene that my grandparents pointed out to me – this entrepreneurial gene. And what it makes you do, is things that a normal person would never do. Why would you build another hotel when one is perfectly fine? Why would you build a sixth and a seventh hotel when four or five are fine? Why would you have to start an IT company? That’s crazy. Or an insurance company? Why do you do this, Rosen? Because this gene is making me do it! Okay, so let the gene run amuck. Let the gene drive you crazy. But, you have to promise, that as you achieve one more success, you will then promise to provide a helping hand to those that need a helping hand more, and more and more. And so that’s really what we do. It’s like a scale, and you want to keep it in balance. Be successful; be more successful – be philanthropic; be more philanthropic.

Can you share one of your personal habits that you think contributes to your success?

Well, I think word workaholic and it’s really sad. Now, I have four kids – I’ve got a 25 year old, 24 year old, 23 year old and a 21 year old. And, I’m in my 70’s. So, I had them, as I said before, when I was in my 50’s. I do believe that one has to work very, very hard and be happy in what it is you’re doing. One can’t forget about one’s family responsibilities. When the kids were young, I took off a month every summer and spent it with them traveling all over the United States. And, I’m really so proud of that. But, I must confess that, even when I was traveling with them, I received correspondence, emails on a regular basis so I would be able to know exactly what was going on. If there were any challenges, any difficulties, I would get on the phone and have long conversations. But now, the kids are … only two are left in college, and so I’ve got more time. And, unfortunately, I’m not taking my vacations, and I’m spending more time. We’ve got so many projects, and just keep working, and working, and working. And people say, ‘You’re crazy. People ten years younger than you have already retired. What’s wrong with you?’

I don’t want to retire. I love doing what I’m doing. And I think that, if you find something that you really love doing, do it! Do it as long as you can.

Parting Advice

Find something you love. Do it the best that you can. Always be honest. Always be respectful and you’ll do just fine.

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