Chip Conley and his investors were forced to make some tough decisions.
Several months ago, Conley, the CEO of Joie de Vivre Hotels in San Francisco, California, witnessed competing hotels facing potential foreclosure. According to the Wall Street Journal, "there is about $5.6 billion in securitized mortgages tied to hotels coming due this year and next...27.8% cover properties now estimated to be worth less than their mortgage balances." (source: Trepp LLC's Foresight Analytics). Billions of dollars of mortgages are coming due in the coming years. Analysts are forecasting that the hotel industry will not regain its full strength until 2013.
Photo courtesy of Chip Conley
Chip and his myriad investors (over 30) agreed to sell a majority stake in JDV to Geolo Capital.Conley sees this as a great opportunity to acquire other hotel properties and expand their brand in other states.
During my interview with Chip last week, I learned some important lessons.
If you are considering selling a majority stake in your company as an expansion strategy, listen to Chip's rules:
1. There is a difficult balance between managing confidential information and transparency during these transitions.
2. In today's connected global economy, exceeding customer expectations does not guarantee steady growth and retention.
3. There is a good chance that your competitors are ignoring some important performance metrics. Chip and his team track some unusual KPI's and it has helped them fuel strong profits and employee engagement.
4. While competing hotels experienced loan defaults and declining occupancies, Joie de Vivre Hotels transcended survival and success drivers, and focused on transformational customer experiences.
Conley is visibly excited about expanding the JDV experience beyond California's borders. And his customers will not be disappointed. He and his dedicated teams will look for ways to create transformational customer experiences. Says Conley, "We do this when we're creating a hotel by using a pyramid which "meets expectations" at the base, "meets desires" in the middle, and "meets unrecognized needs" at the top...in the process of creating a hotel, we imagine our ideal customer (and, in some cases, interview people who we think fit that profile) and we learn more about what they love and don't love about their current hotel options and we ask broader questions about their lifestyle needs. For example, we decided to add free daily yoga at the Hotel Vitale because we realized so many professionals were traveling and getting out of their yoga rhythm while they were on the road...that wasn't something that anyone said that they expected a hotel to do (offer yoga classes in the hotel in a Financial District) but it was clear that this was an important part of their lives....on an on-going basis, we learn about this by just taking our top clients out for meals and understanding their needs a little better.
If you lead a company that is facing debt problems, limited access to capital, and a critical growth crossroads, invest 17 minutes to hear Chip's sage growth advice.
Whether you serve IT executives, CEOs, or tourists, you will learn the power of creating peak customer experiences.
Click here to watch:p>
This post originally appeared on FastCompany.com.
