I am charged with leading my grandfather’s start up company that his family has grown from the ground floor into a $25M business, including five store fronts and roughly 190 associates in the hotel and restaurant business. Some may think that working with your family is a curse. On the contrary, it has been a blessing for us as it has allowed us to individually lead from our places of expertise while our values and priorities are all rooted from a common base.
The Scalzo family has owned and leased hotels since 1962. My mom and her two sisters began running their dad’s hotel in 1998. As recent as 2008, the company had little experience with food and beverage components.
The Scalzo’s flagship hotel is the Park Vue Inn, an independent hotel directly across from Disneyland in Anaheim, California. This hotel continues to be extremely profitable and creates the lifeblood for our company’s growth. But as strong as we thought our company was, we unknowingly bet our entire livelihood on one purchase of a lifetime and were grossly unprepared for the growing pains that were in store for us.
At the beginning of the recession, Scalzo Hospitality was in acquisition mode. We had just finished a major refurbishment project at the Park Vue Inn and were ready for our next growth opportunity. My brother and I decided that the metropolitan area of the Twin Cities was where we should focus mainly because we wanted an environment ripe for centralized resources, training, and networking.
In the spring of 2009, the Four Points Hotel by Sheraton, three miles north of downtown Minneapolis, was available and was priced below market value. Scalzo Hospitality successfully closed on May 28th, 2009. We reopened as the Ramada Plaza Minneapolis on June 1st, 2009 and have been methodically moving uphill ever since.
What we thought to be company growing pains in our most recent past paled in comparison to the omnipresent cash flow crisis, brand awareness concerns, culture climate ambiguity, and a $3,800,000 hotel renovation. Scalzo Hospitality doubled in employees and tripled in debt liabilities, while lacking the experience in full service hospitality with food and beverage components. I guess you could say that my brother and I were in over our heads.
We purchased a “toxic asset” in June of 2009, in the middle of the gravest recession of my lifetime. The year of 2010 was amazing; full of challenges, disappointments and sleepless nights. In August of 2010, the company realized that we, indeed, “bet the family farm”. If things didn’t improve quickly we were destined to lose what we worked so hard to build. However, we were steadfast in our resolve and found courage in our faith.
The strategies we had in place were working and our business was slowing improving, but I was unsure if they were improving faster than the monthly cash flow was hemorrhaging. It was in this emotional state where I felt my highest level of responsibility and accountability to myself and to my grandfather’s company.
For me, to risk my company and work as though failure was not an option was awe-inspiring. To find success and accomplishment out of this grueling work is the essence of my entrepreneurial spirit. Though far from it, my year of 2010 ended as being the closest I had ever come to self-actualization.
The Ramada Plaza continues to garner market share and is on the upside of the recession. The hotel is enjoying its sixth consecutive double digit growth period over last year and should make even cash-flow by year end. This is the fruit of an eighteen-month turnaround process that has fresh challenge always waiting for us on a daily basis. My position as CEO for Scalzo Hospitality continues to be a wild and sleepless roller-coaster ride, exciting as it is scary.
This uncertainty and directional ambiguity is the reason for my blog. I know that I am not alone in these difficult times as a small business leader. In fact, some of my chair-level executive colleagues would say that I haven’t risked enough! However, we all have our own levels of risk aversion and I have identified our company’s level of tolerance.
I write not because I have the answers, but because I seek these answers from you, who may have a more successful company with more experience in risk aversion, turn-around processes, cash management, and basic small business tenacity.
My question for you is this. As we climb out of this economic recession…how optimistic should I be in my company’s growth in the hotel industry? Should I invest in my property’s infrastructure, technology and human resources? On the other hand, should I wait and see how robust this next economic phase proves to be before I begin to allocate funds for development?
Thank you for taking the time to read this post. I look forward to your feedback!
