Keeping it in the family

Thriving multi-generational hotel companies are rooted in tradition while fostering innovation

One of the most cliché pieces of advice about business and family is that blood and the boardroom should never mix. Critics say that relatives working together are a recipe for office dysfunction that will lead to failure. But, with 64 percent of America’s gross domestic product being comprised of family-owned business, 62 percent of Americans employed by a family business, and 78 percent of new jobs coming from a family business, perhaps the old adage is wrong.

The hospitality industry is no stranger to family-owned businesses; hotels and hotel management companies are often kept within the family across generations. Whether regionally or internationally, many hoteliers have found ways to successfully mix business and family.

In the small town of Carmel-by-the-Sea, California, a small boutique-style inn stands. The Hofsas House was built in 1947―only 30 years after the town was chartered―by Fred and Donna Hofsas. The couple purchased four cottages and Donna began renting out three of them to visitors. By 1957, Donna’s business had grown and she had added 25 rooms along with a swimming pool. Donna brought their son, Jack, up in the hotel where he learned the business.

The three generations of the Musser family of Grand Hotel.

Eventually, Jack and his wife Doris took over Hofsas House Hotel. They, too, raised their children up on property, teaching them the ins and outs of the hospitality industry. By the age of 12, daughter Carrie Theis, the current owner and operator of Hofsas House, was running the front desk. Today, though the property boasts 38 rooms, the original four cottages that started it all still stand at the center of the property.

Carrie Theis is proud to be running her grandmother’s hotel and has found a way to make working with family a boon to the business.

“You have a lot of pride in carrying on the founder’s traditions. I think to make it work, you make sure that you define the roles with

(L to R): Carrie Theis, mother Doris Theis, brother Scott Theis and Carrie's son Caelan outside the Hofsas House.

the family members and find things they like to do that they do well, rather than making them do things they don’t like to do,” she said. “You have to find family members that have the same sense of pride and ownership that you have.”

Upon Theis’ retirement, the Hofsas House may continue to stay in the family.

“My son is helping us with the marketing and social media, as well as sitting on the board,” said Theis. “We’re talking now about him taking over, to be the fourth generation to run the Hofsas House.”

In Michigan, long-time hotel employee, W. Stewart Woodfill, purchased the Grand Hotel in 1933 to save it from receivership in the midst of the Great Depression. Woodfill was the sole bidder on the Mackinac Island property.

It can be difficult to balance work life and personal time when working with relatives, but the average retention rate for a family-run business is better than for comparable companies.

Woodfill’s nephew, R.D. Musser, Jr., began working at the hotel in 1951 and, after working his way through a variety of positions within the property, was made president in 1960. In 1979, Musser and his wife Amelia purchased the hotel from his uncle and began redecorating the interior and exterior. Musser’s son, Dan Musser III, also worked his way through various positions before being named vice president. A short while later, in 1989, he was named president.

When the elder Musser retired in 2011, the reins of the business were officially passed to his son.

Hofsas House, Carmel-by-the-Sea, California.

“Owning the Grand Hotel—I’ve never really felt that way about it, I feel like we’re more caretakers—it’s an iconic building and destination in our state of Michigan,” said Musser. “Yes, we’re the owners of it, but I feel like it’s everyone’s hotel.”

The 390-room, four-star property now includes all the outlying properties such as The Jewel Golf Course, the Gatehouse Restaurant, Sadie’s Ice Cream Parlor, Carleton’s Tea Store, Sushi Grand, and more. It takes a lot of work to run a hotel of this size, which means Musser needs a little bit of help. Who better to turn to than his family?

“I have two sisters that are also part-owners. My sister Mimi is active every day and does all the merchandising,” said Musser. “She takes care of anything ‘pretty’ at the hotel—flower gardens, menus, weddings.”

The Grand Hotel (Image courtesy of Don Johnston)

In the Southeast, there’s Daly Seven, Inc. Founded by the seven children of Philip and Frances Daly, Daly Seven manages hotels under brand umbrellas from Best Western, Hilton, IHG, Innkeeper, and Marriott. The company as we know it today was built off Philip and Frances’s decision to purchase the Danville Memorial Gardens in 1961. Their property management grew when they built their first Innkeeper hotel, also located in Danville, in 1972. Only seven years later, the children decided to found Daly Seven, Inc. and built their first motel in Raleigh, North Carolina.

Seven Dalys still sit on the board today—Niles Daly, Jim Daly, Bob Daly, Shelayne Daly Sutton, Charisse Daly Kleinman, Jon Daly, Jr., and Joe Daly—spanning across the second and third generations of the family. The company is responsible for 38 properties in Virginia, North Carolina, and South Carolina, as well as four Memorial Gardens.

Jon Daly, Jr., says, “Family business dynamics can be tricky at times, but the many blessings greatly outweigh the difficult issues. It’s important to recognize that the most complex decisions often require you to put the family first, because ultimately that is what’s best for long-term success of the business.”

At Liberty Group, a father-and-son team is at the helm. Raxit Shah is the founder of Liberty Group and the current executive chairman. His son, Punit Shah, is the CEO. Raxit Shah founded Liberty Group in 1980 when he purchased his first hotel located in Liberty Township, Youngstown, Ohio. Since that first purchase, Liberty Group has grown to include more than 55 hotels representing over 4,000 hotel rooms.

Punit Shah has spearheaded the campaign for Liberty Group to drive returns through identifying and acquiring management intensive investment opportunities. Carla Shah, Punit Shah’s wife, is the corporate director of revenue management at Liberty Group. She oversees all brand revenue managers across all brands in the Liberty Group portfolio.

And of course, Marriott International falls under the multigenerational category. J. Willard Marriott and his wife Alice started their own A&W root beer stand in 1927. The Marriotts expanded their drink stand to include hot food items, eventually working their way up to catering in-flight meals. In 1957, the Marriotts made a shift in industry—they wanted to become hoteliers. In Arlington, Virginia, the Marriotts opened the world’s first motor hotel under the management of their son, Bill.

Over time, Marriott has opened hotels all over the world, entered the cruise business, and expanded their offerings. In 1972, J. Willard Marriott named Bill as CEO, while he himself served as the chairman of the board. Bill would later take his father’s place as chairman in 1985.

Hampton Inn managed by Liberty Group.

Research suggests that a multi-generational business environment can foster innovative thinking in ways non-family companies cannot. During his tenure at Marriott, Bill introduced the practice of revenue management—using analytics to predict consumer behavior at the micro-market level—to the entire hotel industry. While J. Willard Marriott founded the hotel chain, it was Bill who made the company the hospitality giant it is today. With his leadership spanning over 50 years, he turned the regional hotel chain founded by restaurateurs into an international lodging company.

The key to a business’s success doesn’t seem to be whether or not it is family run. If families pick the right members to work for them, a familycontrolled business can be very efficient.

The key to a business’s success doesn’t seem to be whether or not it is family run. What seems to factor in most is which family members are chosen to come on board. If families pick the right members to work for them, a family-controlled business can be very efficient. In its lifetime, Liberty Group has grown exponentially and has over $450 billion in investment experience since 1980, thanks to Raxit Shah’s careful decisions about whom to hire. The Hofsas House still stands and has grown from the four small cottages to a 38- room tourist destination under one family’s leadership and harmony of values.

Multigenerational, family-owned hospitality companies are starting to gain more recognition. Like with any business, these hotels have their own set of challenges. It can be difficult to balance work life and personal time when working with relatives. But, the average retention rate for a familyrun business is better than for comparable companies. Much of this is because the ulture that comes with a family business leads to fewer human resources issues.

In the end, a business is still a business. What matters most is whether it can deliver a quality service or product to customers while making a profit.


ABOUT THE AUTHOR

Savannah Little is a writer based in Raleigh, North Carolina.

(In Feature Image: The Dalys: Top (L to R): Niles, Jim, Jon, Pat and Bob Bottom (L to R): Shelayne Sutton, Charisse Kleinman.)