With American Idea, Trump Hotels is selling the name and marketing services to franchisees and Danziger envisions 90 percent of those hotels to be conversions of existing properties. With the Scion brand announced last year, Trump Hotels will manage the hotels in addition to licensing the name. Scion will likely be half conversions and half new development, he said.
Before the election, Trump Hotels was busy expanding its boutique luxury brand internationally. The Trump family owns fewer than half of the 14 hotels it manages, including golf resorts in Scotland and Ireland, the Trump National Doral Miami, and a winery in Charlottesville, Virginia. Construction continues on two resorts in Indonesia.
Going down-market successfully with American Idea may prove challenging for Danziger. The strategy of bringing innovation and quality to cheaper hotels is sound -- and already an established trend -- but “branding requires more than dreaming up a generic name, slapping a new sign on the door and installing a Coke machine,” said Piers Schmidt, founder of London-based consulting firm Luxury Branding.
“I suspect they’ll get a few of these going -- rebadging some tired Holiday Inns and other franchised operations who fancy a bit of access to the presidential orbit,” he said. “But I seriously doubt it will make any great inroads as a brand.”
Danziger sees it differently. He compares American Idea to long-successful companies that capitalized on their country of origin, including American Airlines and American Express.
‘Mixed’ Performance
Performance at Trump hotels, meanwhile, is “mixed,” Danziger said, declining to provide numbers. Several hotels are having record years while others face operating challenges, including Trump SoHo. SoHo owner CIM Group, a Los Angeles investment firm, bought the hotel out of foreclosure from the original owner three years ago. “The hotel hasn’t had a dollar spent on it by its owners for seven years,” Danziger said. CIM and Trump Hotels have moved to replace the food and beverage manager, among other changes.
One thing is certain, Danziger said: Trump Hotels won’t be taking offers for any of its properties, regardless of exhortations by ethics experts.
“They’re not for sale,” he said. “This is a family business.”
This article was provided by Bloomberg News.