Stake Your Claim

If interviewing Chip Conley during his vacation in Lake Tahoe-on the California-Nevada border-is too much of a cliché of how your life could look, then call us pedestrian. "It's important to have time off. The first couple of years, I didn't get enough of that," says the hotelier, who started his hotel management company, Joie de Vivre Hospitality, with just one hotel and now operates 30 hospitality businesses in Northern California, 25 of which are hotels.

What was once a "no tell motel" became The Phoenix Hotel in 1987, when Conley was 26 and itching to create a haven for hip young travelers, artists and musicians on the road. Buying the space for $800,000-a bargain in hotel terms-Conley then spent about $200,000 on renovations. Four months later, The Phoenix Hotel was ready to show its new face to San Francisco. "We completely cosmetically renovated the hotel," says Conley, who raised the money from friends and family. "Every room in the hotel was dedicated to an original San Francisco artist."

Conley appealed to a youthful niche audience with amenities such as a massage treatment room, where musicians could work out their pre-performance jitters, and an "underground" San Francisco guidebook for every room. After achieving first-year sales of $600,000, Conley pressed on, opening his second and third hotels. By 1990, sales had reached $3 million; and between 1993 and 1997, Joie de Vivre grew from three to 13 hotels. Now it's a $75 million company with 1,000 employees.

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That success is due, in part, to Conley's decision to buy an existing hotel. "It's usually too expensive to start from scratch and make it work," says Conley, 43. "It's better to cosmetically upgrade something that's already been there."

"Unless you're an established developer or a hotel company, building something from scratch is probably not the right way to do it," agrees Gregory Peck, a hotelier whose background includes investment banking, real estate investing, and hotel development and management. Peck, who put his hotel and real estate background to use in 2001 with the purchase and renovation of The Beverly Crescent hotel in Los Angeles (now called The Crescent), recommends acquiring a property for "less than replacement costs." According to Peck, "You're dealing with older buildings and the limitations imposed by these properties, but it's cheaper and a simpler process."

Not that starting a hotel is simple. "It's a daily, 24-hour-a-day responsibility," says Peck. Another hurdle: local zoning restrictions. "We didn't understand how long it would take to get the city to approve what we wanted to do," he says. "Read the fine print and the details. Sit down and talk to people who might know about what you're doing."

Finding a niche will set you apart from big chains-you'll cater to a market that's looking for something beyond run-of-the-mill. "Every one of our hotels has a different personality," says Conley. Every time he creates a hotel, he imagines a magazine and five words or phrases to describe that magazine-for instance, for The Phoenix Hotel, it was Rolling Stone and "funky, irreverent, young-at-heart, cool, adventurous."

"The most important thing is to create a positive memory for the guests," says Conley. "You need to think about how you can create a compelling and remarkable experience."

Karen E. Spaeder is a freelance business writer in Southern California.

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