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The Secret Behind This Legendary Hollywood Hotel's 50-Year Run

This story appears in the December 2013 issue of Entrepreneur. Subscribe »

This isn't Hollywood. This is bliss.

An urban oasis nestled on a residential cul-de-sac just steps from Los Angeles' celebrated Sunset Strip, the Sunset Marquis is the stuff dreams are made of. Conceived as the first all-suite hotel in the U.S., it has been a refuge for generations of rock 'n' rollers, actors, comedians, filmmakers, supermodels and moguls, a monument to luxury and casual elegance. Since opening its doors 50 years ago, the Sunset Marquis has grown to include 52 detached, Mediterranean-influenced villas, two bars, two heated outdoor pools and even an underground recording studio, all interconnected by winding brick pathways that guide guests through the property's labyrinth of tropical gardens.

It's a bona fide West Hollywood institution, a sun-kissed sanctuary seemingly immune to the vagaries of time and fashion. George Rosenthal isn't satisfied, however. The founder and chairman of real-estate development and investment company Raleigh Enterprises built the hotel from the ground up, and he fully appreciates the beauty of his creation. He also can't help but obsess over flaws that are all but imperceptible to the naked eye. Near perfect isn't perfect, after all--and for Rosenthal, perfection is the ideal.

George and Mark Rosenthal
George and Mark Rosenthal
Photo (C) Marc Royce

"I can enjoy what we've done here, but I'm always looking for something we could do or could add," the soft-spoken Rosenthal says between bites of a veggie burger at the Sunset Marquis' centerpiece indoor/outdoor restaurant. "There's a certain amount of joy, but there's always concern. Are the plants cut right? Is the light right? Is the heat lamp correct? People look, but they don't see. I wish I could get everybody to look and understand that every aspect is important."

Rosenthal has made a career out of seeing things that others don't. Since launching Raleigh Construction Company (now Raleigh Enterprises) in 1955, he has acquired, developed and managed more than 11 million square feet of real estate across the globe, reimagining dormant plots of land and run-down commercial buildings as resort hotels, residential apartments, office towers, shopping centers and film studios. The Raleigh portfolio encompasses dozens of subsidiaries, including an archival records-keeping firm, a rental provider for film and TV production equipment and a vineyard adjacent to Rosenthal's majestic vacation retreat four miles from the Malibu coastline.

"I don't paint, and I don't write music," Rosenthal says. "A piece of property is the canvas on which I can create things."

It's always sunny in Los Angeles: poolside at the Sunset Marquis.
It's always sunny in Los Angeles: poolside at the Sunset Marquis.
Photo (C) Marc Royce

Now 82, Rosenthal has handed off most of Raleigh's day-to-day operational responsibilities to his oldest son, Mark, the company's president and CEO, whose boyhood nickname "Markey" lent the Sunset Marquis its name. But the elder Rosenthal is more than just a figurehead: He remains an active participant in all facets of Raleigh's business and is a close observer of the technologies and trends that could shape the organization's future, name-checking everything from Instagram to Elon Musk's proposed Hyperloop high-speed transportation system. After decades of assiduously avoiding the media spotlight and letting his achievements speak for themselves, Rosenthal is finally opening up on his life and legacy.

"I look back on a long career and I think, Gee, 50 years ago we built this hotel, and it still is here. I think this is the only Los Angeles hotel built by an individual that hasn't changed hands," Rosenthal says. "Have we had moments of duress? Yes. Would I like to think there could have been an elimination of some of those times? Yes. But would I change very many lines of it? No. It's been a joy. Someone asked me one time, 'What would be your epitaph?' Without hesitation, I said, 'The reality has far exceeded the fantasy.' I've got no complaints."

His hotel may be synonymous with Hollywood glitz and glamour, but Rosenthal grew up dirt poor 3,000 miles away in Medford, Mass. "I was born during the Depression--my dad was a plumber, and he worked 24/7 just trying to keep the family in the house," he recalls. "There were a lot of things we didn't have. One of the most difficult things I saw as a youngster was my parents arguing over whether my dad had an extra dollar to give to my mother. It was really traumatic."

The Rosenthals moved to the Los Angeles area in 1945. A decade later, George founded Raleigh Construction, building tract houses, the sales of which were subsidized under the GI Bill. His parents loaned him the $10,000 he needed to buy the first development property by selling their home and moving into a small apartment. "When your parents give you their house money, you damn well better succeed," Rosenthal says. "I just wasn't going to fail. That was not within my vocabulary."

Raleigh Enterprises built 24 houses in Garden Grove, expanding from there into the Northern California market. At the end of the 1950s, the firm shifted its focus to West Hollywood, settling into an office on Third Street and constructing a series of apartment buildings and shopping centers, many of which still stand today.

The hotel has a collection dedicated to rock-related art and memorabilia.
The hotel has a collection dedicated to rock-related art and memorabilia.
Photo (C) Marc Royce

Around the same time, an upstart publisher named Hugh Hefner began making plans to expand his fledgling Playboy Enterprises from Chicago to the West Coast. Rosenthal cold-called him and proposed a partnership, outlining a plan to erect a Playboy Club on the Sunset Strip, the nexus of the West Hollywood entertainment community and home to legendary nightspots such as Ciro's, the Mocambo and the Crescendo.

Rosenthal met Hefner at Los Angeles International Airport and drove him to a vacant lot at the corner of Sunset Boulevard and Alta Loma Road, telling him, "This is where you should be." Rosenthal also hatched a plan to construct an opulent 500-room Playboy Hotel next door to the site, catering to the Playboy Club's performers and guests. "Part of the motivation was, 'How am I gonna meet all these Bunnies in the Playboy Club?'" Rosenthal laughs. "I'll tell you how you meet 'em--you house 'em!"

But Rosenthal's efforts to finance the hotel hit a dead end. Despite Hefner winning a nearly two-year battle with the U.S. Post Office to secure second-class mailing privileges for Playboy magazine, the publication was still reviled in many quarters of pre-sexual-revolution America, and cautious investors wanted nothing to do with the project. Rosenthal finally secured a meeting in Chicago with the Central States Pension Fund, run by Teamsters boss Jimmy Hoffa, who agreed to loan him $12 million to fund the construction.

"I went back to Hefner's house that night," Rosenthal recalls. "Hefner says to me, 'You know what's going to happen if we take that money? You're going to open the bottom drawer of your desk, and you know what's going to pop out? Bobby Kennedy. Because he's after Jimmy Hoffa.' So we didn't take the money."

Raleigh Enterprises ultimately did secure $1.4 million from local lenders to fund the 10-story, 65,000-square-foot Playboy Building, which opened in 1964 and housed the Playboy Club as well as the magazine's photo and TV production facilities. (Broadreach Capital Partners purchased the property in 2006 for about $100 million.) But the Playboy Hotel never panned out, prompting Rosenthal to instead acquire a patch of land at 1200 Alta Loma, about 150 yards away.

The Sunset Marquis opened for business on that land the year before the Los Angeles Playboy Club, with a main building housing 102 suites averaging 529 square feet each. "I wasn't going to build a standard hotel room," Rosenthal says. "I didn't want to have a hotel operation where you had to sit on the bed to talk to somebody. Typical hotels had more than 90 percent rooms and less than 10 percent suites. This building was the first all-suite hotel that I know of. It was a place you could come to and it would be like your home."

Lenny Bruce, George Carlin and other entertainers working the Sunset Strip club circuit gravitated to the Sunset Marquis, and Hollywood executives soon moved in as well, transforming the central pool area into a de facto office space.

Curb appeal: Guns N' Roses guitarist Slash at the hotel's unassuming entrance.
Curb appeal: Guns N' Roses guitarist Slash at the hotel's unassuming entrance.
Photo (C) Ross Halfin

"We had producers and directors sitting here for breakfast, lunch and dinner, doing all their meetings, interviews and casting," says Sunset Marquis general manager Rod Gruendyke, who joined the staff 22 years ago. "In the days before cell phones were commonplace, we drilled holes into the concrete and ran hard lines to telephones on each table, so people could talk to their office and do work."

Soon after the Sunset Marquis launched, the Whisky a Go Go opened on Sunset Boulevard. The club quickly emerged as the epicenter of the Los Angeles rock 'n' roll scene, presenting local acts like The Byrds, The Doors and Buffalo Springfield, and later showcasing some of the earliest headlining U.S. performances by British bands Cream, The Kinks and Led Zeppelin. While many touring acts playing Los Angeles stayed a short distance east at the Hyatt House--aka the Riot House--more established artists decamped to the Sunset Marquis.

"The English bands thought the American bands were stealing their riffs and their music, and they didn't feel comfortable staying with them at the Riot House," Gruendyke says. "Jeff Beck came down here, found this hotel and moved down here. He told Roger Daltrey of The Who, and [Daltrey] told Led Zeppelin and other people, and before you knew it, all the English bands were staying with us."

Live at the Sunset Marquis

The Sunset Marquis is inextricably linked with rock 'n' roll lore. Music royals as varied as Keith Richards and Gloria Estefan have occupied villas for months at a stretch; Green Day was banned for bad behavior; Depeche Mode frontman Dave Gahan suffered a near-fatal drug overdose; and Courtney Love penned what may have been a suicide note on hotel stationery, later writing and recording the song "Sunset Marquis" with her band Hole. The main building, renovated and expanded starting in 2004 to the tune of $30 million, includes parking space for two tour buses, and during the summer months the hotel hosts Live at the Sunset Marquis, a web series spotlighting up-and-comers performing poolside.

Rock 'n' roll and R&R: on-site recording studio NightBird
Rock 'n' roll and R&R: on-site recording studio NightBird
NightBird Photos (C) Marc Royce

And then there's NightBird Recording Studios, the cutting-edge production facility located within the Sunset Marquis' underground garage. NightBird--spearheaded by composer and pianist Jed Leiber (son of the late Jerry Leiber, co-writer with Mike Stoller of pop perennials like "Jailhouse Rock" and "Stand by Me") and designed by Hollywood Bowl acoustician George Augspurger--has hosted sessions by artists ranging from Aerosmith to ZZ Top, generating a multitude of bestselling records that average around 30 Grammy Award nominations each year.

"Anybody can buy equipment. What makes this place truly unique are the people who work here, the location and the relationship we have with the hotel," says Leiber, NightBird's CEO. "That's what makes NightBird special.

I don't know of another place in the world like it."

Rock 'n' roll and R&R: on-site recording studio NightBird

Rosenthal stresses that the Sunset Marquis is not exclusively a pop-star paradise. "We take care of [celebrities] as we would take care of anybody. The fact that you come in with credentials that say 'I'm extremely well-known'--sure, we'll take care of you. But if Mr. Smith walks in the door, he'll get the same treatment. It's not an elitist environment. From our perspective, everybody is the common person, and they deserve to be treated the same way."

Granted, not every traveler can afford a stay at the Sunset Marquis: Weekend rates for suites start at roughly $285 per night, and the hotel's crown jewel, the 3,000-square-foot Presidential Villa, will set you back a cool $7,000. But the Rosenthals and their staff maintain that the hotel's intangibles--its scenic splendor, its seclusion and serenity--are amenities that no competitor can match.

"Whenever I talk to George about a new hotel going to be built in West Hollywood, he tells me, 'Rod, don't worry about it. They can build all the boxes they want, but they'll never be able to replicate the Sunset Marquis. Nobody will do this again in Los Angeles,'" Gruendyke says. "And he's right. Every new project going up around us is a square-box high-rise. People will be looking down on us and saying, 'Oh my god, is that a park down there? What's going on?' And hopefully they'll come down and say, 'I don't want to be on the 10th floor of a hotel. I don't want to ride an elevator every day. I want this garden feel.' That's George's foresight."

Rosenthal's Malibu vacation estate is nothing short of breathtaking. Located close to 1,500 feet above sea level in Newton Canyon, the property stretches across 235 acres and encompasses a hacienda-style main residence--inspired by Rosenthal's travels across Mexico and Spain with friend Emilio Azc?rraga Milmo, the late president of Mexican media company Televisa--as well as two guest houses, a two-bedroom staff quarters and a gym. Each element and detail reflects Rosenthal's total commitment to design aesthetics and creature comforts: Mexican artisans and craftspeople were commissioned to create a salmon stone fireplace, quatrefoil windows and hand-painted frescos, and one Guadalajara-based artist spent more than a year hand-carving ironwood entry doors depicting the exploits of St. George the Dragon Slayer.

"I wanted to emulate the lifestyle that I enjoyed so much in Mexico, but I wanted it in Los Angeles," Rosenthal says, surveying the house from his seat on an overstuffed leather couch in the main living room. "A good painter is never done with a canvas. They always go back and add a little here, a little there. That's what this is: It's a glorious, continuing canvas for me."

The Rosenthal Estate Winery
The Rosenthal Estate Winery
Winery Photos (C) Berlyn Photography

Twenty-five acres of the estate are dedicated to hillside grapevines planted from original rootstocks identified by viticulturists at the University of California, Davis. The Rosenthal Estate Winery planted its first vineyards in 1986 and '87 and produced its first vintage two years later under the label Malibu Hills Vineyards. Today the firm releases 3,000 to 4,000 cases of wine each year, and its Rosenthal Wine Club subscription service counts more than 2,500 members worldwide.

Rosenthal launched the boutique vineyard in part to justify his investment in the property, turning to wine after scrapping his plans to allocate a chunk of land to growing avocado trees. The Rosenthal Estate Winery also underlines his finesse for reengineering land to build something new and unexpected.

The Rosenthal Estate Winery
The Rosenthal Estate Winery

"I'm a recycler. I take an asset, recycle it and do something else with it," Rosenthal says. "I've always seen life as a jigsaw puzzle. You have the border of it, and with each little piece and discovery you put down, the pieces fit together. That's [Raleigh Enterprises]: We're a jigsaw puzzle that has come together with multiple disparate pieces, and out of one thought or one opportunity, something else developed."

Those disparate pieces include File Keepers, an archival business records and information management company founded in 1974 after Rosenthal accepted a sweetheart deal to lease a vacant, 500,000-square-foot building in downtown Los Angeles. "I didn't know what to do with all that space," Rosenthal says. "They said, 'We'll lease it to you for three cents a square foot.' I thought, For three cents a square foot, I'll figure out what to put in the building."

The Rosenthal Estate Winery

In 1979 Raleigh Enterprises acquired what is now Raleigh Studios, an 11-acre independent film and TV production facility that opened in 1915 under the name Famous Players Fiction Studios, in conjunction with the shooting of the Mary Pickford silent A Girl of Yesterday. Originally Rosenthal planned to raze the studio to build a Kmart, but sensing that the advent of satellite TV would create an unprecedented demand for new broadcast content, he instead spent some $40 million to expand and renovate the site, constructing three new state-of-the-art soundstages that are currently home to prime-time TV series like ABC's Castle and TNT's Major Crimes. "We do not produce content--we rent space to companies who do," explains director of studio operations Yolanda Montellano.

Raleigh Studios operates in concert with Hollywood Rentals, which provides professional lighting and grip equipment, power generators and production vehicles for the film, TV, advertising and special-events industries. All productions filmed at Raleigh Studios are required to lease Hollywood Rentals gear; the site also includes a supply store and three screening rooms available to rent for postproduction chores like voice-over services or private viewings. "We're always looking for new revenue sources," Montellano notes.

Rosenthal credits Raleigh Enterprises' ongoing growth and diversification to son Mark. "Were it not for Mark's involvement with the company, it would not be where it is today," Rosenthal reflects. "I'm a great entrepreneur, and I have peripheral vision and creativity, but I just don't do well with what makes the watch tick. Mark has been a guiding light in that way."

Mark Rosenthal joined Raleigh in 1986 after earning a degree from the University of Southern California's Gould School of Law. His legal background proved invaluable in 1991, when the state of California and its insurance commissioner John Garamendi seized Raleigh's then-financial partner Executive Life Insurance Company after the value of the insurer's multibillion-dollar portfolio collapsed--a fate tied to its massive investments in the junk bond market of the go-go 1980s.

"We had built two major ops buildings on Olympic Boulevard with [Executive Life], we had a portfolio of nearly 10,000 apartment projects around the country we had acquired with them, we were overseeing 570 [general services administration] and post-office buildings with them, and we had about 800 co-ops in New York City with them," Mark explains. "Garamendi basically said, 'Walk away from everything or we're going to sue your ass.' We said no, and they sued us for multiple billions of dollars. They sued us personally, and sued every single business we had. I managed that entire litigation. I found the insurance coverage and various things to help fund it, because we didn't have the money to pay for it. I'd never seen legal bills like that."

Raleigh Enterprises ultimately prevailed in receivership court, giving Mark the leverage to negotiate a resolution. "That was a point of inflection for the company," he says. "It was a few years of stress. My legal education paid for itself many times over."

Raleigh's leadership transition has been virtually seamless, Gruendyke says. "You've got a father who's constantly thinking out of the box, and a son who is more of the foundation. [Mark's] the one who says, 'That's a great idea, and this is how we're going to make it work.' That's why they work so well together," he says. "They pull out each other's strengths. They complement each other--they take an idea, and they expand on it as far as the planets will let you go."

So how has the Sunset Marquis remained the quintessence of Hollywood cool when so many overnight sensations have long since faded into obscurity? Five-decade runs are not exactly the norm, especially in this town.

Mark Rosenthal chalks up the hotel's enduring success to its allegiance to old-school, even unhip virtues like family, community and customer care. "We're trying to deliver services at the highest level of professionalism," he says. "People say, 'I feel like I'm coming home when I come to this hotel.' What does home represent to people? It's a sense of security--it's a protective environment. When you talk about entertainers, why do they keep coming back? Because it feels safe. We've set up decoys for some of our high-profile clients when the paparazzi are out on the street--we'd have a car go in one direction, and they'd go out the back. People appreciate that."

The Rosenthals say that core ethos won't change as the Sunset Marquis enters its second half-century in business, but they're already exploring the next evolution of other assets in the Raleigh portfolio. Raleigh Studios has developed five studio projects worldwide, ranging from Baton Rouge, La., to Budapest, Hungary. In mid-2012, the company signed an agreement with China's Wuxi Studio to create a full-service production and entertainment complex outside of Shanghai.

Kicking it on the roof: Anthony Kiedis, frontman of seminal L.A. band The Red Hot Chili Peppers.
Kicking it on the roof: Anthony Kiedis, frontman of seminal L.A. band The Red Hot Chili Peppers.
Photo (C) Ross Halfin

The Rosenthals are also mulling the future of File Keepers as the world continues its migration from paper to digital. Mark confesses the company is uncertain exactly where the archival storage segment is headed and how quickly it will arrive there, but he notes that the buildings File Keepers occupies will remain valuable assets regardless of what kind of business might set up shop within their walls.

"Hard assets for me have always been a long-term protection," George says. "We dialogue about what businesses aren't going to be here in the next four or five years, and are we a part of that? And if we are a part of that, how are we going to change? We as a company are at the forefront of anticipating change. We don't know exactly how it's going to change, but we have to be ready. The most secure thing is apartment buildings and hotels. People live the same--hotels change interiors, but people always need a place."

George wants Raleigh's customers to experience a feeling of reassurance. "I am of the belief that although we all declare our independence at 18 years of age, we come from a place of dependence from infancy. We are dependent on so many other people to take care of us," he says. "The common denominator [across Raleigh Enterprises] is that we want to take care of people and satisfy their insecurities. How do we make you feel comfortable in this hotel, so that you feel like a member of the family? We take care of people. Whatever it is they need, and whatever company it is, we take care of them as instantaneously as we can--to make them feel secure, and make them feel 'They really care about me.' That's the connective tissue."

Jason Ankeny

Written By

Chicago-based writer Jason Ankeny is the executive editor of Fiercemobile content, a daily electronic newsletter dedicated to mobile media, applications and marketing.