BBH: What about your passion for hotels? Was there something deep-seated there or did it develop over time?
TM: I like hotels because I love traveling and the travel business. I’ve traveled to 95 countries and have flown eight or nine million miles on commercial airliners – 98% of that in the middle seat on the back of the bus. The hotel business is very dynamic. It’s the most complicated of the real estate asset classes, and it changes every day. Its complexity is the barrier to entry. There are about 58,000 hotels, just in the United States. I’d say that 15% of them are run really well, so that creates a great deal of opportunity.
BBH: How did you start the first one? Did you create a fund?
TM: No, it was deal by deal up until 2016. We’d find a good investment, call up some friends and family and capitalize the equity and then get a bank loan. It started with small hotels, then grew to medium-sized ones. I did a couple of individually capitalized portfolio acquisitions, then we raised a discretionary fund in 2016. We are almost finished deploying the fund.
BBH: You touched on this when you said that only 15% of hotels are well run. What does it take to be a well-run hotel, and how do you differentiate when there are so many of them out there?
TM: I would say it’s partly design – the creativity behind the building. You have to activate them every month – that’s what keeps people coming back. I subscribe to the European hotel model, where hotels are meeting places for communities. They are not just about the guests that are in the building; they are about the surrounding neighborhood. So, it is part design and creativity, part distribution. The distribution landscape continues to change. It’s important how you manage your sales channels, and it’s really quite complicated. You can always sell the rooms, but it’s a question of what price you can sell them for. If you give away the rooms early at a low price, then you leave some profitability on the table. If you take more risk and hold back your inventory and wait until closer to the time of stay, you could potentially get more profits, but you might go empty. You’ve got to play that risk analysis game.
BBH: Rebecca, you worked with Tyler on The High Line Hotel. Talk about how you identified the opportunity and the development of the hotel.
RM: The High Line Hotel is a dream project – a magnificent architectural jewel in the middle of one of New York City’s most charming areas. The High Line Hotel was a former Episcopalian Seminary, turned former priest housing, which we transformed into a hotel. Our beautiful building feels like the grand dame of Chelsea, and we’ve always wanted it to be an anchor for our special neighborhood. Our seasonal events are open to all, free of charge. It has been thrilling to see our annual Halloween dog costume parade grow from a quirky neighborhood tradition to an event attended by hundreds of people and their pets. The first year we hosted an Easter egg hunt, I stayed up all night assembling paper Easter egg lanterns, and Tyler and I hung them from the trees in the front yard while our older daughter slept in her stroller. Five years later, we have lines for blocks to get into a party that includes a petting zoo and crafts. And our holiday tree lighting in December is a must-do – whether to see our spectacular evergreen aglow or to enjoy a couple hot toddies!
But what I’m most proud of is the vibe of The High Line Hotel. It’s incredibly cool of course. But the feeling is one of total openness and warmth. I love walking through the lobby and seeing locals, couples, tourists, babies, dogs, grandparents – it’s as eclectic and welcoming as New York City itself. There are different languages being spoken, families visiting, novels being written on laptops, meetings taking place – there are always a lot of great stories unfolding in The High Line Hotel lobby.
BBH: How much of MCR operations is centralized versus decentralized?
TM: We have about 200 people above property and about 4,800 people who work in the hotels. We have two offices, one in New York and one in Dallas, and that is where revenue management, operations, e-commerce, creative acquisitions, marketing and sales all sit. We purposely don’t distribute out the IT role to individual hotels; we keep that at corporate, and we do the same thing with marketing. Marketing is a very challenging field. Traditionally, hotels promote themselves from within the building. We centralize that and then push it out to our individual hotels.
BBH: How do you spend your time and think about leadership?
TM: There’s no shortage of hotels out there; they’re everywhere. A huge part of how you differentiate your hotel company is culture. People want to have fun when they come to work. We look at fun in a competitive way: doing it better than the other guys. It’s fun to outperform the competitors. There’s a metric in the hotel business called rev-par index, which is revenue per available room. It’s an amalgam of distribution and IT and marketing and great customer service and loyalty. The metric lets you assess daily performance and informs how we can create an exceptional guest experience so they keep coming back. When you see yourself winning, that’s fun.
We say, “happy employees lead to happy guests.” The happiness gets passed through, so if the team is happy, then the guests are happy. And if the team is not happy, then the guests definitely won’t be happy.
BBH: How would you describe your investment approach? How do you think about investing in new properties?
TM: To put it succinctly, what’s our edge? What can we do with this hotel better than the people we are running it for? It’s about differentiating. And how can we best our competitors?
BBH: What would you say is your biggest success and your biggest challenge as CEO?
TM: Launching the TWA Hotel was a big deal. Raising our second discretionary investment fund was a big success.
The biggest challenge is integrating the teams when you have thousands of people. We have an annual general manager conference, and we are up to 500 people attending it now. It’s about bringing the team together and getting everybody to work collaboratively towards progress.
BBH: You mentioned TWA. How did that project come to be? It was definitely unique compared to what else you had previously done.
TM: Yes, it was. We won an RFP from The Port Authority of New York. It was a very opened-ended RFP, but we beat some strong competitors. People often ask me why we won, and I think it’s because we had a good financial plan, a great operating plan and terrific creative. The design of the buildings and the project, as well as the enthusiasm for the project, was what won us the deal. We won it about five years ago, and then it took us about four-and-a-half years to bring it all together. It’s a national historical landmark, which creates a lot of additional challenges and a lot of additional hurdles to jump through. In all, we dealt with 22 government agencies and 176 national consulting firms. It’s such a stunning building, and I think a lot of people appreciate the care and the detail that we put into it.
RM: I remember walking through the TWA Flight Center right after MCR won the deal. It had been boarded up for over a decade, but you could still feel the magic of the building. It was palpable. And now this wonderful American architectural icon is open for everyone to enjoy – whether you are an overnight guest, a gym member, have a dinner reservation at Jean-Georges’ Paris Café or are just wandering through. My favorite Friday night activity is sitting in The Sunken Lounge watching how delighted people are with the hotel – whether twisting in the Twister Room, browsing at the TWA Shop or taking in the interactive museum exhibits and custom Solari Board messages.