> aes Poy te ee J ee a oo Be sateen pelginGled je lOd SiO) CIE O) AN Ore Hotel School Bill Summers HOSPITALITY GOES GLOBAL The Cornell Hotel School By Bill Summers Edited by Fred Conner his richly illustrated book is volume two of the Cornell Hotel Society’s commitment to chronicle and consolidate the history of both the Cornell School of Hotel Administration and the international hospitality industry, of which the School is so much a part. Using both broad strokes and fine lines, universal examples and fascinating detail, the stories presented herein describe and reveal the individuals and circumstances that shaped the hospitality industry from the 1920s to 2007. Cornell Hotel School faculty, students, and alumni have always sought ways to make hospitality services more efficient, effective, and profitable. Even so, the scope of today’s worldwide hospitality industry could scarcely have been envisioned by anyone in the early twentieth century. For instance, the advancements after WWII in transportation and information technology led to profound improvements in how people work and relax. Such developments, combined with greater acceptance of free-market ideology, made the world much smaller and the hospitality industry much larger. Today people, goods, capital, and information move freely and rapidly around the globe, a luxury hardly imagined a century ago. Moreover, the emergence of hospitality as the world’s largest industry influenced many nations’ economies in a positive way, especially that of the United States. As the hospitality industry has grown and matured, its diverse nature has given rise to highly specialized disciplines ranging across development, design, construction, finance, marketing, law, information technology, and human resources—in addition to the basics of lodging, food service, and recreation. | continued on back flap] HERE NEB ED PERLE SPRL MT EIR CTT SFR EEN RIE OY CORNELL UNIVERSITY LIBRARY tis nun te see ee a nN ai Tae re ets) ee ae cn Ae etn HOSPITALITY GOES GLOBAL ia aaa iit: The skyline of Shanghai’s financial district reflects the dynamic, complex, and global character of the hospitality industry. HOSPITALITY GOES GLOBAL The Cornell Hotel School By Bill Summers CORNELL HOTEL Society, INc., ITHACA, NY 14853 U.S.A. © 2007 by Cornell Hotel Society, Inc. All rights reserved. Library of Congress Control Number: 2007931399 ISBN 978-0-9649921-1-5 ‘Text is composed in Adobe Minion, FF Profile, and Monotype Poppl-Residenz Imageset in the United States of America cn UAitgs, 5 puac & Printed and bound by Tien Wah Press, Malaysia Cpt isten carefully to what 1s asked of you, and then go out of your way, if necessary, to be helpful. Try hard to give a patron the same attention that you would want to be shown if you were in his place. It is a simple rule, but it 1s so important that no person, no hotel, can succeed unless it is observed. —E.M. Statler VI ie Contents BIRTH OF AN INDUSTRY AND A SCHOOL Pee ee. gk 8 a : HOSPITALITY AND CORNELL MATURE i iy Four LANES AND JET PLANES ori... «2, 2 EXPANDING AROUND THE GLOBE ee 41 New Ways TO OWN AND MANAGE Pee roeeee eae. wtt;t:;ti(‘(<‘(‘(#}NN(N(NNU..... 59 THE First RESTAURATEURS rr 8 a 7 BECOMING THE “THIRD PLACE” ee le” FF 89 WOMEN, AFRICAN-AMERICANS RISE UP CI es 99 J ey > S 3 E | hea“? ™ COMPUTERS CHANGE EVERYTHING irs BMV IION ROVOTIEION unc ee en et 115 FROM PEANUTS TO HOTELS ka 127 THE STOPWATCH AND THE TUB Pe I tet cies ee. 137 REST AND RELAXATION, REDEFINED Peete FE RP ee 149 Movinc EACH OTHER FORWARD nee init y a tee GN 6s Ge ew Less La or a te 165 LEADING THE Way rr rr ree a ee a 183 EPILOGUE: HOSPITALITY S$ DEFINING ATTRIBUTE......... 193 ES oe. i dhol Mel Se oe 196 Acnmouteaomnents and Contripugors. ..... 6. ec ee eg gt 204 Ce ee ee ee, 210 Sources ee A a i 212 oon ree... 6. ce 219 Oe ge a ee 223 VII VIII Foreword n behalf of the Cornell Hotel Society, it is a privilege to bring you this history of the hospitality industry. This book traces its origins back to 1994, when the Cornell Hotel Society Book Committee was formed. In its first work, the committee oversaw the production of the book Hospitality Leadership, published in 1997 (© 1996) as the official history of the Cornell Hotel School. In 2003 the committee members decided to publish a companion book that traces the history of the hospi- tality industry. Hence, we undertook to produce this book, Hospitality Goes Global. Our goal was to chroni- cle the evolution of both the hospitality industry and hospitality education, emphasizing the period from 1900 to the present day. Too, we agreed that the book would highlight the Hotel School’s influence on the industry's growth, particularly by relating stories about graduates’ contributions to the field. All of the committee members are pleased that we could recognize in this book so many individuals from the Cornell Hotel School community—alumni, faculty, administrators, and staff members. At the same time, for every person profiled or even men- tioned, we know there are at least ten more who are equally noteworthy in their own right. Time and space, however, did not allow us to be as exhaustive as we would have liked in highlighting the contributions of hundreds of other leaders, many Cornell alumni included. Many people have made important contributions to this project, starting with the book committee mem- bers. First, I want to thank the executive leadership of the committee, comprising vice chairmen George Bantuvanis °51, Richard Kennedy ’56, and William Eaton ’61. It is through their unwavering commitment and dedication that this book has been brought to fruition. Further, I want to acknowledge our professional and creative staff—writer Bill Summers (82, A&LS), editor Fred Conner (’77, A&LS), photo editor and committee member John Marcham (50, A&S), and designers Phil Wilson (MFA *69) and Kat Dalton—who together kept the project moving toward an efficient close. (See pages 204-207.) I also want to thank the other members of the book committee for their vital contributions over the past two years. They are Leif Evensen ’66 (historian for the European Region of the Cornell Hotel Society); Tom Felderman ’82; Bjorn Hanson ’73; Christine Natsios °85 (director of alumni affairs for the Cornell Hotel School); and Walter Williams (former director of alumni affairs and development for the Cornell Hotel School). In addition, many people at the School helped to bring this project to a successful conclusion. They include Dean Michael Johnson and former deans David Butler and Robert Beck ’42, and former associ- ate dean for academic affairs Leo Renaghan. Other members of the School and university communities who made substantial contributions are Derrick Brown, Ruth Devine, Brad Edmondson (’81, A&S), Joyce Leonard, Cydney Peters, William Steele (54, A&S), Kandace Van Gorder, Nancy Wilson, Glenn Withiam (’74, A&LS), and Mary R. Wright °45. Please see pages 208-209 for more about the invalu- able contributions made by these individuals. I know that every member of the team joins me in hoping that you find this book to be an enlightening and informative journey through the history of the most dynamic industry in the world. Sincerely, Michael W.N. Chiu ’66 Chairman, Cornell Hotel Society Book Committee 1994-2007 IX PROLOGUE as HOSPITALITY EVOLVES Service and E.M. Statler LTHOUGH ELLSWORTH MILTON STATLER quit school at age nine, he had the instincts of a scholar. From his earliest days P as a hotelman Statler always carried a small black notebook with him, and he puzzled over the details of running his hotels. When he hit upon a way to improve things, he made a note of it—for example, ideas about advertising, plumbing innovations, and front-desk efficiencies. Another thing he wrote in his book is, “Life is service. The one who progresses is the one who gives his fellow men a little more, a little better, service.” Those 22 words would become Statler’s credo. He would run his hotels with a passion for This plaque at the Cornell Hotel School. © personal service, helping to make that attribute the hallmark for an pays tribute to Ellsworth M. Statler, its earliest benefactor. He was honored entire industry. He would be of enormous personal service himself, by the hospitality industry in 1950 as “Hotel Man of the Half Century.” becoming the foremost benefactor of the Cornell University School of Hotel Administration, in Ithaca, New York. Under E.M. Statler’s leadership, the industry and the Cornell Hotel program would begin an enduring partnership that has produced many advances in both the workplace and the classroom. In 1950 the hotel industry named Statler “Hotel Man of the Half Century,’ even though he had died twenty-two years earlier, barely a quarter of the way through the century. E.M. Statler, it could be said, contributed more than anyone else to the founding of both the modern hospitality industry and hospitality- management education. At the Cornell Hotel School, now more than eighty-five years old, faculty, students, and alumni still follow Statler’s lead, seeking out ways to make hospitality services more efficient, more effective, and more profitable. But the scope of the industry—and the School—could scarcely have been envisioned in Statler’s day. Advancements in transporta- tion and information technology have led to profound improvements in how people work and relax. Those gains, combined with greater acceptance worldwide of free-market ideology, The first Statler Hotel, in Buffalo, New York, have made the world much smaller and the hospitality opened in 1907. . P 7 industry much larger—and more profitable. HosPITALITY GOES GLOBAL 2 Today people, goods, capital, and information move freely and rapidly around the globe, a luxury hardly imagined a century ago. In most modern societies the standard of living has risen ever higher. People have more disposable income, and they spend much of it on leisure activities—including travel, accommoda- tions, meals, and entertainment—the very staples of the hospitality industry. The emergence of hospitality as the world’s largest industry caused profound shifts in many nations’ economies, especially that of the United States. When the Cornell Hotel program began in 1922 most jobs in the United States were in manufacturing and farming. America was a country that made things; its great businesses produced oil, steel, automobiles, lumber, and wheat. Today only one out of twelve U.S. workers is in manufacturing, and fewer than one in 250 works on a farm. Most jobs in the United States today pro- vide information and services, and about one-fifth of the world’s economic activity is generated by travel, lodging, entertainment, and food-service enterprises. Indeed, the hospitality industry itself has grown and matured and now barely resembles its original form. Roadside inns once dominated the industry, offering a floor to sleep on and a roof overhead. Now hospitality encompasses bed and breakfast inns, motels, hotels, restaurants, casinos, convention centers, cruise ships, mega resorts, spas, amusement parks, clubs, stadiums, vacation ownership, and managed services. At first industry growth was measured in units— a new hotel here, a new restaurant there—with each unit owned and operated by a different individual. Now hospitality growth is measured by sales volumes in the millions and billions of dollars and is led by large, multinational brands and the immense owner- ship and management responsibilities that come with directing large organizations. The field has become so diverse that it has given rise to highly specialized disci- plines ranging across development, design, construc- tion, finance, marketing, law, information technology, and human resources. Men led the industry in its infancy. During the early days of professional hotel management, few women were given the chance to perform in anything but menial jobs. Today women run large hotel companies, manage five-star properties, and give counsel as high- priced consultants. At the Cornell Hotel School, women students now outnumber men. (Chapter 8 in this book, pages 99-113, chronicles a few of the women who became distinctive leaders in the industry after graduating from Cornell.) The hospitality industry touches everyone every day, in some way. The industry in 2006 represented $4 tril- lion in annual revenue (10 percent of the world’s gross domestic product) and 8 percent of world employment. In the United States alone people could choose from nearly one million restaurants and five million guestrooms. As the industry has evolved so has the educational commitment to it. For the first half of the twentieth century only a small number of institutions offered any formal edu- cation in hospitality management. By the end of the century over 600 colleges and universities provided some form of hospitality education. Those programs ring the globe from Europe to the Americas to Asia to Australia. Leading them all, the pioneering program that started in upstate New York as an obscure experiment in “hotelmen training” has evolved into the world’s most important center for hospitality-management education—Cornell University’s School of Hotel Administration (known familiarly as the Cornell Hotel School). As the first degree-granting school in the United States to serve the industry, the Cornell Hotel School has held a unique advantage. In its early years the School built and maintained preeminence on the strength of its alumni, who spread their knowledge throughout the hospitality industry worldwide Young E.M. Statler about 1890 in Wheeling, West Virginia, where he learned about hotels and entrepreneurship at the Hotel McClure. SERVICE AND E.M. STATLER 3 IFE IS SERVICE - THE ONE WHO PROGRESSES S THE ONE WHO GIVES HIS FELLOW MEN A Be ee ee ee ee A plaque with E.M. Statler’s motto, in the Hotel School lobby, reinforces Statler’s vision for the industry. HosPITALITY GOES GLOBAL 4 es Mb ipeed I PON and rose to prominent positions in leading global hospitality businesses. As the industry grew ever larger and more diverse, Cornell Hotel School leaders recognized that they could no longer expect to maintain preeminence through the program’s graduates alone. Those leaders realized that for the School to maintain its lead- ership position and remain distinctive, they would need to build a deep and sustaining partnership with the hospital- ity industry. That commitment to be intertwined with industry—to observe, explain, and even influence progress—is among the core themes of this book. Readers will see how this collaborative part- nership has helped both the School and the hospitality industry to thrive over nearly a century of dynamic global growth. “Our interaction with industry is vital to our enter- prise,’ said former Dean David W. Butler, in 2004. “It is the cornerstone in our ongoing commitment to shape the global knowledge base for hospitality management.” Evidence of this partnership can be seen through- out this book. It is a special bond, cultivated through decades of working together to find ways to make the industry bigger, better, and bolder. It is a bond that both industry executives and School leaders will con- tinue to nurture as both groups seek to make the most of the challenges and opportunities that the twenty- first century presents. This is the story of how the modern hospitality industry evolved from the early 1900s to become the largest and most important industry in the world. It is also the story of how the Cornell Hotel School became the first collegiate hospitality-management program, and how that program has evolved and matured in step with the industry. It is the story of an industry and a school closely linked, one influencing the other, to the benefit of both. A note about class-year designations: Graduation years are specified in the text for Cornell University alumni. For those who completed the Hotel School’s undergraduate program (BS degree), only the class year is given. If an individual completed a post-graduate degree through the Hotel School (MPS, MMH, MS, or PhD), both the degree and year are noted. For other Cornell alumni, both the class year and unit are provided, as follows: A&LS = College of Agriculture and Life Sciences; Arch = College of Architecture, Art, and Planning; A&S = College of Arts and Sciences; EE = College of Engineering (Electrical); HE = College of Human Ecology; Law = Law School; and ME = College of Engineering (Mechanical).—Ed. Not Hay NONOSPRORRRRE SORA RAIRURRARRINS LER A manager checks Ile de France bellmen during a field trip of Hotel students in 1938. SERVICE AND E.M. STATLER es thi ates eee a rs et CHAPTER FROM 1032 TO 1929 Birth of an Industry and a School OSPITALITY AS WE KNOW IT Topay traces its roots back at least one thousand years, when the first inns opened across Europe. The Flower Inn, opened in 1032 on the Rhine River in Basel, Switzerland, is believed to be the oldest inn still operating today. When Switzerland became part of the Holy Roman Empire, the inn was renamed The Three Kings Inn (Drei Kénige am Rhein, later Les Trois Rois). Through the centuries the inn has served Europe’s crowned heads, among them Napoleon Bonaparte, who was said to have stayed in the suite that bears his name today. In the 1500s England adopted the stagecoach as the primary mode of travel, The interior of Grand Central Terminal in New York City, an early mixed-use hospitality development that came to include railroad and subway stations, hotels, restaurants, shops, and offices. giving rise to the first national network of inns. The British govern- ment arranged for mail to be delivered by coach, and soon thereafter inns were built to accommodate the postmen and provide them HosPITALITY GOES GLOBAL 8 with fresh horses for the next leg of their routes. It was during this period that innkeepers introduced the “yard of ale,” a tall, narrow drinking glass delivered to coachmen to refresh them before they set off for their next destination. By the end of the 1600s scheduled coach service transported people across the kingdom, and more than six thousand inns lined coach routes. These inns provided two kinds of accommodation. The nobility would sleep on straw beds in single, unheated rooms, while their servants would sleep on stone floors in common areas. Innkeepers served food and drink, making inns popular gathering places for travelers and townspeople alike. The English inn served as a model for what became the colonial inn and tavern in America. These inns were built along stagecoach trails and canals and in seaport towns during the 1600s and 1700s. Much like the inns of England, American inns served as public gathering places, even doubling as schools and courts of law in many towns. Recognizing the importance of inns to statewide commerce, the Commonwealth of Massachusetts even passed a law penalizing any town that did not provide this convenience. In 1775, when American revolutionists met at Boston’s Green Dragon Tavern, Patrick Henry called the taverns of colonial America “cradles of liberty.” Still, colonial inns offered only the barest comfort, as this description illustrates: Accommodations often meant sleeping on the floor of the “long room,’ with one’s feet turned toward the fireplace and one’s head on a rolled-up coat, alongside a dozen or more other persons of both sexes. It meant a quick cold- water wash in an outdoor basin and gingerly use of a com- munal towel. A warning blast on the landlord’s cow horn meant all hands to table, ready to tackle breakfast with fingers and knives. During the early 1800s public lodging began to take hold in Asia and the Pacific rim. In Japan the first ryokans (traditional inns) were built on the Tokai Highway that linked the country’s two most popular destinations—Edo (Tokyo) and Heiankyo (later named Kyoto, which was Japan’s capital from 794 until 1868). These simple inns provided a resting place for the samurai, traders, and others making the long journey between the two cities. In India, the government began to build and manage simple guesthouses called Dak bungalows. Today many of these bungalows have been upgraded and are reserved for government officials. The First Hotels HE INDUSTRIAL REVOLUTION, which began in the mid-1700s, ushered in the hotel era in both Europe and America. The first hotel built in the United States was the City Hotel, located in downtown New York City. Completed in 1794 with seventy-five rooms, the hotel was much larger than colonial inns. Similar hotels were soon built in other cities. Boston’s first hotel was the Exchange Coffee House, opened in 1806, followed a year later by Philadelphia’s Mansion House and by the Baltimore City Hotel in 1826. Each of these properties set new standards for size and ele- gance and became icons of civic pride. Among the trendsetters in early American hotels was Boston’s Tremont House. Opened in 1829, the Tremont dazzled guests with a startling array of amenities: private guestrooms; door with locks; a washbowl, water pitcher, and free soap; clerks and bellboys; and an “a la carte” menu. An annunciator, or switchboard system, even allowed front-desk clerks to contact guests in their rooms. The Tremont House was enormously successful, prompting other hotel managers to strive for the next innovation. In 1836 the Astor House, in New York City, installed steam-powered pumps so that plumbing could be installed on upper floors. The New York Hotel, built in 1844, was the first to attach private bathrooms to some guestrooms. In 1859 New York City’s Fifth Avenue Hotel was the first to have eleva- tors, an innovation that later enabled hotels to be built as high-rise structures. The Sagamore Hotel, which opened in 1883 on Lake George, New York, was the first to have electricity in all rooms. In 1894 the Hotel Netherlands, in New York City, became the first to provide tele- phones in all guestrooms. In 1890 the first Waldorf Hotel was built in New York City, on the ground where the Empire State Building now stands, at 350 Fifth Avenue. It was the world’s first fully electrified hotel and offered a private bath in every guestroom (see photo on page 19). In the 1840s railroads began to replace steamers and stage- coaches as the primary means of travel. Americans moved west and hoteliers followed. Among the landmark proper- ties built at major rail centers were the Palace (in San Francisco, 1875); the Palmer House (in Chicago, 1882); and the Brown Palace (in Denver, 1893). The Palmer House was the first hotel constructed of fire-resistant material. New rail lines enabled affluent Americans to travel on vacation, encouraging developers to build the first resorts. Spas, as they were then known, opened in Saratoga Springs, New York (Grand Union Hotel), and The Three Kings Inn (Les Trois Rois) on the Rhine River in Basel, Switzerland, first opened in 1032 as The Flower Inn. BIRTH OF AN INDUSTRY AND A SCHOOL 9 Model T Fords and other automobiles at the United States Hotel in Saratoga Springs, New York, in 1922 reflect the rising role of the automobile in American tourism. HosPITALITY GOES GLOBAL 10 White Sulphur Springs, West Virginia (the Greenbrier). Other resort hotels built during the 1800s included the Catskill Mountain House and the Coney Island House, both in New York State; the Hotel Del Coronado, near San Diego, California; the Ponce de Leon, in St. Augustine, Florida; and the Broadmoor, in Colorado Springs, Colorado. Meanwhile, across the Atlantic, César Ritz began building a hotel empire to serve the rich. In 1898 Ritz opened the hotel that bears his name in the Place Vendéme, in Paris. In London his famous proper- ties included the Claridge, the Carlton, and the Savoy. In 1907 the Ritz Development Company licensed the Ritz name to the Ritz-Carlton Hotel in New York City. Later, use of the Ritz name would extend to Montreal, Boston, Lisbon, and Barcelona, making Ritz-Carlton the first international luxury hotel chain. In the words of King Edward VII, Ritz was the “king of hoteliers and hotelier to kings.” In 1893 Jacques Tschumi made educational history in Lausanne, Switzerland, when he opened the first hotel school—Ecole hételiére de Lausanne. That effort was sponsored by la Société Suisse des Hoteliers (the Swiss Hotel Association). Known today as Hotelleriesuisse, it is still the school’s parent organiza- tion as well as the Swiss hotel industry’s governing body. Needed: Better Transportation — EVEN AS THE HOSPITALITY industry advanced around the globe, its growth was constrained by the lack of transportation infrastructure. In the United States railroads were an improvement over coaches, but they could reach only so many destinations. The next big invention to spark a revolution in transporta- tion would be a simple two-wheeler—the bicycle. The bicycle’s popularity in the 1880s and 1890s spurred interest in the nation’s roads. In 1893 an Office of Roads Inquiry was formed in the U.S. Department of Agriculture, promising new roads to replace the dirt lanes serving the bicycles, wagons, and coaches in rural America. Meanwhile, two bicycle mechanics in Springfield, Massachusetts—Charles and Frank Duryea—built the first gasoline-powered “motor wagon” to be operated in the United States. (It lacked any brakes, so on its test runs, in September 1893, the vehicle had to be brought to a stop by driving it into an embankment or other roadside obstacle.) By 1896 the Duryea Motor Wagon Company had sold 13 models of the Duryea, an expensive limousine that remained in production into the 1920s. The Duryea brothers set the wheels in motion for the introduction of the automobile, which would change the landscape of America. The first automobile to be mass-produced in the United States was the 1901 Curved Dash Oldsmobile, built by Ransom Eli Olds. He produced 425 “Curved Dash Olds” that year and was America’s leading auto manufacturer from 1901 to 1904. In 1908, American Henry Ford introduced his low-price, highly efficient Model T. Five years later Ford installed the first assembly line to use a conveyer belt in his factory in Highland Park, Michigan. The line reduced the Model T’s assembly time to just 93 minutes. By 1927 15 million Model Ts had been manufactured. Spurred by these transportation improvements, the hotel industry grew rapidly over the first quarter of the twentieth century. As noted in the prologue, E.M. Statler was at the forefront, building the first modern commercial hotel in Buffalo, New York. When the Buffalo Statler opened in 1907, it offered many revolu- tionary amenities: private baths for every room, full- length mirrors, overnight laundry, mail chutes connecting all floors, a pin cushion with needle and thread, posted room rates, and free morning newspa- pers. Statler’s offer, “A room and a bath for a dollar and a half,’ made overnight accommodations afford- able for millions of middle-class Americans, and Ford’s inexpensive Model T made travel convenient. The popularity of the Model T put additional pres- sure on the federal government to become more involved in road development. In 1916 Congress passed the Federal-Aid Road Act, which made federal funds available to state highway agencies for road improve- ments. But before any new roads could be built, America ran into a daunting detour: World War I. During the war, thousands of soldiers and families crossed the country for the first time, sparking even greater interest in travel and putting more pressure on Congress to build a national road system. In 1921 Congress passed the Federal Highway Act to provide funding for a system of two-lane interstate highways. As rapid industrial development took hold, rural America began to decline. The 1920 census showed that, for the first time, more Americans lived in urban rather than rural areas. This shift was reflected at uni- versities as well. At Cornell University’s College of Agriculture, for example, enrollment dwindled from a high of 1,704 in 1915-1916 to 676 1n 1928-1929. City dwellers needed jobs, and hotel management emerged as a fast-growing field with the lure of steady work and good pay in the nation’s major cities. Sensing this demographic swing from rural (agriculture) to BIRTH OF AN INDUSTRY AND A SCHOOL 11 Above, the Home Economics building, in 1922, the first home of Cornell’s Hotel program. Right, H.B. Meek, founding head and later dean of Cornell’s hospitality program. HosPITALITY GOES GLOBAL 12 urban employment (e.g., hospitality and other service businesses as well as manufacturing), a few visionary thinkers called for a school to train hotel managers. One, hotelier John (“Uncle Jock”) Howie, a Scotsman, pitched such a school to Cornell as early as 1912. Howie believed that college-trained managers could improve the state of hotels, many of which were using long-outdated operating methods. Twentieth-century American travelers, he held, deserved better than to sleep on straw mattresses in drafty inns with the noise from the tavern downstairs echoing throughout. TILL, WHEN THE CORNELL Hotel program opened on September 20, 1922, it was met with great skep- ticism. After all, for centuries no formal training was necessary to run an inn. Indeed, most industry people, including E.M. Statler, thought that “hotel keeping” was a skill best learned on the job. The program fared even worse on campus, where professors and students in other schools mocked it as a program for waiters and cooks. Moreover, among its detractors, it didn’t help any that this originally all-male program came under the auspices of the School of Home Economics. Founding Dean Howard Bagnall “H.B.” Meek knew, however, that service, or “the subtle anticipation of human needs,’ as he put it, could be taught as the scientific basis of outstanding hotel management. A former mathematics instructor at Yale, Meek, age 29, began in the hum- blest of conditions. His first office was a closet under the stairs on the fourth floor of Home Economics Hall (later renamed Comstock). Short on teaching space, he scouted the campus for unused basements, attics, and storerooms, then asked students to fix the plaster, paint the walls, and install light- ing fixtures. The first lecture hall was a heated barn that stood at the present site of Mann Library. It was in these surroundings that people like the manager of New York’s Waldorf Hotel (and later the Waldorf-Astoria) were asked to lecture, recalled faculty member Charles “Chuck” I. Sayles °26. In the first months of the program Meek worked with hotel managers and academics to create and deliver basic courses built around solving hotel prob- lems. Students took courses in accounting, economics, food preparation, chemistry, biology, physiology, and diet and nutrition. They studied marketing, pricing, commercial geography, and textile selection and deco- ration. After opening with 20 students in 1922, enroll- ment grew to 101 in 1924 and to 125 in the fall of 1926. As Cornell’s hotel-management program grew, Meek knew he needed financial backing to keep pace. The American Hotel Association (AHA) had pledged support, but by the summer of 1924 it had paid noth- ing. Howie and others favored the program, but other hotelmen, including E.M. Statler, wanted the associa- tion to fight Prohibition first. In fact, when the AHA made its first payment to Cornell, in the fall of 1924, An early food-preparation lab, likely in the original Home Economics building. Student John Courtney ’25, at right rear, later became a long- serving member of the Hotel School faculty. BIRTH OF AN INDUSTRY AND A SCHOOL 13 Invitation to the first Hotel Ezra Cornell in 1926, and Risley Hall dining room, site of the 1926 and 1927 opening banquets for the program’s student-run “hotel for a day.” HOSPITALITY GOES GLOBAL 14 nH od my BS Boe Fi oli —————— ne Bowed ond al Pa pre ore tad . == oe | See World Airways—Pan Am—created Germany’s Kempinski Hotel Airport Munich (upper As the motel market expanded so, too, did new InterContinental Hotels in many of the airline’s desti- reat lee cee — and existing franchised food operations. Led by nations.) Even as carriers made news with these incre- Howard Johnson’s in the 1940s and early 1950s, chain mental gains, various governments were hard at work (branded) restaurants such as Stuckey’s went up at on a new technology for military aircraft that would highway travel stops and interchanges. (Read more revolutionize commercial flying as well: the jet air- about the development and evolution of the restau- craft. In the 1940s and 1950s commercial carriers were rant industry in chapters 6 and 7.) flying aircraft powered by slow, piston-driven engines. So dramatic increases in airlines’ capacity and speed had to wait for engineering advancements. HosPITALITy GoEs GLOBAL 32 Unlike its Western allies, the United States emerged from World War II with its economy in relatively good shape. Intent on blocking the perceived Soviet threat, the U.S. government undertook a massive effort to develop jet air- craft. Drawing on British power-plant design and German sweptback-wing technology, American designers produced an array of jet designs first used in military aircraft during the 1940s. Similar progress was being made in the United Kingdom. In 1952 the British Overseas Airways Corporation (BOAC) used a new British-made jet engine in its revolutionary de Havilland Comets. The original Comet, a 36-seat jet, reached speeds of five hundred miles per hour. Two years later, however, the Comet’s career was interrupted after three catastrophic accidents. (Investigators determined that metal fatigue enhanced by a design flaw caused the fuselage to burst apart during flight.) A redesigned Comet—the Comet 4—returned to commercial service in 1958, with seating for 56 to 109 passengers. As the Cold War took hold, the U.S. government continued to pour funds into the development of the jet engine. Many breakthroughs achieved with military aircraft were later applied to the commercial sector. Boeing Aircraft Company, for example, used the sweptback-wing design to reduce drag and increase a cage tus eis RUNS SRG a a J oe Se Sieh latiadstuib acc a Pe A 3 speed. Boeing also revamped the jet tanker used to refuel bombers in flight and introduced it in 1959 as the four-engine Boeing 707, the first commercial pas- senger jet (see page 26). The new plane could carry up to 181 passengers and travel at 550 miles per hour. The 707 Era P AN AMERICAN World Airways was the first carrier to order the Boeing 707. That bold move into the jet age extended Pan Am’s heritage of innovation in commercial flight. Under the leadership of its presi- dent, Juan T. Trippe, Pan Am launched more new air- craft and opened more transcontinental routes than any other airline, before its eventual demise in the 1970S. The jet age had arrived, and led by Boeing Corporation, aircraft makers produced more jet air- craft. United Airlines, American Airlines, TWA, and The Spruce Goose, an experimental forerunner of Pan Am’s “clipper ship” aircraft, created by Howard Hughes—airplane manufacturer, airline owner, and hotelier. (See more about Hughes on page 154.) Four LANES AND JET PLANES 33 HosPITALITY GOES GLOBAL 34 other carriers bought these jets and began to serve more routes and cover more miles. New airports were built in major and secondary markets, and millions flew for the first time. Between 1960 and 1980 the number of miles covered by Americans traveling on airlines quadrupled. As more people turned to air travel, safety standards for airlines needed to be developed and implemented. Realizing that the skies were becoming too crowded (e.g., in 1956 two aircraft collided over the Grand Canyon, killing 128 people), Congress passed the Federal Aviation Act in 1958. The legislation created a new regulatory body, the Federal Aviation Agency (later renamed the Federal Aviation Administration). The agency created an air-traffic-control system to regulate separation of commercial aircraft. It also assumed jurisdiction over all other aviation safety matters. At the same time the private sector took steps to further secure the skies. One notable pioneer was Albert L. Ueltschi, who had been a pilot with Pan Am in the 1950s. Ueltschi was inspired to pursue a career in airline safety after a conversation with Pan Am’s Trippe. Trippe told Ueltschi that the biggest problem facing the industry was the lack of training to teach pilots how to handle potentially disastrous equipment failures. Ueltschi went on to develop the first computerized flight simulator designed specifically to train pilots on how to solve inflight problems and handle emergency situations. Ueltschi built a thriving Fortune 500 com- pany—Flight Safety International—that was purchased in 1996 by Berkshire Hathaway. Ueltschi helped secure the safety of millions of airline passengers and the global expansion of the hospitality industry. Deregulation and Franchising Spur New Growth N THE EARLY YEARS Of the jet era air travel was a | luxury affordable only to big business and wealthy individuals. Then, when Congress passed the Airline Deregulation Act, in 1978, the industry soon became affordable to the masses. Competition led to reduced fares, enticing more people to fly. U.S. airlines’ operat- ing revenues reached their highest point in 1979, as 317 million passengers flew in the skies over America. With low airfares, travelers had more money to spend on lodging and leisure activities. The new highway system and faster, cheaper air travel coincided with a lengthy economic boom that began after World War II and has continued with only brief interruptions. Technology developed during and after the war years helped produce a more efficient and productive economy. Americans had more money to spend, more leisure time, and greater freedom to travel. This drove rapid growth in the hospitality industry. Hotel revenue per available room in America quadrupled between 1963 and 1982. Between 1967 and 1982, sales at eating and drinking places also quadru- pled. The number of fran- chised restaurants doubled between 1960 and 1970, and then doubled again by 1980 to reach 60,000 units. Following the highways, Americans moved in droves to the suburbs—and away from downtown railroad stations and large center-city hotels. This further pushed the hotel industry from a one-flag, one-product approach to a one-flag, multi- product approach, creating new opportunities for hos- pitality professionals and owners. In the first half of the twentieth century, the typical hotel-school gradu- ate expected to become the manager of a single hotel, or, if a source of capital could be found, to buy or build a hotel. In the language of the industry, the focus then was on “the unit.” With the rise of chains, instead of managing or owning a hotel, a hotel-school graduate could buy into a name-brand franchise. Many graduates parlayed franchises into empires, some building chains of a sin- gle brand, others acquiring a range of different brands in a single market. An example is J. Peter Kline ’69, MS 71, who co-founded Bristol Hotels & Resorts with a single independent hotel in 1981. As president and CEO, Kline led Bristol through the acquisition of 125 hotels and became the world’s largest franchisee of Holiday Inn and Crowne Plaza Hotels. (Bristol was purchased by Holiday Inn’s parent company, Bass PLC, in 2000.) Spee BS rte ae ne el oe me S oe m4 e Ve ==> an oe ne ae 4 ¢ ory “ as rs, % « % < 5 > ete * 6 ey SOF > CBR mY ue’ 48: + ‘% Zo The Flamingo, opened in 1946, the first casino-hotel in Las Vegas, Nevada. (Also see the next page and page 154.) FouR LANES AND JET PLANES 35 The Statler Inn, pictured above, was part of the original Statler Hall, which opened in 1950 as the permanent home of Cornell’s newly established School of Hotel Administration. HosPITALITY GOES GLOBAL 36 During the 1950s and 1960s the lodging industry diversified into new kinds of properties. Among the first and most successful business conference centers were General Electric’s facility in Crotonville, New York; the Tarrytown House in Tarrytown, New York; and Columbia University’s Arden House in Harriman, New York. Convention centers, extended-stay hotels, and resorts began to grow into their own segments. In 1946 Benjamin “Bugsy” Siegel opened the Flamingo, the first casino—hotel, in Las Vegas. In 1950 Gerard Blitz launched a new concept—the club village—with Club Méditerranée. These innovative concepts created incremental demand—and new career options. A New Home for the Hotel School A THE HOSPITALITY industry evolved in many dramatic ways through the twentieth century, educational institutions worked hard to keep pace. Cornell was no exception, and H.B. Meek had grand plans for the Hotel department. The foundations for growth in the 1950s and beyond were laid in the immediate post-war years. When World War II ended Alice Statler stood prepared to deliver on her promise of providing funds toward a new building for Cornell’s growing Hotel department. The need had never been greater; enrollment doubled from 189 in 1945 to 378 the next year, and remained in the high three hundreds throughout the rest of the decade. Even during the war years, with enrollment dwindling and the Hotel program’s future uncertain, program director H.B. Meek had lobbied for a new building to house the Hotel department. Meek’s bold plan included an assembly hall and teaching facilities, but also a small hotel where students could gain first- hand experience in hotel management, restaurant operations, and food preparation. By 1944, however, support for the inn and restaurant had waned, possi- bly out of trustee concerns that such a facility might compromise the university’s tax-exempt status. Undaunted, Meek pressed for a solution. A commit- tee he served on was studying the feasibility of a Day Four LANES AND JET PLANES ag Me Ce I yO, a sae "yay ine, “ese apaay CE Te I eee Lu 7 & = ° Lu aud = © a Ww ro) — a. oD e oO ee ~o e Pas a wo w => c o w ES — = o aa LA oS — See © a7 UO © co = oO Q a) ow Pl Oo ha o oO > wD oa _ © U w _ ‘3 ae Oo e o E £ rw w = rr ¢ wv oO See Gen o _ ras) c oO oD = YZ oO oO te oO — ov Alice Statler officiates at the cornerstone-laying for Statler Hall HosPITALITY GOES GLOBAL 38 faculty club for the university. When the university balked at spending $400,000 to build such a club, Meek proposed an innovative alternative. He offered to ask the Statler Foundation to include such a club in the new Statler Hall. The Hotel department would lease the area to the club and operate its dining room. Statler Foundation trustees and university adminis- trators accepted Meek’s idea, only to see another obstacle arise. The faculty club intended to serve alco- hol, but a New York state law prohibited bars from operating within a certain distance of a church. Under that law, when measured on a straight line, the Statler’s bar would be too close to Sage Chapel. The impasse was overcome by using the walking distance, rather than the bee-line distance. In 1945 architects presented plans for a building on East Avenue, between Barton and Sage Halls, on a lot occupied by faculty housing. The building would include a faculty club, classrooms, and an inn. The plans fell short of Meek’s vision, but he believed it was the “best solution yet presented.” After three more years of negotiations between Hotel department and university officials, construction began. At noon on May 7, 1949, Alice Statler laid the cornerstone for Statler Hall. Construction progressed smoothly until—one week before opening day in Spring 1950— the laborers went on strike. While those workers pick- eted by Cascadilla Creek, trucks filled with furniture sat idle in the parking lot. As they had done before, Hotel students came to the rescue. As Professor Charles Sayles ’26 recalls, eighty stu- dents were then enrolled in a building-construction course, all of them familiar with Statler Hall through frequent inspection trips and study of the construc- tion drawings. They offered to install the furniture, as long as they would be excused from class. Despite wails of protest from students in the Industrial and Labor Relations School against crossing picket lines to perform the strikers’ jobs, the plan proceeded. By the Friday afternoon of the 25° Hotel Ezra Cornell the entire facility was in immaculate order. Just one year after the cornerstone had been laid, the Cornell Hotel School had its permanent home. In keynote remarks at the opening ceremony, Edmund Ezra Day, Cornell’s president, hailed the enormous progress the Hotel program had made since its founding twenty-eight years earlier. He called Statler Hall “a magnificent addition” to the university and its “richly deserving” Hotel program. He said Statler Hall was a tribute to the “vision and wisdom” of the Statler Foundation trustees (at that time, still Alice Statler, Frank McKowne, and Edward Letchworth). Statler Hall, Day said, was “an enduring memorial to a truly great man,” Ellsworth M. Statler. “West Point of the Industry.” The opening of Statler Hall brought the Hotel School a huge wave of publicity. An article in Future magazine, which was later reprinted in Reader’s Digest, claimed that “Statler Hall is the West Point of the Hotel World.” In 1950 the department of Hotel Administration became a sepa- rate school within the College of Home Economics. In 1954 the trustees made it an independent university unit—the School of Hotel Administration—with H.B. Meek its dean. By the late 1940s and early 1950s many graduates had moved into leadership positions in hotel compa- nies around the world, helping the School gain inter- national renown. Each year twice as many students applied as could be admitted, and up to 20 percent of each entering class would come from other countries. As the School grew into a global entity, so did the industry. Hoteliers followed the airlines overseas, and soon the hospitality industry was opening new hotels and resorts in markets around the world. For his part, Meek did not rest until he realized his full vision for Statler Hall and the Hotel School. With Statler Hall opened, Meek courted the Statler Foundation until foundation trustees agreed to fund a $1.75 million wing that would include a 900-seat auditorium, additional laboratories for food and engi- neering courses, offices, lecture rooms, test kitchens, and a 25,000-volume library. When the Alice Statler Auditorium and the new wing opened in 1958, it marked the crowning achievement to Meek’s thirty-nine years of leadership at the Hotel School. Moreover, it represented another chance for Alice Statler to demonstrate her leadership in hospitality education. Meek retired in 1961 and became the execu- tive director of the Council on Hotel, Restaurant, and Institutional Education (CHRIE), an association of hotel and restaurant educators. The year 1969 saw the deaths of both Meek and Alice Statler. Statler died at the age of 87, having been the first woman to run a hotel company, as well as manage a foundation and participate in a legendary corporate merger. Meek died at age 75 of a heart attack while sailing in the waters off his Cape Cod home. He had lived a full life, mastering four academic disci- plines—mathematics, astronomy, economics, and accounting—and creating a fifth, hospitality educa- tion. He guided the Cornell program through four decades of growth and established the School as a global leader in hospitality-management education. Four LANES AND JET PLANES 39 CHAPTER + New LINKS ABROAD Expanding Around the Globe WO GLOBAL CONELICTS—World War II and the Korean War—helped to accelerate the international expansion of the hospitality industry. World War II gave many people their first glimpse of different lands and cultures around the world. As people learned more about life in distant parts, they grew curious to experience those cultures firsthand. By the end of Korean War hostilities in 1953, the U.S. government had achieved unprecedented political and economic clout. The United States became even more active in world affairs, leading Americans to take a greater interest in life beyond U.S. borders. Americans wanted to travel not only from Los Angeles to New York, palace of the Lost City, a casino-hotel in but to Paris, London, and Rome. Many wanted to visit Europe to Sun City, South Africa, the costliest resort : ) in the world when it opened in 1992. see their ancestors homeland. In much the same way, 41 HosPITALITY GOES GLOBAL 42 America’s increasing visibility as a world power drew a wave of visitors to the United States. Aircraft manufacturers and the airlines found ways to serve this growing market of international travelers. Before 1959 air travel over the Atlantic Ocean took at least fourteen hours in a loud, cramped plane. While cruise ships offered a more comfortable alternative, they needed five to seven days to cross the Atlantic. But when Boeing introduced the jet-powered 707 airliner, transatlantic transit time was cut in half. In 1969 Boeing introduced the first wide-body jet, the Boeing 747. Twice the size of any other Boeing jet, the 747 could seat 450 passengers. It featured two aisles, an upper deck over the front section of the fuse- lage, and four engines under its wings. Pan Am again led the way as the first airline to purchase and fly this revolutionary jet. Other makers were quick to follow Boeing. Douglas built its first wide-body, the DC-10, in 1970, and only a month later Lockheed unveiled the L-1011. In 1976 a British—French consortium launched the Aérospatiale— British Airways Concorde and with it the first regu- larly scheduled supersonic service. The jet age boosted overseas travel to new levels. According to Worldwatch Institute, the number of international visitors arriving in the United States grew from 25 million in 1950 to 69 million in 1960, and then to 286 million in 1980 and 657 million in 1999. The Rise of Worldwide Brands J TO THE PIONEERING efforts of Inter- Continental and Hilton in the 1940s, the world’s hotel industry was ready for long-haul travelers. At first glance, the late 1940s would seem a dark time for the hospitality industry. Most of Europe and much of Asia lay in ruins from war. With their industries and agriculture devastated, many countries were incapable of producing much for export to generate badly needed hard currency. One bright economic prospect for some, however, was tourism’s potential to generate revenue. Those overseas governments with access to U.S. Marshall Fund aid used that source of funding to develop tourism industries. (Development funds were otherwise scarce in the post-war era.) So foreign governments, along with some private shareholders, opened up to the idea that an American hotel com- pany with an established record could attract U.S. tourists and business customers to their shores. Under the lead of Conrad Hilton, American hotel chains in particular began to seek out opportunities in other lands. In 1947 Hilton Hotels established its Hilton International division to lead its expansion into Europe, South America, and other regions. Conrad Hilton’s interest in learning about world cultures gave him an advantage and made him the first multi- national hotelier. His first offshore venture came in the late 1940s when the Puerto Rican government announced plans to build a hotel that would attract tourists and industry. Eager to align with a brand name, government officials offered to build and fur- nish the hotel. They wrote to three large U.S. hotel chains, asking them to bid on what amounted to a risk-free opportunity to manage the hotel. Conrad Hilton was the only bidder to respond in Spanish, making him a lock for the contract. “That may have been one of the first examples of management sensitivity to an owner,’ says Charles A. “Charlie” Bell ’49, a former executive vice president of Hilton International who helped lead Hilton’s interna- tional growth. In Puerto Rico, Hilton came up with a plan that did not put any of the company’s equity at risk. He pro- posed to the government that he would design and operate a hotel that the government would pay for through bonds. The government would lease the property to Hilton, with rent to be set at two-thirds of gross operating profits. In what was a novel approach, all Hilton committed was $300,000 for operating equipment and initial working capital. As such, the company created the prototype of what became known as the operating lease, a mechanism that started the global expansion of the company. These leases did not commit Hilton to pay a fixed return, but they were not risk-free. ea . i wend inal Along with its commitment to provide working capi- The Caribe Hilton in Puerto Rico, first overseas tal, Hilton guaranteed to cover any operating losses. ee The hotel in Puerto Rico was an immediate success and soon other emerging countries wanted a Hilton hotel to attract tourists and businesspeople. Hiltons went up in Turkey, Mexico, and Cuba, all under the lease formula established in Puerto Rico. Those prop- erties flourished until trouble surfaced in Cuba. After Castro came to power far fewer people visited Cuba, and occupancy rates plunged to as low as 14 percent. Hilton eventually persuaded the Cuban government to pick up the losses, but the government also took over the hotel and Hilton’s involvement in Cuba ended. Hilton learned a valuable lesson in Cuba—political developments beyond its control could cause the EXPANDING AROUND THE GLOBE 43 AROUND THE WORLD WITH CURT STRAND S president of Hilton Interna- tional from 1968 to 1986, Curt R. Strand ’43 marked many new trails in the hotel industry. As Strand discov- ered, while pioneers have the best opportunities, they also face the greatest obstacles. “Pioneering is hard work that is not always financially rewarding,” he wrote in an article for Cornell Hotel and Restaurant Administration Quarterly in 1996. “Risk is high, and the learning curve is Steep. But is it fun? Yes, especially in retrospect.” Soon after Hilton International was formed in 1947, hotel demand raced ahead. Most areas, however, lacked the transportation infrastructure and services needed to support rapid development. Berlin, for example, was little more than a barren field of cleared rubble. Hong Kong had just three hotels, and had to get by with water service that operated for two hours every other day. In Cairo, a high-rise hotel was built without a crane, thanks to six thousand women who walked up twelve stories carrying cement mix on their heads. Three of Strand’s most memorable projects took place in Madrid, Hong Kong, and Istanbul. The Madrid property was Hilton International’s first hotel in Europe. It opened in 1953 on the Castellana, Madrid’s version of New York’s Park Avenue, just as Madrid was emerging from a three-year civil war. Conditions were less than ideal. In front of the hotel, donkey carts competed with 1928 Renault taxi cabs and ancient street cars. No foreign currency was available to import anything, and the origin of much of the equip- ment was in question. For example, the labels on the ele- vators suggested they had been made in Austria, but the HosPITALITY GOES GLOBAL 44 Hilton team soon realized that the lifts had been pieced together in a local machine shop. Toilet paper had to be smuggled in across the straits of Gibraltar by Conrad Hilton’s brother Carl, who served as project manager. Carl Hilton had been a captain in the Navy, so it was assumed he could handle a rowboat at night. It took Hilton International at least twenty years to get its part of the profits—and its expenses—out of the country. As Strand put it, the company learned some valuable lessons, not the least of which was that a twenty-year lease with- Out renewal options can be too short. In 1963 Strand traveled to Hong Kong to meet with a group of five brothers and sisters about managing a hotel they had recently bought. But Strand discovered that they really wanted to run the hotel as a family enterprise under the Hilton name, an arrangement of no interest to Hilton. As Strand walked toward the ferry that would begin his trip home, he saw a tall building under construction with a large Texas flag flying over its roof. Visiting the deserted site, Strand and his team realized it was a large hotel over- looking the harbor, marked by a construction sign bearing the name Leo Corrigan, Dallas, Texas. Back in the United States, Strand contacted the general manager of the Dallas Hilton and asked him to arrange a meeting with Corrigan. Strand learned that the hotel was due to open in three months, but the manager Corrigan had hired had turned out to be of questionable character. Strand sent Corrigan a management lease, and a week later both parties agreed to the lease. The hotel made an operating profit with 21 percent occupancy the first year, thanks largely to Hong Kong’s low labor costs. Hilton International’s development costs for the hotel: $2.47, the cost of Strand’s phone call from New York to Dallas. In Istanbul the Hilton property had its origins in, of all things, a football (soccer) match. After host Turkey had upset Sweden in an international match, the Swedes claimed they were beaten not by the Turks, but by the cockroaches that kept them awake for two nights in their Istanbul hotel. When the Turks read these stories, they were outraged. Turkey’s minister of finance also happened to head the country’s football association, and under his lead the gov- ernment decided to use its pension fund to build a hotel. Hilton was awarded the right to construct the hotel on the edge of a large downtown park overlooking the Bosphorus River. Strand and his associates insisted that the hotel have a strong Turkish flavor in its interior spaces. The Hilton team restarted long-dormant Turkish crafts to create car- pets, tiles, fabrics, and artwork. This became a template for future projects, especially in places rich in history, tradition, and culture. When it opened in 1955, the Istanbul Hilton was the first modern hotel built in Europe, and the prototype for the post-war boom in hotel construction. At the grand opening, a thousand troops paraded in historic costumes and raced on beautiful horses in front of ancient palaces and mosques. The event brought Turkey to the attention of the West, created a tourist industry from scratch, and made the Hilton name synonymous with fine hotels. Note: This sidebar is adapted from “Lessons of a Lifetime, The Development of Hilton International,” by Curt R. Strand, Cornell Hotel and Restaurant Administration Quarterly, June 1996. company to sustain sizable losses. Hilton did not think his company should bear such risk. Under the lead of executive Curt R. Strand ’43, who would later run Hilton International from 1968 to 1986, Hilton created a strategy that involved two different contractual arrangements at once. Hilton would use operating leases in established cities, while in developing loca- tions it would use a relatively new and risk-free arrangement—now known as the management contract—under which the owners bore the full risk of operating losses. In Europe Hilton found it difficult to convince lessors that their rent would depend on Hilton’s ability to operate profitably. So the firm set out to establish hotels on the outer perimeter of locations in Europe and elsewhere where demand for their expertise was particularly strong, such as Madrid, Berlin, Istanbul, Cairo, and Montreal. As a result, ten years after its start in Puerto Rico, Hilton International had opened eight hotels and, more importantly, built a track record of success. In the single year of 1963, just a decade after open- ing its first European hotel (in Madrid), Hilton opened eight more major hotels in eight countries, including Japan (Tokyo) and Italy (Rome). But as well as Hilton International was doing, company executives felt that it was being undervalued by the investor com- munity. Although Wall Street understood real estate, it struggled to place a value on Hilton’s long-term man- agement leases and operating agreements. Indeed, Conrad Hilton was convinced that the company’s stock price did not reflect these future low-risk earn- ings. The Hilton family, which owned or controlled more than 25 percent of the company’s stock, deter- mined that the value of two independent companies would exceed the value of the combined companies. Thus, in 1964 Hilton Corporation spun off Hilton International into a freestanding enterprise. Many years later, under different circumstances, Marriott followed suit when it split into a management firm and a real estate and contract-feeding firm. Both moves have proven to be highly favorable to stock- holders. In 2005 Hilton International returned to its origins when it was purchased by Hilton Corporation. Hilton’s success in international markets in the 1960s and 1970s also attracted competitors. By the end of the 1970s negotiations had become much more competitive. Using its leverage as the best-known international hotel company, Hilton fought to gain favorable terms in its management agreements. Terms extended up to fifty years; management fees were 3 to 5 percent of revenue, plus 10 percent of gross operating profits. During this period hotel companies began to merge with airline companies in a bid to accelerate interna- tional expansion for both entities. The first of about ExPANDING AROUND THE GLOBE 45 HosPITALITY GOES GLOBAL 46 forty such alliances came in the late 1940s when Pan American World Airways created InterContinental Hotels Corporation. InterContinental opened its first overseas property in Belem, Brazil, in 1949 and began to build properties across Latin America and in Europe. In 1967 Trans World Airlines purchased Hilton International Corporation and American Airlines bought and developed its own hotels under the name Americana Hotels. Swissair owned Swiss6tels; Singapore Airlines purchased several hotel properties; Japan Airlines’s CEO (the late) Kenji Osano initially owned Sheraton hotels in Hawaii (and then in California) and later linked with Nikko Hotels; Aer Lingus bought Dunfey’s; and All Nippon Air devel- oped ANA Hotels. In what may have been the boldest attempt at a linked-enterprises strategy, Richard J. “Dick” Ferris 62 built Allegis Corporation, which owned United Airlines, Westin Hotels, and Hertz Rental Car. All of those original alliances have since been abandoned, as the advantages of owning both hotels and an airline proved to be more imagined than real. On the surface, such partnerships would appear to make sense, given that most trips involve both air travel and hotel accommodations. In reality, customers’ airline and hotel preferences overlapped only slightly; economy fliers on TWA, for example, mostly avoided Hilton International’s five-star hotels. More so, the airline’s destinations and the hotel locations were only partly complementary. In 2006 only two airline—hotel company partnerships remained: Japan Airlines and JAL World Hotels; and ANA (All Nippon Airways Company, Ltd.) and ANA Hotels and Resorts Company, Ltd. Even though TWA reaped few operating advantages from owning Hilton International, it still benefited from Hilton’s success. On many occasions Hilton’s earnings more than covered for TWA’s losses. TWA owned Hilton International for eighteen years, until 1985, when corporate raiders began the trend toward breaking up conglomerates. Many of the hotel industry’s big names—Sheraton, Holiday Inn, and Marriott among them—vigorously pursued overseas growth without airline partners. They took the systems that they had developed in the United States and rolled them out in Europe. This influx of American hotels initially caused some angst among Europeans. “At first the Europeans were horrified,” says retired lecturer Malcolm Noden. “While the Swiss were all about service, some American chains wanted to see how quickly they could get guests past the desk and into their rooms.” Respecting Other Cultures | T DID NOT TAKE LONG, however, for American hotel companies to appreciate the distinctive cultures in overseas markets. Taking their lead from Hilton, com- panies such as Marriott and InterContinental pursued master franchise agreements with local partners who knew the prevailing customs and business practices. “American hotel companies were highly respectful of other cultures,” says Bjorn R.L. Hanson ’73, senior partner with PricewaterhouseCoopers. “The global expansion of the hotel industry is truly one of the great success stories of the modern business era.” From 1947 onward, Hilton and others created a hotel industry in America and concurrently spread it abroad. What had been a craft practiced historically by European hotel-family dynasties had become, in the United States, first a business and then an industry that exported its know-how worldwide. Worthy Competition. While U.S.-based and -owned brands led the trend toward globalization from the 1950s to the 1970s, several brands based outside the United States also built multinational empires. They include the Mandarin Oriental and Trusthouse Forte, based in the United Kingdom; the Accor Hotel Group, Concorde Hotels, and Club Méditerranée, of France; Okura Hotels and Prince Hotels, of Japan; Rezidor SAS, of Belgium; Kempinski Hotels (owned by Dusit Thani Group) and Amari Hotels, of Thailand; Shangri-La Hotels and the Peninsula Hotel Group, of China; and Taj and Oberoi Hotels in India, among many others. Developing and third-world countries have helped to fuel this expansion. Eager to attract tourists and industry, government officials provided incentives to hotel developers. An example is Malaysia, which— under the Second Malaysia Plan—offered a five-year tax holiday for selected industries, including compa- nies that opened hotels in designated areas by the end of 1973. The Rasa Sayang Hotel, in Penang, was one such beneficiary, according to Michael W.N. Chiu °66, executive director and general manager who built and operated the hotel. Many governments built or expanded airports to accommodate large jets and fur- ther boost tourism. Thailand, Malaysia, Indonesia, Vietnam, and Burma (Myanmar) are among the Asian countries that overhauled facilities and added new air- lines to draw more international visitors. Enhanced air travel encouraged entrepreneurs to build resorts in exotic places. Developers worked with government tourism bureaus and tour operators to open new destinations in places like Indonesia, the Maldives, Australia, Mexico, Tahiti, and Fiji. In Thailand, Piyaoui Chanut turned Dusit Hotels and Resorts into one of the world’s most renowned resort EXPANDING AROUND THE GLOBE 47 | 20 p00 See Ce A NY ALS nr eae wild AAS " AY YY \ Credit cards, like this early Diners’ Club card, were introduced in the 1950s to allow travelers to charge their meals and lodging worldwide. HospPITALITY GOES GLOBAL 48 , woe companies. These resorts allowed the middle class to visit locales that had been the exclusive province of the wealthy. In the 1960s many new resorts were built along the Mediterranean Sea. From Spain to Greece, city and beach hotels opened to serve summer guests wanting to relax in sun-bathed climates. Portugal and the Scandinavian countries soon followed. The advent of credit cards in the 1950s helped to further advance the global hospitality market. The trend began when individual hotels launched their own credit cards. Later, the American Hotel Association (AHA) developed the Universal Travel Card, a card designed to be honored at more than one , hotel. The card caught on, and in 1958 the AHA 4 sold the license for its Universal Travel Card to | q American Express. ; Diners’ Club founder Frank McNamara pioneered the use of credit in the restaurant EEE Ze LZZZ industry. In 1950 the first Diners’ Club credit - 3 _ cards were given out to two hundred people— mostly friends of McNamara—and accepted at fourteen restaurants in New York City. Those restau- rants were charged 7 percent for each transaction, while card subscribers were charged a three-dollar annual fee. American Express and Diners’ Club led the way in issuing travel credit cards that became popular with both business and leisure travelers. The airlines followed suit, adopting a “fly now, pay later” plan that attracted many travelers. Another driver of the industry has been the increas- ing influx of global events and attractions, particularly in Asia. Gaming has become so popular in Macau that the island is now known as the Las Vegas of the East. Mainland China and Singapore have likewise begun to grant gaming licenses as large American casino opera- tors compete for a foothold. A Disneyland resort complex opened in Hong Kong in 2005 and another is planned near Shanghai. For auto-racing fans, in 1987 the first Japan Grand Prix Formula One World Championship was held at Honda’s historic Suzuka Circuit; in 1999 Malaysia opened its spectacular Sepang Formula One track; and in 2004 a world-class Formula One circuit and grand- stand opened in Shanghai—built at a cost exceeding USg$300 million and touted as the best in the world. All this activity boosted in-country travel and attracted visitors from overseas. Looking ahead, many observers see enormous potential for growth in China’s hotel market. Much has changed since China first opened its borders to foreign tourists in the late 1970s. The country has experienced strong and steady economic growth, increasing the buying power of its citizens. Just as the United States did more than a half-century ago, China is making more autos and building more highways. The Chinese government encourages people to take holidays and travel through the coun- try and region. Indeed, busloads of tourists from mainland China are now a common sight in neigh- boring Hong Kong. So much in China has changed that Beijing was selected to host the 2008 summer Olympic Games. Another important global trend began in the 1970s with the launch of hotels created to serve business- people. Much of this movement was rooted in the Middle East, where oil-rich countries attracted busi- ness travelers from around the globe. Developers built properties to support business guests in places like Dubai, Abu Dhabi, Riyadh, and Jeddah. J ‘He Hore SCHOOL ATTRACTED international stu- | dents since its inception—laying the basis for a global alumni base, in keeping with the industry’s global focus. The program’s first international student was H. Alexander MacLennan ’26, from Great Britain, followed two years later by Kakumaro Kemmotsu ’28, from Japan. Since the Hotel program’s founding, over- seas students have accounted for, on average, 10 to 15 percent of its student body. In contrast, until the 1980s, students from overseas accounted for only 2 to 3 percent of Cornell University’s overall enrollment. In the fall of 2005 the Hotel School matriculated 175 freshmen and 49 transfers (131 women, or 58 percent), who came from a total of 16 countries. There were 24 international students, or 11 percent. Reflecting its commitment to hospitality, the School has worked to make every student feel welcome. A 1961 article in the Hotel School’s student newspaper, The Cornell Innkeeper, advised Hotel students “not to feel sorry for your neighbor and fellow student from far across the seven oceans. Instead, try to understand his problems. Give him a hand without being asked Professor Vance Christian ’61, a passionate educator, is remembered by overseas students for welcoming them to his home for holiday dinners. EXPANDING AROUND THE GLOBE 49 The 2006 CHS European regional meeting, in Zurich, drew a hundred alumni from eighteen countries, many of whom enjoyed a boat ride on the Vierwalstatter See among the Alps. HosPITALITY GOES GLOBAL 50 for it.... Making the newly arrived and perhaps bewildered foreign student feel part of all phases of our school should be an easy task.” The late Nami Thiyagaratnam, MPS ’85, remem- bered the warmth bestowed by the late Professor Vance A. Christian 61, MS ’65, the first African- American member of the Hotel School faculty. “Who else would have thought of my family and driven to Hasbrouck Apartments, searched out my number, and collected my wife, two little children, and myself for our first American Thanksgiving dinner?” Nami asked. “When we reached his charming house, I found that Vance had collected twelve others for the same dinner who would otherwise have also been alone during this holiday.” Alumni Bonds. Just as students come from points all over, as graduates they fan back out across the globe. In 1953, for example, Ichiro Inumaru graduated and returned to Tokyo to run his family’s business, the Imperial Hotel. Soon after he joined with Kakumaro Kemmotsu ’28 and Frank A. Ready, Jr. °35 to form the first overseas chapter of the School’s alumni association, now the Cornell Hotel Society (CHS). In 1959 a Caribbean chapter was formed to serve alumni in Central America, and two years later Ready founded the first European chapter. By 1966 the alumni society reported that “the sun never sets on a Cornell Hotelman.” Today the Cornell Hotel Society has sixty chapters in ten regions representing more than thirty countries. With more than 9,500 alumni members and hundreds of affiliated members, CHS is arguably among the most active and influential alumni associa- tions in the world. Many graduates have worked tirelessly to build strong alumni networks and promote the School. In Europe, for example, Rudolf W. “Rudy” Miinster ’62, former general manager of the Kempinski Hotel in Berlin, launched a fundraising campaign to help European hoteliers further their professional educa- tion. Under Miinster’s lead, from 1963 to 1988 the European chapter of CHS raised $360,000 that enabled 270 students to travel to Ithaca to attend the School’s summertime Professional Development Program. Miinster would go on to become the second non-American president of the Cornell Hotel Society. (The first non-indigenous president was Michael W.N. Chiu ’66, a Chinese Asian.) Deiv Salutski 71 assumed this fundraising responsibil- ity from Minster in 1988 and has success- fully drawn contribu- tions from both corporate benefactors and School alumni. Leif R. Evensen 66; Ralph M. Starke ’52, the for- mer general manager of the Hilton Rotterdam; and Rudolphe W. “Ruedi” Schelbert ’55, a former exec- utive at Swiss Hotels, are among many others who have worked to build a thriving alumni network across Europe. In the same way, real-estate and hotel developer Chiu, hotel executive Liv Gussing ’91, and Yuji A. Yamaguchi 61 (former CEO of Fujiya Hotels Ltd.) have helped the School build a strong presence in Asia through the for- mation of CHS’s Asia—Pacific Region, which held its first regional meeting in Hong Kong in 1995. Executive Education. Another way that the School diversifies its global reach is through its executive- education programs. Much of the groundwork was laid in 1961 when Dean Robert Beck ’42 and Assistant Dean Gerald W. Lattin, PhD ’49, brought fresh think- ing to this discipline. In 1962, 250 students from sixteen countries came to Ithaca to take summer- session courses. By 1968 nearly half of the 350 summer students came from overseas, and the following year most students were from overseas. International stu- dents who attend these seminars are now recognized Fifty-two School alumni from eleven countries attend the Asia-Pacific regional meeting of the Cornell Hotel Society in Bangkok, Thailand, in 2006. EXPANDING AROUND THE GLOBE 51 by the Cornell Hotel Society as a special category of alumni. The School’s executive-education programs, held primarily in the United States and Europe, continue to draw industry leaders from points across the globe. Each year more than a thousand professionals learn from the School’s faculty and apply that knowledge from Bangkok to Brussels. Over the years, the School has supplemented its core executive-education Above, Professor Richard Moore coaches an executive in the use of a specialized computer program during the School’s summer Professional Development Program. programs by developing programs designed for corpo- rate clients. In 2005 alone the School delivered seven- Right, Nanyang Technological University in teen custom-designed programs for clients in fourteen Singapore, home of a joint hospitality master’s- degree program with the Cornell Hotel School begun in 2006. countries. Worldwide Academic Partners. In another move to expand its global imprint the School has forged alliances with academic institutions around the world. In 1971 Dean Beck agreed to establish a two-year com- munity college in Puerto Rico. Beck’s boldest move may have come in 1980, when Cornell entered an agreement with Paris-based IMHI, the Institut de Management Hotelier International. When the agree- ment was announced, Beck recalls a cool reception from French journalists. “They were saying, ‘Why does France need Americans to come over and teach them about hotels?” Beck HosPITALITY GOES GLOBAL 52 remembers. “One man got up and said, “This means the burgerization of France!’” The alliance with IMHI, which lasted for twenty- four years, was discontinued in 2004. Hotel School leaders felt the program was being perceived as a joint degree, even though Cornell had little input into the curriculum and no financial interest in the program. The School will evaluate other European programs with the goal being a mutually beneficial partnership. More-recent alliances have had less staying power. One formed in Australia in the 1990s with the Australia International Hotel School unraveled in the early 2000s. “A faculty committee’s comprehensive review of the School’s international strategy led to the decision that that particular alliance did not fully meet the School’s strategic objectives for the future,” accord- ing to Dean David A. Butler, who served as head of the Hotel School from 2000 to 2005. In Australia as well as with some of the Hotel School’s other joint programs, Cornell had limited input. In some cases the Cornell name was on the degree, but the degree was not sanc- tioned by Cornell. “We had little or no control over the quality of these programs,’ Butler recalls. “For these programs to work in the future, we decided that there needed to be an Ithaca experience to deliver programming that had meaningful contribution from the Hotel School.” Even before Butler took the reins as dean, the School had been pursuing a partner to build a presence in Asia. After fourteen years of on-and-off negotiations, in the fall of 2004 Cornell and Nanyang Technological University announced the creation of a joint Master of Management in Hospitality program, to be housed at Nanyang’s campus in Singapore. The Cornell—Nanyang Institute of Hospitality Management (CNI) offered a graduate program beginning in 2006. The alliance created the first joint-degree program for both institutions and the first graduate hospitality program in Asia. Cornell Hotel School Professor Judy Siguaw, found- ing dean of CNI, says, “CNI is an exciting opportunity to leverage the brand names of two prestigious institu- tions, while creating a renowned hospitality program for students seeking expertise in Asian markets.” With the CNI agreement the School built on the good and bad experiences that came from developing and negotiating earlier agreements. Students spend half their time in Singapore and half in Ithaca. The dean of CNI will always be appointed by the dean of the Cornell Hotel School, and members of a Joint Advisory Board reflect equal representation from both schools. Worldwide Research Partners. At Cornell, the Center for Hospitality Research (CHR) further extends the Hotel School’s global reach (see page 199). CHR’s sup- porters include some of the industry’s leading multi- national companies and associations, including (in alphabetical order): American International Group, ARAMARK, Cendant, Expedia, Four Seasons Hotels and Resorts, HVS International, the International Hotel and Restaurant Association, JohnsonDiversey, Kohinoor Group, KPMG International, Marriott, Marsh, Nestlé, PricewaterhouseCoopers, Smith Travel Research, Southern Wines and Spirits, SynXis, Taj Dean Robert Beck ’42 teaches a course at the Institut de Management Hotelier International near Paris. IMHI was an educational partner with the Hotel School from 1980 until 2004. EXPANDING AROUND THE GLOBE 53 HosPITALITY GOES GLOBAL 54 THE ROMAN PRINCE OF HOSPITALITY orn deaf, Roberto E. Wirth ’75 has learned to compensate with his other senses. Proving that a strong will can Surmount any hurdle, Wirth has built a distinguished career that earned him the 2005 Independent Hotelier of the World Award from Hotels magazine. “Roberto has developed his other senses to where he has a uniquely powerful understanding of people,” says Giuseppe G.B. Pezzotti ’84, MPS ’96, senior lecturer at the Hotel School. “It is like he can see behind his back.” Wirth owns and runs one of the world’s most exquisite hotels—the Hotel Hassler, in Rome. Perched atop one of the city’s Seven Hills, the five-star hotel provides an unmatched view of the Spanish Steps, the House of Parliament, and the Vatican. For many decades the 100-room Hassler has served as the hotel of choice for world leaders and celebrities, including U.S. presidents Eisenhower, Kennedy, Nixon, Ford, and Reagan; British prime ministers Thatcher and Major; Princess Diana; Bill Gates; Elizabeth Taylor; and Oprah Winfrey. The Wirth family’s legacy in the hotel business dates back five generations, starting in Switzerland in the 1870s (and always in top-quality hotels). The Wirths have owned the Hassler since 1921 and Roberto has run the property since 1982. In his early years Wirth was not aware of his lack of hearing. From age 5 through 12 he attended a school for the deaf in Milan. “I did not realize that | was deaf because all of my class- mates were deaf,” he recalls. “It was easy to communicate with everyone.” When Wirth moved to a conventional school, he encoun- tered difficulty in his interaction with hearing students. But that only sharpened his resolve. “I realized then that | would face obstacles,” Wirth says. “That made me a fighter. | decided early on to never give up in going after my goals.” Even as a teenager Wirth knew that he wanted to run a hotel. At the time his father, Oscar, ran the Hassler, and Wirth asked his father to let him work in the hotel. But his father was cool on the idea, telling Roberto that to be a hotelier, he would need to use the telephone to interact with guests and employees. Unsure of his future but still undaunted, Wirth started with summer jobs in various hotels, toiling as a carpenter, electri- cian, dishwasher, and cook. Later he worked full time in engineering, finance, and general management, growing in each job more committed to his goal. Eager to complement his work experience with classroom learning, Wirth enrolled in a hotel school in northern Italy. With no interpreter at the school, Wirth learned how to read lips. Still, he found the barriers to communication significant and decided to return to hotel work. When Wirth’s father died, in 1968, his mother took over the hotel. She gave Roberto a choice: either continue his education or start working for a living. Deciding to continue his educa- tion, Wirth left to attend Gallaudet University, a school for the deaf in Washington, D.C. He then spent one year at the National Technical Institute for the Deaf at New York’s Rochester Institute of Technology before finishing his under- graduate studies at the Cornell Hotel School. Wirth went on to work for several large chain hotels in Boston, San Francisco, and Honolulu. In Honolulu he became more involved in the deaf community, running the Silent Aloha magazine for the deaf and serving on the mayor’s committee on people with handicaps. Wirth says his years in the United States changed him. “Before coming to the United States | was narrow-minded,” he says. “But | found that America has more freedom and oppor- tunity than anywhere in the world. It opened my mind and gave me the confidence | needed to overcome any challenge.” In December 1977 Wirth returned to Italy to become assis- tant manager at the Hassler. His mother was uncertain whether he could manage the hotel, so she put him to the test. Four years later Wirth was named general manager. The Hassler already had the best location in Rome and the accommoda- tions and cuisine to match. Now it was about to reflect the style of a man who had learned to put personal service above all else. “In Europe, guests prefer the individual hotels because they experience the personal touch of the host,” Wirth observes. “1 make it a point to greet and see off our guests. We want to know what they liked, but also if there was something that could have enhanced their stay. I’ve always been very sensitive to the happiness of others.” Soon the media in Rome were calling Wirth the youngest and hottest manager guiding Italy’s luxury hotels. But Wirth was not about to rest on his record. When a palazzo at the foot of the Spanish Steps went up for sale in 1999, Wirth saw the chance to realize his dream of opening a fine-wine academy. He bought the property and, in 2002, the International Wine Academy of Roma opened its doors. The academy appeals to wine enthusiasts and experts alike, and even provides classes tailored for the hearing-impaired. “The hearing-impaired are better equipped than anyone to taste wine,” Wirth says. “Their senses are more intense.” Wirth’s accommodation of the deaf at the wine academy is just a small part of his commitment to those who do not hear. In 1994 he set up a fund to help educators of deaf pre-school children in Italy to travel to Gallaudet University to refine their skills. Since then more than a hundred teachers have benefited from this training. Wirth also serves on the board of directors at Gallaudet and returns there twice a year to lecture and spend time with educators and students. A tall, handsome man whose personal countenance matches the elegance of his hotel, Wirth puts a premium on physical fitness. He stays in shape by jogging through Rome’s historic Villa Borghese gardens and working out at the Roma Spa. At his home in the Alps, he enjoys skiing and taking long hikes in the summer. Among his many athletic accomplishments, Wirth completed the New York City marathon in 1998. His work schedule does not permit time for many other pursuits, but Wirth says that one day he hopes to play more golf. For now, however, Wirth remains focused on making the Hassler the best hotel it can be. He does so in part by empha- sizing the need to communicate. “Today’s technology makes communication for everyone so much easier, and especially for the hearing impaired,” he remarks. “E-mail is a very important tool that | use a lot in everyday life and work.” Still, it is the personal exchanges that Wirth enjoys most. “| get to interact with a lot of famous people and learn from them,” Wirth says. “It helps balance out the hard work | have put into running the hotel.” EXPANDING AROUND THE GLOBE 55 Professor Chekitan Dev travels 100,000 miles a year around the world preparing case studies for his students. HosPITALITY GOES GLOBAL 56 Hotels and Resorts, the Thayer Group of Companies, Wimberly Allison Tong and Goo, and Wyndham International. Faculty members work with CHR’s industry advi- sory board to identify challenges, conduct research, and publish the results to help improve operating practices around the world. More than 45,000 scholars and executives have reg- istered on the center’s web site, where they have access to original research reports. The web site is supple- mented by an active publicity campaign that promotes CHR’s research through major media outlets world- wide. In 2005 that publicity program generated more than 63 million media impressions. Moreover, the Cornell Hotel and Restaurant Administration Quarterly, the School’s world-renowned academic journal, first published in 1960 and now under the umbrella of CHR, has 4,000 global subscribers. (For more about CHR and Cornell Quarterly, see pages 143-147.) The School is also working to incorporate more global content in its curriculum. Professor Chekitan S. Dev is one of several faculty members who bring the world to the Ithaca campus. Dev travels 100,000 miles a year and has first-hand experience in thirty coun- tries. He turns those experiences into case studies that he uses in the classroom. For example, students in his strategic-marketing course study cases from Russia, France, and Hong Kong. “I visit as many places as I can where interesting things are happening in hospitality,” Dev says. “There is no better way to learn and understand than to work with executives as they take on challenges in the field. Reaching outside the United States provides context and makes the class that much richer.” Dev also applies a global approach to his research. He has built a database of hotel managers in forty-six different countries, encompassing all classes and sizes of hotels in both developed and developing countries. This gives Dev a rich database to draw from as he builds global content into his coursework. harles F. “Chuck” Feeney ’56 spent the early years of his life amassing a fortune. He has spent the last thirty years giving most of it away. Feeney is from a working-class family in Elizabeth, New Jersey, a small port town a few miles from lower Manhattan. At age 17 he volunteered for post-war service in occupied Japan and Korea. Upon his return Feeney used the scholarship he earned under the G.I. Bill to attend the Cornell Hotel School. The scholarship checks barely cov- ered tuition, so he made and sold sandwiches to class- mates. Even then Feeney knew how to make a buck. “Friends would say | didn’t need to look for a job after college because | was making too much money making Sandwiches,” he says. Feeney remembers a paper he wrote while at Cornell for a course called Money, Currency, and Banking. He recalls, “I got my paper back with a note from the professor stat- ing: ‘You have a flair for writing but no knowledge of the subject matter. Try journalism.” After graduation Feeney finished his remaining G.I. Bill entitlement by studying political science at the University of Grenoble, in France. While there he started a summer camp for children of sailors in the U.S. Sixth Fleet on the French Riviera. It was then that he hit on the idea of sell- ing goods to members of the fleet. He and fellow Hotel School graduate Robert W. Miller ’55 formed Tourists International Duty Free Sales and began to sell liquor, perfume, tape recorders, and transistor radios. In 1962 Duty Free opened a shop at the Honolulu International Airport, and then another at the Kai Tak GIVING WHILE LIVING airport, in Hong Kong. The company took off when the Japanese government lifted travel restrictions on its citizens. In 1963 Feeney foresaw a demand for foreign consumer goods, primarily liquor and luxury products, and Duty Free opened shops in airports around the world. Feeney studied Japanese and made deals with tour opera- tors to funnel travel groups through Duty Free’s outlets. Duty Free Shops (DFS) became a retail empire. In 1988 Forbes magazine put Feeney on its list of the four hundred richest people, estimating his worth at $1.3 billion. What Forbes did not know was that in 1982 Feeney had secretly transferred his entire interest in Duty Free Shops to a number of foundations known together as The Atlantic Philanthropies, based in Bermuda. Only 50 years old at the time, Feeney knew that he did not want money to consume his life. Instead, he wanted to use it to help others. “Money is more worthwhile to the people in need when things are tough rather than when things are good,” Feeney says. “If | have twenty dollars in my pocket and | do something with it today, it’s already producing twenty dollars worth of good.” That approach is in stark contrast to the practice of many foundations, which pay out a small percentage of foundation assets each year. Atlantic Philanthropies has already given away more than $3 billion. Today Feeney devotes himself to running the global businesses of The General Atlantic Group Ltd., which includes hotels, spas, fitness clubs, retail shops, and real estate. He also helps Atlantic Philanthropies decide which causes to support, from a university in Ireland to a maternity hospital in Vietnam. Like every other board member, Feeney has only one vote. A humble man who avoids publicity, Feeney hid his identity as benefactor while Atlantic Philanthropies parceled out huge sums to worthwhile causes. Grants were paid by cashier’s check to hide the source, and recip- ients often had no idea about the source of the money. To further protect his privacy, Feeney even declined to take as personal tax deductions contributions to Atlantic Philanthropies. If Feeney could have had his way, no one would have ever known. But in 1997 Feeney called The New York Times to disclose that he was behind what was then one of the top-ten philanthropic organizations in the world. He decided to go public because a business deal, the sale of Duty Free Shops to a French conglomerate, was about to remove his cover. After the story broke Feeney returned to avoiding pub- licity. Then in 2002 he announced that The Atlantic Philanthropies would arrange to give away all its assets within fifteen years. It would focus on solving problems rather than on self-perpetuation, with the emphasis on helping disadvantaged and vulnerable people. Feeney hopes the acceptance of the principle of “giving while living” will be his legacy. “Everyone knows when they’re born but nobody knows when they will die,” he says. “If you want to give it away, think about giving it away while you are alive because you’ll get a lot more satisfaction than if you wait until you’re dead. It’s a lot more fun. Giving to help others has brought me great pleasure.” EXPANDING AROUND THE GLOBE 57 CHAPTER FROM FRANCHISES TO REITS New Ways to Own and Manage HROUGH 1950 MOST HOTEL COMPANIES and individual hoteliers owned and managed their own hotels. Then, the rise of operating leases, management contracts, and franchising changed the way hotel companies operated and made money. Hotel companies now make money in three ways. They may own and operate hotels, keeping the profits generated; they may franchise their brand name to hotel owners for franchise and royalty fees; and they may manage the day-to-day operations for hotel owners, again for a fee. Many hotel companies engage in all three practices as a way to maximize brand exposure, diversify revenue streams, and control risk. In this environment the owner of the hotel is Christopher W. Hart *72, PhD °82, often different from the owner of the brand, and the property often teaches a class on the sources of financing for hospitality enterprises. 1S operated by yet a third entity. a9 Howard Johnson’s restaurant in North Attleboro, Massachusetts, in 1936. “Hojo” was an early franchiser of its properties. HosPITALITY GOES GLOBAL 60 Franchising Changes the Industry. When Kemmons Wilson founded Holiday Inn in 1952, he put in place an operating model that would revolutionize the hotel industry. Adopting a formula pioneered by fast-food operators as early as the 1920s and fine-tuned by Dairy Queen in the 1940s, Wilson and then others licensed the right to use their brand names to hotel owners and conferred the benefits that come with that name. The franchisee typically pays the franchiser an application fee, recurring royalty fees (usually 4 to 6 percent of room revenues and 2 to 3 percent of food and bever- age revenues at full-service hotels), and fees for use of a central reservation system. In return, the franchisee gains use of the all-important brand name, national advertising programs, use of the reservation system, training programs, and discounts on furnishings and equipment. Wilson’s first franchised properties were a huge suc- cess, with occupancy rates averaging better than 80 percent. Franchisees lined up to purchase their own Holiday Inn, and within ten years the brand had become a national chain. Large hotel companies set out to duplicate Wilson’s success. Hilton, Sheraton, and others began to offer franchises in various markets, primarily down- town locations, suburbs, and airports. Those who purchased franchises for full-service hotels faced a new challenge—finding knowledgeable operators and marketing professionals to run them. REITs Make a Comeback. Franchising accelerated in the 1960s and 1970s, powered by a newly revived vehicle called the Real Estate Investment Trust. The first REITs, as these trusts are known, gave small investors a way to invest in large, income-producing properties such as office buildings, hotels, and malls. REITs typi- cally acquire hotels and pay fees to a management company to operate the property. After the manager pays all expenses, any remaining profits are distributed to the REIT’s shareholders. In 1960, responding to rising demand for real-estate financing, President Eisenhower reestablished favor- able tax considerations for REITs. Since then REITs have been allowed to deduct dividends paid to share- holders from their taxable corporate income, which often removes all tax burdens for the trust. Under this structure, REITs gave investors a tax-efficient way to invest in real estate and participate in the income stream without owning properties outright. Small investors poured billions of dollars into REITs, which in turn poured huge amounts of capital into new construction. During the less-regulated envi- ronment of the 1960s and 1970s, and in the rush to put that money to work, many lenders adopted dubious underwriting procedures. Lenders approved many projects in unattractive, questionable, and overbuilt markets, while other projects were built solely for the tax benefits or merely to enhance the image of a mixed-use real-estate development. At the same time, overzealous franchisers encouraged developers to build more and more properties. Citing Holiday Inn as an example, franchisers led investors, lenders, and developers to believe that joining a national franchise was a sure way to success. The seeds of a market collapse had been sown. In 1973 the energy crisis began and a severe reces- sion followed. Interest rates and inflation soared, caus- ing a steep decline in leisure and business travel. As lodging demand waned, marginal properties could not keep up, and lenders were compelled to foreclose. Excessive franchising during this period also tar- nished the image of major hotel chains. Some man- agement companies—Hilton, Radisson, and Sheraton among them—had franchised as many as 80 percent of their hotels. As they ceded control of their opera- tions, they also lost some control of their brand. Still, despite its shortcomings, franchising continues as a viable and popular practice in the hotel industry. Many companies, in fact, use franchising as their pri- mary growth vehicle. With history as their guide, today these companies exercise great care in how they select markets and franchisees. Enter the Management Contract. Once fully aware of the pitfalls of franchising, hotel companies and owners began to look for a growth strategy that would better serve their interests. This gave rise to professional hotel-management companies, which sought to capitalize on the separation of the operation and ownership of hotels. Management companies oversee the day-to- day operations for hotel owners, typically earn- ing fees in three ways. One fee is a percentage of a hotel’s revenue (usually 3 to 5 percent of rev- enues); other fees are for pre-opening develop- ment, purchasing, marketing, reservations, and advertising; and there are incentive fees paid out of hotel profits. TOP MANAGEMENT ee Tim Lely 9 Interstate Hotels Tishman Hotel Group Ocean Hospitalities, Inc John Q. Hammons Hotels Destination Hotels and Resorts Outrigger Enterprises American Property Management Corp As early as the 1940s U.S. hotel companies had used management contracts to expand into overseas markets. In Europe and Latin America, Hilton, InterContinental, and others managed hotels for local owners and governments, gain- ing a foothold in these markets—some of which were politically volatile—without having to assume the risks of ownership (see chapter 4). In the United States hotel companies saw manage- ment contracts as a way to grow and extend their brands without taking on large quantities of debt. Indeed, in the early 1970s excessive debt loads had put White Lodging Services Corp Lodgian, Inc Merritt Hospitality LLC Source: Hotel Business Research 2005 Top 10 management companies by gross annual revenue in 2004 (in millions of US dollars) $2,300.0 657.5 560.0 547.4 495.1 447.0 380.0 366.0 351.6 283.7 New Ways TO OWN AND MANAGE 61 HosPITALITY GOES GLOBAL 62 some fast-growing hotel companies on the brink of collapse, most notably Marriott. “For Marriott, the oil embargo, coming on top of rapid expansion, created a debt load that threatened the company with bankruptcy,” says Leland C. “Lee” Pillsbury ’69, who was part of the team that created Marriott’s first management contract with Prudential Insurance Group, in 1973. A second driver behind the move toward separate ownership and management is the different financial structures required to support each activity. Publicly held companies that own hotel assets generate large amounts of depreciation; the depreciation can be used to reduce net taxable income and earnings per share. Consequently, on Wall Street these companies could not raise investment capital at rates as low as other companies, including institutional investors such as insurance companies. However, when hotel companies and institutional investors collaborated, stockholders of both companies could be rewarded. Two factors encouraged the growth of these arrangements. First, institutional investors wanted to tap into the potential they saw for profitable growth in the industry. At the same time, these investors had sus- tained sizeable losses in previous downturns. Now they wanted to invest only in hotels that would be managed by experienced professionals. That was even more the case as hotel properties became larger and more complex. In the early 1960s the average hotel had fewer than eighty rooms. By the 1970s new hotels were built with hundreds and even thousands of rooms (recalling such immense properties as Chicago's Stevens Hotel, from the late 1920s, with more than 2,700 rooms). Under this scenario hotel developers had to contract with a management company to secure a loan. Taking their lead from Hilton International (see chapter 4), Hyatt and Marriott led the development of the management contract in the United States during the 1970s. Over the next decade life-insurance companies such as Prudential, Mass Mutual, and Connecticut General provided most of the capital driving hotel development. In fact, in 1980 Prudential was the largest owner of hotels in the United States. In the 1980s Marriott emerged as the industry leader in hotel management. Marriott follows a strat- egy in which it develops or acquires a hotel, installs its own management, sells the property to an investor group, and then negotiates a long-term contract to manage the property. Under Marriott’s lead, manage- ment contracts have become so prevalent that few hotels that operate as part of a national chain are actually owned by that chain. Many other leading hotel-management companies operate independent of any brand affiliation. Interstate Hotels & Resorts, formed in 1961 and once guided by Donald R. Trice ’61, is the nation’s largest independent hotel-management company, managing more than 280 hotels in Belgium, Canada, Portugal, Russia, and the United States. The company operates hotels for REITs, institutional real-estate owners, and privately held companies. William R. Geiler ’73 (’70, A&S), executive vice president of acquisitions, has led much of the firm’s expansion. After leaving Interstate, Trice joined with Richard M. Stormont ’58 to create Stormont Trice Management Corporation, manager of Marriott, Hyatt, Renaissance, Residence Inn, and Courtyard by Marriott properties. Another entrepreneur who has thrived in both hotel ownership and management is Robert A. Alter ’73. In 1976 Alter formed Mountain Resorts, Inc., a resort- condominium and hotel-management company that acquired, developed, and sold commercial and resi- dential properties in Colorado. In 1995 Alter founded Sunstone Hotel Investors, Inc., a public company that owned, developed, and managed hotels. In 1999 the company was taken private to form Sunstone Hotel Investors, LLC. In the ensuing five years Sunstone acquired nearly $800 million in hotels and sold over $380 million in hotels. In 2004 Sunstone Hotel Investors went public as a REIT. Most of Sunstone’s properties are managed by Interstate Hotels & Resorts, while others are managed by Marriott and Hyatt. Another leading hotel developer and management company is Sage Hospitality Resources. Formed in Denver in 1984, Sage has converted dozens of dis- tressed properties and historically significant buildings to hotels in large urban centers. Sage was co-founded by CEO Walter L. Isenberg ’80 and counts many other Hotel School graduates among its executives, includ- ing Zachary T. Neumeyer ’80, Kenneth J. Geist ’80 (MBA ’82), and Peter J. Karpinski ’99. These are just a few of the many Cornell Hotel School alumni who are leading the hotel ownership and management fields. Uneven Evolution UST AS FRANCHISING had endured an uneven J evolution, the same would hold true for manage- ment contracts. The first domestic management contracts guaranteed a base return as a percentage of gross revenue, and marketing and promotional expenses were charged as operating expenses of the hotel. Under this structure management companies could turn a profit even before realizing any incentive fee on gross operating profit. Many observers felt that this structure gave the manager more control—more power—than the owner. “Owners thought that management companies were charging excessive fees and costs at the expense of the investors,’ says Robert E. Kastner ’78 (MBA ’80), who New Ways TO Own AND MANAGE 63 HoOsPITALITY GOES GLOBAL 64 PILLSBURY KNOWS HOTELS ince his first day in the hotel business, Leland “Lee” C. Pillsbury ’69 has been going up. Fresh out of the Hotel School, Pillsbury joined Marriott Corporation in 1969, when it was a small but fast- growing business. He grew with the company, and by age 27 was running a 500-room hotel at the airport in Bloomington, Minnesota. Pillsbury later went to work at Marriott’s headquar- ters where, at age 36, he became the company’s youngest-ever executive vice president. Pillsbury led Marriott’s entry into the time-share business, launched Fairfield Inns, and oversaw the acquisition of Residence Inns. During his tenure, the number of Marriott hotels increased from 125 to over 700. Pillsbury attributes his fast rise to being surrounded by strong managers, many of whom were fellow Cornellians. “Marriott recruited many top people from Cornell,” he says. “They took it upon themselves to coach me and help me grow.” Pillsbury retired from Marriott in 1989 to start Grand Heritage Hotels, a manager of historic and unique independent hotels. Even as his teams improved performance at the proper- ties they managed, Pillsbury found that owners were never quite satisfied. In 1991 he sold the company so he could con- centrate on investing in hotels. He knew that many hotels at that time were held by reluctant owners. Banks, lenders, and individuals who had invested through master limited partner- ships were eager to shed their holdings, so much so that many hotels were selling for half of their original cost. Pillsbury sensed opportunity; he knew how to run hotels, while his men- tor, friend, and former Marriott colleague Frederick V. Malek sat on several boards and had access to institutions with money to invest. They went to Textron, Inc., in Providence, Rhode Island, where Malek was a friend of a board member and Pillsbury knew the head of mortgage lending. “We told them, ‘We can select underpriced assets, and we have the strategic skills to position those assets for recovery,” Pillsbury says. “We know which brands perform best in which markets. We know how to manage relationships with manage- ment companies so that both parties benefit.” Textron commit- ted a sizeable sum, and Pillsbury and Malek formed their first venture fund in 1991—Lodging Opportunities Limited Partnership, under the business name Thayer Lodging Group. Thayer began to implement its strategy of targeting invest- ments with significant opportunity to add value through reno- vating, repositioning, rebranding, changing management, and controlling expenses. Among the eight hotels acquired in the first fund was a Doubletree Guest Suites outside Washington, D.C., bought from Marine Midland Bank (later HSBC), which had foreclosed on it. Thayer converted it to a Residence Inn, and through 2003 had achieved a 44 percent gross internal rate of return (IRR). Thayer launched a second fund in early 1995, raising $100 million from investors in the first fund as well as some new investors, including the government of Singapore. One of the top performers among the eight hotels acquired for the fund was the Crowne Plaza Hotel in Rockville, Maryland, where Thayer installed new management, turned underused squash courts into an executive meeting center, and reflagged under Doubletree. That property has since generated above-market returns. By 1997, however, the market had become unattractive, with too many REITs willing to overpay for assets. Pillsbury knew Thayer would not be able to meet its commitment to deliver a 25 percent return to investors in its second fund. He flew to Singapore to meet with the head of investment for the Singapore government. Over lunch, Pillsbury explained that since he could no longer guarantee the desired return, Thayer would release the government from its commitment. “When we said we would give them their money back, they reacted with disbelief,” says Pillsbury, who took the same approach with all Fund II investors. Soon thereafter the John Hancock Insurance Company went public, deciding in the process to unload all its real estate. The company put its hotels on the market but few buyers stepped up; so Hancock officials went to Thayer. Under Pillsbury’s lead, the team sized up the Sheraton in Washington, D.C. With sup- port from its original investors and Sun America, Thayer bought the hotel for $220 million. That off-market purchase has been the rule rather than the exception for Thayer. In fact, twenty-three of the firm’s twenty-five investments have been produced this way; only two came through a competitive auc- tion process. Much of Thayer’s success—especially in Greater Washington, D.C—has come through repositioning properties to serve the extended-stay market. Thayer recast several properties to attract the large numbers of people that government agencies, research centers, and corporations in the capital region bring in for extended periods. Thayer launched its third fund in 1999, aiming at first to acquire more 300- to 500-room full-service hotels. But REITs had made that category too pricey, so the firm moved up to the $200-to-$300 million range. In March 2001 Thayer acquired the RIHGA Royal Hotel, in New York City, for nearly $200 million. Six months later came the tragedy of September 11 and its dev- astating impact on the Manhattan hotel market. Thayer decided not to invest in the hotel, and sold it at a substantial loss. Fortunately for Thayer, the other big asset in that fund would prove to be a winner: the 1,584-room Grande Lakes Resort, in Orlando, comprising a Marriott hotel, a Ritz-Carlton hotel, an 18-hole golf course, over 100,000 square feet of meet- ing space, and a huge spa. With Marriott as manager and developer, the property opened in July 2003 and has exceeded expectations ever since. Thayer launched a fourth fund in 2003 that raised $240 mil- lion, more than half of which came from its original investors. Today Thayer manages total assets exceeding $2 billion. Since the first fund was formed in 1991, returns to investors on real- ized and unrealized investments have averaged nearly 30 per- cent per year. “Pension funds and other capital sources were quite shy about making hotel investments until people like Lee showed them that highly profitable hotel investments could be made with manageable risk,” says John B. “Jack” Corgel, a professor at the Cornell Hotel School. “Lee is a brilliant businessman, but he is also an intellectual. He has the unique ability to discrimi- nate useful academic research from the less useful, and com- municate how that research can influence practice.” Pillsbury has been most generous in sharing his wisdom and resources at Cornell. He has been a guest lecturer many times at the School and served repeated terms on the University Council. Thayer Lodging is a corporate partner to the School’s Center for Hospitality Research, and Pillsbury is the founding sponsor of the Partnership Center at Cornell’s Samuel Johnson School (the graduate business school). In addition to Thayer Lodging Group, Pillsbury has founded Several other companies. TIG Global specializes in Internet mar- keting, enabling its client hotels to keep direct control of their customers’ data. EMC Venues arranges corporate meetings and events at hotels, conference centers, and resorts. A new Thayer venture is a web-based central reservations platform for China’s domestic hotel industry. Headed by Dian “Teddy” Zhang ’97, the company is a joint venture between Thayer and Jin Jiang Corporation of Shanghai, China’s largest hotel company. New Ways TO OwN AND MANAGE 65 Grande Lakes Resort in Florida, a 1,500-room enterprise that includes two hotels, a golf course, meeting space, and spa, is a holding of Leland Pillsbury’s Thayer Lodging Group (see pages 64-65). HosPITALITY GOES GLOBAL 66 teaches accounting and finance courses to hotel pro- fessionals around the world. “As management compa- nies took more fees off the top and middle, they became less motivated to increase the bottom line. Owners and operators should have common goals, and the achievement of those goals should benefit both parties.” As owners became increasingly disenchanted with financial results, the institutional money that had fueled the hotel sector began to dry up. This led hotel companies to seek other forms of investment capital. Under Marriott’s lead, hotel companies launched mas- ter limited partnerships, through which small pieces of hotel portfolios were sold to individual investors through retail brokerage firms. When reworked tax laws were enacted in 1986, that market collapsed as well. The Savings-and-Loan Fiasco. After the financial- services industry was deregulated, new rules cleared the way for the savings-and-loan industry to lend on hotels and other forms of commercial real estate. That decision may have looked sound in theory, but it only made a bad situation worse. Although savings and loans had experience in making loans on single-family homes, most had little record in lending against com- mercial properties. Eager to win their share of large construction and development loans, these banks doled out massive numbers of loans—many of which were over-leveraged by borrowers—with little concern for the quality of the real estate or the track record of the borrowers. Imprudent lending and excessive building became apparent when the U.S. economy entered a recession in 1990 and the Persian Gulf War in 1990-1991. National hotel occupancy rates slumped to near 60 percent and plunged much lower in several markets (e.g., Dallas, Houston, San Francisco, and Seattle). Not surprisingly, hotel room rates suffered a similar decline. A torrent of foreclosures and bankruptcies followed, throwing the bank industry’s savings-and- loan sector into freefall. The FDIC (Federal Deposit Insurance Corporation) and FSLIC (Federal Savings and Loan Insurance Corporation) became insolvent during the course of their failed efforts to bail out the large number of failing federally and state chartered savings-and-loan banks. As a result, the federal gov- ernment created the Resolution Trust Corporation (RTC) to handle the crisis. As it acquired insolvent banks, the RTC assumed hundreds of defaulted hotel loans and actual properties. It sold off these assets at below-market prices, with some properties changing hands for less than half their original cost. Prudent investors took advantage of this opportu- nity. REITs, in particular, reemerged as major players in the 1990s. According to the Lodging Research Network, the number of hotels owned by REITs increased from 39 in 1993 to 970 in 1998. By 2004 there were nearly two hundred publicly traded REITs oper- ating in the United States, with assets totaling over $500 billion. One of the REITS most active in hotels during this period was Felcor Lodging Trust, where Michael Angelo De Nicola ’80, chief investment offi- cer, has helped direct growth under CEO Thomas Corcoran. Pillsbury and Malek, former senior executives at Marriott, were among those who formed investment- fund practices that focused solely on hotel real-estate investments for institutional investors (see pages 64-65). Malek, Pillsbury, and a small number of others had the market nearly to themselves, as other New WaAys TO Own AND MANAGE 67 HOSPITALITY GOES GLOBAL 68 investors, still stinging from poor operating results, stayed away. The 1990s saw widespread consolidation among management companies. Management-fee structures were reduced, and a partnership model that had favored management companies was replaced with one that allowed the balance of power to swing back to owners. New Kinds of Properties a AKING ADVANTAGE OF THE Steady flow of institu- tional capital during the 1980s, innovative hote- liers introduced the concept of lodging properties targeted at specific types of guests. In 1984, for instance, Holiday Inn launched Embassy Suites Hotels—the first nationwide all-suite hotel chain—in Overland Park, Kansas. The all-suite hotel was devel- oped to serve travelers who do not require the large public facilities found in most full-service hotels. Space usually allotted for meeting rooms and restau- rants is instead used to create suites that offer separate living and sleeping rooms. In particular, all-suite hotels were developed as an attractive option for the increasing number of women business travelers— since a suite provides a separate room for meeting or entertaining that isn’t also a bedroom. The late 1980s saw the emergence of the extended- stay segment. Designed for guests who stay a mini- mum of five nights, extended-stay hotels offer guests a level of comfort and space associated with an upscale apartment. Most guestrooms have large living areas and full, eat-in kitchens. Some even have two separate sleeping areas and individual dining rooms. One entrepreneur driving this segment was Jack DeBoer, an apartment developer in Wichita, Kansas, who conceived the Residence Inn concept. To raise cash for growth, DeBoer sold half of his company to Holiday Inn. Later, DeBoer made a deal with Marriott to lend him the money to buy back Holiday Inn’s interest. DeBoer then sold the entire company to Marriott, including about thirty owned properties and sixty franchised properties. Marriott would go on to dominate the extended- stay market. By 2007 the company had opened 634 extended-stay hotels—511 Residence Inns and 123 TownePlace Suites. Holiday Inn emerged as another frontrunner in this segment with the launch of Homewood Suites in 1988. (The Holiday Inn brand was later sold to Bass PLC, which renamed the com- pany Promus Companies, Inc. Homewood Suites is now owned by Hilton.) A new class of budget hotels also took hold in the 1990s, emerging as a result of a trend known as “amenity creep.” Established budget brands competed SUS a arc J. Falcone ’95 needed fewer than five years to establish himself as one of the foremost equity research analysts on Wall Street. Falcone consistently outperforms the other analysts who cover the lodging, gaming, and leisure industries, and by age 33 he had earned enough awards to cover a wall in his office at Deutsche Bank in New York. A native of Poxton, Massachusetts, Falcone’s interest in hospitality took root during childhood summers spent in the beach town of Dennisport, on Cape Cod. At age 12 he began washing dishes in a restaurant and later worked as a sous chef. “! found that | loved interacting with people, and | knew early on that | wanted to pursue a career in hospi- tality,” he says. When he enrolled at Cornell in 1991, Falcone’s goal was to some day own a restaurant. Entering his junior year, however, he decided to shift his focus toward core sub- jects important to running any business. “! realized that no matter what job | might do, | would need a grounding in disciplines like finance, marketing, and real estate,” he remarks. Professor John B. “Jack” Corgel remembers Falcone and his friend Greg Loeber ’95 for the distinct impression they made in his course on real-estate finance. “There were these two guys, long and lean, who would always sit toward the back. They wore dirty Cornell base- ball caps with curved brims pulled over the brow, and they would slump in their seats and stretch their legs into the aisles,” Corgel recalls. “You might say they looked like they were casually absorbing it all. But when the tests rolled around, they would consistently earn top marks. Marc and Greg were classic finance junkies.” Upon graduation Falcone moved to Florida, where he helped convert a beachfront resort into a condominium property. He then moved to Atlanta to set up and manage a 1,500-seat beer garden that ran during the 1996 Olympics. After those two entrepreneurial ventures, Falcone wanted to work in a more structured environment. He got his chance when a Cornell alumnus, Robert A. LaFleur ’88, hired him to help the investment bank Bear Stearns build a presence on the lodging side of equity research. Learning under Jason Ader, widely regarded as the top lodging and gaming authority on Wall Street, Falcone quickly grasped the fundamentals of equity valuation. Before long he was man- aging his own portfolio of gaming and lodging companies, covering everything from motor-sports businesses to theme- park operators. Falcone worked for five years at Bear Stearns, where the firm’s gaming, lodg- ing, and leisure industries platform earned Institutional Investor magazine’s top ranking for four consecutive years. In 2001, when Deutsche Bank’s top ” gaming/lodging analyst left the firm, the bank hired Falcone for the job. At age 29, he had become a managing director and the top gaming/lodging analyst for one of the premier investment banks on Wall Street. Taking over Deutsche Bank’s portfolio of sixty gaming, lodging, leisure, and land-based entertainment firms, Falcone has proven to be a keen interpreter of the events and trends that shape performance. His work often stands out because of his drive to always know a little bit more than the next analyst. While Falcone says that his rela- tionships with CEOs, CFOs, and other executives are important, he makes a point to gather input from less obvious sources. Purchasing directors, food and beverage managers, and even cab drivers are among those Falcone has tapped to inform his opinions on the forty-five firms he covers himself. “As a research analyst, you pretty much run your own company within a large environment,” he observes. “I try to get beyond the company line and gather information from sources that others might not think of.” Falcone often taps into the wide circle of Hotel School colleagues working in the industries he covers. He calls that contact base crucial to building his record. “lam constantly coming across Cornell people, and that has been essential to my becoming a successful analyst,” he says. Falcone analyzes the data he collects and turns it into a prodigious stream of research that runs to fifty to a hundred pages in a single week. That research flows to some 2,500 clients, who rely on Falcone’s insights to help guide their investment decisions. Falcone is best known for his ability to make bold predictions that run counter to conventional thinking. For example, in the aftermath of the events of September 11, 2001, he was the first analyst to correctly predict a quick rebound in the lodging market. His ability to spot trends in the gaming business has been equally compelling. In fact, Falcone has been recognized in various rankings of top analysts, including those conducted by Institutional Investor, Bloomberg News, and The Wall Street Journal. Like so many School alumni, Falcone remains active in the Cornell community. Each fall he travels to Ithaca to address students in Senior Lecturer Reneta McCarthy’s casinos class, and in Fall 2005 he was a guest speaker in the Dean’s Distinguished Lecture Series. In Las Vegas, where he spends up to 150 days a year, Falcone often Speaks at Cornell Hotel Society events. He especially enjoys telling students about his work. “A lot of people still don’t know that jobs like mine exist,” he says. | New Ways TO OWN AND MANAGE 69 HOsPITALITY GOES GLOBAL 70 Interior of the Ritz-Carlton San Juan Casino Puerto Rico, an example of mixed uses in hospitality developments that grew in the 1980s. for an edge by offering more amenities such as free newspapers, breakfasts, beauty supplies, and even fitness centers. As room rates rose to offset the cost of those amenities, budget hotels inched up toward the mid-range price category. This led to a new class of budget hotels—called hard budget—that have small guest rooms and offer very few if any amenities. Examples include Knights Inn and Susse Chalet (whose products and rates are similar to those of long-established Motel 6 and Super 8). HE 1980S ALSO MARKED 4 rise in mixed-use developments. These developments combine residential and commercial components in one pro- ject, usually in urban centers. Mixed-use projects typically include several significant revenue-producing centers, such as retail, hotel, condominiums, and office space, each designed under a coherent plan and integrated by a common design. In Victoria, Hong Kong, the profitable downtown Hilton was razed and redeveloped into Cheung Kong Centre, an office complex. (With land at a premium, redeveloping a successful hotel property to office space in Hong Kong made economic sense, despite the huge fee—more than $120 million—for terminating the Hilton management contract.) In New York City, Kenneth A. Himmel ’70 led the Palladium at Columbus Centre devel- opment, a mix of condominiums, hotels, restaurants, retail space, and movie theaters adjacent to Columbus Circle. Himmel has developed several other notable mixed-use projects, including Chicago’s Water Tower Place, Boston’s Copley Place, and Seattle’s Pacific Place. In Las Vegas, the Bellagio, the Venetian, Wynn Las Vegas, and other casino—hotel properties continue to find new ways to combine gaming, convention centers, fine food, art gal- leries, high-end retail stores, recreation, and family entertainment into inte- grated projects. Some mixed-use projects represent remarkable environmental triumphs. In downtown Atlanta, The Atlantic Station project rises off a former brownfield that once housed the Atlanta Steel Mill. Co-developed by AIG Global Real Estate and Jacoby Development, Inc., this 138-acre site now holds more than 12 million square feet of retail, residential, office, and hotel facilities. Under the leadership of its president, Kevin P. Fitzpatrick ’76, AIG Global Real Estate also developed the largest mixed-use project undertaken in China. Condominium hotels were another product to reemerge, transformed, in the 1990s as owners sought to cash in on the enormous rise in property values in some urban markets. In one of the most publicized conversions, the Plaza Hotel in New York City went from an 800-room hotel to one with fewer than 150 traditional guestrooms plus around 180 condomini- ums and 150 condo-style guestrooms. «a Foxwoods casino in Connecticut, billed as the largest casino in the world, with 340,000 square feet of gaming space, 1,416 guest rooms in three hotels, and conference facilities. The Mashantucket Pequot Tribal Nation opened Foxwoods in 1986 as a high-stakes bingo hall which grew to include 7,000 slot machines and 400 gaming tables. New Ways TO Own AND MANAGE 7s HosPITALITY GOES GLOBAL /2 Niche Segmentation A NOTHER DRIVER OF GROWTH in the 1980s came in the form of a new strategy called segmentation. When Holiday Inn, Hilton, and other hotel chains were founded, they developed a standardized product that was essentially marketed to a single class of customer. Holiday Inns, for example, were designed to attract the mid-rate business and leisure traveler. Marriott and Hilton, by contrast, offered a higher grade of services that would appeal to more-affluent guests. Other national chains similarly served specific niches. Over time these chains saturated the markets they served, which led them to seek ways to expand without infringing on their existing properties’ busi- ness. The solution was to create new products and brand names, each designed to serve a different class of customer. In that way a chain could offer two or more affiliations in one market without directly com- peting against itself. Once segmentation appeared (introduced in 1981 by Quality Inn, now Choice Hotels International), Holiday Inn jumped in by developing the up-market Holiday Inn Crowne Plaza brand, and the down- market Holiday Inn Express and Hampton Inn, which is now owned by the Hilton Hotel Corporation. Marriott went midscale with Courtyard and down- scale with Fairfield Inn. Later, Marriott went upscale by acquiring Renaissance Hotels and introducing Marriott Marquis; upper-upscale with Ritz-Carlton; and totally “exclusive” by creating Bulgari, a new hotel “brand” developed in association with the jewelry- and-design Bulgari Group. Buy and Consolidate Y THE 1990S PUBLICLY HELD hotel companies were measured by their ability to show consistent earn- ings growth. While segmentation had proven a path to growth, owners in this environment found that the most efficient way to grow was to merge and acquire. In the 1990s Starwood Hotels and Resorts and Patriot American Hospitality (later known as Wyndham International) were among the most active buyers. With each acquisition they increased their revenue base and removed competition at the same time. Starwood acquired the assets of Westin, Sheraton, and HEI Hotels, while Patriot American bought Interstate Hotels, Carnival Hotels and Resorts, Wyndham Hotel Corporation, and Grand Heritage Hotels, among others. Later, the Promus Hotel Corporation, which owned brands such as Doubletree, Homewood Suites, Hampton Inn, and Embassy Suites, merged with Hilton Hotel Corporation. As of year-end 2004, New York City—based Cendant Corporation was the largest U.S. lodging company, based on the number of rooms in the United States (439,279). At the time, Cendant owned brands such as Wyndham, Super 8, Days Inn, Ramada, Travelodge, Howard Johnson, Knights Inn, Wingate Inn, and AmeriHost Inn. (In 2006 Cendant underwent a restructuring, spinning off its hotel brands into a new entity, Wyndham Hotels, Inc.) The next four largest, all with more than 300,000 rooms each, were Marriott International, Hilton Hotel Corporation, Inter- Continental Hotels Group, and Choice Hotels International. Rounding out the top ten in 2004 were Best Western International, Accor, Starwood Hotels and Resorts, Carlson Companies, and Hyatt Hotels Corporation. At that time, those ten hotel companies controlled fifty-nine of the industry’s most recognized brands and 54 percent of the U.S. room supply. Notably, many of the CEOs of these companies—such as Starwood’s Barry S. Sternlicht, Hilton’s Stephen Bollenbach, and Cendant’s Henry R. Silverman—all began as finance executives. Amid this move toward a handful of dominant public companies, hotel firms are no longer evaluated solely on day-to-day operations and property-level performance. Now they are judged on their ability to increase shareholder value. This change is reflected on Wall Street, where “lodging, leisure, and gaming” has become its own equity sector (see page 69). TOP INTERNATIONAL HOTEL COMPANIES (2006) Top 10 hotel groups worldwide based on room count InterContinental Hotels Group 537,533 Cendant Corporation 532,284 Marriott International 485,979 Accor 475,433 Hilton Hotel Corporation 472,720 Choice Hotels International 417,631 Best Western International 315,875 Starwood Hotels and Resorts 257,889 Carlson Companies 147,129 Hyatt Hotels Corporation 144,671 Source: Hotel Online Special Report by Georges Panayotis, MKG Consulting Ownership changes also help to explain the increas- ing prominence of management-consulting firms serving the hospitality industry. As institutional investors, partnerships, pension funds, and investment trusts took ownership of hotel properties, more emphasis was placed on the value of hotels and corpo- rate structures. (See the sidebars about Bjorn Hanson 73, pages 158-59, and Stephen Rushmore ’67, pages 170-71.) At first the ownership-change trend prompted a dramatic rise in consulting practices at accounting firms focused on hospitality. But that trend was reversed by the post-Enron Sarbanes-Oxley Act, enacted in 2002, which prohibited accounting firms New Ways TO OWN AND MANAGE 73 HosPITALITY GOES GLOBAL 74 from auditing and consulting for the same client. Most firms responded to the new law by curtailing their consulting business. In addition, some hotel companies hired their own on-staff experts, lessening the need for consulting support, especially in the asset-management and investment realms. Industry Statistics. The industry’s growth has also encouraged several entrepreneurs to start businesses that provide data and trends on industry performance. Smith Travel Research (STR), based in Henderson, Tennessee, is widely considered the preeminent source of hotel-industry data. Founder Randy Smith started his career at Holiday Inn, which later shared its data with Smith to help him launch STR. On a weekly and a monthly basis, STR provides statistics on occupancy, average daily rate, and revenue per available room for the entire U.S. lodging industry. STR segments that data into categories based on chain scale, region, loca- tion, and price point. STR protects the confidentiality of each provider’s data, using that data only in aggre- gate form. Hotel chains, management companies, lenders, appraisers, and developers use STR’s data to inform their decisions. Tough Times in the 2000s. Early in the new millen- nium the hotel industry was beset by new challenges. An economic downturn began early in 2001, and later that year came the terrorist attacks of September 11. Hotel occupancies fell to 59 percent in 2002, the lowest level in thirty-one years. By 2003 hotel profitability had dropped 45.1 percent from its peak level in 1999. Average sales price per room dropped approximately 15 percent from peak values in 1999. The hotel industry nevertheless proved resilient once more. By 2005 people had begun to travel for both business and leisure at levels seen before 2001. Occupancies rose and rates soon followed, while sup- ply growth remained at relatively subdued levels. Against those favorable conditions, the industry set its sights on another period of growth and expansion. With 70 percent of the U.S. hotel rooms already branded, but only 25 percent branded in Europe and even fewer in Asia, the bulk of growth is expected to come outside the United States. Keeping Pace (the School’s Beck Era) A S THE INDUSTRY EXPERIENCED dynamic change in the second half of the twentieth century, so, too, did the Cornell Hotel School. In 1961 Dean H.B. Meek was succeeded by Robert A. Beck ’42, a no-nonsense military man who would run the School for twenty years. Upon his graduation from the Hotel program, Beck became a U.S. Army artillery officer. On D-Day—June 6, 1944—at 5:20 AM Beck landed on Utah Beach. One week later he was wounded while fighting several miles from the coast. Beck’s right leg had to be amputated above the knee, and he spent the next eleven months in hospitals. In his unit of 185 men, Beck was one of only eleven survivors. “I was one of the lucky ones,” he says. After the war Beck spent seven years working in food service in Boston’s Quincy Market. Intrigued by labor relations, he returned to Ithaca and enrolled as a graduate student in Cornell’s new School of Industrial and Labor Relations. Soon after Beck arrived, however, Meek offered him a position teaching basic accounting at the Hotel School. Beck accepted, found that he loved to teach, and got a master’s in education and then a doctorate with a concentration in psychology. Beck joined the School faculty as an assistant professor in 1954, was awarded tenure in 1957, and became a full professor in 1960. A year later, at age 41, he succeeded Meek as the second dean of the School. During Beck’s twenty years at the helm, his greatest accomplishment may have come in expanding the cur- riculum and upgrading the faculty. He moved away from the practice of hiring alumni as faculty, seeking instead to hire teachers of the highest caliber, regard- less of their backgrounds. That approach helped the School stay on the front edge during a period of robust evolution in the industry, especially in finance and real estate. Among those joining the faculty during this time was James J. Eyster, Jr. 69, PhD ’77, who wrote one of the first textbooks on management contracts. Through his teaching and work as an expert witness, Eyster became a leading national authority on management contracts. (See pages 172-79, for more about the School’s collaborative efforts with industry in teaching finance and other disciplines.) By the time Dean Beck retired in 1981, he had led the School through two decades of vibrant growth. Student enrollment had doubled, executive education had become a thriving global discipline, and Statler Hall had emerged as an internationally prominent research center. As Beck moved on to assume his next challenge—running the Institut de Management Hotelier International, in Paris—the Hotel School was poised to extend its global leadership. New WAYS TO OWN AND MANAGE /5 ee 4 % Rn FP tee % CHAPTER EARLY ENTREPRENEURS The First Restaurateurs IKE THE MOTEL SECTOR, the restaurant industry as we know it today owes its rise to the automobile. Once Henry Ford's Model T made automobile travel available to the masses, people took to the growing network of roads and U.S. highways. They traveled for business but also for pleasure, making the Sunday drive a staple of American culture. By 1920 eight million cars were on the road, and travel was being measured in miles per hour, not miles per day. Jesse Kirby was among the first to realize that the automobile would change the way people eat. In 1921 Kirby opened the first drive-in restaurant, the Pig Stand, in Drew Nieporent '77,a successful Dallas, Texas. Customers drove into a paved lot surrounding the restaurateur in New York City, helped with rescue efforts restaurant, where they were served by young waiters on foot. To speed after the September 11, 2001, terrorist attacks. up service, Kirby had his waiters race to be the first to hop on the // Jesse Kirby opened the first drive-in restaurant in 1921, in Dallas, Texas, called the Pig Stand. HosPITALITY GOES GLOBAL 78 running boards of the arriving customers’ Model Ts. Thus the term “carhop” was born, and drive-ins multi- plied across the country. Capitalizing further on the economic prosperity of the 1920s, entrepreneurs began to build and franchise the first restaurant chains. AKW Root Beer became the first fast-food franchise, Howard Johnson opened his first restaurants, J. Willard Marriott launched Hot Shoppes, and White Castle’s five-cent hamburgers became an instant draw. Eating Out. When Prohibition started in 1920 it began a thirteen-year ban on alcohol sales in the United States. Restaurants that had been serving free sand- wiches with five-cent beers were forced to adopt new marketing strategies—and upgrade their sandwiches. Despite Prohibition, however, the restaurant industry thrived on strong economic times, led by growth in drive-ins, coffee shops, and cafeterias. Soon after the Great Depression began in 1929, industry leaders appealed to the public to eat out more often. This campaign was led by the decade-old National Restaurant Association, which had become a powerful advocate for the industry. As the Depression wore on into the 1930s, the association introduced two advertising campaigns: “Enjoy Life—Eat Out More Often” and “Take Her Out to Dinner at Least Once a Week.” By the 1940s, drive-ins were beginning to lose their appeal for a core customer base: young parents and other adults. The drive-ins were, instead, attracting hordes of teenagers who would order a cola and fries, stay for hours, and drive off with silverware and plates. Adults became discouraged by this trend and stayed away, draining operators of a primary source of busi- ness. Many of those adults (with or without families) turned instead to a new type of establishment, mid-price chain restaurants, while those who could afford to patronized the growing number of white- tablecloth restaurants where waiters served lavish, multiple-course meals, some of which could last up to three hours. When the United States entered World War II in 1941, restaurants enjoyed a surge in business. Many women were no longer at home preparing meals; they were at work in the factories. As a result, from 1942 to 1945 the number of meals eaten in restaurants climbed from 20 million to 60 million per day. Franchising Firsts NE OF THE FIRST highly successful food-service chains was Dairy Queen. In 1938, a father and son team—J.F. and Alex McCullough—from Kankakee, Illinois, began experimenting with a soft frozen dairy product. A good friend agreed to run an “all you can eat” trial sale for the product at his walk-in ice cream store. In just two hours, at 10 cents a customer, he had dished out more than 1,600 servings of the new dessert. In 1940 the McCulloughs opened the first Dairy Queen. Building a Winner, One Scoop at a Time. Food fran- chising was all but unheard of back then, but soft ice cream was ideally suited to franchising. When the United States entered World War II in 1941, there were fewer than ten Dairy Queen stores. Soon after the war, however, the system expanded at an unprecedented rate, growing from 100 stores in 1947 to 1,446 in 1950, and then to 2,600 in 1955. Today, the Dairy Queen CE apie i a A Horn and Hardart Automat in New York City, circa 1940s. Founded in Philadelphia in 1902, these early fast-food eateries were most popular in the 1930s and 1940s. THE First RESTAURATEURS 79 ).W. “BILL” MARRIOTT, JR.: FROM HOT SHOPPES TO HOTELS e is best known as a hotel man, but J.W. “Bill” Marriott, Jr., got his Start in the kitchen. In the spring of 1927, Marriott’s father, J.W. “JW” Marriott, Sr., and his mother, Alice, opened a nine-stool root-beer stand on 14th Street NW in Washington, D.C. Six months later, realizing that D.C. winters were too cold to allow for much of a root-beer market, the Marriotts Started serving chili and changed the name of the busi- ness to The Hot Shoppe. Soon they had strung together a chain of restaurants, and in 1929 they incorporated Hot Shoppes, Inc. Bill Marriott grew up in those family restaurants. Throughout his high school and college years, he worked in various positions and learned every facet of the busi- ness. But as well as he knew restaurants, Marriott had his sights set on the hotel industry. He joined the company full-time in 1956 and soon afterward led its move into the lodging business. In 1957 the company built its first motor hotel, the Twin Bridges, in Arlington, Virginia. As the general manager, Bill Marriott would often work the “front desk,” which was nothing more than a window that customers would drive up to. Even then, Marriott had a keen sense for the bottom line. “Bill would count the number of people in each car, and if there were not at least four, he would say the hotel was full, hoping that the next car had more people in it,” recalls Leland C. “Lee” Pillsbury ’69, who worked closely with Marriott. HosPITALITY GOES GLOBAL 80 Marriott went on to build an enormously successful hotel company. Much of that success, say those who worked with him, was in his knack for hiring well. “Even as a young man, Bill had the ability to hire strong, smart people,” Pillsbury says. “He was not threatened by intelli- gent, aggressive people.” Much of that hiring took place at the Cornell Hotel School. Winthrop W. “Bud” Grice ’53 and Maurice O. “Bus” Ryan, Jr. 54 were among the first Hotel School graduates Marriott hired. Grice and Ryan went on to recruit many more Hotel School graduates, giving Marriott a distinct Cornell flavor during its formative years. One of those Cornellians, Stephen P. Weisz ’72, decided to join Marriott after a personal encounter with Bill Marriott himself. Weisz had interviewed with the company during his last semester at the Hotel School. While he was interested in Marriott, he was not sure about the com- pany’s interest in him. That’s because when Hotel Ezra Cornell (HEC), the student’s annual showcase, rolled around in April, Weisz had still not heard from the com- pany, which had misplaced his application. Weisz was managing director of HEC that year, and in that capacity he interacted with several Marriott execu- tives, including Ryan, Grice, and Bill Marriott personally, who was serving on a panel at the event. At one point dur- ing the weekend, Grice and Ryan pulled Weisz aside and asked if he was joining the company. When Weisz replied that he did not have a job offer, they were dumbfounded. They assured Weisz that he did, in fact, have an offer. At the end of the weekend, Weisz drove Marriott to the airport. As Marriott got out of the car, he said to Weisz, “What Bus and Bud told you last night, that comes Straight from me.” “At that point, | knew | was going to work for Marriott,” Says Weisz, who thereafter rose to become president of Marriott Vacation Club. Bill Marriott has always taken pleasure in interacting with employees and customers. When he is in the corpo- rate office (outside Washington, D.C.), on most days he can be found having a sandwich with other employees in the cafeteria. When he travels to his hotels, Marriott makes a point of seeking out employees in all positions. “Bill Marriott is like his dad in that his company, his customers, and his employees are his life’s passion,” says Ryan, who rose to senior vice president during his 35 years at Marriott. “He is so passionate about what he does that he does not consider it work. He feels the real value in vis- iting his hotels is to spend time with the hourly employ- ees. He wants them to feel his humanness, to have a sense that they know the family behind the name.” Pillsbury has similar recollections. “Bill would treat everyone the same, from the general manager to the dishwasher,” Pillsbury observes. “As a manager, it was a real pleasure to have him visit your hotel. He would walk up to every employee, address them by name, look them in the eye, and say, ‘Hello, !’m Bill Marriott. He really cares about every single employee, and he makes people feel good about their work.” Weisz has felt Marriott’s caring touch in a more personal way. While on vacation in Bermuda in the 1980s, Weisz’s wife, Linda, suffered an accident on a motorbike that required eight hours of surgery. Soon after they returned home, Bill Marriott called to find out how Linda was doing. “That shows the genuine caring that Bill has for people,” Weisz says. Marriott balances that personal warmth with a steely resolve and a sure mind. One of Pillsbury’s first interac- tions with Marriott came when Pillsbury was general man- ager of the Marriott Hotel in Bloomington, Minnesota. Marriott had come to town to inspect a site where his development team had proposed the company build a new hotel. As Pillsbury drove Marriott to the site, he shared his enthusiasm for the proposed hotel. But soon Marriott was leading the conversation, quizzing Pillsbury on Minneapolis. And as soon as Pillsbury reached the site, Marriott had made his decision. “This is not an obvious location,” he said. “I want a roadside no-brainer.” “That was my first exposure to how he thought,” Pillsbury recalls. “He knew exactly what he wanted, and he knew that site did not fit the model.” Ryan, too, recalls that Marriott took the time to know the business down to its finest nuances. Ryan says he was astounded on many occasions at the detailed knowledge that Marriott displayed when meeting with a hotel general manager and the hotel’s executive team. “Bill would practically memorize the operating state- ments of each hotel,” Ryan says. “He was so well versed that you had to know your facts when you sat down with him.” Weisz, too, has marveled at Marriott’s grasp of the details. “He would ask you about something, and you would scratch your head and ask yourself, ‘How does a guy in his position even know to ask that question?” Weisz recalls when Marriott visited the hotel he ran in Dallas years ago. Weisz and his team proudly told Marriott about a recent upswing in rates and occupancy. “That’s okay,” Marriott said, in what was almost a deflating response. “But when | came in last night, | saw some lights on at the Quality Inn across the street. Were you full last night?” “No, we had 97 percent occupancy,” Weisz replied. “In that case,” Marriott remarked, “we haven’t com- pleted our task.” It was classic Marriott, Weisz says—always striving to do better. “Bill’s dad liked to say, ‘Success is never final,” Weisz remarks. “That’s the credo that Bill lives by.” In the late 1970s Marriott began shifting the company from hotel ownership to property management and fran- chising. That transformation culminated in the company’s split into Marriott International, a hotel management and franchising company, headed by Bill Marriott, and Host Marriott (now Host Hotels), a hotel ownership company chaired by his younger brother, Richard Marriott. Over the years the Marriott companies have compiled a family of more than a dozen lodging brands that range from limited-service to full-service luxury hotels. Today it manages and franchises properties under the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Courtyard, SpringHill Suites, Residence Inn, TownePlace Suites, Fairfield Inn, and ExecuStay brands. Marriott also develops and operates vacation ownership resorts, executive apartments, and conference centers. In building that portfolio Bill Marriott has taken on much risk—and reaped much reward. Perhaps no deal was more bold than the Marriott Marquis in Times Square. At a time when Times Square had deteriorated into one of Manhattan’s least desirable neighborhoods, Bill Marriott pushed the decision to have the company invest $500 mil- lion in the property. Weisz recalls that the corporation’s leadership had serious doubts about the move; Bill’s dad even expressed reservations right up to the closing. But the company went forward with the hotel, and the Marriott Marquis thereafter became a driving force in turning around Times Square. “It was another example of Bill Marriott having the intellect to figure out the right thing to do, and the courage to go through with it,” Weisz says. Marriott’s leadership spans more than fifty years, dur- ing which time he has taken the company from a family restaurant business to a $19 billion global lodging com- pany with more than 2,700 properties in seventy countries. Years ago Bill Marriott turned 70, yet he is as active as ever. In 2005 he visited over two hundred hotels, including several Marriotts that are owned by Lee Pillsbury’s investor fund (see pages 64-65). “He knows as much about those hotels as | do,” Pillsbury remarks. “Bill Marriott is the greatest hotel man I’ve ever known. He can walk into a hotel and within ten minutes he can tell you how that hotel is doing.” THE First RESTAURATEURS 81 SPEEDEE SERVICE hei. Wha McDonald’s, begun in California in the 1930s, franchised its first restaurant in Des Plaines, IIlinois, in 1955. HosPITALITY GOES GLOBAL 82 brand represents one of the largest fast-food systems in the world, with more than 5,900 restaurants in the United States, Canada, and twenty foreign countries. Dairy Queen, like many other fast-food companies, created a new crop of franchisees—and minted many new millionaires. Fast Food and More. Another franchising success began in 1948 when brothers Maurice and Richard A. McDonald took a huge gamble that would revolution- ize the restaurant industry. At the time the drive-in they operated in San Bernardino, California, was net- ting a heady profit of $100,000 a year. Still, they shut it down, pared the menu from thirty-five items to nine, and got rid of the carhops. Three months later they introduced a new concept—a self-serve drive-in with a limited menu. Using their new “speedee service system,” the McDonalds promised to deliver a ham- burger, milk shake, and French fries within fifteen seconds of taking the order. By 1952 that single McDonald’s restaurant was pro- ducing $350,000 in annual revenue, a huge sum in those days. Soon thereafter a milk-shake-machine salesman named Ray Kroc bought the national franchising rights from the McDonald brothers. (Ironically, Kroc thought he’d make his money by sell- ing more Multimixer milk-shake machines whenever a new restaurant opened.) In 1955 Kroc opened the first franchised McDonald’s in Des Plaines, Illinois, gener- ating first-day revenue of $366.12. Five years later, two hundred McDonald’s restaurants were in business. In 1961 McDonald’s opened “Hamburger University,’ a training facility outside Chicago for new franchisees that further accelerated the company’s growth. By 1970 there were more than a thousand McDonald's restau- rants, and at least one in every U.S. state. Imitators sprang up, among them Burger Chef, Carl’s Jr., Jack in the Box, Taco Bell, and, later, Arby’s, which was founded by Cornell Hotel School graduate Forrest B. Raffel ’43. But McDonald’s would face its stiffest competition from two other Hotel School graduates, James W. McLamore ’47 and David R. Edgerton °48, who were already in the restaurant busi- ness. They had purchased a struggling chain of restau- rants based in Miami. They pursued a simple idea for their burger: bigger is better, and founded Burger King Corporation in 1954. “A company called “Whataburger’ had this big burger,’ Edgerton recalls. “We said, “We can do this!’” Drawing on his Hotel School training, Edgerton build Burger King franchise empires. In 1967 McLamore and Edgerton sold their 274 restaurants to the food conglomerate Pillsbury for $18 million. The experience of another fast-food entrepreneur— Colonel Harland Sanders—bears out the axiom “better late than never.” Sanders actively began fran- chising his Kentucky Fried Chicken business in 1955— at age 65. The business soon grew to be one of the largest food-service systems in the world. Burger King, another fast-food franchising success, was founded by Hotel School alumni and has engaged many other alumni as franchisees. redesigned the company’s Insta-Burger machine—a When he was 40, Sanders began cooking meals in type of broiler—to make it faster and bigger. They produced a burger twice as large as the standard size, called it “The Whopper,’ and priced it at 29 cents, or slightly less than twice the price of a hamburger at McDonald’s. The renamed Burger King would become a national icon in fast food, and McLamore and Edgerton would take on lots of Hotel School families as franchisees. Charles J. “Chuck” Mund ’51 (see page 84), Manuel A. Garcia *65, and Richard D. Fors, Jr. 59 are among the many Hotel School graduates who went on to his home kitchen for travelers who stopped at his ihe ie ss i 3 ih y ¥ 2. NiO SRA 1 Se Sil en MAID i a iH i SDA MI bi Noma 4 a “a ‘tbh “athena ro Be senses cM isp ny Obie Wi aah oie ae acs eN> OF 4 WE é a 4 : « ; a > ; | 7 ie ENA a hee ona mwa peeing ei ea oe ‘ . et Yo - >" Z , THE First RESTAURATEURS 83 t’s not easy to start your own business. According to Charles J. “Chuck” Mund ’51, it’s a little easier if you start out with a solid brand name, especially if the brand belongs to a couple of Cornellians. For Mund, the brand was Burger King, founded in 1954 by Hotel School alumni James W. McLamore ’47 and David R. Edgerton ’48. Mund started with one franchised restau- rant, which he could barely afford, but eventually built restaurants all over the United States and Canada, and in Holland, too. “A lot of Hotel School graduates look down on franchis- ing,” Mund says. “You’re not running a luxury hotel; you’re running a hamburger joint. But by running hamburger joints, you can afford to stay at luxury hotels.” Mund grew up during the Great Depression in a small town in New Jersey, where his parents ran a retail busi- ness. They told him stories about what life had been like before they moved to the United States from Germany, where they had owned and operated their own restaurant and tennis club. “Deep down, from early childhood, | wanted to own something, to do something that was all my own,” Mund Says. He began taking odd jobs, mostly in restaurants, learn- ing about cooking. Out of high school in 1946 he joined the Army to get the financial benefits available through the G.|. Bill. The army shipped him to Tokyo, where he joined a unit that operated a small hotel for officers. Mustered out in Tacoma, Washington, he hopped a train for the nearest hotel school (in Denver), applied, and was accepted. A year later he transferred to Cornell. Mund finished his degree in just two and a half more years, by taking an overload of courses. While still a student he picked up any odd job he could find. He waited on tables, worked hotel night desk, and ran the Utica Club beer concession for the entire Cornell fraternity community. HosPITALITY GOES GLOBAL 84 CHUCK MUND: A BURGER KING In the summers he worked at the Statler Hotel in Buffalo, New York. With every job he squirreled away as much as he could, building a nest egg for future investment. He even joined ROTC, the U.S. military’s Reserve Officers Training Corps, because it offered a small stipend. Mund was called back to active duty in 1952 for the Korean War and went to Europe to run officers’ clubs in Heidelberg. After that tour, and back in civilian life for good, he worked for Hilton Hotels, ran the food-service business for Columbia University, and eventually joined Service Systems, a Startup contract-feeding firm in Buffalo, launched by Cornell alumnus Robert D. Flickinger ’47. Mund eventually rose to vice president, but he found himself saying, “This still isn’t what | want to do.” Hearing of an opportunity with Burger King, Mund drove to Florida to meet the founders. He liked the Burger King concept, and because the founders were Cornellians, he had faith in the company. But capital was the key. “| couldn’t have done this without a franchise, because banks were not ready to lend money to an individual,” he explains. With franchises, “the fact that the track record is there for a lending institution to review will open up the door for an individual with limited capital.” Mund did well with his first franchise, making enough to pay off his loans and save up toward another franchise. He kept rolling out, and eventually had restaurants in six States. Some were near Buffalo, so he expanded into Ontario, Canada. Others in Washington state led to loca- tions in Vancouver, British Columbia. Along the way, Mund picked up several partners, including a few more Cornell Hotel School graduates. “| wanted to own it all,” he explains, “but it didn’t take me too long to realize that your span of control is limited. You’ve got to partner with people who are just as inter- ested as you are in the bottom line.” Mund encourages students to take an enlightened view toward franchising, pointing out that most of the growth in the hospitality industry is in franchises. His advice: don’t go for new things. Find something with proven durability and good profitability, and a territory where you can negotiate a good franchise deal. A final lesson Mund offers: know when to get out. “We got in because the territories were undeveloped. We got out when they were saturated,” he explains. He sold off many franchises, then turned around and sold the real estate on which they were built. He has kept several successful units, mostly in New Jersey, which are now managed by his son Eric W. ’84. “It’s always hard work,” Chuck Mund observes. “The food business is known for its long hours. While everybody else is out having a good time, we’re the ones providing it.” Mund and his wife, Carol (’52, HE), have been most gen- erous in giving back to Cornell. The Munds have served Cornell together for more than fifty years. Carol is a life member of the Cornell University Council and has shared her expertise with committees serving the international programs, arts, and Cornell Adult University (CAU). Chuck has been equally active on the University Council and was recently named a presidential councilor, the highest honor the university bestows on an alumnus. In the fall of 2005 the Munds were among seven distin- guished Cornell alumni to receive the Frank H.T. Rhodes Exemplary Alumni Service Award recognizing their out- standing long-term service as Cornell volunteers. —by William Steele service station in Corbin, Kentucky. As more people started to come just for his food, Sanders moved across the street to a motel with a restaurant that seated 142 people. Over the years he developed his blend of eleven herbs and spices, a chicken-batter recipe that is still used today. Sanders’s fame grew, and in 1935 Governor Ruby Laffoon made him a Kentucky Colonel for his contri- butions to the state’s cuisine. But in the early 1950s a new interstate highway was drawn up to bypass Corbin, putting an end to Sanders’s business. He auc- tioned off his assets, paid his bills, and set out to do more than live on his monthly $105 Social Security checks. Eager to capitalize on the popularity of his fried chicken, Sanders drove across the country from restaurant to restaurant, cooking batches of chicken for the owners and their employees. When the reac- tion was favorable, he entered a handshake agreement under which he would be paid a nickel for each chicken the restaurant sold. By 1964 Colonel Sanders had more than six hundred franchised outlets in the United States and Canada. That year he sold his inter- est in the U.S. company to a group of investors, but he remained a public spokesman for the company. In 1976 an independent survey ranked Colonel Sanders as the world’s second-most recognizable celebrity. Another innovator in quick service was Dave Thomas who, in 1969, gave up being a multi-unit Kentucky Fried Chicken franchisee to start Wendy’s International, Inc. Thomas installed drive-through pick-up windows in his restaurants, and within five years he had one hundred Wendy’s “Old Fashioned Hamburger” restaurants generating $25 million in annual revenue. McDonald’s and Burger King fol- lowed close behind in adding drive-through windows to their new and existing units. By the 1950s Americans consumed 25 percent of their meals outside the home. The most popular reason to eat out was to celebrate a birthday, while the busiest day of the year for restaurants was Mother’s Day. In the 1960s another Cornell Hotel School graduate helped his father apply the franchising concept to their family’s donut business. When Robert M. Rosenberg graduated in 1959, many of his classmates were joining Howard Johnson’s in Braintree, Massachusetts, which was on its way to becoming the world’s largest restau- rant chain. Some of those classmates laughed when Rosenberg chose instead to work in his dad’s donut shop outside Boston, but they didn’t laugh for long. Rosenberg helped his father revolutionize the donut shop concept, expanding their first Dunkin’ Donuts shop into a dominant franchised national chain. “The Rosenbergs turned thousands of donut fran- chisees into millionaires,’ says Christopher C. Muller, THE First RESTAURATEURS | 85 HosPITALITY GOES GLOBAL 86 MPS ’85, PhD ’92, a former Cornell Hotel School faculty member who now teaches at the University of Central Florida. “They also paved the path for many other limited-menu franchise businesses to follow.” Mrs. Fields, Starbucks, Subway, and, more recently, Panera are among the brands that have successfully followed the Dunkin’ Donuts model. G.I. Bill of Rights. The 1960s saw another explosion in chain dining, driven by three factors. First, the genera- tion that lived through Word War II began to amass wealth and prominence. As noted earlier, many returning World War II veterans took advantage of the G.I. Bill of Rights, which provided for (among other things) college or vocational education. Inspired by those benefits this generation prospered and, at the same time, started the baby boom. Middle Management. The second force propelling chain dining was a new style of management in the United States that grew out of World War II. Under the lead of Harvard Professor Peter Drucker, American companies adopted hierarchical management to over- see their growing empires, giving rise to a new, large class of middle managers. These people traveled exten- sively, thereby creating a need for convenient dining on the road—as well as at home for the left-behind spouses and children. Enter the Interstates. Third, the largest contributor to the growth of fast food was the accelerating construc- tion of the U.S. interstate highway system. As a national highway system took hold, suburbs spread across America. Fast-food restaurants followed, lining the roads that linked cities to their suburbs. By 1968 twelve franchised restaurant companies each had sales exceeding $50 million—Big Boy (owned by Marriott), Burger Chef, Burger King, White Castle, Denny’s, Frisch’s, McDonald’s, Shakeys, A&W Root Beer, Howard Johnson’s, ITT, International House of Pancakes, and Orange Julius. A few of the first restaurant pioneers failed to follow this new road system, however, and soon found them- selves on a detour to failure. An example is Howard Johnson’s, which began in the 1920s and by 1967 was the world’s largest restaurant chain. Founder Howard Johnson put the customer first, and under his lead Howard Johnson’s was the first to offer a distinctive combination—table service and take-out all in one. However, when Johnson stepped aside and his son took over, the company began to lose its way. The younger Johnson lacked his father’s passion for opera- tions, showing instead an obsession with the numbers. He moved the company’s headquarters to New York City, where executives lost touch with the firm’s mar- ket. They soon lost focus, too, expanding headlong into the motel business and letting food quality and service standards flag in their restaurants. The company’s biggest mistake was in failing to see how the new national highways would change the way Americans traveled—and ate. The company’s execu- tives ignored the highways and the suburbs, choosing instead to build their chain of restaurants along old Route 1 from Portland, Maine, to Miami, Florida. As customers took to the new interstate-system highways, Howard Johnson’s had no one left to serve. “Howard Johnson’s is a case of classic marketing myopia,’ Muller says. “They thought they were in the restaurant business when they were really in the convenience business. They didn’t move with their customers.” As restaurant owners linked their individual units into chains, they also developed brands to encourage customer loyalty. Consumers identified with these brands; they knew, for example, exactly what they would get if they stopped at a McDonald’s, whether in Topeka or Toledo. As these brands became established and accepted by the public, franchisees used economies of scale to gain advantages in how they purchased, marketed, and sold their products. THE First RESTAURATEURS 387 CHAPTER RESTAURANTS Becoming the “Third Place” VEN AS QUICK-SERVICE RESTAURANTS dominated the 1960s and 1970s, another wave of entrepreneurs was taking the industry in a new direction. One was Joseph H. Baum °43, who pioneered the concept of theme restaurants, first in the United States and later in markets around the globe. Baum grew up in Saratoga Springs, New York, with parents who ran a family hotel. In 1953 he joined Restaurant Associates, and later that year the firm opened its first theme restaurant, The Newarker, at the Newark Airport, in New Jersey. Experts predicted failure, for the airport drew few travelers at the time and Newark was not known for its restaurants. But Baum introduced many novel concepts—such as Windows on the World restaurant offering seven oysters instead of the standard six, and serving the on the 107th floor of New York City’s World Trade Center, a Joseph Baum seventh on a separate plate. Soon the restaurant was grossing over ’43 project, allowed three tiers of diners to view Manhattan below. $3 million a year. 89 Students prepare dishes for a major dinner at Statler Inn, as part of a class on restaurant management. HosPITALITY GOES GLOBAL 90 In 1959 Restaurant Associates opened its first restaurant in New York City, The Four Seasons. It was among the first upscale restaurants to feature California wines and today its glassware designs are on display in New York City’s Museum of Modern Art. Baum would eventually rise to the presidency of Restaurant Associates, overseeing the development and operation of 130 restaurants in thirty-one cities by 1970. Many of the best-known establish- ments were in New York City, including Four Seasons, Brasserie, La Fonda del Sol, and Forum of the Twelve Caesars ~.% (a Roman-theme experience with silver gladiator helmets as ice buckets). In 1970 Baum teamed with Michael Whiteman, founding editor of Nation’s Restaurant News, to start a food and restaurant consulting company. They soon began work on their first and best known project— Windows on the World (see page 88), a restaurant on the 107th floor of New York City’s 1 World Trade Center (North Tower). At the time, in 1971, no one wanted to be in the WTC. The architecture had been roundly panned, and there was not yet a Battery Park complex or a South Street Seaport to draw tourists and other visitors to that area of downtown. In fact, the Port Authority had to rent much of the space in the South Tower to municipal and state government offices, sometimes for as little as $2 per square foot. “Lower Manhattan was a wasteland,’ says Dennis J. Sweeney '64, who worked on the Windows on the World project as an associate of restaurant-design company Cini-Little Associates before joining Baum fulltime soon thereafter. Baum, Whiteman, and Sweeney set out to confront the old adage about rooftop restaurants: “The view is great and the food stinks.” First, they created a three- tiered dining room so that patrons in each of the three hundred seats could enjoy sweeping views. Then, in keeping with the location’s “world” theme, they cre- ated a menu reflecting the finest cuisine from many cultures around the globe. Windows on the World opened in 1976 to glowing reviews from food critics. Soon it became the first restaurant ever to grace the cover of New York Magazine. Even Paul Goldberger, noted architecture critic for The New York Times, wrote a favorable review. “Tt was the first time the trade center buildings had been portrayed in a positive light,” Sweeney recalls. “We got huge publicity.” Another restaurant that was part of the Windows on the World complex—tThe Cellar in the Sky— became one of the first to pair food and wine. Each night the cellar master and the chef worked together to match five wines with five entrées. A third establish- ment at the original Windows complex—the City Lights Bar—gave customers who could not get a reservation at one of the restaurants a chance to enjoy the view over a drink and hors d’oeuvre. Sweeney recalls lines of eighty people waiting their turn in the tower lobby for a ride up and a seat at the bar. By 1979 space in the South Tower was renting for as much as $35 a square foot. “The restaurant alone did not drive the rent up,” Sweeney says, but it was a factor.” Later, Baum and his team would earn similar acclaim for restoring the Rainbow Room, a complex comprising three restaurants, banquet facilities, and meeting rooms on floors 64 and 65 of Rockefeller Center. In the mid-1980s Baum had opened a restau- rant on 49th street called Aurora that earned three stars in The New York Times. David Rockefeller ate lunch there often, and one day he asked Baum if his team would rejuvenate the nearby Rainbow Room. Working with architect Hugh Hardy, Baum and his team set out to re-create the café society of the 1930s and 1940s—an era when the Rainbow Room had been a preeminent midtown social venue. Hardy directed a distinctive interior design that featured silk-covered walls, green leather chairs and carpet, and colored lights on the domed ceiling. They also added a spec- tacular bar and a cabaret showroom, and reactivated an idle revolving dance floor by replacing the wooden track and balls with nylon. Early on the evening of December 1, 1987, David Rockefeller lit the traditional Christmas tree outside Rockefeller Center. The Rainbow Room— closed for two years—would reopen that night for Rockefeller’s holiday office party. Baum and his team had worked through the previous night and all that day to set up for the grand reopening. Halfway through the party, Rockefeller and his wife were dancing when he stopped and grabbed a microphone. With tears in his eyes he began telling the audience how proud he was of the restaurant. Still standing on the revolving floor, Rockefeller had to keep moving his feet to stay in front of the crowd. Baum kicked Sweeney in the shins and told him to stop the floor. Sweeney raced to the control panel but the room was dark. He threw a few switches— first the lights went off, then the window shades came down. Finally he hit the right one, and Rockefeller finished his speech standing still. A student shows off his ice sculpture, prepared for the final dinner of a Hotel School course. Before the Rainbow Room reopened, Baum had promised Rockefeller that the restaurant would double its sales from $9 million per year before restoration to $18 million after. He was wrong— the restaurant grossed $25 million that year. THE “THIRD PLACE” Ql HOSPITALITY GOES GLOBAL 92 Baum and Whiteman may be best known for their striking imprint on the New York City restaurant scene, but they also had an impact in markets around the world. They created the World Trade Center Club in Taipei, Taiwan, and drew up restaurant plans for the Hotel Arts Barcelona (Spain) and the Regent of Sydney (Australia). They also created the first fast- food courts in Europe, Japan, and the United States. Baum is also credited with introducing several ser- vice enhancements that are common practice today. He is credited with having invented the practice of “cupping” a dirty ashtray with a clean one as it is removed from the table, to keep the ashes from flying into the air. He was also among the first restaurateurs in the United States to have servers refold a diner’s napkin when the diner went to the restroom. Baum was also not afraid to shun convention; for example, he did not like his waiters to ask diners if everything is all right. “He felt that the waiter ought to know this without asking, Sweeney says. Theme Dinnerhouses | ‘HREE CORNELLIANS WERE KEEPING a Close watch on Baum. Peter E. Lee, Richard J. Bradley, and Robert A. Freeman, all from the class of 1963, created the first casual-theme restaurant—Victoria Station. Tailored after a London steakhouse, it offered a dis- tinctive menu that included two new features—the self-serve salad bar and the standing rib-roast. The restaurants thrived, and the company became one of the first highly successful initial public offerings among restaurant companies. The restaurant business is known for imitation, and soon the commercial landscape was rife with Victoria Station knockoffs. For instance, Steak and Ale was designed with an English theme, the owners hoping to evoke fond memories among those men who had been in England during World War II. More imitators sprang up—Beef and Brew, Scotch and Sirloin, Longhorn, and Lone Star among them. One that stood out was Outback Steakhouse, which was a Victoria Station makeover in an Australian theme. One of the dominant restaurants of that era was T.G.I. Friday’s, founded by Alan Stillman in New York City in 1965. The first restaurant, located on the Upper East Side at First Avenue and 63rd Street, rang up $1 million in revenue in its first year and ushered in the dawn of the singles age, according to Newsweek magazine. “Friday’s was really a bar with a restaurant attached,” observes Christopher Muller. By 1975 T.G.I. Friday’s had grown to ten restaurants in eight states, and Carlson Companies, Inc., acquired the company. Under the lead of CEO Marilyn Carlson Nelson and later her son Curtis C. Nelson ’86, the A SACK FULL OF GOOD IDEAS hen he was 13, Burton M. “Skip” Sack ’61 lied about his age so he could take a job washing dishes at a new Howard Johnson’s in Brookline, Massachusetts. Sack so enjoyed the cama- raderie and spurts of business that he worked forty hours a week year-round toward his goal to someday manage his own Howard Johnson’s. Sack, however, was a better worker than a student, and, realizing that he needed some discipline, he left high school during his senior year to join the Marine Corps. Sack was sent to Quantico, Virginia, for training, where he found himself in the company of second lieutenants freshly commissioned out of college (ROTC) or the Naval Academy. For Sack, it was a sobering introduction to the power of rank. “I was living in a squad bay with sixty-five guys, while the lieutenants were two to a room. | was eating at picnic tables for twelve, they were eating at tables for two and four. | was saluting them,” he observes. “I decided that if people with college degrees were going to be better off, | needed to get one myself.” Still intent on some day managing a restaurant, Sack applied to schools that offered hospitality management programs. But with his average grades, he knew he would have to augment his application. He wrote a letter to his Supervisor at Howard Johnson’s, asking for a recommen- dation. That letter turned out to be the most important note Sack would ever write. On the day before his discharge, Sack received an acceptance letter from Cornell. Days later, during the first week of class, Hotel School Dean H.B. Meek pulled Sack aside. Meek told Sack that he had received a letter on Sack’s behalf from Howard D. Johnson himself, then one of the nation’s most revered businessmen. Meek said that he had been honored to receive the letter, and since Johnson thought so much of Sack, Meek had decided to accept him. Sack excelled at Cornell and went back to work in mar- keting for Howard Johnson’s. He rose fast, eventually becoming senior vice president overseeing real estate, cor- porate development, architecture, design, and construc- tion. But Sack wanted to return to the entrepreneurial side of the business, where he had thrived in launching the company’s Ground Round franchise. When the company was sold to a British concern in 1980, the new owners decided to divest the Red Coach Grill division. Sensing opportunity, Sack put together an investment group that bought thirty properties. His team reinvigorated the restaurants and sold them for a tidy profit. Later, Sack decided to invest in Applebee’s, a fledgling restaurant chain. While McDonald’s, Burger King, and oth- ers were offering franchises one at a time, Applebee’s needed to build critical mass in a hurry and therefore was offering entire regions. Sack raised $54,000—a lot of money at the time—and bought the rights to operate Applebee’s in all of New England. Over the next eight years he opened sixteen restaurants that eventually grossed $38 million a year. In 1994 Sack sold them back to Applebee’s for stock, and watched the stock go from $13 to $90 a share over the next decade. Sack would then rejoin Applebee’s as executive vice president, traveling throughout Europe and the Middle East to help franchisees open restaurants. Later, Sack Started another company that built authentic Irish pubs around Boston. He would go on to serve as president of the National Restaurant Association, traveling the globe to promote an industry that in 2004 employed twelve million people and generated sales of $476 billion in the United States alone. Through it all, Sack has been a steady supporter of the Hotel School, sharing his wisdom and resources in many ways. Back in 1957, Dean Meek had made the right call. company expanded the business to more than 800 restaurants in 47 states and 55 countries. Friday’s success spawned many imitators, such as Houlihan’s and Bennigan’s. In part due to this trend, in 1980 America had the highest consumption of alcohol per capita in its history. As the 1980s wound down, another entrepreneur would put a fresh spin on the Friday’s concept. Burton M. “Skip” Sack ’61 was already an accomplished restaurant executive, having built the Ground Round and Red Coach Grill franchises for Howard Johnson’s. Now he saw a chance to capitalize on changes in the American workforce, namely, that more women had begun to work full time. That dynamic made eating dinner out more often an attractive—and affordable— option for many families. “When kids used to come home from school and ask ‘what’s for dinner?’, mother would look in the pantry. Today, restaurants are the pantry,’ says Giuseppe Pezzotti. “Eating out means no prep and no THE “THIRD PLACE” 93 HosPITALITY GOES GLOBAL 94 dishes. It has also become the best way to get everyone together away from the distractions of home, like the television and the Internet.” Sack wanted to reverse the Friday’s formula, that is, to create a restaurant with a bar attached. He met with the founders of Applebee’s in 1988 and decided that they had the right approach for his concept. Sack bought Applebee’s franchising rights for New England and helped turn the brand into one of the most suc- cessful restaurant chains in America (see page 93). Applebee’s was part of a new wave of casual theme restaurants that dominated the industry from the 1980s through the turn of the century. One of the most influential was Darden’s Olive Garden, founded in 1982, which became the first Italian-theme restau- rant to achieve success on a national scale. Olive Garden’s success prompted more than sixty Italian- theme restaurant concepts to launch in the ensuing years. Few stayed for long, but Olive Garden’s contin- ued success keeps that concept alive for future chain operators. The years 1985-2005 also saw enormous changes in fine dining. This development started in Manhattan, where a group of young, unaffiliated restaurateurs developed what has become the model of the contem- porary American restaurant. Drew A. Nieporent ’77, Danny H. Meyer, Daniel Boulud, and David Bouley each saw an opportunity to serve a food-and-wine dinner without the snootiness that had come to be associated with New York’s French restaurants. Each introduced a sort of fine dining for the masses, with the classic French cooking put aside in favor of lighter and more flexible fare. Going Upscale N IEPORENT S FIRST RESTAURANT was Montrachet, in New York’s Tribeca section. Montrachet offered a $16 prix fixe dinner, the menu was in English not French, and there was no dress code. “Nieporent identified personally with his customer base,” Pezzotti says. “He understood where his genera- tion was moving and what they wanted to eat.” (See pages 76-77, 95.) Another young upstart was doing much the same in New York’s Union Square, where Danny H. Meyer was launching the Union Square Café. As Meyer put it in an article in The New York Times on October 12, 2005: “Whoever wrote the rules that food tastes better because it’s more expensive, more formal, and served with more pretense is wrong.” In fact, Meyer’s restaurants set new standards for service in fine dining. According to lore, a couple went to the Union Square Café to celebrate their anniver- sary. When their waitress overheard that it was their anniversary, she arranged to have a cake made. She NIEPORENT’S MANHATTAN MAKEOVER rew A. Nieporent ’77 has followed a sure path on his rise to the top of the restau- rant world. As a teenager he served as a kitchen boy at a camp, worked at a McDonald’s, and then was a pantry and prep person at The Duck Joint, in New York City. Knowing in high school that his passion was in restau- rants, Nieporent went to the Cornell Hotel School, where the world opened up to him. “The diversity of the Hotel School’s student body Stands out for me,” he said. “I got the chance to interact with people from all over and see the world from many perspectives.” It was through a fellow student that Nieporent experi- enced different cultures in an even more compelling way. That student helped Nieporent land a job with a cruise company the summer after his freshman year. He traveled the Caribbean, the Mediterranean, and the Baltic Seas for this first-class line, helping to serve three exquisite meals a day, seven days a week. Nieporent so enjoyed the experi- ence that he worked cruises not only in the summer but also over winter and spring vacations all the way through school until his graduation. After graduation Nieporent worked one more cruise in the Mediterranean before joining the culinary team at Maxwell’s Plum, in New York City. Later that year he was transferred to its sister restaurant, Tavern on the Green. In 1982 he became the manager at 24 Fifth Avenue and under his lead the restaurant earned two stars from The New York Times. To broaden his knowledge and skills, Nieporent embarked on a yearlong tour of Europe, where he studied how leading restaurateurs practiced their craft. Upon returning to New York, he worked as captain at a number of top restaurants, including Le Périgord. In 1985 Nieporent struck out on his own, opening Montrachet in New York. That proved to be the beginning of a remark- able twenty-year run during which Nieporent opened twenty-two restaurants. Among the best known is the Tribeca Grill, where his partners include actors Robert DeNiro, Bill Murray, and Sean Penn; the great Russian bal- let dancer Mikhail Baryshnikov; and other celebrities. He came to own six restaurants in the Tribeca section of New York—Montrachet, Nobu, Nobu Next Door, the Tribeca Grill, Layla, and Tribakery. In 1994 Nieporent branched out to the west coast, opening Rubicon, in San Francisco, where his partners include DeNiro, Robin Williams (actor and comedian), and Francis Ford Coppola (film director and producer, and owner of Coppola-Niebaum, a Napa Valley vineyard). Later that year Nieporent opened Nobu in New York, which has proven to be the most financially successful of the lot. Nieporent feels an enormous personal attachment to each restaurant, so much so that he does not have a favorite. “They are all my children, so | can’t say | like one more than another,” he says. Professional knowledge has been key to Nieporent’s success. “You have to believe in what you know and sur- round yourself with people who will follow you,” he says. Hiring the right people is another vital component in running a successful business, Nieporent adds. That is especially true in fine-dining restaurants, where personal Service is so vital to the enterprise. “You have to hire peo- ple who care, because it’s not something that you can train,” he observes. “It comes down to trying to know the customer and giving the right personal touch in every interaction.” Service is so important to Nieporent that he designs his restaurants in a way that enables the best service. “There are so many little things that you can do to take care of your customers,” he says. “The way you serve tables, pour water, take a reservation, or even talk to your customers. We are constantly vigilant in this mission.” Nieporent treats his employees with the same care that he extends to his customers. In the aftermath of the 9/11 tragedy, traffic was closed south of Canal Street, forcing him to close his restaurants for several weeks. Nieporent paid his employees through the period, even though they were unable to work. He also was a visible presence at Ground Zero (see page 76), doing everything he could to help physically with the rescue operation, and later donat- ing and distributing soup and sandwiches to thousands of rescue workers and volunteers. Nieporent downplays his involvement, saying that many others contributed in much the same way. For all his successes, Nieporent has seen a few of his restaurants come up short of expectations. He says it was never the food or service, but the choice of location that went awry. “I used to think that ‘if you build it they will come,” he Says. “That is what we have in Tribeca, which has become a true destination for restaurant goers. But | have learned that that is not always the case. You have to open in a neighborhood that can support you. Otherwise, no matter how good you are, you cannot sustain yourself. Never underestimate the importance of location.” THE “THIRD PLACE” 95 Professor Richard Penner teaches Hotel students principles of design. HosPITALITY GOES GLOBAL 96 then presented the cake, a complimentary bottle of champagne, and a bouquet of flowers to the startled couple. She also took pictures, had them developed at a nearby shop, and presented the photos to the couple before they left. “Tt is that kind of service that you remember forever,” Pezzotti says. In the 1990s television’s Food Channel helped to change the way people buy and prepare food. One of the most celebrated chefs of that era was Ming Tsai, a 1989 graduate of the Hotel School’s M.P.S. program (and a 1986 graduate of Yale). Tsai went on to create the world-renowned East—West Bistro and the Blue Ginger restaurant. The telegenic Tsai also showed a flair for entertainment, winning an Emmy as the host of the Food Network’s East Meets West program. “Ming has been as influential as any of the celebrity chefs of his generation,” Muller says. “When he puts a dish on TV, he can change how people buy and pre- pare their food for a week.” In fact, the Food Channel has helped spawn yet another new category—“fast casual.” Many of Tsai’s disciples are Cornell graduates, and many have launched successful restaurants in California. Matthew A. Baizer ’90 is president and CEO of Zao Noodle Bar in San Francisco. Douglas R. Keane ’93 has opened four restaurants in San Francisco and Napa Valley. Robert L. Price ’96, Mark C. Nicandri ’94, and David P. Gogolak ’97 run the Askew Grille in San Francisco. In Ohio, Alton F. “Rick” Doody, MPS ’84, runs the Bravo Restaurant Company, parent to Brio’s, a chain of “casual elegance” restaurants popular in markets across the country. Even Chris Muller, with a former student and now founding partner, has returned to operations as president of ’Za Bistro! in Orlando. Many of these entrepreneurs first envisioned start- ing a restaurant while taking courses in the Hotel School’s academic concentration, “Independent Restaurant Operations.” The concentration helps stu- dents learn the skills needed to manage, operate, and own an independent restaurant enterprise. “My favorite course was Independent Restaurant Management,” says Nicandri, of the Askew Grille. “I knew early on that I wanted to own my own restau- rant. Through the case studies and field trips, I saw the entrepreneurial side of the industry.” With so many options to choose from, Americans in the year 2000 spent more than 45 percent of their food dollar at eating-and-drinking places, up from 25 percent in 1955. By 2010 Americans are expected to spend more than half of their food dollar at an anticipated one million establishments. Behind the home and the office, restaurants have become the “third place” in America. International Growth. Today many companies are expanding in rapidly developing countries that have emerging middle classes with the incomes and urban lifestyles similar to those in the United States in the late 1940s and 1950s. At the beginning of the 1970s, only 900 U.S. fran- chised units operated outside the United States. By 1994, 29 of the top 50 U.S. restaurant chains operated Over 17,000 units in other countries, mostly under franchise arrangements. The international market is now dominated by ham- burger, chicken, and pizza chains. In 1994 seven U.S. restaurant chains accounted for 91 percent of overseas units. McDonald’s, the largest food-service organiza- tion in the world, operated 5,461 units in seventy-nine countries outside the United States, with non-U.S. sales of $11 billion, or 43 percent of total sales. KFC had the second-largest number of units out- side the United States— 4,258 in seventy-three coun- tries. The fried-chicken chain’s $3.6 billion in sales outside the United States accounted for 51 percent of its sales in 1994. Pizza Hut had 25 percent of its units located outside the United States (KFC and Pizza Hut are part of Yum! Brands, Inc., Louisville, Kentucky). Subway, a subsidiary of Doctor’s Associates, Inc., had 944 restaurants located outside the United States. Domino’s Pizza, the second-largest pizza restaurant chain in the United States, operated 840 franchised units in thirty-seven countries, with sales of $415 mil- lion. Dairy Queen, a subsidiary of International Dairy Queen, Inc., had 628 of its 5,542 units operating in six- teen countries outside the United States in 1994, with sales of $300 million. That same year Wendy’s oper- ated in thirty-two countries and territories; 413 of its 4,411 units were outside the United States, with sales of $390 million. Family restaurant chains, too, have entered the international market, led by Denny’s, Big Boy, and International House of Pancakes. Casual dinner- houses such as T.G.I. Friday’s and grill buffets like Sizzler, Golden Corral, and Ponderosa are also expanding into the international arena. In the same way, non-U.S. food-service companies have moved aggressively into North America. In the mid-1990s London-based Grand Metropolitan, PLC, owner of Burger King, was the largest foreign investor in U.S. foodservice. Imasco Ltd., Canadian-based owner of the Hardee’s and Roy Rogers chains, was the second-largest foreign investor, with 1994 sales amounting to nearly $4 billion. London-based Allied Domecq PLC is the third-largest foreign investor in USS. foodservice, having acquired Dunkin’ Donuts in 1990 and owning Baskin-Robbins. THE “THIRD PLACE’ > of SSESEEERSSES SAR theeecetotniantoniaeaene set PRC PCH OE sesionsiseasebee ne CHAPTER DIVERSE LEADERSHIP Women, African-Americans Rise Up HROUGH MUCH OF THE TWENTIETH CENTURY the hospitality industry was anything but hospitable to women. Men who were otherwise competent leaders often failed to appreciate the talents women possessed. The prevailing view was that hotel administration was a man’s profession,’ while a proper course of study for women was home economics. This industry bias was apparent from the beginning at Cornell’s Hotel program. For all his vision, Dean H.B. Meek was unable to overlook the common prejudices of the day to see that women would be important contributors to the industry. Recalls Dorothy Daly Johnson ’26, one of five women in the department's second Grace Leo-Andrieu ’77, a standout in the graduating class, “He had not wanted Any women in the designer-hotel movement, and two features from her award-winning Lancaster Hotel, in Paris. Course, and he Save the five of usa particularly hard 99 Carrie Connell Meyer ’30, a cigarette girl at a Hotel Ezra Cornell in the late 1920s. HosPITALITY GOES GLOBAL 100 time.” Meek was hardly alone in his views. Hilda Longyear Gifford ’26 recalled that the American Hotel Association “told Professor Meek not to train any women.” Yet it was Longyear herself who was crucial to saving the first Hotel Ezra Cornell (HEC). It was May 1926 and students were preparing to play host to their first conference for industry leaders. There was only one problem: no one had addressed the school’s lack of proper banquet facilities to entertain those execu- tives. The quick-thinking Longyear appealed to Anna Grace, director of Cornell’s dining services, who gave the HEC team permission to use Risley Hall for the banquet—provided that Longyear was put in charge. The conference was a resounding success, so much so that the Hotels Statler Company contingent came away convinced of the program’s viability. As described earlier (see page 15), the following year E.M. Statler himself was persuaded to attend HEC— and the rest, as they say, is history. Longyear was one of several early women graduates who would build a successful career. Years later she and her husband, John P. Gifford ’29, donated more than $250,000 to the Statler Hall capital campaign. Yet even as Longyear and other women thrived, the bias against women remained entrenched. In 1935 only 15 of 209 enrolled students were women. By 1940 the uni- versity’s total enrollment of 5,798 included 1,378 women, or 24 percent. The hotel program’s enrollment of 326 included just 18 women—or less than 6 percent. Between 1933 and 1943 a total of 20 women graduated from the Hotel program. When Margaret McCaffrey Kappa ’44 and her mother met Meek at a hotel show in Chicago in 1940, “Maggie” recalls a cool reception. “He said that not many women entered because good jobs for women upon graduation were scarce.” At her mother’s urging, however, Meek allowed Kappa in. Kappa went on to run housekeeping for 26 years at The Greenbrier, con- sult for many leading hotels, and become the first female president of the Cornell Hotel Society. Another maverick among the first female graduates was Mary R. Wright ’45, who worked for accounting and consulting giant Horwath & Horwath, managed hotels in upstate New York, and taught hotel opera- tions at several colleges (see pages 102-103). With the onset of World War II the Hotel program’s student body—and women’s role in it—changed for- ever. Total enrollment fell from 319 in 1941 to 84 in 1944, when 41 of the 84 students were women. That spring virtually no one graduated. As able-bodied male Hotel students left Cornell for military service, they were replaced by a growing number of female students. Still, Meek was concerned that these women were arriving at Cornell with unrealistic expectations. “It has consistently been my pol- icy to discourage the enrollment of women students, not because they are in any sense unwelcome, but because we have felt that the public has been misled regarding the opportunities open to them in the hotel field,’ Meek wrote. “When a girl comes from a hotel family or has had hotel experi- ence so that she is able to apprise the situation for herself, she is very welcome. The others I try at least to talk to, to be sure they understand the situation.” As a result, in 1950 only slightly more than 5 percent of the Hotel students were women (20 of 376), while the overall university population included almost 23 percent women: 1,721 out of 7,541. served for many years as co-editors of the School's For all his resistance to female students, Meek had alumni magazine, The Bulletin [of the Society]. no trouble surrounding himself with able female assis- Meek also must have noticed when, upon E.M. tants. One was Edna Osborn, who served as his admin- _ Statler’s death in 1928, his widow, Alice Seidler Statler, istrative assistant until his retirement. Affectionately became chairwoman of the board for Hotels Statler known as “Eddy,” she “literally seemed to run the Company, Inc. Statler’s posthumous order to put a School while Dean Meek was away,” recalls George M. woman in charge of his corporation was almost Bantuvanis ’51. Osborn and colleague Helen Ayers unheard of in the 1920s, but Mrs. Alice Statler was When Hotel School students took over the Hotel New Yorker, women sorted the laundry. From left are Edna Mullen, Frances Hicks ’32, and Janet McGregor. (Mullen and McGregor were matriculated in special Hotel courses, ’29-31 and ’30-31, respectively.) WoMEN, AFRICAN-AMERICANS 101 MARY WRIGHT JOINS THE “INN” CROWD he may call herself a “hick from Herkimer,” but Mary R. Wright ’45, CHA, lit many new trails for women during her sixty years in hospitality. Wright was one of the first women hired to manage a hotel, chair a collegiate hospitality program, and start her own consulting practice. And she did all this at a time when women were not expected to command such roles. By age 16, Wright was eager to experience life beyond her quiet hometown. She spent consecutive summers working as a carhop at the Dutch Mill barbecue stand fifty miles away in Oneonta, New York. Wright became intrigued by the business. In late August 1941, Wright was set to attend Syracuse University with a scholarship. Then, unexpectedly, she won the Cornell regional scholarship—worth $100 more than her Syracuse scholarship. Her parents, who had observed her interest in the hospitality business, remarked that Cornell “had some sort of hotel school.” So on Wright’s next day off from work the family drove to Ithaca. Wright applied to Cornell, interviewed with Assistant Dean Al Kish, and was accepted. “It was all accomplished in an afternoon,” Wright recalls. “Kish sent me over to Anna F. Grace for a job and a dorm room. Just like that, | was in!” Wright was one of only five women among the one hundred students in her first-year class. As she recalls, there were only three or four other women in the upper classes. At a time when some of her female classmates felt at a disadvantage for being among such a profound minority, Wright says she gave no thought to Cornell’s male-dominated classes in 1941. “All-male classes were what one should expect in a hotel school in 1941,” Wright recalls. HosPITALITY GOES GLOBAL 102 In December 1941, the School and the industry would change dramatically after the attacks on Pearl Harbor. Many students and professors left school to enlist, while enlisted men and women were assigned to Cornell for training. During the war, Wright found abundant opportu- nity to grow while in college and in the work world. In the summer of 1942, Frank H. Briggs ’35, then presi- dent of Hosts, Inc., hired Wright as both the pantry woman and dining room manager for the Palmer House in Herkimer. Wright recalls the Palmer House as the first place she had to fend off unwelcome overtures from male colleagues. “The chef and | were taking inven- tory in the cooler when he tried to kiss me,” she states, adding that at the time there was no recourse for such action. In the fall of 1943, with the country deeply involved in the war, the School was short of teaching staff, prompting administrators to look for talented, bright individuals to plug the void. Wright had shown an aptitude for account- ing, so Professor John Courtney ’25 suggested she teach the School’s famous “small hotel” accounting course. And she did—starting in the first term of her junior year and continuing through summer session and her senior year. “I was teaching military men and returning veterans, all older than I,” she recalls. “They helped me develop poise, restraint, and control. It was a strengthening experience, to be sure.” She also learned about human nature. Wright recalls how some students tried to cajole her into giving higher grades than they deserved. “Vince J. Di Pasquale ’48 took me skating on Beebe Lake,” Wright says. “He was hoping for an A, and all he got was a bad cold.” During her senior year Wright pursued post-graduation employment opportunities in her “minor” course study, personnel relations. Her search resulted in a sustained per- Sonal correspondence with the Waldorf-Astoria’s Lucius M. Boomer, a giant in the industry and great friend of Cornell’s Hotel program. Wright apparently had a job to develop a training program all lined up through Boomer when the rug was pulled out from under both of them by critical union negotiations. Instead, upon graduation in 1945, Wright joined Hilton’s Plaza Hotel in New York City as assistant personnel man- ager (a junior executive position). Later she moved to the accounting firm Horwath & Horwath, where she started as a checker—she checked the accuracy of the auditors’ reports as typed by the steno pool. It was there that Wright first experienced bias toward professional women; executives refused to send her on audits for fear that clients would resist a woman in that role. Still, Wright worked her way up to be assistant to the partners, E.B. Horwath and Louis Toth, the men who pioneered hotel accounting. (Earlier, Toth had created the first accounting courses for Cornell’s Hotel program.) For her part, Wright gave little thought to the gender imbalance in the work- place, with one exception: the Cornell Society of Hotelmen, comprising her fellow alumni, refused to allow women graduates to participate in the smokers held at major hotel trade shows. No doubt her future success and advancement in a male-dominated industry was due to her focus on main- taining a professional business demeanor, working hard and doing the best job possible, and being well trained. A few years later, Wright tapped into the Cornell net- work again. She joined McCormick and Company, where she worked for Edward J. Vinnicombe, Jr. ’33, vice president of sales, as office manager and his liaison with the field Sales force. Even before she started, Wright received a stark reminder of the challenges of being a woman in what was a man’s world. One of the five secretaries who were to report to Wright quit because she didn’t want to work for a woman. “She left before | arrived, so | knew it had noth- ing to do with me personally,” Wright says. “Also, in gen- eral, | could sense that there was company resistance to adding a third female junior executive, the other two being the standard office manager and dietician.” A few years later, Wright moved into hotel management through another Cornell connection. She interviewed with three Hotel program alumni who were officers at Treadway Inns—). Frank Birdsall, Jr. ’35 (president), Frank J. Irving ’35 (vice president), and Fred J. Eydt ’52 (comptroller)—and was named manager of the firm’s inn in Batavia, New York. Wright was not the first woman ever to manage a hotel— others had acquired the job primarily through family. But she was, she believes, one of the first women actually hired for the job. Certainly, a woman hotel manager was unusual in 1962. “They took a chance on me, knowing that stockholders might have a hard time accepting a female as a manager,” Wright recalls. “There was resistance, but I’m proud to say that the stockholders accepted me before long.” Wright won over her skeptics in part through her dogged work ethic. At the end of the first year, the local stockholders offered to reward her with a mink stole. But she declined, telling them, “Il wouldn’t have any use for it because I’m at the hotel all the time.” Wright was so suc- cessful in building effective community relations that she earned the Key to the City, an honor that she calls one of the highlights of her career. After six years with Treadway, Wright took her innkeep- ing talent to Massachusetts’s Northfield Inn, an aging, out-dated facility that was part of evangelist Dwight L. Moody’s complex, including the Mount Hermon and Northfield Schools. Wright faced numerous challenges in the small, conservative community, including directing Northfield’s native-son chef, who was most unhappy hav- ing to answer to a woman. “He didn’t say so to my face, but word was well voiced in conversation,” Wright recalls. Thereafter Wright was recruited to open a Holiday Inn in Geneseo, New York. That, however, turned out to be a humbling experience. “The property was underfinanced, plus | found that | did not have the marketing know-how to sell an inn where you could not rely on a fortunate location and lots of travelers,” Wright says. By then, she remembers, there were several other women in Holiday Inns’s required management-training program. Wright next moved to Rochester, New York, and sought Sales experience. Wright remembers it this way: “I tried Selling real estate, but | didn’t do well and didn’t like it. | missed the business atmosphere. So | developed my own business, through which | sold business specialty products and brokered printing and graphic arts. Then, one day in Batavia, where | had a client, Genesee Community College’s human-resource director spotted me. She tracked me down and encouraged me to apply and interview for the job of chairing the college’s new Hotel Technology pro- gram, to start that fall.” Wright got the job. “lam very proud of developing that program,” Wright Says. “I started with just the twelve state-approved course titles and my pencil.” At the time, 1979, few specific text- books were available. So Wright wrote course materials, including her own small-hotel accounting course. She arranged for field observations, internship opportunities, and guest speakers, and spearheaded an annual Gala Dinner to showcase the students’ talents. Six years later, Wright would go on to New York’s Rochester Institute of Technology, where she taught upperclass hotel-management courses, served students as an academic advisor and project mentor, and developed Seminars—principally in customer-service skills. Interested in another hospitality-program chair, Wright moved on to Ohio’s Tiffin University. But there she was frustrated by a lack of support services, so she struck out on her own as a consultant. Wright handled a range of consulting assignments—the first for the Cornell Club of New York and the last for the Cedar Point Amusement Park, in northern Ohio—before deciding to return to her roots in New York in 1994. First she returned to Batavia as staff resident in a senior resi- dence and then moved to Cooperstown to retire, just thirty miles from Herkimer, where she started. Wright takes great satisfaction in her multifaceted journey. “! accepted that it was a man’s world, and | always thought of myself as a business person in that world,” she says. “I’m proud to have been either the first woman or the first person in several of my jobs, and proud of the unexpected honors that | was privileged to receive.” WoMEN, AFRICAN-AMERICANS 103 Professor Myrtle Ericson, who taught kitchen skills and quantity cooking from 1944 until 1975. HOsPITALITY GOES GLOBAL 104 ready. As explained earlier, she and her team kept the company afloat during the Great Depression and war years and managed a strong run of growth during the post-war economic boom. When Mrs. Statler sold the Hotels Statler chain to Conrad Hilton in 1954 the company was almost twice as big as it had been before the war. Until her death in 1969 Alice Statler would remain the School’s fore- most benefactor, arranging donations of more than $10 million. In 1946 Helen J. Recknagel became the first female professor in the Hotel program. Assigned to teach “business communications,’ or what some viewed as a largely secretarial course, she turned it into the School’s first course in sales and marketing. In 1960 Recknagel became the founding editor of Cornell Hotel and Restaurant Administration Quarterly (see page 146). Another forceful female voice on the Hotel faculty was Professor Myrtle H. Ericson, who taught “Introduction to Kitchen” and quantity-cooking tech- niques from 1944 to 1975. Ericson remembers that women Hotel instructors did not receive equal pay unless they demanded it. “Helen Recknagel, Laura Lee Smith, and I were the lowest paid faculty members on campus. We complained, and in 1955 we got an increase.” More Women Succeed TILL, MOST WOMEN had a tough time breaking into S the industry. In 1963 the School’s enrollment comprised less than 10 percent women: only 41 women versus 384 men. (By contrast, in 1960 the uni- versity’s total enrollment of 8,179 included 2,119 women, or almost 26 percent.) But as women gradu- ated and went on to successful careers, the sexism began to fade. Indeed, by the early 1960s more female students than ever before began to pursue leadership roles at the School. Julie Milligan Flik ’63 arrived at Cornell in 1959, moving from an all-girls prep school to being one of eight female students in a class of one hundred. Although she felt out of place at first, she quickly shed any inhibitions and became active in many campus organizations. She became treasurer of the Hotel Sales Management Association’s student chapter, served as an orientation counselor for the Women’s Student Government Association, and sang in the Sage Chapel choir. Unlike so many before her, Milligan says she never felt discrimination. “I might have been spared because I was in the right place at the right time, considering the movement toward inclusion,” she says. “To the contrary, I have felt my femininity to be an asset.” Milligan went on to manage banquet operations for Hilton before she and her husband, Ruediger Flik, launched a food-service management company in 1971. (See page 132 for more about Flik’s career.) Julie Milligan Flik has been a prominent advocate for the industry. She has served as president of the Society for Foodservice Management, as chair of the National Restaurant Association Education Foundation, and as a member of U.S. Secretary of Labor Elaine Chao’s Advisory Committee on Apprenticeship. When Dean Beck succeeded Meek in 1961, it sig- naled a new era for women at the School. Beck’s wife Jan hosted at least two School functions a month at the Beck’s home and was a regular presence in Statler Hall. Always actively engaged in the affairs of the School, Jan M. Beck forged a personal connection with so many students that she came to be known as “the First Lady of Statler Hall.” Moreover, the Beck’s three daughters all went on to have professional careers. From his personal experience Beck knew firsthand what women could do, and he set out to change how the School and the university admitted students. Dean Beck was a founding member of the Council on Special Education Projects, a university initiative that aimed to create equal opportunity for women and minorities. At the School he encouraged his director of admissions, Cheryl Farrell, to give female applicants their due. Farrell also had the support of a growing number of faculty members, Vance A. Christian *61 (one of the first African- American professors at Jan M. Beck, “First Lady of Statler Hall,” Cornell), and Francine A. during her husband, Robert’s, deanship. Herman (professor emeri- tus) foremost among them. Still, Farrell recalls meeting stiff resistance from others at the School. “Even in the 1960s we had people on the admissions committee who would not vote for a woman,’ Farrell says. “They did not see how women could contribute.” With Farrell and Beck leading the way, however, more women were coming to the School, including a growing number from overseas. In 1971 Jennie K.Y. Chua became the first Singaporean woman to gradu- ate from the School. Chua would go on to run Raffles Hotels in Singapore and become a senior hotel execu- tive in Southeast Asia. In the early 1970s more women learned about the School from an unexpected source—network televi- sion. A new show called Hotel featured a woman as the owner of the hotel and another woman as the assistant manager. The show drew huge ratings, and many women who applied to the School during that era mentioned it as a motivating force. WoMEN, AFRICAN-AMERICANS 105 HOsPITALITY GOES GLOBAL 106 “The show portrayed women in a different light, and I think that led many women to take an interest in the School,” Farrell observes. In 1975 the number of women enrolled reached a high of 126, versus 474 men. One woman who enrolled during the mid-1970s was Katherine Klauber Moulton 78, who went on to become president and general manager of Colony Beach & Tennis Resort, in Florida. In 2001, Moulton was named Independent Hotelier of the World by the readers of HoTELs magazine. By 1985 there were 375 men and 326 women, and that year Elizabeth A. Harlow Reed ’85 became the first female managing director of Hotel Ezra Cornell. In 1992 the School had 345 female students and 332 male students, the first time women outnumbered men. In all but one year from 1992 through 2005, the School enrolled more women than men. In 2005 it enrolled a record 55 percent women. That pattern essentially mir- rors that of the university, which enrolled 25 percent women in 1935, 48 percent in 2000, and close to 50 percent in 2005. Knorr: A Top Manager i ESPITE HOTELMEN S ORIGINAL bias against allow- ing women to participate as professional equals, women have become leaders across the hospitality industry, perhaps most notably in the lodging sector. Like Julie Milligan Flik, hotel executive Antoinette “Toni” Knorr ’77, MPS ’o1, attended a girls prep school before Cornell, and she, too, had experienced little bias while at the School. To the contrary, she recalls being inspired by School leaders to learn and grow. “Dean Beck was larger than life, and [Professor] Vance Christian was responsible for my decision to focus on food and beverage,’ Knorr says. But when the time came to enter the work world, Knorr was surprised at what she encountered. “I found the interviewing process to be like a bucket of cold water,” she says. “One guy told me that I needed to get some experience, but that I would have to ‘get my knocks elsewhere.” Knorr started in food and beverage with Hyatt, hoping one day to become a general manager. A few years later she decided that she needed to refine her culinary knowledge before she could run a hotel. Against the wishes of her supervisor, Knorr took a leave of absence to attend La Varenne, Anne Willan’s cooking school in Paris. She calls it the best experience of her life. “For French people, food is their life, the founda- tion of their culture,” Knorr observes. “I learned every- thing at the most fundamental level.” Knorr recalls visiting indoor markets where stacks of Brie would rise off beds of straw all the way to the ceiling. On a trip to a restaurant she watched the chef take a goose, slit the belly, pull out the fore gras, de-vein it, put it in the oven and say, “Voila, foie gras!” “Until then I knew foie gras well enough to talk about it, but after that, I really knew it,’ she says. Afterward Knorr returned to Hyatt, where she over- saw catering in Dallas for three years and then traveled as part of a corporate team that opened new hotels. She would go on to spend a total of twelve years as the general manager of the Grand Hyatt in Washington, the Park Hyatt in San Francisco, and the Grand Hyatt in New York. At large gatherings of Hyatt general managers, Knorr was one of only five or six women. Intent on breaking into what she calls a clubby environment, she took up golf and learned to shoot in the mid gos. But what really stood out was her booming tee shots. She won several longest-drive competitions at corpo- rate outings, and afterward would take pleasure in showing her fellow general managers the new clubs she had won. “T learned to really enjoy golf, she says. “For me, it was an entrée into the men’s club.” After twenty-four years with Hyatt, Knorr left to join Millennium Partners, a New York-based real-estate development company focused on hotels. As an asset manager, she oversaw the openings of a Four Seasons in San Francisco and Ritz-Carltons in Boston and Washington, D.C. Knorr was managing capital budgets—a tremendous responsibility— but she found the work frustrating. For one, she grew tired of chasing unrealistic financial targets and working under the constant pressure to minimize costs. As much as she wanted to coach marketing teams at the hotels, she had no real authority to do so. “I was part of the team, but in the end, as the owner’s representative, my voice carried only so much weight,” she recalls. After commuting from San Francisco to New York for two years, Knorr wanted a change. A natural mentor, she decided to return to hotel management. Knorr was hired to run San Francisco's W hotel, a top property for the hottest lodging brand of its time. Under her lead the hotel led the city’s upscale market, no surprise to those who know Knorr. “Toni Knorr is that rare combination—brilliant, a fantastic operator, and a really good person,’ says Bradford G. Wilson ’84, a former W executive who worked with Knorr 1n 2005. Reflecting on her career, Knorr says that as she proved herself, the sexism wore away. But even today she sees entrenched bias against women. “There are companies who do nothing but pay lip service to diversity,” she observes. “I cringe at some of the decisions made to fill key positions. Some people will simply never be enlightened.” Toni Knorr ’77 has built a distinguished career in hotel management. WoMEN, AFRICAN-AMERICANS 107 HosPITALITY GOES GLOBAL 108 Leo-Andrieu: Manager, Designer, Award-Winner 7 alumna who found her way to Paris— and stayed—was Grace Leo-Andrieu ’77. She is president and CEO of Paris-based GLA Hotels, which manages upscale boutique properties worldwide. While learning from and working with renowned designer and architect Philippe Starck, Leo-Andrieu personally designed three properties in Paris—the Lancaster, the Montalambert, and the Bel-Ami. All three earned awards for their interior design, as did Leo-Andrieu herself. Regarded as one of the pioneers of the designer- hotel movement, she was honored at the 2003 European Design Awards ceremony. Leo-Andrieu and GLA Hotels develop and manage independent, luxury hotels ranging from the exclusive Cotton House (on Mustique Island) to the Royal Riviera (in Saint-Jean- Cap-Ferrat) and Almyra (Cyprus). Leo-Andrieu also has her own line of toiletries (“Contemporel”), and launched “Touch of Grace,” a boutique collection of accessories for home, person, and dog. Leo-Andrieu’s Paris hotels have storied histories. The Lancaster, built in 1889 as a private residence, was home for the actress Marlene Dietrich from 1937 to 1940 (room number 45 is the Marlene Dietrich Suite). The hotel’s founder, Emile Wolf, was a Swiss citizen who hung his national flag outside the hotel during the Nazi occupation. The flag fooled the Germans into thinking it was neutral territory and kept the Gestapo out of the property for the entire war. Later, the Russian painter Boris Pastoukhoff befriended Wolf during a lengthy stay. When Pastoukhoff could not pay his bill, he offered Wolf his paintings instead, and today many of his canvasses adorn the hotel. Leo-Andrieu was raised in a traditional Chinese family in Hong Kong, where she was influenced by the Western travelers she met while working at her father’s business, the Hotel Astor. Leo-Andrieu enrolled at Stanford University for one year before realizing that her passion was in hotels. She transferred to the Cornell Hotel School and has never looked back. “Cornell gave me the right training, excellent background, and good contacts,” she says. “It was a wonderful experience.” Gussing: Multinational IKE LEO-ANDRIEU, Liv Gussing ’91 came to the Hotel L School with a remarkably diverse multinational background. By age nine she had lived in Sweden, Somalia, Ethiopia, and Switzerland. By seventeen she had worked in a Swedish hotel and a Swiss hospital and mastered four languages. Gussing speaks well of her experience as managing director of HEC in 1991, but she also recalls learning in more humble ways. In a class on management she got her first chance to start and run a business. Her team made submarine sandwiches and sold them late at night in the dorms and fraternities. “Tt was not a very successful business,” she says. “But it was a valuable lesson in learning how important it 1s to select the right business—and the right business partners.” Gussing has since built a career that took her to four continents and prepared her to be general man- ager of the Amandari Resort in Bali, Indonesia. She started at the St. Regis Hotel (in New York City) where, as a butler dressed in a black tuxedo and white gloves, she catered to guests who included singer/ performer Harry Connick, Jr., the prime minister of Sweden, and the Royal Thai family. At twenty-three she moved to Bangkok, where she developed and helped to implement operating procedures for eight five-star hotels for Dusit Thani Hotels and Resorts. Later, Gussing joined Aman Resorts as a front-office manager at the Strand in Yangon, Myanmar (Rangoon, Burma), where she trained employees in how to cater to guests paying over US$500 per night. A seasoned executive by then, Gussing still learned something every day. She recalls the time a butler she had trained approached her carrying a pair of guest shoes caked with polish. “Ms. Liv, can you help me get this off?” the man asked. The shoes were suede. “Tt was another reminder of how service is all about the details,” Gussing observes. Gussing then embarked on a furious run around the globe, helping Amandari open resorts in Indonesia; Wyoming; Bora Bora, French Polynesia; and Marrakech, Morocco. In 2003 she was named general manager of the Amandari Bali, a 30-suite resort overlooking Bali’s sacred Ayung River. Gussing has seen the world, including living in a remote village where native farmers walked through her resort to get to the rice fields. As much as she loves Bali, Gussing has not lost her appetite for adventure. “T can pack a bag in one hour and be ready to go anywhere,” she says. “I'll keep exploring for as long as I can. That is the beauty of this industry.” Mellen: Smart, Independent, and Dedicated Me LIKE Fix, Knorr, Leo-Andrieu, and Gussing, Suzanne R. Mellen ’76 came to the School ready to learn and lead. Mellen found that the School encouraged public speaking and soon discovered that she had a gift for it. After she made a Liv Gussing 91 travels the world for her career in hotels and resorts. WOMEN, AFRICAN-AMERICANS 109 Right, Suzanne R. Mellen ’76 speaks at the Hotel School. She is managing director of the San Francisco office of HVS International. HosPITALITY GOES GLOBAL 110 presentation to a group of Ithaca businessmen in one class, a local real-estate developer offered her a summer job. Even as Mellen displayed her talents, however, doubters remained. When she told her academic adviser that she planned to concentrate her studies in finance and engineering, he told her that she would be better suited to a career in sales. Later, when Mellen graduated and took a job consulting in New York, she saw a different side of discrimination. “You would go out to social clubs and find secre- taries sitting on the laps of their bosses,” she com- ments. “It was an uncomfortable era for professional women in general, especially at social events.” Mellen says that the onset of sexual-harassment laws, which allowed hostile-environment litigation, helped to reduce the physical and verbal harassment that women had endured. In 1981 Mellen joined Hospitality Valuation Services International, a consultancy started by Stephen Rushmore ’67, whose initial charter was to assign value to hotel properties. With Marriott as his first client, Rushmore began to build HVS into a global entity delivering a wide range of management services to the lodging, restaurant, and leisure industries. Mellen was an ideal fit at HVS. Drawing on the whole of her education at the Hotel School—finance from Professor Robert M. Chase (’59, ME; MBA ’61), engineering from Professor John “Jack” Clark (PhD 69, EE), and design from Professors Richard H. Penner (768, ’72, Arch.) and Michael H. Redlin (67, PhD °74, ME)—Mellen knew how to evaluate a physi- cal asset even before she left Ithaca. With five years of consulting experience, she was poised to help Rushmore take HVS to the next plateau. She quickly made her first major contribution, developing a for- mula that companies use to value hotels, and a com- puter program to go with it. At age thirty-two Mellen moved from New York to San Francisco to open a second HVS office. HVS had little brand presence on the West Coast, and the naysayers told Mellen that San Francisco was too provincial for the firm. But Mellen loved a challenge, and she borrowed a small sum from Rushmore, packed up, and headed west. rthur Keith ’84 is one of a grow- ing number of African-Americans who have built successful manage- ment careers in the hospitality industry. Keith is senior vice president and general manager of the Gaylord Opryland Resort & Convention Center in Nash- ville, Tennessee. With nearly 2,900 guestrooms and 1.5 million visitors each year, it is among the twenty largest hotels in the world. A native of Elmira, New York, Keith was recruited to play football at Cornell, where he became the first mem- ber of his family to attend college. On the field and as a student, Keith’s leadership abilities were evident. His academic adviser, now-retired Professor Florence Berger, recalls how Keith’s fellow students often looked to him for guidance. “Out of the thousands of students | have taught, Arthur would be in my top two,” Berger said. “He is a true leader, respected by students and faculty for his humility and brilliant mind.” Keith served as Berger’s teaching assistant and helped her with research on her book about creativity, INNovation: Creativity Techniques for Hospitality Managers (co-authored with the late Professor Dennis H. Ferguson ’68). Later, Berger helped Keith land an internship in the accounting department at the Plaza Hotel in New York City, a role that sparked his interest in hotel management. “Professor Berger opened my eyes,” Keith said. “She saw something in me that | did not see in myself” “T was thrilled to have the opportunity,” she says. “I knew that I would have freedom to do things my way. I would also have no board to report to and no return-on-investment numbers to worry about in the first year.” ARTHUR KEITH MAKES HIS MARK through problems, but also to work in the trenches and learn by doing,” he said. After graduation Keith served as rooms director at the Statler Inn. He then joined Stouffer Hotels, where he even- tually managed properties in four cities over ten years. Looking for a new challenge, Keith entered the gaming industry as assistant general manager of Station Hotel and Casino in Kansas City, where he oversaw the design of TONS th a $300 million casino complex. Later, Keith moved to Las Vegas and led the opening team at The Venetian Resort Hotel and Casino. Next he went to Harrah’s Entertain- ment, overseeing operations at the Rio All-Suite Hotel and Casino. In 2004 Keith moved to Nashville and the Gaylord Opryland. The property has since received various awards, including a fourth consecutive Gold Key Elite Award from Meetings & Conventions magazine. In 2006 the American Hotel & Lodging Association named Keith Outstanding General Manager of the Year. Keith keeps close ties to the Hotel School. He has been a guest speaker in the Dean’s Distinguished Lecture Series and has served as an executive coach for the School’s Master’s-degree students. “I feel very blessed that | went to Cornell, for what | learned and for the relationships that | made,” he said. “What | tell aspiring hotelies is, ‘Stay humble, learn from While he valued his classroom learning, Keith also drew = anyone you Can, and try many jobs to broaden your lessons from his job as a line cook at the Hotel School’s knowledge.” Statler Inn. “Cornell taught me how to analyze and think It took Mellen less than a year to pay back her loan and build a thriving business. Now she co-owns the San Francisco practice with Rushmore, overseeing seventeen employees who have made the office a perennial profit engine for HVS. WoMEN, AFRICAN-AMERICANS 111 omen, of course, were not alone in having to overcome bias. In 1952 James H. “Bud” Ward became the first African-American to graduate from the Hotel School. Ward remembers being called into Dean Meek’s office early in his first semester. Meek congratulated Ward on his accomplishments, and then asked him what he planned to do when he graduated. “Dean Meek seemed to be fully aware and hon- estly concerned that Negroes were not being hired as managers in the hotel industry,” Ward says. “I gave him some weak response about there being hotels primarily for Negroes. That seemed to relieve him quite a bit.” When graduation came, Ward’s classmates were lining up jobs with major hotels, and he hoped to do the same. But despite excellent grades and rec- ommendations from several professors, Ward had just two offers: one from a small restaurant in New Jersey, the other from a food-service operation in Saudi Arabia. “I was both angry and disappointed with the discriminatory practices in America, but | was determined to keep moving,” he says. Ward passed on those offers and instead became cafeteria manager at Howard University, in Washington, D.C. A year later he went to work at a small hotel in Miami that catered to blacks. Ward next applied to graduate school at the University of Miami but was not admitted. Mellen says Rushmore sparks the spirit of entrepre- neurship in all his colleagues. “Steve Rushmore is an incredible leader,” she says. “He has given me complete free rein to let my talents grow. That kind of freedom is not found in most con- sulting firms.” HosPITALITY GOES GLOBAL 112 JAMES “BUD” WARD: LEADING THE WAY FOR AFRICAN-AMERICANS Fed up with the segregation and discrimination he saw in Miami, Ward joined a minority-owned public-relations firm in Washington, D.C., where he served clients such as Coca-Cola Company and Carnation Milk Company. After four years there Ward was ready to strike out on his own. The Civil Rights Act of 1964 had just been signed, along with creation of the Equal Employment Opportunity Commission (EEOC) to oversee dis- crimination complaints. Ward decided to become a diversity consultant and opened his own company, Special Market Resources, Inc. Soon he was helping several major corporations and government agen- cies comply with EEOC guidelines. In 1966 Ward got a call from what was then Marriott-Hot Shoppes, where fellow Hotel School Students Maurice O. “Bus” Ryan, Jr. 54 and Winthrop W. “Bud” Grice ’53 were vice presidents in the company’s new hotels division. Ryan and Grice had recommended Ward as a speaker for the annual managers’ meeting. Ward agreed to speak, but only if he were first given the opportunity to conduct a small survey of the company’s employees. He spent several weeks speaking to employees at every level in the company’s hotels and restaurants. When the time came to present his findings at the meeting, Ward took the stage and looked out at more than two hundred managers—every one of them white. Ward blurted out to the crowd, “I feel like a fly in a bowl of buttermilk.” No one laughed, and as Ward said later, “My comments about their EEO status sort of went downhill from there.” As for the sexism she observed in her younger years, Mellen says that it has faded as women have shown what they can do. “Women have had to work harder than men in the same jobs. As a result, people now realize that women can do most jobs as well as or better than men,” she states. Ward pointed out that 70 percent of the company’s employ- ees were black, all of them working in such positions as maids, cooks, waiters, and janitors. He called “unequal” employment the number-one civil-rights concern both throughout America and within Marriott-Hot Shoppes, and ended with this chal- lenge: “Motivating and developing productive working relation- ships with minorities may call for some to subdue their own feelings of prejudice. For the good of America and your com- pany, your help is needed to move your minority workers beyond opportunity to productive achievement.” He left to scattered applause. Two weeks later Ward got a call from J.W. “JW” Marriott, Sr., himself. Marriott invited Ward to his office and when he got there, Marriott was sitting with a copy of Ward’s speech in front of him. Marriott said, “I’ve read your comments several times, and | gather you don’t think very much of our company, do you?” Ward responded, “Mr. Marriott, | think you make a great Mighty Mo and Orange Freeze,” referring to the company’s sig- nature burger and shake. Marriott chuckled, and said, “So why don’t you join us and help us do something about ite” Ward consulted for Marriott for a few years, after which the company offered him a position as assistant vice president of industrial relations. Ward asked how many assistant VPs the company had. None, he was told; the other executives at his level were all VPs. Ward said he preferred not to establish another precedent, so after a bit of negotiation, JW Marriott A mother of a son and daughter, Mellen is unabashed about her commitment to her career. “I could not imagine relying on a man to earn a living for me,” she comments. “I gave up a lot to develop my career, but I was not going to put limits on myself.” Mellen, Gussing, Leo-Andrieu, Flik, and Wright are among the thousands of women who have built hired him as the corporate-wide vice president of management training and development. Ward thus became the first black vice president in the “white” hotel industry. Ward worked at Marriott for almost twenty years, rising to senior vice president and a corporate officer. He introduced organization development theories and practices to the com- pany, and his staff participated in the opening or acquisition of over 350 hotels worldwide. Ward was also on the team that designed and developed the “Courtyard by Marriott” concept. After he retired in 1985 Ward started a company called Symbiont, Inc., which specializes in telecommunications network architecture, fiber cabling, and software development. Ward enjoys working for himself again—so much so that, even though he’s more than 80 years old, he is in the office every day. Ward will be best remembered for opening up management opportunities for minorities and women during a tense period for civil rights. Marriott moved from having no black or women managers in its hotel division to having more than 15 percent when Ward retired—including several general managers and vice presidents. Was it tough? He answers yes and no. “| had the backing of the president, and the company was full of right-thinking people who believed in my motto: ‘Doing whatever’s fair is not always easy, but it’s right.” distinctly successful careers in hospitality. Still, Flik says that for future generations of women with professional aspirations, the onus will be on them. “Even now women are not given equal opportuni- ties because they are thought to be not as dedicated to advancement as men,” Flik observes. “Women need to speak up.” WoMEN, AFRICAN-AMERICANS 113 tA se Ll [ee 5 ee ee | eee a CHAPTER AN INFORMATION REVOLUTION Computers Change Everything HE HOSPITALITY TECHNOLOGY FIELD traces its roots to the 1920s, when the first suppliers began to serve the industry. One early leader was the National Cash Register Company, which had introduced a “posting machine” that printed hotel charges on a guest's card. As primitive as it sounds today, that machine was among the first improvements over pen and paper in the hotel accounting field. Years later the industry’s first major advance in computer technology came not in hotels, but in the airlines. In 1953, a chance meeting on an airplane helped lead to a new computer system that would revolutionize airline travel. C.R. Smith, then Before computers, a reservation president of American Airlines, and Blair Smith, a salesman for IBM, center for Hilton Hotels. Computer technology soon replaced chalk, sat next to each other on an American Airlines flight. While discussing stepladders, and many telephone operators in the reservation process. the travel industry, the men explored the idea of a data-processing 115 HosPITALITY GOES GLOBAL 116 system that would create a complete airline seat reser- vation and make the data instantly available to any agent in any location. Six years later, American Airlines and IBM announced plans to develop the Semi-Automatic Business Research Environment, better known as SABRE. The system—the first real-time business appli- cation of computer technology—would enable the airline to advance from handwritten passenger reser- vation information to an automated system. When SABRE was completed in 1964, it became the largest private real-time data processing system, second only to the U.S. government’s system. In addition to its functional benefits, SABRE enabled American Airlines to save 30 percent on its personnel costs. In 1976 the SABRE system was installed in a travel agency for the first time, touching off a wave of travel automation. By the end of that year 130 locations had received the system, and by 1978 it could store more than a million fares. In the mid-1990s, however, American Airlines had to sell off SaBrE amid govern- ment inquiries into price collusion and other monop- olistic practices. SABRE Travel Network has since thrived on its own, developing by 2006 the world’s largest global distribution system and serving content (data) from airlines, hotels, car-rental companies, and cruise lines to over 50,000 travel-agency locations. Sheraton, Holiday Inn Forge Breakthroughs. Sheraton was among the first hotel chains to advance through technology. In 1948 the company incorporated the telex system into its reservations network. Ten years later it introduced Reservatron, the industry’s first central computerized reservation system (CRS). In 1970 Sheraton led the way again, becoming the first chain to use a toll-free 800 number, and thus give cus- tomers direct access to reservations. As Sheraton advanced, Holiday Inn was making similar progress. In 1965 Holiday Inn introduced its own computerized central reservation system. Holidex, as it was known, gave millions of business travelers and families an easy way to organize their trips. With one phone call, guests knew exactly what kind of room, food, and pool awaited them down the highway. The system proved to be a huge draw for both travelers and franchisers, who saw it as a sure way to stimulate business. In fact, many “Mom and Pop” roadside lodging operations that relied on guests arriving in town without reservations were put out of business by the Holidex system. On top of drawing more business, central reserva- tion systems helped hotel managers to overcome prob- lems with their existing booking process. Before the advent of computerized systems, many hotels would overbook by 10 percent or more to cover for no- shows. As a result, on many occasions guests holding reservations were told that they had to go to another hotel. Hotel managers generally treated these displaced guests well. At Sheraton, for example, they received free transportation to and accommodation at another hotel, along with a generous certificate redeemable at any Sheraton Hotel. But it was rarely an easy or com- fortable interaction. “It was amazing to watch hotel managers use their best psychology to pacify customers who understand- ably became furious upon being told they had to go to another hotel,” recalls Leif R. Evensen 66, who worked for Sheraton in the late 1960s. NCR and Cornell Experiment Together URING THE 1960s many advances in hotel D technology were pioneered at the Cornell Hotel School. In 1960 Professor Charles I. Sayles ’26 led a study of “the possible application of data processing equipment to the various aspects of hotel operation.” Thus began the computer era at the School, an era that helped to fuel some of the first significant steps in moving manual work to the computer. At the time, Hotel School Dean Robert Beck ’42 knew that the National Cash Register Company (NCR) was emerging as a leading supplier to the industry. In 1953 NCR had established an electronics division to pursue electronic applications for business machines. Four years later, the company introduced the first fully transistorized business computer, the NCR 304. Moving to solidify ties with the company, Beck formed a committee of faculty members and NCR representatives to explore the possibilities offered by computing. Leading the discussion for Cornell were Richard A. “Dick” Compton and Professor Sayles, who had already done pioneering work in creating a front- desk accounting system. That system recorded a guest’s transactions on punch cards that could be fed into an “accounting machine” that printed out a bill, essentially replacing the traditional guest-folio bucket or tray. The system was adopted by several hotels, most notably Toronto’s Royal York. An early National Cash Register computer is demonstrated at a Hotel School research lab in 1957. COMPUTERS CHANGE EVERYTHING 117 BOB CHASE’S GREAT DISCOVERY n 1964, while playing a “manage- ment game” as part of an IBM workshop, Professor Robert M. Chase (’59, ME; MBA ’61) had an epiphany. He and his team- mates discovered something. It wasn’t something that was directly taught to them, but rather something that the game led them to discover for themselves. Chase thought that “discovery learning” might be a good way to teach some things about the hotel business. The IBM game ran on a computer. Chase wasn’t a “computer guy”—few people were in those days—but he learned, and eventually came up with CHASE (ostensibly an acronym for Cornell Hotel Administration Simulation Exercise). Teams of five students competed, each managing an imaginary hotel. At first the moves of the game were entered on punch cards fed into a com- puter at Cornell’s Langmuir Laboratory, with the results returning the next day on wide, track-fed, side-perforated, computer-paper printouts. Later the game was played using terminals connected to a mainframe on campus. For many years Chase was adamant that game players should not do the actual data entry. “You wouldn’t be running a hotel, you’d be running a computer,” he’d say. The CHASE game soon led to CRASE (Cornell Restaurant Administration Simulation Exercise) and CHESS (Cornell At the committee’s suggestion, NCR agreed to lend the School a computer to see what students and faculty could do with it. In 1968 technicians installed the NCR “Century 100” computer on an upper floor of Statler Hall. A few weeks later, however, someone in the room below noticed the ceiling was sagging, and the massive computer was moved to the basement. As enormous as the NCR computer was, it held only 16 kilobytes of memory, barely enough to store two pages of a word-processing document or a photo HosPITALITY GOES GLOBAL 118 Hotel Educational Strategic Simula- tion). CHESS was the first program to run in real time. As technology evolved, Chase shepherded the programs through conversions to run on five dif- ferent computer platforms. Today, run- ning on desktop PCs, the games are used by corporations and hospitality schools all over the world. Ironically, the games are not used regularly by other schools in the United States, which prefer not to display the Cornell name. In recent years the games have been dropped from the Cornell Hotel School curriculum, too, as basic classes in hotel and restaurant management are streamlined to make room for instruction in finance and real estate. Early in 2005, in collaboration with his faculty colleague Mark P. Talbert ’89, MPS ’93, Chase began developing Internet versions of the games. In an early test, compet- ing teams were based in Germany, China, India, and Fiji. The server running the game was in Sydney, Australia, and players communicated in a chat room run from Florida while Chase supervised from Ithaca. “One of our discovery learning experiences,” he says, “was that we should put all the teams in the same time zone.” Although his early programming work took him away from teaching plumbing and heating technology and made him a professor of information technology—in fact, the first person outside of England to teach computing at a university—Chase still insists he’s not a computer guy. “I’m an educator who uses computers,” he says. —by William Steele the size of a postage stamp. Assistant Professors Thomas M. Diehl ’68 (MBA ’70) and Richard G. Moore (’67, EE; MBA ’70) asked student Robert S. Bennett ’73 to figure out a way to use the computer to handle the School’s alumni records. Bennett ended up with two drawers of punch cards representing some 4,000 alumni records, and a program that would read through the cards and produce a summary report. Bennett no doubt took pride in his hard work, which involved writing over 1,000 lines of program code to create a data-sorting method superior to the existing manual procedure. At that time it was impossible for Bennett and others to know that the next generation of students would be able to accomplish the same assignment in five minutes with basic spreadsheet software, such as Excel. Later, even with an added compiler to run the more flexible Fortran language, Professor Moore saw little application to the industry because the computer was still a batch processor. Information was entered on punch cards and the computer would print out results on a wide piece of paper with perforations along the edges. “We were trying to run a real-time business in batch mode, and the industry was running real time with terminals,’ Moore recalls. Although the NCR computer offered little practical gain, students enjoyed the experiment and wanted to learn more about programming. In the spring of 1968 Moore taught twenty students in the Hotel School’s first course in programming. The course proved so popular that Moore taught two sections the following fall. As the industry produced more advanced computer systems, the Cornell/NCR committee worked to stay on the defining edge. The committee set out to develop systems that an individual hotel could use to keep track of all its “data”: guests, services, and money. Two systems were envisioned—a back-of-the-house system for payroll, human resources, accounts payable, accounts receivable, and general ledger; and a front- of-the-house system for registrations, check in and checkout, housekeeping, and night auditing—in other words, the entire guest cycle. Moore, Diehl, and Chase assembled a team of stu- dents to support the committee’s work. This was a high-powered group of exceptional thinkers that would later make a dramatic impact on the field. In 1987 Dietmar Mueller-Elmau, MPS ’80, founded Fidelio Software GmbH, the first successful hotel- management computer system. Joseph A. Marko ’78, MPS ’80, became president of Fidelio North America. Bennett eventually became vice president for technol- ogy at Marriott, and Jules A. Sieburgh ’72 (MBA ’74) would rise to executive positions at Host Marriott and later at Priceline. Minicomputers: Woes, then Gains S ROOM-FILLING MAINFRAMES gave way to the minicomputer, an individual hotel could have its own computer system. The desktop computer finally extended that possibility to every hotel and restaurant, and soon companies sprang up offering management software for various hotel and restaurant functions. COMPUTERS CHANGE EVERYTHING 119 HosPITALITY GOES GLOBAL 120 With progress came problems, however, particularly the fragmentation of systems. For instance, a hotel might have one system at the front desk for handling reservations and room assignments and eventually preparing the bill. Another system—likely from a different vendor—would handle accounting, payroll, purchasing, and receivables. Still another system might track point-of-sale transactions in the restaurant, sou- venir shop, or health club (known then simply as the “gym’), while a fourth system would log phone calls made from the guest’s room. As hoteliers discovered, few of these systems were able to interact with one another. For example, point- of-sale systems for food and beverage outlets often did not interface well with other systems. While interfaces could be built among the various systems, those inter- faces could cost more than the systems themselves. For much of the 1970s and 1980s, hotel companies strug- gled to find the right combination of systems to serve their individual needs. In fact, even in 2006 it was not unusual to find more than twenty separate computing systems in the same hotel, many of them lacking full compatibility. As described on pages 121-122, “enter- prise systems” promised some degree of relief from the confusion, but ideal solutions were elusive. Competing for Customer Loyalty LOWED BY A RECESSION in the United States S and the 1990-1991 Gulf War, the hotel industry suffered through one of its worst economic periods in the early 1990s. Amid sliding room and occupancy rates, hoteliers sought better ways to serve guests and earn their loyalty and repeat business. This led technology experts to develop databases that track and maintain each guest’s individual prefer- ences. Each time a guest stays at a company’s property, employees notice and record that guest’s preferences, such as a favorite newspaper, a preferred room, or a special flower arrangement. Hotels can use this data to market more effectively to guests, and to serve those guests with an exquisite personal touch throughout each stay. The theory is, to the extent that such pam- pering encourages repeat patronage, the technology more than pays for itself. Four Seasons Hotels and Resorts is one chain that has used technology to track and serve the individual needs of guests. “Four Seasons has a great infrastruc- ture linking all of its properties, and they do a very good job tracking guest preferences,” says Sabato D. Sagaria 97, who worked at the Four Seasons resort in Palm Beach, Florida, in the early 2000s. “Our industry has a fairly high employee turnover rate, so while the faces at a Four Seasons may change before a guest returns, the system is in place to pass [customers’ pref- erences] along.” Among casinos, Harrah’s Club in Las Vegas is known for aggressively tracking the spending habits of its customers. Harrah’s uses the data to drive its pro- motional activities. “Harrah’s tracks every bet attached to a person,’ says Gabriele Piccoli, an assistant profes- sor of Information Systems at the Cornell Hotel School. “The system logs where people bet, how often they bet, and how much they bet. Since Harrah’s derives most of its revenue from gaming, this is a wise investment on their part.” Enterprise Systems. By the late 1990s the industry had turned its focus to enterprise resource planning, or software that manages all company operations through one central database with individual modules connected to it. In theory, one system would manage the entire enterprise—front desk, back office, point of sale, marketing, and more—and data would move seamlessly among the units. For example, a point-of- sale terminal in the gift shop would feed its transac- tions to the front desk to be added to the customer’s bill, and the income would pass to the back office to become part of the monthly financial statement. Fidelio became a leader in this market, making by 1994 more than 3,700 installations in hotels in ninety-seven countries. MICROCOMPUTING n the 1980s and 1990s, Cornell Hotel School faculty spent much time talking with former students about the technology skills they needed in their first jobs out of school. Faculty members learned that many graduates were being asked to manage, manip- ulate, and analyze data to drive business decisions. To help address this need, in 1995 the School hired Lecturer Mark P. Talbert ’89, MPS ’93, to teach a course > A DRIVE TO “EXCEL” sistently list it among the five most valuable courses they took at Cornell. “We ended up teaching Office Suite at a depth that nobody else in the world teaches,” says Professor Leo M. Renaghan, associate dean for academic affairs from 2000 to 2006. “It became a skill that our students have, to use a personal computer to increase organiza- tional and personal productivity that nobody else does today.” in “microcomputing.” Although most students have Some students wanted to go further, and Talbert since come to Cornell with years of experience in front introduced a course called “Advanced Business of a computer, Talbert finds that they still don’t appre- | Modeling.” The course teaches the use of Microsoft’s ciate the business possibilities. “They’re skilled in the recreational use of the computer, but they know just as little about getting work done on it as ever,” built-in macro language, Visual Basic for Applications, which can pull data out of a database, process it in a spreadsheet, and feed the report to a word processor. he says. As the skills of graduates improved, so did the expec- Talbert’s course focuses on the Microsoft Office tations of employers. “Recruiters used to ask if you Suite, and especially its Excel spreadsheet, as a tool for knew Office Suite,” Talbert says. “Now they ask if you making business decisions. The course was the first of | know Visual Basic.” And the more such questions are its kind at Cornell, and some say the first anywhere in What seemed like an ideal solution has proven not so easy to implement, however. Indeed, chains that set out to replace a maze of legacy systems with a new enterprise system found that doing so could take sev- eral years and millions of dollars. Those on the leading edge often found themselves on the bleeding edge, spending a fortune on conversions that, by the time they were functional, were also obsolete. “Theoretically, enterprise resource planning works very well, but 75 percent of these projects fail,’ says Erica L. Wagner, an assistant professor at the Cornell Hotel School. “They either exceed budget, take too long, or their functionality is minimal.” asked, the more students are drawn to Talbert’s the United States. When asked, former students con- course. COMPUTERS CHANGE EVERYTHING iZ}k A CASHLESS ENVIRONMENT t many hospitality properties, magnetic-strip key cards have replaced cash. One example is Kerzner International’s Atlantis Paradise Island Resort in the Bahamas. Up until 2003 the Atlantis accepted cash at its 230 point-of-sale locations (e.g., restaurants, lounges, shops, spas). But resort managers wanted to find a better way to man- age transactions, a way that would add convenience for guests and ease the handling of cash for the resort. Through the combination of a room-key card system and a hospitality-management system, the resort moved to a cashless environment. Upon check in, each guest receives a magnetic-strip key card that operates the Vingcard door lock, tracks activity at the casino, and allows guests to purchase throughout the resort through a link with the comput- erized property-management system. Employees sim- ply ask for the guest’s room number to confirm a match. Guests like the system because they don’t have to carry cash. The resort favors this approach because it drives higher sales and reduces the risk of loss inherent in cash handling. Other hospitality merchants are using a similar approach. On many cruise lines, for example, cus- tomers use similar magnetic-strip cards to pay for everything from drinks by the pool to massages in the spa. In quick-service restaurants, modern technology similar to that used for paying highway tolls is allowing for cashless transactions in the drive-through lane. In one system, called FastTrack, a numbered device is installed permanently in the windshield. A reader board above the drive-in lane uses a radio frequency to read the number of the device as the car drives through. The card is charged, and no cash exchanges hands. While Fidelio was emerging as the top provider of information systems to hotels, Micros Systems was doing the same for restaurants. Micros offers a global distribution and service network for major chains, regional chains, and independent operators, for both table service and quick-service operations. Micros has more than 220,000 installations worldwide, including the world’s largest point-of-sale system at Stadium Australia in Sydney, Australia. In 1995 Micros completed its acquisition of Fidelio, creating the dominant information supplier in the HosPITALITY GOES GLOBAL 122 industry. Soon thereafter the company introduced its Micros-Fidelio enterprise system, the first to offer a multiproperty, fully integrated hotel system that includes property management, sales and catering, central reservations, revenue management, material management, and back-office applications. It now has over 20,000 installations worldwide, across a client base that includes InterContinental Hotels Group, Hilton International, Marriott International, Four Seasons, Wyndham Hotels, Le Meridien Hotels, and Best Western. The Internet Changes Everything Y THE ADVENT Of the twenty-first century there B was universal reliance on the Internet and its subpart, the World Wide Web. As such, it is hard to imagine that less than a dozen years earlier the Internet and web were essentially novelties. It was not until the early 1990s that the Internet began substan- tially to revolutionize business communication. Mostly through the capabilities of the web, in less than a decade the Internet became the world’s most power- ful communication tool. The Internet has brought huge changes in how hotels inform, serve, and interact with their guests, starting with the way hotel rooms are marketed and sold. Not surprisingly, most hotels use their web sites to show detailed listings of amenities and services, and encourage bookings and room upgrades. Additionally, some hotel companies have fortified their sites with information on ancillary activities such as spa treat- ments, golf reservations, restaurant bookings, museum and theater admissions, sightseeing tours, and sport- ing events. By packaging these items together, hotels are generating higher revenue per customer than before. More important, hotel companies are also using the Internet to book more business at lower costs than they incur with traditional booking methods. Prop- erties with branded web sites have managed to shift much of their booking to this channel and away from more-expensive channels such as on-line agencies, tra- ditional travel agents, toll-free call centers, and direct phone calls to the hotel. The Internet has also given rise to another distribu- tion channel—on-line travel agents. These agents— Expedia, Hotels.com, Travelocity, Priceline, and Orbitz are among the best known—deliver everything con- sumers need to research, plan, and purchase an entire trip. Using the agents’ branded web sites, travelers can book airline tickets, hotel reservations, car rentals, cruises, and related services. Of course, indirect distribution comes at a price. On-line agents derive a fee of approximately 17 per- cent for each booking, cutting into hotels’ profitability. Karen E. Tepper ’03, a market manager with Expedia, Inc., is one of several agency employees who negotiate with hotel managers the number of rooms that the hotel will set aside for sale on line through resellers and at what rates. That means that, in some cases, hotels are competing against their own on-line reservations. Most hotel companies have already implemented on-line distribution strategies designed to minimize their reliance on third-party agents. Perhaps most important are lowest-price guarantees offered at many hotels’ web sites. Moreover, most hotel companies use proven marketing tools—an attractive, easy to use web site, electronic marketing programs, and Internet brand-building technologies—to entice Internet users to do business on their web sites. Marriott and Hilton are among the hotel companies that already book up to three times as much business on their own sites as is booked via indirect channels. Many industry observers believe that the role of on- line travel agents will diminish further as branded web sites gain more traction with consumers. In fact, a Goldman Sachs study that compared several hotels in several markets across seven distribution channels showed no substantial difference in prices offered. On average, consumers who shopped around could have saved only 1.98 percent. When there were differences, the lowest prices were usually found on the brand’s COMPUTERS CHANGE EVERYTHING 123 FIRST MOVERS Breakthroughs in the use of technology in hotels: 1927 1946 1951 1957 1983 1983 1986 1991 1994 1995 1999 ¢ The Hotel Statler in Boston is the first hotel with radio reception; guests use headsets to receive broadcasts from a central control room. ¢ Western International Hotels issues the first guest credit card. ¢ Hilton is the first chain to install television sets in all guestrooms. ¢ Hilton offers direct-dial telephone service. ¢ Westin is the first major hotel company to offer reservations and checkout using major credit cards. ¢ VingCard invents the optical electronic key card. ¢ Teledex Corporation introduces the first telephone designed specifically for hotel guestrooms. ¢ Westin is the first hotel chain to provide in-room voice mail. ¢ First on-line hotel catalog debuts—TravelWeb.com. ¢ Promus Hotels Corporation and Hyatt Hotels are the first chains to establish web sites on the Internet. ¢ Choice Hotels International and Promus are the first companies to offer guests “real time” access to the hotels’ central reservations systems. ¢ Choice Hotels International and Holiday Inn, Inc., are the first to introduce on-line booking capability. ¢ Choice Hotels International is the first chain to test making in-room PCs a standard amenity for guests. HosPITALITY GOES GLOBAL 124 controlled distribution channels—its toll-free number and web site. Thus, as hotel companies continue to gain control over inventory and price, they will have less need to rely on indirect channels. The Internet’s effect on hospitality is expected to grow even larger. Investment bank Crédit Suisse First Boston predicted that 24 percent of all hotel bookings would be made on line by 2007. As important, more customers and guests will use the Internet to gather the data they need to choose among properties and Services. In keeping with its commitment to lead the indus- try, the Cornell Hotel School teaches several courses about the Internet. In one, Senior Lecturer William J. Carroll teaches students how to evaluate marketing, sales, and operations activities in the changing hotel- distribution environment. Students learn how to build an integrated channel strategy encompassing sales, marketing, pricing, cost, financial performance, service delivery, and product development. Toward a Better Future Moe HOTEL DATABASE applications such as property-management and point-of-sale systems have increased operating efficiency for many in the industry. Hoteliers have used these systems to increase revenue, decrease costs, and better manage their financial and operating data. But even with that progress, the industry’s use of technology is still far from optimal. “The industry has not always been a leader in embracing technology, but it has accelerated its use in the last decade,” says Bjorn Hanson ’73, managing director for the consulting firm Pricewaterhouse- Coopers. “This is true in how hoteliers manage the information needed to run their businesses, how they train and instruct their staffs, and how they communi- cate with the public.” Few industries face a technology environment as large or complex as the hotel industry. More than one hundred different categories of systems are commonly used within hotels. As noted earlier, while most of these sytems need to interact, few are designed to do so. Indeed, the hospitality technology field is so frag- mented that the largest software providers and technology service providers each command less than 1 percent of the market, and the vast majority each hold less than 0.1 percent. The result is many unrelated producers, creating incompatible products. It is that fragmented environment that raises sig- nificant barriers of time, risk, and cost to hoteliers’ willingness and ability to acquire and install new sys- tems. What is more, recall that even when hoteliers consider new systems, much of the risk and cost is not tied up in the hardware or software itself, but in the age-old problem of developing the interfaces required to enable new and existing systems to interact. Industry leaders are working to address the problem of systems that do not interact. In 2002, for example, nine leading hotel industry technology experts formed the Hotel Technology Next Generation (HTNG) ini- tiative. HTNG is intended as a vehicle to develop the adoption of standards and practices that can help the hotel industry achieve generational change in technology. A second group is working to develop new technol- ogy standards for the industry. This commitment, called the Hospitality Information Technology Integration Standards (HITIS), is designed to reduce the cost, time, and risk involved in buying and imple- menting new information systems. HITIS is based on the theory that a single set of technical and business standards will help create stronger technology vendors. At the Cornell Hotel School, the faculty is working to keep pace with an ever-changing technology land- scape. “The people in the industry are changing, the technology is changing, and customer expectations are changing,” says Professor Wagner. “We need to educate our students to be able to respond to a more complex environment. There are still a lot of business people who buy the latest technology and end up losing money because they don’t think about how it’s going to influence their business.” Preston Clark teaches a computer course at the School’s Binenkorb Center. COMPUTERS CHANGE EVERYTHING 125 FR CHAPTER MANAGED SERVICES From Peanuts to Hotels N 1936 AN ENTREPRENEUR named Davre Davidson hit on an idea that would take the hospitality industry in a new direction. Intrigued by a study promoting the nutritional value of peanuts, Davidson set out to sell nuts in places where they had never been sold before. He loaded bags of peanuts into the back seat of his Dodge and began to call on factories and offices along the Pacific coast. Davidson was among the first to manage a hospitality service for others. Today, managed services, as the field is known, has grown into a diverse business that spans far beyond food into most facets of the industry, even including the management of hotels. A Hot Shoppes van is One of Davidson's first customers was the Douglas Aircraft plant in used to load pre-cooked meals into an airliner. southern California, where he convinced managers to let him install 127 HosPITALITY GOES GLOBAL 128 peanut dispensers on the factory floor. Years later, a Douglas employee introduced Davidson to William Fishman, who ran a vending machine company that served a Douglas plant in Chicago. The two men became friends and in 1959 they merged their opera- tions to create a new company called Automatic Retailers of America, or ARA for short. Intent on becoming a national company, in 1961 ARA acquired Philadelphia-based Slater Systems, which at the time was the country’s largest “by the manual” food-service business. ARA continued to expand by acquiring the best-managed local businesses and convincing managers to stay with the company. Food Service Takes Flight. While Davidson and Fishman were advancing the concept of food service on the ground, Hot Shoppes, Inc.—later the Marriott Corporation—was doing the same in the air. Beginning in the 1930s, airlines began to fly long routes. In an effort to rise above the competition, car- riers began to serve food during flights. They soon realized, however, that they were not well suited to provide this service on their own, so they turned to Hot Shoppes for help. In 1937 Hot Shoppes launched its airline catering business at Hoover Field (current site of the Pentagon), serving as its first customers Capital, Eastern, and American Airlines. Hot Shoppes quickly emerged as a forerunner in the managed services industry. In 1939 the company won its first management contract: to feed U.S. Treasury employees. During World War II Hot Shoppes fed thousands of workers who moved to the nation’s capi- tal to work in the defense industry. In 1945 the firm continued to expand, landing its first airport-terminal food-service contract at Miami International Airport. Later, Hot Shoppes won its first institutional feeding contract at Children’s Hospital in Washington, D.C. As Hot Shoppes became the industry’s dominant force, a group of enterprising young men were pursu- ing their own niche. During World War II, Hobart College, in Geneva, New York, trained almost a thou- sand men in the U.S. Navy’s v-12 program. Many of those men returned from combat to complete their college educations on the G.I. Bill. In 1948 three of those veterans—William Scandling, Harry Anderson, and W.P. Laughlin—took over operation of the Hobart dining hall while they were still undergradu- ates. The following year they began to manage dining services at nearby William Smith College. After their graduation in 1949, the men expanded the business to serve other colleges and universities across the country. Saga Corporation, as the company was eventually named, became one of the first nation- wide providers of food service specifically for educa- tional institutions. One Saga executive, William P. Fisher ’60 (PhD ’68, A&S), went on to a most dynamic career in the field. Fisher served as executive vice president of the National Restaurant Association before returning to the private sector as a senior executive at Service Systems in Buffalo, a firm founded by Robert D. Flickinger ’47. Later, Fisher became president of the National Restaurant Association and then served in a similar capacity for the American Hotel & Motel Association. Fisher even made time to teach account- ing at the Hotel School. Saga was acquired by Marriott in 1986, making Marriott the nation’s largest foodservice management company at the time. Twelve years later, Sodexho Alliance acquired a stake in Marriott’s foodservice and facilities-management businesses. Five years later the French company acquired the remaining portion, thus becoming one of the leading foodservice companies in North America. A Sporting Endeavor. In the 1960s the growing popu- larity of professional sports leagues prompted ARA to enter what it called the “leisure services” market. ARA won contracts to manage food and beverage conces- sions at stadiums and arenas where professional and college sports teams played. In 1968, ARA expanded into international markets when it secured the con- tract to provide food service at the summer Olympic Games, in Mexico City. The company has since provided food service at thirteen Olympic Games in venues around the world (see page 131). In the late 1980s and 1990s, ARA Services began to shift its emphasis from project work to building long- term partnerships with its customers. To reflect this new focus, the company’s name was changed to ARAMARK. The company also began to call its rela- tionships with customers “unlimited partnerships,” reflecting ARAMARK’s commitment to do whatever it could to satisfy its clients and help them succeed at their core businesses. In 2005, ARAMARK reported rev- enue of $11 billion. More Study at the School A. FIELD OF MANAGED services has grown, the Hotel School has put more resources toward this discipline. Today the School teaches classes in managed services at both the undergraduate and graduate levels, often in close collaboration with industry leaders. In each course, students venture into the field to gain practical exposure to fast-growing segments of the business. In 2004, for example, students in the School’s master’s-degree (MMH) program and a few under- graduates traveled to North Carolina to study the foodservice and conference-service businesses that FROM PEANUTS TO HOTELS 129 HOosPITALITY GOES GLOBAL 130 ARAMARK manages for the University of North Carolina at Chapel Hill. After hearing presentations from ARAMARK executives and touring the food and conference facilities, students were asked to examine two actual business proposals then being addressed by the company. In one, students evaluated the feasibility of expanding ARAMARK’s executive conference center on campus. At the end of the weekend, students pre- sented their findings to members of ARAMARK’s man- agement team. “The course was a great way to explore an emerging business in action. The concept of learning through immersion is genius,’ says Christina M. Lofton ’o04. “We enjoyed formulating solutions that we knew might be implemented in the future.” This kind of field-based learning has helped stu- dents better appreciate the scope of managed services and its potential as a career. Indeed, in its early years, managed services was not well understood and, as a result, few students had an interest in pursuing a career in the field. That perception began to change as Marriott, ARAMARK, and other leaders intensified their recruiting efforts on college campuses. At first, despite their well-known corporate names, these recruiters found they still had a tough sell. “In the early years, institutional food service was not high on the list for most graduates,” recalls Edward A. Evans ’74 (MBA ’75), whose second job was managing human resources for Saga in Texas and Oregon. “Students had a hard time envisioning a career path in the field.” As these companies grew, however, they began to develop hierarchies like those found in leading hotel companies. Students could see how they might join a leading managed services provider like ARAMARK (U.S.), Sodexho (French), or Compass Group (English) and work their way up the ranks into senior management. In fact, Evans himself lived out this vision, rising to become senior vice president of ARAMARK’ uniform and career apparel group. Alumni Build Careers Ms OTHER HOTEL SCHOOL graduates have built successful careers in the field. At ARAMARK alone, they include Ira R. Cohn MPS ’83, president of ARAMARK’s business services unit; Marc A. Bruno ’93, vice president in the international group (see next page); Abigail A. Spencer-Charpentier 95, vice president for human resources in conference centers; and Carl M. Mittleman ’97, vice president of operations in parks and resorts. Mittleman, for instance, became interested in the field after hearing about it from a guest speaker in a class during his junior year. He completed an intern- ship at ARAMARK that summer and took his first job arc A. Bruno ’93 has earned the gold medal in food service. He has shared meals with boxing cham- pion Muhammad Ali and members of the U.S. Dream Team basketball squad, as well as presidents, heads of state, and celebrities. As a project leader for ARAMARK, Bruno (at far right, pictured with other Cornellians working the Olympics) oversaw dining services for three Olympic games. At the 2004 Olympics, in Greece, Bruno’s team and a local com- pany spent five weeks serving the 23,000 athletes, coaches, and support personnel who lived in the Olympic village, along with 1,600 members of the NBC Sports broadcasting team. “It was a fabulous opportunity to be of service at this spectacular event,” says Bruno, a vice president in his company’s international group. “The work is immense and challenging, but the rewards are even greater.” In Athens, Bruno and his team designed and built kitchens and a 6,500-seat dining room. They hired 2,000 employees, including 700 cooks and chefs from around the world who served up to 60,000 meals a day. The chal- lenge, Bruno says, is to cater to the unusual needs of the athletes. “They eat very particular things, and they eat a lot,” he comments. “We blended the local cuisine into the menu to make it a truly exceptional dining experience.” Bruno FOOD SERVICE OF EPIC PROPORTIONS was a visible presence in the dining hall, making sure that athletes and their guests were taken care of. At the Athens games the amount of food consumed was staggering: 56,000 pounds of cheese and dairy prod- ucts, 300,000 eggs, 190,000 pounds of seafood, 675,000 pounds of fruit, 3 million soft drinks, and 25,000 loaves of bread, for starters. The Athens games had an especially distinctive Cornell flavor. The dining room was designed by Jennifer L. Safran ’96, a Senior project manager with ARAMARK. The company also hired twelve Hotel School undergraduates to work the games. “The Hotel School faculty is always very helpful in rec- ommending students to support us,” Bruno says. “ARAMARK is pleased to have such a strong partnership with the School.” For the students, working at the Olympic games was a broadening experience. “I never studied abroad during my time at Cornell, so this was a perfect opportunity to live in another country and work with people from so many dif- ferent cultures,” said Morgan R. Berk ’04. Bruno, who also holds an MBA from the Harvard Business School, has shared his experiences with students as a guest lecturer in Professor Alexander Susskind’s food and beverage class. It was in that class in 1990 that Bruno, while still an undergraduate, first learned about ARAMARK’s support of the Olympics, through a lecture given by an executive on the firm’s role in support of the 1988 Seoul games. “| was intrigued by the size and scope of such an undertaking,” he recalls. “When | speak with students about the Olympics | have worked at, | see in them the same excitement that | felt almost twenty years ago. It is a great opportunity to share a glimpse of what is involved in the largest food and beverage event in history.” after school as concessions manager at Coors Field, in Denver, home of the Colorado Rockies baseball team. Several promotions later, Mittleman oversaw ARAMARK’S services in one of the world’s largest parks, Denali National Park, in Alaska, and then became Vice President Operations West, for ARAMARK’S Harrison Lodging division. As the field expanded under the lead of Sodexho, ARAMARK, Compass Group, and others, seasoned hospitality leaders were drawn to managed services. Michael Z. Kay ’61 is one executive who made a distinctive mark in the field later in his life. Kay had already built a highly successful career in general man- agement by the time he took over as president and FROM PEANUTS TO HOTELS 131 ulie Milligan Flik ’63 spent her child- hood summers digging for clams in the waters off her beach house on Long Island. Walking door to door along the boardwalk on Friday mornings, she would sell her catch to a standing clientele at 25 cents a dozen. Twenty years later Flik drew on her entrepreneurial Spirit once more, teaming with her husband to launch a thriving foodservice business. Reflecting on that progres- sion from clams to catering, Flik says with a smile, “I sup- pose | was destined to work in the food industry all along.” One year after graduating from the Hotel School, Flik joined Hilton’s banquet-sales training program in Chicago. Nine months later she moved to San Francisco to run ban- quet sales for a new Hilton hotel. It was in that city that she met her husband to be, Ruediger Flik. They married and started a family, and Julie left hospitality to focus on raising her two sons and daughter. In 1971 the Fliks approached Sarah Lawrence College, north of New York City, offering to handle its food-service operations. They won the contract, launching what would become a thriving business serving colleges, private JULIE FLIK: FROM CLAMS TO CATERING schools, industry, and healthcare. FLIK International grew board member of the NRA and was elected chair of its to serve nearly a hundred clients and generate annual sales exceeding $70 million. In 1995 the British food-service company Compass Group PLC bought FLIK International. Under the deal, the Fliks would manage the business for another four years. Still, when the Fliks chose to sign, it was a bittersweet moment. “! cried,” Julie Flik recalled. “It was almost like selling a child. But all of our employees have benefited from the sale. We have never regret- ted it,” As of 2006, Flik continued to work as an executive vice president for Compass. Throughout her career Flik has actively supported her industry. For both the Society of Foodservice Management and the National Restaurant educational foundation, which works to recruit and retain restaurant industry workers. Flik has also been a tireless sup- porter of Cornell. She serves on the University Council and was a mem- ber of the President’s Council of Cornell Women. At the Hotel School, the Fliks have established an endow- ment to support faculty travel and development. “Our hope is that many members of the Hotel School faculty will use this revolving grant to enrich their professional knowledge, and, in turn, share that knowledge with their students,” Flik says. Today Flik divides her time between Bion Island, New York, and Key Biscayne, Florida. She enjoys tennis, golf, and the opera, and each summer she still digs for clams in the Association (NRA), she flew around the globe to evaluate waters off her childhood beach house. food service at U.S. Air Force bases. She later became a chief executive officer of LSG Sky Chefs, in 1991. He had been president and CEO of Omni International Hotels, president and COO of the Portman Hotel Company, and a senior executive at Charter Medical Corporation. At LSG Sky Chefs, Kay led an aggressive growth strategy that helped the company capture 30 percent of the airline catering industry. Under Kay’s lead, Sky Chefs acquired its largest competitor, tripling its busi- ness in the process. Later, the company was sold to HosPITALITY GOES GLOBAL 132 Lufthansa Airlines at a multiple of earnings highly favorable to Sky Chefs shareholders. While Kay is best known for his strategic leadership, he also showed an abiding interest in Sky Chef’s day- to-day operations. Before Kay joined, the company was logging 1,000 injuries and losing more than 18,000 workdays each year. Many of those injuries were sus- tained by kitchen workers who strained their backs lifting heavy objects. Kay introduced a safety program that trained work- ers in how to function without strain. The company offered financial rewards to workers with good safety habits and other incentives to supervisors, who had a quarter of their bonuses tied to their unit’s safety record. By 1994, workdays lost to injuries had been reduced to five thousand a year. “The old approach was designed to catch employees doing something wrong,’ Kay recalls. “We found that by focusing on rewards rather than punishment, we were able to achieve much greater success.” Another early pioneer in the field was Michael Hostage (58, A&LS), who ran much of Marriott's food-service business from the mid-1960s to the mid- 1970s. Hostage, who had learned brand management at Procter & Gamble, led the creation of the brand sys- tem for Marriott’s hotel empire. As managed services grew, still other hospitality executives were drawn to the field as entrepreneurs. Julie Milligan Flik (see page 132) and her husband, Ruediger, started their own catering business in 1971 and years later sold it to Compass Group, which went on to become one of the world’s largest catering businesses. Two other Cornell graduates who made their own path to the field are brothers Martin Wells (°83, Law) and Steven M. Wells ’86. Raised in Syracuse, New York, they grew up in the business, as their father Henry had built a foodservice company that he sold in 1985. Both Martin and Steve, however, chose to earn law degrees, REMEMBERING ALAMO ichael S. Egan ’62 showed an inno- vative touch in building Alamo Rental Car into a national brand in the 1980s. Egan led a team that bought Alamo in 1979, and he became its president. Under his lead, Alamo was the first to offer unlimited free mileage. The firm also started the practice of building rental plazas adjacent to, rather than at, airports, giving Alamo a price advantage. At one point, Egan gathered several employees in New York City, where he told them to drive to Alamo headquarters in Florida, with a Stop at every travel agency to pitch them on Alamo. “It sounds corny, but it worked,” Egan says. “We had to find creative ways to attract business.” In its heyday, Alamo was the third largest car rental company in the United States. and each practiced law for several years before decid- ing to return to the field they knew from childhood. “I found that I did not really like being a lawyer,” Martin says. “I knew the foodservice business, and that’s what I liked.” Martin earned an MBA from the University of Michigan, and he and Steve returned to their home- town in 1990 to found the American Food and Vending Corporation. Serving markets in fifteen states, the company’s initial charter was to provide vending machines stocked with candy and coffee and other items. Martin and Steve were later joined by cousin Joshua J. Wells ’93. They have since built the company into FROM PEANUTS TO HOTELS 133 CORNELL DINING: WORKING A HOME-FIELD ADVANTAGE he world’s best-known Hotel School Cornell Dining, a not-for-profit operation, has won sits on the Cornell University campus, and many industry awards, and its managers give presenta- that school has an alliance with the best- known culinary school in America (the opened in 1999, Cornell’s Robert Purcell Marketplace Culinary Institute of America, or CIA, in Hyde Park, New York). One could say, then, that Cornell has a running start magazine’s annual “Best of Show” award. Diners on building an exceptional campus dining program. In can choose from six separate food-preparation fact, many of Cornell Dining’s managers are graduates of and -service areas, as well as bread and cereal sta- Cornell’s Hotel School, and most of its executive chefs are _ tions, salad bars, dessert tables, and an ice cream graduates of the CIA. The truth is, Cornell Dining had built a name as a leader as far back as the 1960s. Under the lead of Arthur A. Jaeger ’62, Cornell’s dining service was transformed during the bar. Much of the food is prepared at the stations in view of the customers. (Pictured at right is the Marketplace Eatery’s Mongolian Wok.) While sev- eral other campuses offer marketplace eateries, 1960s and 1970s. One of Jaeger’s innovative touches was Cornell’s is one of the very few that offers all-you- the guest-chef program, where well-known chefs would can-eat dining. To serve around 24,000 meals per visit campus to show members of the Cornell team how day (breakfast, lunch, and dinner), Cornell to prepare their signature dishes. Dining’s annual budget is $36 million. one of the nation’s largest independent corporate dining and vending firms. The company has succeeded by positioning itself as an alternative to the few large foodservice companies that dominate the industry. “Our publicly held competitors face high corporate overhead, long decision-making processes, and pres- sure to produce short-term return on equity,” Steve Wells says. “By contrast, we are able to focus our energy on building long-term client relationships. We provide clients and their employees with innovative and imaginative solutions that reflect our passion for food-service excellence.” An Enlightened Approach in Japan. Chiaki Tanuma, MPS ’80, is a second-generation leader at the forefront of the Japanese foodservice industry. He is president HosPITALITY GOES GLOBAL 134 tions at the major industry shows each year. Soon after it Eatery (on north campus) was awarded Food Management A key to Cornell Dining’s success is the commitment to improving the skills of every team member. Cornell Dining provides extensive training for its entire culinary staff, including specialized training at the Culinary Enhancement Workshop, of which the Culinary Institute of America is a sponsor. and CEO of the Green House Group, in Tokyo, a firm founded in 1947 by his father, who was both a vision- ary and an entrepreneur. Green House Group provides contract food service to government and municipal offices, corporate offices, hospitals, nursing homes, and schools. It manages full-service hotels, restaurants, and delicatessens and operates nearly two thousand outlets in Japan. In 1991 Green House expanded to South Korea, where it directs the restaurant section of Our Home, Ltd., the nation’s largest contract food- service company, which is also the franchisee for some thirty Saboten restaurants, a Green House brand. Under Tanuma’s lead, the Green House Group works closely with clients to develop food-service pro- grams that promote healthful living. Indeed, the com- pany motto is “wellness and ambience through food.” Tanuma has been vice chairman of Japan Foodservice Association since 2001, and a director of the Japan Medical Foodservice Association since 1998. “Our clients expect more from us than food service, says Tanuma, who is now cautiously explor- ing opportunities in Tatwan and China. “Our policy is to provide better health through food, served in a comfortable environment.” Much as Tanuma has done in Japan, U.S. food- service providers are striving to give clients more healthful menu options. In 2006, for example, ARAMARK announced plans to create six hundred new recipes, many of which will have reduced calories, less fat, and fewer carbohydrates than in the past. The company said that many of the new dishes will meet at least one of these criteria: 15 or fewer grams of total carbohydrates; fewer than 300 calories; fewer than 480 milligrams of sodium; less than 30 percent of calories from fat; or be vegetarian. Sodexho USA has launched a similar strategy at the corporate sites it serves. A “Uniform” Approach. The increased emphasis on building and managing hospitality brands has created yet another opportunity for managed-services providers. Many corporations have turned to managed-services companies to create and produce matching uniforms for various employee teams, A typical meal for the Restaurant Saboten at Shinjuku Park Tower, Japan, operated by Green House Group, which promotes healthy diets and living throughout its extensive hospitality enterprises. including food-service workers, custodial employees, and grounds-keeping personnel. The goal: distinguish the brands from competitors, create a professional appearance for guests, and increase employee morale. CrnTAs Corporation has become the largest uniform provider in the industry, followed by ARAMARK. The managed-services industry has come a long way since that first fistful of peanuts was dispensed on the factory floor. Today managed-service companies serve a broad client base including corporations, col- leges and school districts, conference centers, conven- tion centers, correctional institutions, healthcare institutions, parks and resorts, and sports and enter- tainment venues. Professional managers help their clients manage a wide range of services and assets— from food to uniforms to full-service hotels. FROM PEANUTS TO HOTELS 135 On CYSify & oath; Choo] T Hote] MR Comer 564 8217 Lig CHAPTER LEADING WITH RESEARCH The Stopwatch and the Tub WO MEN WATCHING A HOTEL BATHTUB drain too slowly would seem an odd starting point for a global research program. But the mere notice of that trickle, observed in 1927, touched off a torrent of funding that would help make Cornell’s Hotel program a research hub for the hospitality industry. In the 1920s most hoteliers scoffed at the notion of academic research. E.M. Statler himself insisted that hotel managers could best learn on the job and not from a book, a view that explained his initial opposition to untversity- based hotel education—at Cornell or anywhere. Statler, however, was a man Professor Gary Thompson and devoted to the details, and the deeper he immersed himself in graphics from a 2006 research project into the most productive the nuances of running a hotel, the more he saw the potential arrangement of restaurant tables to maximize revenue. for research. 137 A ready-food packet is emptied in a School lab in H.B. Meek, head of Cornell’s fledgling Hotel pro- 1964, part of an early study of packaged prepared foods that wasn’t commerically practical until gram, observed Statler’s interest in this recollection: microwave ovens came into wide use. I was in [John Howie’s Touraine Hotel] when Statler and I started to make a tour. We went into a guestroom. Statler went into the bathroom and turned on the tap and took out a stopwatch. He measured the time that it took to fill the tub. He pulled out the plug and started his stopwatch HospITaLity GOES GLOBAL 138 again and timed the time it took the tub to empty. He shook his head. He said, “Much too slow. They put in three-quarter inch pipe when it should have been an inch. People aren’t going to stand for this.” Well, this wasn’t very pleasant for Howie, but it illustrates...the kind of research that Statler envisioned. When Statler died of pneumo- nia in 1928 his support for research was evident in his will. He had left stock valued at about $100,000 to endow the Statler Foundation, for the purpose of “research work for the benefit of the hotel industry.” This bequest created the seed money for the first in a series of grants the Statler Foundation would make to help the Cornell Hotel School become a world leader in research. But, as we ll see later on, the path to that leadership was anything but sure or straight. In the spring of 1929 Meek outlined his goals for hotel research. They included an annual survey of hotel finances, a survey of traveler preferences, a study of payroll practices, a study of the effect of “tourist wayside lodging” (i.e., motels) on hotels, and an index of hotel rates. Professor John Courtney ’25 achieved the first goal when he published the first financial survey of the industry, A Study of Fifty Hotels. After that promising start, however, the Cornell hotel-management faculty devoted far more time over the next three decades to instruction than to research. It was not until 1960 that Meek launched a major expansion of research when he announced a study of vending machines funded by the Vendo Corporation. Another step toward formal research was taken that year with funds provided by the Statler Foundation: the debut of the journal Cornell Hotel and Restaurant Administration Quarterly (aka Cornell Quarterly). Under the skillful editing of Professor Helen J. Recknagel, this academic journal drew nearly four thousand subscribers in its first year. But even with these occasional bursts of inspiration, research pro- jects were regularly crowded out by more pressing concerns—such as creating an entirely new academic program from the ground up, securing funding from a reluctant industry and skeptical university administra- tors, and locating and building Statler Hall in the cen- ter of the Cornell campus. That began to change under Robert Beck ’42, who became dean in 1961 just as a number of troubling signs in the industry underscored the need for research. The lodging industry’s average occupancy rate was then just 62 percent. Traditional full-service hotels were struggling financially against the new, streamlined “motor hotels,” just as traditional full- service restaurants were beginning to lose ground to fast-food competitors. At the same time, the pressure was mounting to pass legislation for a minimum wage, which would increase labor costs. Dean Beck’s response to these difficulties was a meet- ing in September 1962 with seventeen industry leaders to discuss forming a center for industry research at Cornell. The Statler Foundation was prepared to make an annual grant of $100,000 for five years to support this research. Six months later an advisory council referred eight projects to the new center, ranging in areas as diverse as data processing, ready foods, hotel- room construction, the effect of fringe benefits on profit-sharing, carpet-padding materials, mattress durability, and the motivations of personnel and guests. H. Alexander MacLennan ’26 headed up the ready- foods project, studying “menu items which are partially or totally prepared and need only one pro- duction operation for serving.” MacLennan hoped that his research would lead to restaurant food that was still tasty yet less expensive to prepare and serve, but the outcome was a mixed bag. It turned out that only foods smothered in sauces would heat quickly enough in boiling water or a conventional oven. Ready-foods research continued at Cornell through THE STOPWATCH AND THE [UB 139 The “mattresster” was used in a School lab to test the durability of various mattress designs. HosPITALITY GOES GLOBAL 140 the 1960s, but the concept was not adopted in restau- rant kitchens until microwave ovens became popular in the 1970s. By comparison, ready foods were a staple in hospital kitchens and other commissary-driven operations (primarily those where the “customer” had little to say about the meal). | N DATA PROCESSING, Professor Charles I. Sayles ’26 A and others tried to use punch-card and keytape technology to create a centralized data-processing system for hotels. Progress was made in 1966 when the NCR Corporation began supplying Cornell with the latest versions of its mainframe computers (see pages 117-119). Indeed, as reported by the Cornell Quarterly, the New York Hilton installed Cornell’s system at its front desk in 1967, but the batch-process- ing technology could not keep up with the front desk’s operations. Later, NCR marketed an accounting program for hotels that was developed at Cornell. In 1969 a fifth-floor addition to Statler Hall was completed, which Beck devoted to a research and development center. Beck named as its director Paul R. Broten (°47, 53, ME), a professor and former Marine Corps officer. An engineer, Broten possessed a memory that Malcolm Noden described as “encyclo- pedic, if not photographic.” Broten, who put a Professor Charles Sayles ’26, center (with tie), oversaw the early work on crude data-processing equipment in a School research lab. premium on practical research, brought to the job an imposing air of confident control. “Paul was a pragmatist who believed that all academic research had to be not just theoretical but practical as well,” Noden recalls. “With his pedigree, he was not shy about being right. In fact, in all the years he ran the center, I don’t believe he was ever wrong.” Under Broten’s lead, a full-scale commercial test kitchen was installed at one end of the floor, housing all the hardware found in any major food and bever- age operation. It was there that, under Professor Stanley W. Davis, the School collaborated with Amana Corporation to conduct the first testing of commer- cially acceptable microwave technology. (Amana had bought the technology from Raytheon, which focused on microwaves’ military applications.) Amana would go on to produce the first microwave oven, dubbed the Radar Range. In another project researchers used a grant from the National Association of Bedding Manufacturers to seek out the ideal mattress. Professor Sayles developed a machine equipped with a sturdy plastic device shaped like buttocks to measure spring reaction. He called his device the “Mattresster.” Researchers asked students to use these “bowling ball buttocks” to test different kinds of mattresses placed in an area near the School library. THE STOPWATCH AND THE TUB 141 HOSPITALITY GOES GLOBAL 142 “Students would pound the hell out of those mat- tresses,” recalls Noden, who joined the group in the early 1970s to oversee market research. The machine proved to be the butt of many jokes, yet bedding manufacturers sprang into action. They began using the machine themselves and eventually adopted mattress standards based on this research. The School also developed a close relationship with the U.S. Army’s food-testing laboratory in Natick, Massachusetts, with the goal of producing technology to improve food service to military personnel deployed overseas. Together, the School and the mili- tary developed a way to use high-frequency radiation to heat packaged foods in small units (e.g., A- and B-rations). For the armed forces this was a huge advance and, as a result of this work, and through many iterations since, today’s Meals-Ready-to-Eat (MRE) concept was born. In the early 1970s the Statler Foundation committed $410,000 to the School over five years to further ex- pand its research. Computer applications were again a main focus, this time spurred on by the first genera- tion of microcomputers. One byproduct of that effort, a 1973 two-part article in the Cornell Quarterly on hotel uses of computers, sold over 9,500 reprints. Researchers also worked on a system that would han- dle billing, payroll, and personnel accounting for Cornell’s on-campus Statler Inn. Noden and Broten teamed up to do the first com- prehensive study of traveler preferences for various hotel brands. Later, under contract to the U.S. Department of State, Noden traveled the world to measure the feasibility of developing tourism in vari- ous remote markets, including several countries in West Africa. The U.S. government used Noden’s research to recommend funding priorities to the World Bank. Even with such notable outcomes, how- ever, when the Statler Foundation grant ran out in 1977 the research center was disbanded. On the face of it, the School took a hiatus from formally spearheading research projects from the late 1970s until the early 1990s. In reality, however, individ- ual faculty members continued their own research and were having an important effect on the way the hospi- tality industry conducted its business. Consider, for example, Professor James J. Eyster ’69, PhD ’77, and his seminal work on hotels’ use of management contracts. Meanwhile, the School was revising its entire curricu- lum to focus on management topics and Cornell Quarterly was adjusting its emphasis from operations issues (such as which mattress to buy) to management research (such as managers’ negotiating skills). In 1990 the School’s new dean, David A. Dittman, made research a cornerstone of his tenure. He declared that, “Hospitality-management research is a key to the long-run preeminence of the school...the research we create today becomes the curriculum we teach tomorrow.” New Research Partners N JULY 1992 THE SCHOOL reinstituted the Center | for Hospitality Research (CHR) to formalize its commitment. Founding partners included Procter & Gamble, EcoLas (cleaning products), Cini-Little (food service and hotel design), Banfi Vintners, Marriott Lodging and Resorts, Medallion Hotels, and Amedo Hotels. Its first director was Professor John B. “Jack” Corgel. “For the most part, companies do not have their own in-house brain trusts or full-fledged research departments,” Corgel said. “We will be the de facto research center for the industry.” Early projects addressed the importance of ameni- ties in hotels; how the franchise affiliation of a hotel affects its room pricing; how brand names affect a customer’s purchase decision; and how airline-style yield management could be applied to hotels. In 1994 Professor Leo M. Renaghan succeeded Corgel as CHR’s director. The center attracted addi- tional corporate support that was used to fund several research projects focused on the luxury hotel market. History, however, was about to repeat itself. Funding ran out, and the center failed to generate a steady flow of distinctive research. The center languished as an unappreciated and underutilized function for much of the 1990s. That began to change when David W. Butler became dean in 2000. A former college president and head of the School’s executive-education program for seven years, Butler believed the School needed a new vision to fit the times. In its early years the School had become known through its alumni, many of whom rose to leadership positions with large hospitality companies. But that attribute alone was no longer sufficient as the core of the School’s reputation, Butler concluded. “The School built its name on sending successful graduates out,” Butler says. “They more than anything else built the reputation of the Hotel School. But with the industry so much larger, no school could expect to have dominant influence solely through the knowl- edge and success of its graduates.” Butler wanted the School to be the leader in influencing the way industry executives think about their jobs—how they set strategy, how they manage people, how they do their work. He captured the School’s mission in these words: “shaping the global knowledge base in hospitality management.” Butler saw research as a centerpiece in that mission, and under his lead the School was once again committed to building a viable research center. THE STOPWATCH AND THE TUB 143 HosPITALITY GOES GLOBAL 144 Butler appointed Professor Cathy A. Enz as the next director of the resurrected Center for Hospitality Research, and gave her the resources to turn the center into a thriving enterprise. Enz fashioned a mission statement for the center that drew on Butler’s oft- repeated slogan of four Rs: “Rigor, Relevance, Relationships, and Reach.” For CHR the words meant: ¢ Rigor: faculty would produce high-quality, scholarly research that stands apart. * Relevance: faculty would study topics practical to the industry. * Relationships: the center would form partnerships with those industry leaders who could fund and guide research. * Reach: the center would build channels to spread its research around the globe. Enz was poised to set an example herself. She and her colleagues Judy Siguaw and Leo Renaghan, along with McGill University’s Laurette Dubé, MPS °88, PhD 90, had just received a $250,000 grant to conduct a best-practices study with the American Hotel and Motel Association. Eventually they turned out 140 case studies and wrote a book and numerous articles. The main series of articles was published in the Cornell Quarterly—still the School’s main research voice after forty years of publication. (Siguaw later was appointed the founding dean of the Cornell-Nanyang Institute, a joint master’s degree program between Cornell University and Nanyang Technological University of Singapore, described on page 53.) Still, Enz had to prod the faculty to submit more research to the center. In a move to help the faculty find meaningful data, the center formed strategic alliances with industry data providers, who gave Cornell researchers exclusive access to their data. Smith Travel Research (STR), a firm that collects and analyzes data on hotel rates and occupancy, airport use, geographic and demographic profiles, and workforce makeup, was among the first to provide data to the center. Others who soon followed included PKF Hospitality Research, D.K. Shifflet Associates, and TravelCiicx. As content began to flow, CHR turned to building relationships. The “new” CHR had been launched with a three-year, $150,000-a-year grant from an anony- mous donor. But the Center needed to find industry partners to secure long-term support, because the partners that had joined earlier had all dropped out by the late 1990s. Under the lead of Joseph D. Strodel, Jr., hired as managing director in 2001, the center began to attract big-name sponsors such as Four Seasons, AIG, Willowbend Golf (run by David C. Southworth ’81), and Cendant Corporation. (See page 199 for the CHR partners in mid-2007.) But even as they built a finan- cial foundation, Strodel and Enz knew that to satisfy existing supporters and to entice prospective partners, they needed results. They devised a strategy to maxi- mize the reach of the content being delivered. Getting the Word Out N A SHREWD FIRST STEP they created “Friends of the | Center” alliances with trade and professional maga- zines and industry-based news services. “Tt was a match made in heaven,” Enz said. “We'd provide content and they'd provide good exposure for work done at Cornell.” Enz also calls Cornell News Service writer Linda Myers a key to the center’s rebirth. Myers, who was managing editor of Cornell Quarterly in 1981-1982, wrote news releases on each report and sent them to industry trade magazines and the general news media. Reports on how to increase servers’ tips, how to retain employees, and a blockbuster, “Why Discounting Doesn't Work,” not only circulated widely through industry publications but also on travel and business pages in mainstream magazines and newspapers. That’s in addition to the widespread coverage available through Internet outlets and resources. (The Internet was practically unknown and certainly unheralded before the 1990s.) In another move to enhance the center’s reach, Dean Butler directed that Cornell Hotel and Restaurant Administration Quarterly be brought under the cen- ter’s umbrella. That proved to be a crucial first step in restoring the publication’s position as the School’s research voice (see page 146). Another huge leap in putting CHR on the map came in 2003 when Professor Gary M. Thompson took over as director of the center. Thompson designed and programmed web-based interfaces and began to capture more information on visitors to the CHR website. The center also continued to attract major players in the industry as corporate partners, such as HVS International, Marsh, Nestlé, JohnsonDiversey, Sabre Holdings, Southern Wines and Spirits, and Taj Hotels and Resorts. The center’s site posts new research reports as they are issued, archives all previous reports, and offers fea- tured articles from the Cornell Quarterly (including, for instance, the Best Practices series). The site also gives useful information and links for visitors curious about the center or the School. The typical visitor who comes to the site looking for a specific report ends up downloading an average of five items. By November 2006, more than 45,000 people had registered on the site. In total they have down- loaded reports, articles, case studies, and tools over 202,000 times. Users include people at 732 domestic THE STOPWATCH AND THE [TUB 145 long with the growth of the Center for Hospitality Research (CHR) came the rejuvenation of the School’s academic and research journal, Cornell Hotel and Restaurant Administration Quarterly (Cornell Quarterly). Launched in May 1960 with Professor Helen Recknagel as editor, Cornell Quarterly was designed as a vehicle to report on research and a forum for the exchange of ideas. What it wasn’t, unfortunately, was a source of income. A memo saying something like, “Yes, we’re losing money, but we’re working on some ideas to fix that next year,” went from the editor to the dean every year or so, according to Glenn R. Withiam (74, A&LS), a professional journalist who became exec- utive editor in 1987. With the School in a budget crunch when David A. Dittman took over as dean in 1990, the decision was made to outsource Cornell Quarterly’s marketing, sub- scription services, and its actual printing to an outside publisher. There was only one bidder, Elsevier, a giant Dutch firm specializing in scientific and medical jour- nals, which took over in 1992. The company had visions of building a new business-publishing arm, but the “building” idea languished when Elsevier merged with Reed hotel guides and acquired a ready- made business division by purchasing Pergamon and Butterworth-Heineman. Odd man out in that trans- action, Cornell Quarterly received only lackadaisical marketing, and subscriptions declined from some seven thousand to around two thousand. In 2000 Dean David W. Butler decided to reclaim Cornell Quarterly from Elsevier. After a long and some- times bitter legal battle, during which concessions were made on both sides, the contract was “allowed” to expire, and California-based Sage Publications—a better fit for Cornell Quarterly’s model—was engaged HosPITALITY GOES GLOBAL 146 MAKING CORNELL QUARTERLY WHOLE as the next publisher. By 2005 Sage had boosted the subscriber base, both in terms of conventional subscriptions and deals with libraries and other institutions. For years Withiam had argued that to make the publication credible to academics and to attract qual- ity authors, the acquisitions editor must be a faculty member. The School administration eventually acted on Withiam’s recommendation and the job passed to Assistant Professor Michael Sturman, a human- resource specialist, who became academic editor. Withiam continued as executive editor while Sturman took over responsibility for soliciting, reviewing, and accepting and rejecting manuscripts. Cornell Quarterly is an unusual hybrid. Officially, it’s an academic journal, with all articles subject to a “double blind” peer review (reviewers don’t know whose work they’re looking at, and authors don’t know who the reviewers are). But its mission, as enunciated by founding dean Meek, is also to be of value to practitioners. So Cornell Quarterly must be edited in a way that makes it accessible to non- academics. “I try to make it so that when people in the hospitality industry read it, they know that we are trying to reach them,” Withiam noted. —by William Steele RY citi. awe net ey ee te SO gel UN on™ . ae a ed Ww Soe — — dA : mare : ee 3 past oe aa educational institutions and at 1,095 international educational institutions from ninety-seven countries. Similar traffic comes from the business arena. Corporations with the most registrants on the site include Cendant, Disney, Fairmont, Four Seasons, Hilton, InterContinental, Le Méridien, Marriott, Starwood, and Taj Hotels. Most visitors are CEOs, department heads, or vice presidents, meaning that this research is reaching the people who have the power to use the information and findings. The center and the School’s communication office have since notched up this outreach to media. In 2005 CHR issued more than thirty news releases promoting its studies to 1,200 editors and reporters at newspa- pers, magazines, trade publications, and radio and TV stations around the world. The result: 63 million media impressions for the center that year, many in prominent channels such as CNN, The New York Times, The Wall Street Journal, Forbes, Fortune, National Public Radio, USA Today, the International Herald Tribune, The Asian Wall Street Journal, and the Financial Times. As the center has thrived, more faculty members have participated. In the summer of 2005, CHR awarded eighteen grants to ten faculty members for projects involving many disciplines. Thompson pub- lished a study comparing hotel room rates on on-line booking channels. Professor Jan A. de Roos ’78, PhD ’94, and Steve Rushmore ’67, founder of HVS International, published a “Hospitality Valuation Software Tool,” the first nonproprietary software designed to help prepare market studies and valua- tions for lodging properties. Professors Steven Carvell and Daniel Quan studied the low-price guarantees of hotel companies, treating room reservations as though they were futures options. Enz and Associate Professor Linda Canina completed studies on competitive clus- ters; the influence of tangible and intangible assets on hotel performance; and price discounting. Professor Timothy R. Hinkin and Associate Professor J. Bruce Tracey shed fresh light on recruitment and selection practices by developing a web-based tool to measure the costs of employee turnover. Associate Professor W. Michael Lynn produced a guide to tipping policies for restaurant managers, while Associate Professor David S. Sherwyn studied the merits of arbitration versus litigation. Associate Professor Alex M. Susskind analyzed the utility and effect of mystery-shopper programs, and Professor Sheryl E. Kimes (who pioneered yield management for hotels) studied the optimal table mix in restaurants, as well as perceived fairness of demand-based pricing in restaurants. Several professors have even used their research to create web-based tools that managers can use to solve business problems. Some examples—a turnover-cost evaluator, an emergency preparedness kit, and a guide for managers to use to increase servers’ gratuities—are available for free download on the CHR site. CHR’s success bodes well for the future of research at the Hotel School and for the hospitality industry. As Thompson says, exposure is a strong lure. “We can show the reach that people get for their work,” he says. “You write for an academic journal in your specialized field and youre lucky if three or four people read it. The research coming out of CHR is read by thousands.” THE STOPWATCH AND THE [UB 147 CHAPTER NEw IDEAS IN HOSPITALITY Rest and Relaxation, Redefined INCE THE 1970S HOTEL AND RESORT COMPANIES have battled harder than ever before to earn the loyalty of their customers. In the process, they have created a stream of innovative products and services that continue to push out the boundaries of the industry. In the early days most lodging properties offered a limited set of amenities. There was one kind of bed, a narrow choice of meals, and perhaps a swimming pool. Today the discerning customer, whether traveling for leisure or business, can choose from an almost boundless array of services—spas, full gyms, golf and tennis, most styles of cuisine, and even casinos and cruises. Spas: Redefining Leisure Travel. The late twentieth century saw a surge in the A Norwegian Cruise Line ship at sea, popularity of spas. (The word “spa” comes from the first letters of part of the surge in travel that greatly expanded tourism in the 1970s. the words in the Latin phrase sanus per aquam, or “health 149 pt a ema et % a ed : : . Le He enresiniiis eos viii mee RR through water.”) Spas trace their roots to ancient towns known for the healing powers of their mineral waters and hot springs. Travelers would come to “take the waters” and restore their health. One of the first spas was built by the Romans in the city of Bath, England, a hundred miles west of London, where nat- ural hot water still flows into well-preserved ruins. Modern spas range from a “day” spa, where cus- tomers receive a massage, facial, or body treatment, to “destination” spas, where guests spend several days immersed in a regimen combining fitness, healthful eating, relaxation, and renewal. Spas run from small luxury inns to sprawling resorts with upscale facilities that are fully staffed, including medical doctors. The best spas, experts say, provide both service and empathy. “You have an experience, not just a massage, says Hotel School Professor Mary H. Tabacchi, a rec- ognized spa-industry authority. “Technicians are trained to know the muscles and the nerve endings. They figure out what hurts, and they manipulate the muscles and soothe the body. The industry can teach technique, but it is the personal touch, being caring and empathetic, that rounds out the experience.” Among the best-known high-end spa companies is Canyon Ranch, which built its first resort in the foothills of Tucson, Arizona, in 1979 and a second one ten years later in the Berkshire mountains, in western Massachusetts. Travelers can also experience the Canyon Ranch touch at The Venetian Resort Hotel Casino, in Las Vegas; the Gaylord Palms Resort, in Kissimmee, Florida; and on board the Queen Mary 2. Canyon Ranch has even created two luxury residences in Tucson and Miami, where residents find every well- ness opportunity available at the resorts. As Canyon Ranch and other freestanding spas have become popular, luxury hotels have put more resources into their spa business. Many have based their treatments on Asian rituals. In 1999, for example, Four Seasons launched several spa properties in Bali, Indonesia, based on the techniques developed there. Its spa director then traveled the globe to teach those techniques to staff members at other Four Seasons resorts, which routinely rank among the world’s Opposite page and above, Four Seasons Bali at Jimbaran Bay, Indonesia, a spa that specializes in massage and other health therapies. REST AND RELAXATION 151 leading spas. The Peninsula, in Beverly Hills, California, is known for its Thai massage, a yoga-like approach to releasing stress. Shangri-La’s Chi spas offer techniques and treatments from Southeast Asia. Fairmont’s Willowstream and Hyatt’s Pure Spa are other high-end spas, where guests pay up to $300 for a single treatment. In 2007, Hilton announced plans to partner with LVMH on a $200 million joint venture to develop spas worldwide. For some upscale hotels, spas are so important that they drive occupancy and rates. “The Mandarin MEMBERSHIP CLUBS: A HUB FOR HOSPITALITY n 1882 J. Murray Forbes and other affluent Bostonians estab- lished the Country Club of Brookline, the first such club in the United States. Situated on rolling farmland just four miles from downtown Boston, the club became an outdoor retreat. Forbes and his friends constructed grass ten- nis courts, a bowling alley, polo fields, a horse-racing track, and the biggest attraction of all—a golf course. They renovated a farmhouse into a clubhouse where members could dine, play cards, shoot billiards, and even stay the night. Golf soon became so popular that members rou- tinely defied the state’s blue laws by playing on Sundays. On one Sunday several members were arrested and taken to court. Soon thereafter, however, club members helped persuade legislators to end the Sunday ban. HoOsPITALITY GOES GLOBAL 152 Unlike city clubs, which were mostly restricted to men, country clubs allowed wives and children to be active members. By 1900 there were more than a thousand U.S. country clubs, with at least one in every state and territory. Located in urban, suburban, and rural settings, these clubs give millions of people the opportunity to enjoy golf, tennis, swimming, and other activities and games. Clubs also serve as social hubs where members can conduct business or relax in the company of family and friends. The Club Managers Association of America (CMAA) is the professional association for executives who manage clubs. CMAA has close to 7,000 members who manage more than 3,000 country, city, athletic, faculty, yacht, town, and military clubs. The associa- tion promotes friendly relations among members and provides educational services to help members maxi- mize club operations. Oriental is one chain that is basing its growth strategy on its spa business,” Tabacchi says. “Their name, design, and décor conjure up visions of Asia at its best.” Spas have become especially popular among travel- ers seeking to recover from long trips. “Massages are a good way to get over jet lag,” Tabacchi points out. “That’s another example of how the industry grows from itself.” Putting Fitness First N A RELATED COMMITMENT, hotels are providing a | wide range of workout options for guests who do not want to take even one day off from their exercise schedule. In 2005, for example, Hyatt Hotels made over its gyms, installing new treadmills and stair machines. In many locations Hyatt has joined with equipment maker Life Fitness to furnish its gyms with exercise bikes and strength-training equipment. Some Hyatts even have a fitness concierge on-call at all times to recommend running paths and provide workout gear. Marriott introduced the Renaissance Club Sport brand in Walnut Creek, California. Guests can work out in a 12,000 square foot gym that offers basketball, volleyball, racquetball and squash, yoga, and kickbox- ing. Marriott plans to build fifteen similar properties by 2012. In 2003 Westin added treadmills, cycles, elliptical trainers, medicine balls, and yoga mats to 93 of its 121 hotels and introduced the Westin Workout, a $12 mil- lion program developed with Reebok that aims to help travelers stay fit while on the road. Then, in 2004, Westin installed fitness equipment in some guest- rooms to serve the growing demand for private work- out options. The extended-stay market is also giving guests more fitness options. Homewood Suites by Hilton, where the average stay is twelve nights, has added weights to its treadmills and elliptical machines. Holiday Inn Select has partnered with Nautilus, owner of such mainstream brands as Bowflex, Schwinn Fitness, and Stairmaster, to develop fitness centers in its ninety-one properties by 2007. Some properties are adding personal trainers and exercise classes. Says Welf Ebeling, COO of Leading Hotels of the World, a luxury hotel consortium, “Having a nice gym is no longer a nicety; it’s a 2 ” necessity. Golf: Getting in the Swing. Resorts and hotels have tapped into the popularity of golf to further broaden their appeal. Many have built courses on their prop- erty or partnered with private clubs. Still others have built their business models around the sport. One such company, ClubCorp, owned or operated nearly The gym at Marriott’s Renaissance Club Sport in California covers 12,000 square feet and provides for six sports and other exercise. REST AND RELAXATION 153 HosPITALITY GOES GLOBAL 154 170 golf courses, country clubs, private business and sports clubs, and resorts. Its golf properties included Pinehurst, in North Carolina, the largest golf resort in North America, and The Homestead, in Hot Springs, Virginia, America’s first resort, founded in 1766. ClubCorp, which was led by CEO John A. Beckert ’75, served nearly 200,000 member households and 200,000 guests at its properties each year. In 2006 ClubCorp was purchased by KSL Capital Partners. Gaming Goes Mainstream TT HE GAMING INDUusTRY is another hospitality segment that has undergone steady growth in the last quarter century. Gambling has been around for centuries; dice have been recovered from Egyptian tombs, while the Chinese, Japanese, Greeks, and Romans were known to play games of chance for amusement as early as 2300 BcE. More recently, the industry traces its roots to the early 1800s, when illegal gambling took place on riverboats along the Mississippi River, especially in New Orleans. Unsanctioned gambling continued through the Prohibition era, but the industry changed forever in 1931 when the state of Nevada legalized gambling. Sixteen years later, under the leadership of Benjamin “Bugsy” Siegel, the Flamingo Hotel opened as the first well-known casino operation (see photo on page 35). Before moving to Las Vegas, Siegel had organized gaming operations for the Mafia on the East Coast. He built the Flamingo with Mafia money, and was found to be stealing from the project even before the casino opened in December 1946. Less than a year later, the Flamingo had flopped and Siegel had been killed by the Mafia. Still, even in his infamy, Siegel had marked the way for Las Vegas to become the gambling center of the country. In the mid-1960s Las Vegas began to take on an entirely new look. Hotel entrepreneur Jay Sarno envi- sioned a casino and hotel experience with European flavor, which he brought to life in 1966 with the open- ing of Caesar’s Palace. In the 1970s, under the lead of Howard Hughes, Las Vegas cut any remaining ties with the Mafia and fully embraced corporate America. Hughes ran the nation’s leading defense contractor (Hughes Aircraft Company and other Hughes compa- nies) and was among the wealthiest men in the world. He first purchased the Desert Inn, where he was living on the top floor, and then the Sands, Castaways, Silver Slipper, and Frontier. Hughes’s investments in Las Vegas opened the door for other companies to follow. Annual gaming revenue in Nevada first passed the $1 billion mark in 1975. But even then no single prop- erty stood out as an example for others to follow. That changed in 1989 with the opening of the Mirage, a 3,039-room resort created by Steve Wynn that offered not only the best in gaming, but also professional entertainment, upscale retail shopping, luxurious pools and suites, and distinctive dining experiences created by renowned chefs from around the world. “The Mirage was really the first full-fledged casino resort in Las Vegas,” says Mark A. Birtha ’94, a casino- industry executive. “It raised the bar on customer service to an entirely new level.” Other spectacular resorts went up in the late 1990s, among them Wynn’s 46-story, 3,000-room Bellagio, billed as the most expensive resort in the world at $1.7 billion; the 3,000 all-suite Venetian Hotel and Resort, complete with gondolas and sweeping landscapes; and the Mandalay Bay, whose shark reef motif is reminis- cent of the South Seas. Once a small gaming town, Las Vegas has reinvented itself many times. This city in the desert first went through a casino-centric era, then became a resort destination, and then a theme-driven entertainment venue. Most recently, it has become a Mecca for mixed- use real estate and hospitality development. With its strip of glitzy resorts and more than 37 million visitors a year, Las Vegas is still the undisputed leader of the U.S. commercial casino market. In 2004 resort revenue topped $32 billion. Only $6.1 billion of that amount came from gambling while guests spent freely on entertainment, dining, golf, and related services. As Las Vegas has flour- ished, gambling has grown apace in other markets. In 1978 casino gambling was introduced in Atlantic City. In 2003, just as the Mirage had reinvigorated Las Vegas, Boyd/MGM Mirage took Atlantic City to a new level with its Borgata resort. Styled after the best resorts in Las Vegas, the Borgata became enormously successful in its first three years. “Atlantic City was becom- ing a tired day-trip market,” Birtha says. “The Borgata eal changed the way people think a Vi about Atlantic City. It has oh become a top draw, especially for the younger demo- graphic who wanted a Las Vegas—like resort on the East Coast.” Beginning in the 1980s casinos began appearing in other states, on riverboats, and on various American- Indian reservations, which are not subject to state anti-gambling statutes. By 2003 the American Gaming Association reported that 442 commercial casinos operated in eleven states, generating more than $27 Westin Kierland Resort and Spa includes an eighteen-hole golf course and family homes on its Scottsdale, Arizona, development. REST AND RELAXATION 155 ak The World, a 650-person floating condominium resort, billed as the first residential ocean liner. It includes swimming pools, restaurants, sports facilities, a casino, and more. It is owned by Condo Hotel Center, Miami, Florida. HOSPITALITY GOES GLOBAL 156 4 i “ei aa y Ta! ae anh a ae ee) Fel A SO WW Pe em em i mm mm Mm Be NN 4A a ee aye BO 6b 48 te we eg billion in gaming revenue. Native American casinos operated in twenty-eight states, and racetrack casinos in six states. Some 53.4 million individuals visited a U.S. casino in 2003. Based on the U.S. population, that’s the equivalent of more than one in four adults. While the U.S. gaming market is maturing, the casino business is growing at strong rates in many overseas markets. Gaming is gaining traction in Europe, South America, and Russia. Asia, in particular, has seen a gaming boom, driven by Macau, Singapore, and Japan. Singapore has announced plans for two integrated casino resorts, one being developed by Las Vegas Sands Corporation on the island of Singapore at an expected investment exceeding $5 billion. A second integrated resort is planned for Sentosa Island. “Government leaders are realizing that gaming is a proven way to revitalize depressed or stagnant economies through attracting tourism and broadening the tax base,” Birtha points out. B&Bs: A Different Way to Unwind. Bed and breakfasts and country inns have flourished in the last quarter century as more people have sought weekend retreats in quiet places. Most “B&Bs” are located in villages and rural settings. As of 2004, B&Bs had grown into a $3.4 billion industry. To broaden their business, which is dependent on high occupancy on weekends, most innkeepers also provide meeting space and handle weddings and other major social events. Cruise Lines: Luxury at Sea. Just as hotels, resorts, and inns have redefined luxury on land, cruise lines have created an exquisite experience on water. For many, taking a cruise used to mean relaxing in a deck chair by the pool between ports of call. Guests can still do that, but they can also choose from the myriad services that compete with the offerings found at exclusive land-based resorts. Much of the innovation seen in the cruise business came at the entrepreneurial touch of Ted Arison, who founded Carnival Cruise Lines in the 1970s. Arison’s vision was to make a vacation experience once reserved for the affluent accessible to the average person. Cruise lines give passengers an array of services: they can dance in large ballrooms, enjoy first-class plays, watch films poolside, take in Las Vegas—style shows, gamble at casinos, work out in full-service gyms, unwind with a massage at the spa, and enjoy sumptu- ous cuisine served up by some of the world’s finest chefs. Many cruise companies also give passengers the option to play golf while in port at some of the world’s finest courses. In a bid to appeal to families, cruise lines have created varied activities for children, ranging from computer labs to climbing mazes at sea to moun- tain biking and horseback riding on land. Among the best-known luxury ocean liners is Cunard’s Queen Mary 2, which entered service in 2004 as the largest and longest liner ever built, carrying up to 2,620 passengers. The ship features a 20,000 square- foot Canyon Ranch Spa Club, offering the full range of spa treatments. Staterooms include five duplex apart- ments, each with its own exercise area, balcony, marble bathrooms, and a private library. Chef Daniel Boulod serves as the ship’s culinary advisor, while chef Todd English has created his own restaurant on the newest Cunard liner. Not to be outdone, Royal Caribbean unveiled in 2006 Freedom of the Seas, an $800 million cruise ship that carries up to 4,375 passengers. The line is working REST AND RELAXATION 157 HOSPITALITY GOES GLOBAL 158 BJORN HANSON: VOICE OF THE INDUSTRY hen members of the news media tality industry, they call the doctor—Bjorn MBA from Fordham University). Hanson spent the first seventeen years of his career at Laventhol & Horwath, where he mastered the basics of hospi- tality consulting. Through his experience at L&H, Hanson began to see beyond the traditional role that consulting com- panies had played. Until then, hospitality “ consulting had been focused primarily on feasibility studies and appraisals. As Hanson puts it, those were documents that many clients needed rather than wanted. For example, a developer intent on convinc- ing a lender to fund a project needs to give that lender a feasibility study as part of his selling arsenal. When Hanson moved to Coopers & Lybrand in 1990, he set out to broaden the firm’s scope of services. His timing turned out to be exquisite. The economy was mired in a recession that had brought hard times to the industry. In 1990 the average hotel room in the United States lost $1,700, and 16 percent of hotel loans were delinquent. Capital markets had all but stopped providing the funds to develop or acquire lodging properties. Amid this difficulty, hotel owners and managers began reaching out for new kinds of consulting support. Hanson and on another ship due in 2009, which, at a projected cost of $1.1 billion, would be 40 percent larger than Freedom of the Seas. Vacation Ownership: A Week in Paradise. In the early 1980s entrepreneurs introduced a new concept in want executive insight into the hospi- R.L. Hanson ’73 (PhD from New York University, his team were ready; they developed a range of additional services focused on structuring transactions, improving work processes, and producing strategic market and financial research based on high-level economics and statistics. “This marked the first time that a consulting firm focused on hospitality had changed its scope of services in a significant way,” Hanson observes. Hanson’s group won much new business, mostly in the tax, accounting, and human-resources disciplines. Just one year after joining Coopers & Lybrand, Hanson was named industry chairman for the firm, overseeing all hospitality consulting ona global basis. In 1994 Hanson left Coopers & Lybrand to launch a hospitality investment bank- ing group at Kidder, Peabody. Soon there- after Kidder merged with PaineWebber, and Hanson moved from investment bank- ing to equity research. He found equity research less interesting and was prescient with his concerns about the organization of research in investment banking firms, so when Coopers & Lybrand invited him to return in 1995, he did. In 1998 Coopers & Lybrand merged with Price Waterhouse, creating PricewaterhouseCoopers LLP (PwC). Hanson is perhaps best known for the industry forecasts that he began producing back in 1991. Since then his teams have built an unparalleled record of forecasting performance and predicting turning points for the industry. The most daring vacationing: the time share. For a fee, owners gain access to a property for a set amount of time, usually one or two weeks a year. In large programs, owners can swap the use of their primary property for any one of a handful of other properties in locations around the world. By 2004, driven by large lodging call came in July 2000, a time of strong economic growth when other forecasters were calling for more robust times ahead. But when Hanson acquired detailed information from over one hundred sources and ran the data through complex analytical models, he saw some disturbing trends. One was an increase in Supply in certain price categories, another was a shift by corpo- rations toward more rigorous travel policies and stricter enforce- ment of those policies. Hanson’s team released a forecast calling for industry-wide declines in revenue per available room by July 2001. That con- trarian view rattled the industry. But the report also had sup- porters, primarily in the growing number of funds being established to invest in hotels. Many of these fund managers relied on the report to rethink their valuation strategies. As it turned out, by July 2001 REVPAR (revenue per available room) had declined to levels even slightly below what Hanson and PwC had forecast. Nine-Eleven. Just a few months later Hanson’s team would have another opportunity to make forecasting history. Team members were working in their offices in midtown Manhattan when the World Trade Center buildings were attacked. Hanson’s television was the only one that worked at the time, so his team gathered around to watch coverage of the tragedy. Knowing that they could not leave the office because New York’s bridges, tunnels, and subways were closed, team mem- bers set out to quantify the impact of this event. Drawing from data on the Cuban missile crisis, the assassination of President John F. Kennedy, hurricanes, wars, and recessions, the team undertook what Hanson called “an intensely intellectual and entertainment companies like Carlson, Disney, Hilton, Hyatt, Marriott, and Starwood, the industry had annual sales of 800,000 intervals, or $7.5 billion. A rise in the number of extraordinarily wealthy per- sons—the number of Americans worth more than $30 million rose by 10 percent in 2005—has led some challenge,” and issued a report the next day. The report pre- dicted that the events of September 11 would have a defined long-term effect on the industry and on how people traveled. Other industry leaders took different views; some thought the effects, if any, would be short-term. With hindsight, both pre- dictions turned out to be correct, depending on what aspect of travel is analyzed. Hanson and his team received over one hundred calls from the media in the following few days, but declined all interviews out of respect for those lost in the attacks. Still, the report was covered widely in both the general media and the trade press. Hanson’s vow not to speak to the press in the aftermath of the tragedy ran counter to his usual routine. Over the years he has become among the most sought-after experts on hospi- tality, and, among consulting and accounting executives serv- ing the industry, Hanson has been quoted in the media more than anyone else. Today Hanson’s work is divided almost evenly across four areas—strategic research; performance improvement; transac- tion services; and litigation, arbitration, and negotiation, pri- marily about development and management and franchise agreements. In moving from needs to wants, Hanson and his team are helping clients find better ways to run their businesses. “I cannot imagine a more exciting and stimulating career,” Hanson says. “We work with the most interesting, successful, and creative clients on many of their most significant and important challenges and opportunities.” entrepreneurs to start luxury time shares. Self-made billionaire Tim Blixseth developed the Yellowstone World Club near Big Sky, Montana, the world’s only private golf and ski resort. It has 250 members, includ- ing Bill Gates and former vice president Dan Quayle, REST AND RELAXATION 9 HosPITALITY GOES GLOBAL 160 each of whom paid $250,000 to join and committed to building or buying a property on the resort. Blixseth has since acquired nine vacation properties around the world, creating what will be a time-share program for the richest of the world’s rich. Those properties include a private golf club down the road from Scotland’s St. Andrews, a fourteenth-century chateau on a thousand acres outside Paris, and a fly- fishing lake near Cody, Wyoming. The proposed initia- tion fee for Yellowstone World Club members: between $3.5 million and $10 million. Co-Branding: Another Way to Maximize Value. To fur- ther extend their appeal, many hotels have entered into co-branding ventures, primarily with retail and auto- mobile companies. At selected hotels in New York, San Francisco, and Los Angeles, Mercedes Benz is taking guests around in Maybach 62s, which sell for $385,000 each. Qualifying guests at Fairmont Hotels can drive Porsche Boxsters. Certain retail brands are even finding synergies with hotels. Kinko’s, for example—which is owned by FedEx—has earned a niche providing busi- ness services for many convention hotels. In another form of co-branding, Italian jewelry- and-fashion mogul Bulgari formed a joint venture with Marriott's Luxury Group, manager of Ritz- Carlton hotels, to develop “exclusive” luxury proper- ties. The first of the Bulgari resorts and hotels opened in Bali, Indonesia (in spring 2006) and Milan, Italy. Marriott has also joined forces with Ian Schrager, creator of the boutique hotel concept in the United States, to open a hundred style-driven boutique hotels. Italian fashion house and luxury retailer Moschino is doing the same, developing a lifestyle hotel brand called Hotel Moschino. And designer Missoni, with Rezidor SAS Hospitality, also has its own properties. Theme Parks: Blending Luxury with Adventure. As head of the company that bears his name, Walt Disney proved a creative genius over his storied career. In 1955 he created Disneyland, a theme park in Anaheim, California, branded after the company’s famed car- toon characters Mickey Mouse and Donald Duck. That park was an enormous success, leading Disney to open the Walt Disney World Resort outside Orlando, Florida, in 1971. The resort included three hotels, making it the first large-scale hotel-and-amusement destination center. It soon became the world’s largest tourist attraction, and has since grown to include four theme parks, three water parks, a shopping complex, dozens of hotels, and eight golf courses. In 1982 Disney opened the Tokyo Disney Resort in Japan, which has proven to be another consistent moneymaker. That string of successes was broken, however, when Euro Disney opened outside Paris in 1992. Unlike other Disney openings, which had been met by huge crowds and high expectations, the Euro Disney opening was a letdown. A half-million guests were expected on opening day, but only a fraction of that number turned out. French nationalists protested the park, claiming it would sully French culture. The park was beset by small crowds for years to come, as high entrance fees and inclement weather kept many away. Many of those who did come wanted American cuisine and complained that the food was too French. A name change to Disneyland Paris in 1994 and added attractions helped the park earn its first profit in 1995, but it remained far less profitable than Disney’s other theme attractions. Encouraged by its positive experience in Japan, Disney continues to expand in Asia. The company opened a park in Hong Kong in 2005, and active development is underway to build another Disney destination near Shanghai, China. Other companies have entered the theme park busi- ness with mixed success. Marriott, for example, opened two Great America parks in the 1970s, in California and Illinois. Several companies have devel- oped niche parks. One, Great Wolf Resorts, Inc., has thrived with a string of indoor water parks. The parks serve families with young children that live within a convenient drive of the resorts. Parks feature a twelve- level treehouse, water fort, and an interactive experi- ence that features over sixty water effects, including spray guns, fountains, and inner-tube slides. The resort also offers theme restaurants that give guests the impression that they are dining in a forest camp. Arcades and spas round out the offerings. Stay Underwater, Ski the Tropics. Hydropolis, the world’s first underwater hotel, is now under construc- tion in Dubai, twenty meters below the surface of the Arabian Gulf. Guests will be welcomed at a land station before taking a train through a tunnel to the main area of the hotel and its 220 suites, all within the submarine-like complex. The hotel is being built on land owned by the crown prince of Dubai, along the Jumeirah Beach coastline. Another new project in the Middle East is the Kempinski Hotel Mall of the Emirates, a mixed-use project rising next to the third biggest indoor ski slope in the world. “It may be tropical outside, but it’s always thirty degrees Fahrenheit on the slopes,” says Alexander E. Muttscheller ’03, who was working on the project. The W Means Business. When it comes to meeting the needs of business travelers, Starwood’s W brand has set the pace. Launched in 1997, the W concept was designed to serve young, upscale business travelers in urban areas. REST AND RELAXATION 161 Ritz-Carlton Aspen Highlands in Colorado is an all-seasons resort that includes shops, entertain- ment, skiing, and conference centers. HosPITALITY GOES GLOBAL 162 One member of W’s founding team was Bradford G. Wilson ’84 who, in 1998, wrote the operations manual for the first W (on Manhattan’s Lexington Avenue). Wilson was the opening general manager for that property, and later for three other Ws in New York City—Union Square, Times Square, and Tuscany (near Grand Central). As Wilson puts it, Starwood CEO Barry Sternlicht himself was the test case for the W concept. “Barry traveled a lot and he was often bored by the hotels he stayed in, Wilson says. “He had assets in key markets like New York, Los Angeles, and New Orleans, but those assets were different enough from each other that it would not be easy to put a franchise’s name on them. So Barry set out to create a new brand for business travelers who wanted good service but also a certain style and design.” Sternlicht’s directive to his creative team: design a boutique hotel that starts with great service. “In many boutique hotels, staff members sometimes act as if they are better than the guest,” Wilson states. “Barry wanted to go the other direction. He wanted to recruit warm and friendly people, so that personality would become part of what is attractive about each hotel.” The team created a new lobby designed to promote social interaction. Games are set on coffee tables, bookcases offer the latest popular reading materials, and the furniture is comfortable and arranged to pro- mote interaction. This space is known not as the lobby, but as the living room. “At W, up to four people can sit comfortably in a living room for hours, and another person or two can easily pull up a stool and join the conversation,” Wilson observes. “That’s not what you find in most hotel lobbies.” The team also uses music to set a tone. As Wilson puts it, the music is “almost Zen-like” in the morning, then gradually picks up by mid-day and evolves into rock or contemporary by the evening. Guests loved the concept and W soon became the dominant hotel in its niche. As of summer 2005, all but one of the first twenty Ws was outperforming against budget, and in most markets these hotels com- mand a 20 percent premium relative to the market’s typical room rates. The only laggard was in Silicon Valley, where the dot.com collapse had dragged down the region’s lodging industry. “Many people thought the W concept would be a flash in the pan,” says Leland Pillsbury, who oversees investment funds focused on hotel properties. “They saw it as a bar with some hotel rooms tacked onto it. But this has proven to be a highly successful strategy. Barry Sternlicht and his team were the first to shift the focus from baby boomers to Generation Xers and to create a product that resonates with that demographic.” In Wilson’s view, the success of the W brand is the result of Sternlicht’s discerning eye. “What makes Barry a visionary is that he questions things that people take for granted,” Wilson says. “He has an incredible eye for detail. He would make a suggestion, and the operator in you would say, “That wouldn't work. But then it would work perfectly, and you would say to yourself, ‘Damn, I was wrong.” Bathhouses. Not all new offerings come at the high end of the industry. Across China, a growing number of bathhouses offer lodging that is spartan but clean. At Shanghai’s Little Southern Country Spa, for exam- ple, guests can get an overnight stay, a hot shower, breakfast, and a shoeshine for $10. However, they also stay with a roomful of strangers, each sleeping on a big recliner. These guesthouses cater to a growing Chinese middle class that is traveling in record num- bers, for either business or pleasure. The bathhouses became part of a wave of mid-level and low-end accommodations rising in advance of the 2008 Olympics, in Beijing. Cendant Corporation launched its first Super 8 Motel in China in 2004 and is Opening new ones at the rate of one per month. The InterContinental Hotel Group has entered the fray with its Holiday Express brand. The budget category is appealing to many as an alternative to China’s five-star hotels costing over $100 a night on the high side and the state-run institutions that offer poor service and tired furnishings on the low side. REST AND RELAXATION 163 bert A ae x SG cw es — wR ote! Adi of Hi { hoo CHAPTER THE INDUSTRY AND THE SCHOOL Moving Each Other Forward N THE EARLY 1900S THE HOSPITALITY INDUSTRY comprised inns, hotels, and restaurants owned and operated by entrepreneurs in the most-developed countries of Europe, Asia, and North America. The field has since multiplied in its size, complexity, and geographic scope. Hospitality has become a patchwork of various kinds of lodging properties; cruise lines and casinos; mixed-use developments; clubs, theme parks, and sports venues; and timeshares, resorts, and spas. There are even plans for the first underwater hotel (see page 161) and the first orbiting hotel, now under development by Robert Bigelow, who made his fortune building the Budget Suites of America hotel chain. Still, while entrepreneurs continue to find attractive and unusual niches, the The Robert A. and Jan M. Beck Center addition hospitality industry is dominated by multinational corporations to the School’s Statler Hall, opened in 2004, offers the best in teaching technology. that operate On every continent. 165 HosPITALITY GOES GLOBAL 166 This evolution has posed a challenge to educational institutions serving the hospitality industry. To stay abreast of that development and growth, and even influence it, these institutions have had to anticipate change, react to change, and change themselves. Through a constant push to evaluate, adapt, and refine, the best schools have been able to deliver the knowledge students need to succeed. Many schools have sought to stay on the leading edge through close collaboration with industry. Examples of the Cornell Hotel School’s partnerships with industry leaders abound in this book. This inter- play between industry and academe has been so important to the growth of hospitality that this entire chapter is devoted to the subject. Beginning with the Basics. Starting with support from the American Hotel Association and E.M. Statler, and the vision of founding professor and Dean H.B. Meek, the Cornell Hotel School and industry leaders have worked to further each other’s interests. In its form- ative years, the hospitality industry needed people who knew how to run hotels. When Cornell’s hotel- management program opened its doors in 1922, it sought to match that need with courses addressing practical topics such as accounting, laundry manage- ment, food service, plumbing, heating-and-ventilating systems, and public speaking. Right from the start Meek turned to the industry to help build the program. The second faculty member he hired was Louis Toth, of the hotel accounting and consulting firm Horwath & Horwath. Once a week for thirty-four years Toth commuted to Ithaca from New York City to teach at Cornell. As the Cornell Hotel program’s reputation grew, many hotel leaders were so flattered by an invitation from Meek that they traveled to Ithaca to give lectures for free. In 1935, John H. Sherry began commuting from his law practice in New York City to teach hospi- tality law. He missed only one train during forty years of teaching, but that happened on a day when a bliz- zard forced Cornell to close for the first time ever. Sherry is remembered for his textbook, The Laws of Innkeepers. Upon his retirement in 1975, Sherry was succeeded on the faculty by his son, John E.H. Sherry, who also taught hospitality law and regularly updated his father’s book. Hotels Grow Bigger (and Better) OTELS BECAME LARGER and more complex over H the first half of the twentieth century, creating the need for new and diverse skills. No longer was it enough to know how to run a hotel; now managers needed a full team of experts—people who knew, for example, about labor laws and how to hire and supervise a diverse workforce; where to obtain data and how to manage information; and how to develop and design properties and address related legal issues, from project inception to operation. Hotel operators who built chains of hotels needed experts who could create and promote brands, as well as financial special- ists who could enhance asset values to maximize profits and investors’ returns. As the industry became more competitive, so did hospitality education. By the 1950s a dozen colleges offered courses in hotel-management education. Only one, however, had spent three decades building rela- tionships with industry leaders. It was on the strength of those relationships that the Cornell Hotel School had become firmly established as the leader in hospi- tality education. (Indeed, no college or university in the United States besides Cornell offered a compre- hensive four-year degree specifically in hospitality.) The industry went through another transformation in the second half of the twentieth century. As described elsewhere in this book, small chains grew into major corporations. Different kinds of hotels emerged due to market segmentation and to fill niches. More jobs opened up overseas as companies expanded into new markets. The need to provide investor returns and comply with securities laws—as well as the onset of franchising, professional manage- ment, institutional ownership, and real-estate invest- ment trusts (REITs)—made the financial side of hospitality far more complicated. Many More Schools = HIS BOOM IN HOSPITALITY touched off a wave of growth in hotel education. By 1982 there were about eighty competing schools, many of which were founded by Cornell alumni and staffed by Cornell graduates. Among these are schools in Denver, Colorado; Houston, Texas; Las Vegas, Nevada; and Orlando, Florida. (See pages 202-203 for a list of some of the programs and individuals involved.) Hospitality education has also benefited from the International Council on Hotel, Restaurant, and Institutional Education. Founded in 1946, CHRIE is a global advocate of hospitality and tourism education for more than two thousand schools, colleges, univer- sities, and institutes offering programs in hotel and restaurant management, foodservice management, and culinary arts. CHRIE serves as a hospitality and tourism education network, uniting educators, indus- try executives, and associations worldwide. (As noted elsewhere, Dean Meek became executive director of CHRIE Shortly after his retirement from Cornell. He was a founding board member of the organization.) For the Cornell Hotel School, by the late 1970s and early 1980s it was no longer enough to be the first or Movinc EACH OTHER FORWARD 167 HosPITALITY GOES GLOBAL 168 the best. The School had to prove its distinctive value against increasingly sophisticated competition. School leaders knew that to keep Cornell at the forefront, they would need to find even more ways to keep the program interlocked with industry. During Meek’s tenure, the School had made gradual changes in its curriculum. By 1952 course offerings expanded to include subjects such as advanced accounting, admin- istration, economics and finance, engineering, food preparation, housekeeping, language, and expression. During this period the School was notably innova- tive in food-facilities engineering and the design of restaurants and institutional food operations. In fact, this was one of several fields where the School would have a profound influence on the industry, beginning when Professor O. Ernest Bangs joined the faculty in 1958. Bangs was a principal in Detroit’s Stevens Bangs Associates and a founding member of the Food Facilities Engineering Society. The Society agreed to pay Bangs’s salary and expenses to teach a course at the School. Bangs would go on to teach at Cornell for twenty years. Among the many students whom Bangs influenced was William V. Eaton ’61, who had taken a job at the School's Statler Inn after his freshman year as an engi- neering student. After Bangs and Eaton became friends through their shared interest in engineering, Eaton transferred to the Hotel School to study under Bangs. Eaton was one of three members of Bangs’s first class—with F. Dewayne Grissom 60 and Carl W. Vail, Jr. °61—who, along with John C. Cini ’54, worked together in the original kitchen-design department at Hot Shoppes (now Marriott International). In 1968, Cini and Grissom formed the consulting firm Cini-Grissom Associates and soon after were joined by Eaton, Ronald P. Kooser ’61, and Richard L. Beaudin ’60. Over the years more than forty Hotel School graduates would join the firm, and at one time twenty-six were employed, comprising over one-third of the firm. In 2006, at least fifteen nationally recog- nized food-service consulting firms were owned and operated by Cornell graduates who passed through the Cini-Grissom and, later, Cini-Little organizations. “Ernie [Bangs] really created our field,” Eaton says. “In addition to teaching us a profession, he instilled in us the importance of ethics in business, and the real- ization of how important service is to our industry.” Eaton went on to lead Cini-Little as president and COO and continues as a principal of the firm in 2006. Like so many alumni, Eaton has also given much back to the School. For twenty-five years he and Professor Michael H. Redlin co-taught a summer professional development course in restaurant design. Over that same period Eaton lectured during the regular acade- mic year on hospitality design and programming. Big Plans Under Beck We ROBERT BECK MOVED from the School’s faculty to the deanship in 1961, he knew the time had come to expand what Cornell was teaching. He wrote that the School’s primary objective was to ensure “the education of young men and women to assume the responsibilities and leadership of the mass housing and feeding industries.” Then, in a sign of what he intended to accomplish as dean, he wrote, “there are peripheral areas which... have not been sufficiently developed.” Beck set out to strengthen the faculty, update the curriculum, and tighten the bonds between School and industry. During his twenty years at the helm, he oversaw the transition to a second generation of School faculty members. Under Beck’s lead, and then under deans John J. “Jack” Clark (PhD ’69, EE), David A. Dittman, and David W. Butler, the School updated and refined its coursework. (See, for example, the Statler Leadership Development Program discussed on page 177.) Many examples can be found across the curriculum, perhaps most notably in finance and real estate. While accounting was once about keeping the books at individual hotels, it is now far more sophisticated across multiple properties, and the accounting and finance faculty has grown accordingly in recent decades. For many years the School focused on general man- agement, because the management and ownership of hotels used to be unified. With the increasing popular- ity of management contracts in the 1980s and 1990s, however, the separation of ownership and manage- ment caused a fundamental shift in the industry (see pages 61-68). Many hotel properties are now owned by institutions, pension funds, and real-estate investment trusts, and these properties are acquired and divested at a much more frequent rate than in years past. With this trend came a greater need to assess and determine the value of hotels, and to work with corporate struc- tures that are consistent with the Internal Revenue Service's tax code. To address fundamental industry changes, the School recast its finance and real-estate curriculum. Among the new courses was one on the valuation of assets and companies. For many years this course was taught jointly by a faculty member and Stephen Rushmore ’67, who founded and leads Hospitality Valuation Services, one of the industry’s premier consulting practices. (See pages 170-171.) MovIinc EACH OTHER FORWARD 169 HosPITALITY GOES GLOBAL 170 STEPHEN RUSHMORE: DEFINING HOTEL VALUE n 1976 Stephen Rushmore ’67, MAI, wrote the book on how to value hotels. A few years later he started a business that would change the face of hotel development. After earning his MBA at the University of Buffalo in 1970, Rushmore joined the hospitality consulting division of Helmsley-Spear, Inc., the New York City real-estate firm headed by Harry Helmsley. The hospitality division was run by industry icon Stephen W. Brener, who became Rushmore’s mentor. At the time, two kinds of firms served the hospitality real-estate market, but, as Rushmore soon discovered, neither understood the complexities of both hotels and real me estate. Consulting firms such as PKF ), a Consulting and Laventhol & Horwath knew hotel operations but did not understand how to value real estate. By contrast, regional appraisal companies knew real estate but had little experience in hotels. “| believed there was need for a business that could provide both real-estate knowledge and hotel expertise,” Rushmore says. Armed with hotel knowledge, Rushmore committed to refine his expertise in apprais- ing hotel properties. He earned the Appraisal Institute’s membership designation (MAI), becoming the insti- tute’s first member who held a degree in hotel administration. Intent on turning his credentials into credibility, Rushmore convinced the Appraisal Institute that it needed a textbook on how to value hotels. Over the next year, while still at Helmsley, Rushmore spent nights, weekends, and holidays crafting the book. He wrote largely from his own knowledge but also drew valuable input from Brener and PKF’s Roger S. Cline. The result was the first book of its kind, Valuation of Hotels and Motels. In 1980 Rushmore opened his own hotel appraisal business— Hospitality Valuation Services (HVS). He set out to tackle a fun- damental weakness he saw in the hotel-development process. Typically, developers would approach lenders with a proposal for a hotel site. Lenders would request a feasibility study, and the developer would ultimately hire a consulting firm to prepare it. The developer would present the findings—little more than a market study with a few financial projections. The lender would then ask the developer for an appraisal on the proposed site. The developer would go back to the firm that created the feasibility study, only to learn that the firm was not equipped to perform appraisals. The developer would then hire an appraiser, usually a regional business comprising economists and engineers with no hotel background. In most cases, the appraisal would not jibe with the market study. “| Saw an opportunity to combine the market study and the appraisal in one pack- age,” Rushmore observes. He did just that, creating what he called the economic study and appraisal, and making it the cornerstone of his business. By then Rushmore’s book was attracting atten- tion, and the Appraisal Institute asked him to create and give a one-day seminar on how to value hotels. Rushmore spent much of 1980 traveling the country, training appraisers on behalf of the institute. “I Knew | was training my competition,” Rushmore recalls, “but | also knew | had a head start on them.” Rushmore’s seminars were enormously popular. After one session in Los Angeles, the chief appraiser of a local bank told Rushmore that if he were ever to consider a loan for a hotel, he would insist that Rushmore be tapped to perform the appraisal. Sure enough, three months later Rushmore got a call from Marriott CFO Gary Wilson, who was formulating plans for the Marriott Harbor Beach Hotel, near Los Angeles. Wilson had been in touch with the banker who had approached Rushmore after his L.A. seminar. The banker had told Wilson that the appraisal had to be done by Rushmore. Rushmore flew to Washington, D.C., to meet with J.W. Marriott, Jr. Rushmore performed the appraisal, Marriott got the loan, and Bill Marriott fell in love with HVS. Rushmore’s timing was exquisite. Marriott was building many full-service hotels—Courtyards and Residence Inns—and HVS did all the appraisals. Rushmore’s work with Marriott earned him recognition across the industry. He opened a second office in San Francisco, which has been run since its inception by Suzanne R. Mellen ’76 (see pages 109-113). As HVS grew, PKF and Laventhol & Horwath got tired of los- ing the lion’s share of the appraisal market. They acquired appraisal companies and tried to pair them with their hotel consultants. But the two groups did not understand each other and friction ruled. Eventually, these firms tried to train their hotel people as appraisers, but the Appraisal Institute required that appraisers have five years of experience before they could be certified. It wasn’t until the mid-1990s that the large con- sulting firms began to turn out hotel-educated people who held the hard-to-get appraiser designation (MAI). In 1991 Rushmore opened his first overseas office in London. He now has twenty-four offices and two hundred professionals, about 10 percent of whom he has hired from Cornell. Over time, Rushmore realized that the HVS brand could be extended to other services. HVS now has a robust executive- search business with offices around the globe. The firm has developed thriving businesses in investment banking, broker- age, interior design, conventions, sports and entertainment, gaming, timeshares, condo hotels, and restaurants (the latter as both consultant and operator). Each is a separate entity, all housed under the HVS flag. That gives Rushmore two competitive advantages. One, each office offers a wide range of services. HVS often meets the client at the appraisal stage, from which point it is capable of staffing and managing the property. HVS provides financing sources, interior design, and operation analysis. “Our divisions feed into one another,” Rushmore says. A second advantage is that HVS takes a consistent approach from market to market. Rushmore has voting parity in every office, so all reports are uniform in presentation. Whether a customer needs an appraisal in Berlin or Bombay, the appraisal will be performed in the same manner and look the same. “Many hotel companies are active buyers and sellers in mar- kets around the world, so they demand a consistent approach,” Rushmore says. He points out that while some competitors cover the globe, they do so through partnerships and fran- chises that take different approaches from market to market. Rushmore maintains an ownership interest in each of his offices, which are run by partners who also hold a stake. He gives office heads freedom to hire and compensate as they see fit. Unlike big consulting firms, where members have a small piece of a large pie, at HVS partners have a large interest in a smaller pie. “When you have a large interest, and when you work hard, you can make a lot of money,” Rushmore observes. “I have hired a lot of people who enjoy working hard.” Rushmore stays busy today traveling the globe, giving speeches, and writing. He has written seven books and over three hundred articles. He also spends considerable time in litigation support, providing expert testimony on behalf of clients. Rushmore has always made time to be a great friend of the School. He has endowed a chair and several scholarships and was the first industry executive to serve on Cornell’s HEC advisory board. He continues to recruit students and frequently lectures in finance and real-estate classes. Previously, he taught a class in the summer Professional Development Program. A man of many interests, Rushmore likes to fly his own plane, ski, fish, sail, bike, and travel. But work is still his first passion. “I! love what | do. I’m over 60 and have no plans to retire,” he says. “We’re looking for more places to open offices and we’re thinking about additional services to provide for our clients.” MovING EACH OTHER FORWARD 171 John J. "Jack" Clark, Jr., dean of the Hotel School from 1981 to 1989. HosPITALITY GOES GLOBAL 172 Teaching New Finances * HE SCHOOL ALSO HIRED leading practitioners in its finance and real estate department. Professor Jack Corgel joined in the late 1980s after a distin- guished consulting career in real-estate investment. Corgel is the first Robert C. Baker Professor of Real Estate at the Hotel School and is also a faculty mem- ber of Cornell’s Program in Real Estate. Corgel served as doctoral-degree advisor to Jan de Roos, who joined the School faculty in 1988 and emerged as a leader in hospitality real estate. In 1999 the School recruited Daniel Quan, who brought a strong academic background and experience as the chief mortgage econo- mist with the Board of Governors of the Federal Reserve. In that role Quan built close relationships with top Wall Street advisors and bankers, many of whom come to speak in his class on structured finance. Real estate and finance courses are now among the most popular at the School. In fact, when Corgel showed up to teach on the first day of his real-estate course in fall 2005, he found all seventy seats full and the back wall lined with another forty students hoping to enroll. As a result of the School’s commitment to this discipline, Corgel estimated that by 2006 one thousand Hotel School graduates were working in hospitality finance and real estate. Another example of the School and industry collaborating to teach an emerging discipline is the vacation-ownership industry. Beginning in the 1980s large lodging and entertainment companies like Carlson, Disney, Hilton, Hyatt, Marriott, and Starwood expanded this new form of revenue- and profit-enhancement by selling shares in vacation prop- erties. As explained previously, for a fee, owners gain access to a property in a vacation destination for a set amount of time, usually one or two weeks a year. In large programs, owners can trade the use of their property for the use of any one of several other prop- erties in locations around the world. According to the American Resort and Development Association, by the end of 2004 the timeshare industry had over 325,000 units worldwide. In 2004 vacation ownership sales exceeded $11 billion globally and surpassed $6 billion in the United States alone. Stephen P. Weisz ’72, president of Marriott Vacation Club International, worked with the School to develop a course in this discipline. He invited Professor de Roos to spend part of his sabbatical at MVCI head- quarters in Orlando. Once there, de Roos joined with Stephanie E. Sobeck, MMH ’99, an MVCI project director, to build the syllabus for a seven-week course, “Principles of Timeshare and Vacation Ownership.” Each week a different MVCI executive visits the class to cover topics such as financial management, real- estate development, owner services, marketing and sales, and resort operations. (Earlier in his career, Weisz commuted to campus from Washington, D.C., for more than a decade to help teach a course in cor- porate finance.) Extra Fields to Study z HE SCHOOL HAS ALSO KEPT pace with the enormous growth in the field of hospitality law, especially labor relations. By some measures hospital- ity is now the world’s largest employer, so any labor issue has important consequences for the industry. The School has intensified its decades-long commit- ment to this discipline to prepare students for the challenges they will face over a management career. Associate Professor David S. Sherwyn, who has taught business law at the School since 1997, calls anti- discrimination law and union-management relations two especially significant issues facing the industry. Managers, he says, must take these issues into account whenever they make a personnel decision. “When students become professional managers, they are going to manage, hire and fire, and deal with harassment and discrimination,’ Sherwyn says. “They need to know how to make the right call.” In the same way, the School has sharpened its focus on the marketing function. In the early years hotels had relatively little to market; just recall E.M. Statler’s famous line, “A room and a bath for a dollar and a half?’ Now marketing starts with a brand that reflects the distinctive attributes of a specific company. Companies spend millions creating a brand and mil- lions more promoting that brand in an effort to stand out in a crowded marketplace. As recently as the 1980s the Hotel School had only one person teaching mar- keting. By 2006 it had eight faculty members grouped under marketing and strategy. They address subjects like price and quality perceptions, brand management, and customer loyalty programs. The School’s faculty members have also worked closely with industry to build expertise in revenue management. When Professor Sheryl E. Kimes joined the faculty in 1988, she decided to focus on what was then a relatively new academic discipline. In particular, Kimes has become well known for her research into how restaurant managers can maximize revenues. In one study for a restaurant in Phoenix, Arizona, Kimes used a model based on “revenue per available seat hour” to identify two key revenue drivers—demand- based pricing and meal-duration management. Kimes has also shown a keen ability to make her research come alive in the classroom. A three-time “teacher of the year” award winner at the School, she David A. Dittman, dean of the Hotel School from 1990 to 2000. MovING EACH OTHER FORWARD 173 Left, new entrance to Statler Hall after the 1988 renovation and expansion, overseen by Dean John J. Clark, Jr. Opposite page, the new Statler Hotel (1988), with Statler Hall visible at far left. helps students who are averse to numbers learn how to appreciate their importance. “T disliked numbers when I came to Cornell,’ says Uttam B. Muthappa, MMH ’o5, who took Kimes’s quantitative management course to improve his skills as general manager of a hotel in India. “But Professor Kimes taught me how to quantify things that I thought could never be expressed in numbers. Her techniques can be applied to any aspect of the business, and they can inform decisions that maximize revenue.” An Executive Presence. School faculty and administra- tors have also worked to attract a constant flow of industry leaders to Statler Hall. Some 250 senior professionals, most of them alumni, travel to campus each year to lecture, advise, recruit, and take part in major events (such as Hotel Ezra Cornell). In a typical eight-day stretch in October 2003, the School welcomed as guest lecturers Bjorn R.L. Hanson 73, global industry leader for Pricewaterhouse- Coopers; Dennis J. Sweeney ’64, partner in Joseph Baum and Michael Whiteman Company; William G. Sipple ’79, vice president of development for Carlson Hotels Worldwide; Ted Teng ’79, former president and COO, Wyndham International; and Daniel R. Lee ’77 (MBA ’80), chairman and CEO, Pinnacle Enter- tainment. Many executives share insights with the entire School student population in the Dean’s MovInc EACH OTHER FORWARD 175 HosPITALITY GOES GLOBAL 176 Distinguished Lecture Series, held on Friday after- noons since the 1920s. Another way the School shares ideas and insight with industry leaders is through roundtables held on campus. These intimate gatherings bring together pro- fessors, students, and industry leaders who engage in lively discussions on timely issues across disciplines such as law, human resources, design, and leadership. “Most conferences consist of long presentations followed by short discussions, but we do the opposite at our law roundtables,” says David Sherwyn, who oversees this forum for the School. “We pick key issues and spend the day hashing them out. We discuss, argue, agree, disagree, think, rethink, and often laugh as we try to get a handle on the pressing labor and employment issues affecting our industry.” The School also brings talent to campus through its Executive-in-Residence program, where an industry leader is selected to spend a semester or more mentor- ing graduate students. The executive supervises a special project and gives lectures, sharing knowledge and developing relationships with students that often extend past their time on campus. Hotel Ezra Cornell, the School’s signature industry event, draws hundreds of leaders to Ithaca for a week- end of educational sessions, exquisite cuisine, and lively entertainment and networking. These events attract some of the industry’s biggest names, both as attendees and participants. At the 2004 HEC, for example, Matthew Hart, CFO of Hilton Hotels; Chris Cahill, president and CEO of Fairmont Hotels; William Shaw, president and COO of Marriott International; and Barry Sternlicht, chairman and CEO of Starwood, all participated in a panel about brand management. Overseas, Too N OT ALL LEARNING TAKES PLACE in Ithaca. From the start students have taken field trips to see the industry at work firsthand. In the School’s master’s degree program, for example, students travel each spring to an industry site where they observe, interact with, and receive intense instruction from executives. Three high-level industry councils give the School yet another way to stay close to industry. The Dean’s Advisory Council, a Hospitality Industry Council, and the Center for Hospitality Research’s Advisory Board all provide executive insight into the School’s curricu- lum and research activities. Combining Theory and Practice. During the 1980s School leaders placed more emphasis on combining theory and practice. That approach—teaching theory and applying it to a single industry—sets the School apart from traditional business schools. “We have become a business school, albeit with an emphasis on hospitality, that not only teaches concepts, but translates those concepts into practice,” says Professor Leo M. Renaghan, who joined the fac- ulty in 1982 to head up marketing and later became associate dean for academic affairs. “Anything you get out of the top business schools you can get here, too, and you get it applied to the hospitality industry.” An example of how the School blends theory and practice can be found right on campus, at the Statler Hotel and J.W. Marriott Executive Education Center. Cornell’s 150-room Statler Hotel is a teaching tool for the School, where some two hundred Hotel students work alongside full-time professionals across all hotel and restaurant operations. Each year a select group of students participates in the hotel’s Statler Leadership Development Program. Serving in a series of part- time, paid positions throughout the hotel (e.g., front office, housekeeping, marketing, food and beverage), students interact with other hotel employees and guests, putting their classroom learning into practice and gaining knowledge, technical skills, and manager- ial proficiency. Some even rise into management posi- tions during their student career. “The School and the Statler Hotel are an integrated whole, creating a distinctive educational experience for our students and delivering a unique brand of hos- pitality for our guests,’ Renaghan says. Since 1985 the School also sought to enhance its faculty by hiring strong academic performers who also have operational knowledge of the industry. “It became clear that if Cornell was going to continue to be the leading hospitality school in the world, we had to have faculty who could go head to head with the best business faculty anywhere in their fields,” says David W. Butler, the dean from 2000 to 2005. Renaghan was at the cusp of this trend, hired as one of the first faculty members who had both hospitality experience and a doctorate. Other faculty members who have significant experi- ence in the field include Jack Corgel, Thomas Cullen, Jan de Roos, Chekitan Dev, Giuseppe Pezzotti, Daniel Quan, Judy Siguaw, and Kate Walsh. “We were awarding most of the PhDs in hospitality management and sending them off to other places,” Renaghan says. “We decided we would hire those with PhDs. We hired people with current operational knowledge, as opposed to some sort of intellectual skill set. We found people with an appreciation of hos- pitality who saw the opportunity of being involved in a school that’s focused on a particular industry, and we gave them the opportunity to learn what they need to know to apply their academic discipline.” David Butler, dean of the Hotel School from 2000 to 2005. MovInGc EACH OTHER FORWARD 177 A Hotel School senior talks about career opportunities with a recruiter from PricewaterhouseCoopers at a Cornell job fair. From its inception, the School’s graduates have been much sought after by industry. ne HOsPITALITY GOES GLOBAL 178 N RECENT YEARS the School’s administration has also encouraged students to take full advantage of courses that are offered by Cornell’s other schools and colleges. One way it did so was by reducing the num- ber of Hotel School credits required for graduation. “We pushed the kids out of the building,” Renaghan says. “We wanted students to recognize that they were at Cornell University—a great Ivy League institution.” Even before that change, students took related courses elsewhere to build on what they learned at the Hotel School. An example was Kevin P. Fitzpatrick ’76, who completed an independent study in the College of Human Ecology that focused on design issues in the hospitality industry. The Hotel School also enhanced its academic offer- ings through a partnership with the renowned Culinary Institute of America (CIA). These two presti- gious institutions created a collaborative degree pro- gram through which students can earn a bachelor of science (BS) degree in hotel administration and an associate’s in occupational studies (AOS) degree in culinary arts. The program gives Cornell Hotel School students a way to embellish their culinary knowledge and skills. Commitment to Entrepreneurship. Entrepreneurs have always driven the hospitality industry—and the School, beginning with E.M. Statler. The industry’s growth was fueled by other entrepreneurs who found new ways to improve and refine what had come before them. The School has always had an entrepreneurial component to its teaching, reflected in many of its classes. In 2004, however, School administrators and faculty members decided to formalize this commit- ment by establishing an Institute for Hospitality Entrepreneurship. “The Cornell Hotel School has a long record of producing graduates who go on to become successful entrepreneurs in new ventures, family businesses, and corporations, former dean Butler notes. “It was criti- cal that we further substantiate our commitment to this important field of management.” The School is working closely with Hotel School faculty and alumni, other industry leaders, and the Cornell academic community to further strengthen entrepreneurship at the School. The School’s aggressive approach to curriculum management is reflected in its course catalog. Students take courses with titles like Hospitality Real Estate and Finance, Advanced Business Modeling, The Law of the Internet and E-commerce, Strategic Marketing, Multinational and International Risk Management, Managing Hospitality Distribution Strategies, Spa and Resort Development and Management, and Sustainable Development in the Global Hospitality Industry. “The School has maintained its leadership by contin- uing not just to change, but in some cases to change ahead of the industry and to graduate people who are able to lead the growth and development of the indus- try, Butler says. “The Hotel School’s continued success | ENABLING ENTREPRENEURSHIP: HOTEL SCHOOL RECEIVES RECORD GIFT n 2006 Leland “Lee” Pillsbury ’69 and his wife, Mary, announced plans to donate $15 million to the Cornell Hotel School. The gift established the Leland C. Pillsbury ’69 and Mary M. Pillsbury Institute for Hospitality Entrepreneurship, the mission of which is to help students develop into successful entrepreneurs. The Pillsburys’ gift was the largest single donation ever made to the School and one of the largest ever in hospitality education. “Entrepreneurship and innova- tion have been crucial to the evolution of the hospital- ity industry and will continue to be,” Mary Pillsbury said. “Through this gift, Lee and | endeavor to help the School guide and inspire future generations of entre- preneurs who will find their own creative ways to move the industry forward.” Thanks to the Pillsburys’ vision and generosity, Cornell students now receive both academic and prac- tical training in entrepreneurship. Students develop the intellectual skills required to think like an entre- preneur and, through case studies, discover how entrepreneurs turn raw ideas into thriving businesses (or financial failures—an equally valuable lesson). Experienced entrepreneurs coach students and guide their growth. The Pillsburys themselves also play an active role working with students and advancing the institute’s mission. entrepreneurial change as an educational organization. A Grand Addition: The Beck Center “Mary and | will spend most of our time with stu- dents, encouraging their entrepreneurial endeavors,” says Lee Pillsbury. “We want to help kids make their dreams come true.” (For more about the Lee Pillsbury, see pages 62-67 and 80-81.) depends very much on its continuing that tradition of > N 2004 THE CORNELL HOTEL SCHOOL unveiled the Robert A. and Jan M. Beck Center, a state-of-the-art MOovING EACH OTHER FORWARD 179 aaa ~ hid Sereiha tlie ie S Bey | TUT ea 1 ee |) 1] | ‘ H 3 : : HosPITALITY GOES GLOBAL 180 learning space for the School’s undergraduate and graduate programs. Faced on three sides with exten- sive glass treatments, the Center was constructed as an addition to Statler Hall, adjacent to the Alice Statler Auditorium. (See facing page and page 164.) The Center is named for Robert (Bob) Beck, the second dean of the School, and his wife Jan (see photo on page 105). Dean Emeritus Beck’s association with the School at the time spanned nearly seventy years as a student, professor, dean, adviser, and friend. Under his twenty-year deanship, the School broadened its international reach and became known as the world leader in hospitality-management education. The 35,000-square-foot facility houses lecture halls, classrooms, meeting rooms, a computer center, a hospitality suite, and a dramatic three-story entrance atrium. As part of the project, the School’s 19,000- square-foot Alice Statler Auditorium underwent a complete renovation. Both the Beck Center and the auditorium are equipped with the latest instructional technology, allowing faculty and students to engage in interactive learning. The lead benefactor for the Beck Center’s develop- ment was Atlantic Philanthropies, whose generous gift enabled planning to begin. In all, more than 450 indi- viduals and organizations made financial contribu- tions to the $16.2 million project during a fundraising campaign that began just four months after the events of September 11, 2001, when tourism and travel world- wide was at an economic low point. “The timely completion of the Center reflects the extraordinary loyalty and support of our many friends,” said David Butler, dean of the School when the Center opened. “Our alumni, corporate partners, faculty, students, staff, the Cornell community, and other friends rallied together during difficult eco- nomic times to help create this spectacular facility. Their support is a fitting tribute to Dean Beck and his wife, Jan, who so ably led the School for twenty years. It also recognizes the contributions of Deans Meek, Clark, and Dittman and their respective faculties, all of whom played important roles in building and nurturing the strong industry support the School enjoys today.” Opposite page, atrium of the new Beck wing of Statler Hall in use at night. Above, Dean Emeritus Robert A. Beck greets the audience for dedication in 2004 of the Statler Hall addition that honors him and his late wife Jan. MovING EACH OTHER FORWARD 181 oe OS —cinc cieciedetatecotes ietiededde es ‘2 bate a a Or ll ad Ble tue a CHAPTER 4 THE CORNELL HOTEL SCHOOL Leading the Way VER THE LAST CENTURY hospitality entrepreneurs, executives, and educators have forged steady improvements in the way people work, play, relax, and interact. By thinking boldly and taking risks, these leaders have made important contributions to the extraordinary growth of what is one of the world’s most dynamic industries. Looking to the next one hundred years, the hospitality field will continue to evolve and improve through the innovative work of both scholars and practitioners alike. The corporations and academic institutions that thrive will likely be those that not only implement innovations on their own, but also learn from others. As in any discipline, no single hospitality company, or hospitality school, can produce The dramatic skyline of mixed-use all the answers. The most effective executives, and the most hotels and other buildings in Pudong, Shanghai's World Financial District. insightful scholars, build their knowledge on the experiences 183 Michael D. Johnson was appointed dean of the Hotel School in 2006. HosPITALITY GOES GLOBAL 184 of others. As Sir Isaac Newton put it, “If I have seen further, it is by standing on the shoulders of giants.” Academics distinguish themselves by doing practical research and formulating new theories based on those findings and others’ work. Students and businesspeople take the time to evaluate and understand theory, and translate that theory into better, more productive practices. One advocate of active partner- ships between industry and acad- eme is Michael D. Johnson, who became the Cornell Hotel School’s sixth dean on July 1, 2006. Johnson ™ succeeded David W. Butler, who retired in the summer of 2005 after serving as dean since 2000. (Sheryl E. Kimes, professor of hospitality facilities and operations, served as interim dean for the 2005-2006 academic year.) Johnson came to the Hotel School after twenty- four years as a faculty member at the University of Michigan, where he was a professor of business administration and marketing, and director of the business school’s center for customer-focused management in executive education. He holds a doctorate and a master’s of business administration from the University of Chicago, and a bachelor’s of science, with honors, from the University of Wisconsin-Madison. Bright prospects. Johnson described several trends that in his view will stimulate continued growth for the hospitality industry. Two especially positive forces are the continuing advances in communication and technology. Together, such improvements are acceler- ating the globalization of business. One major boost has come from the Internet, which has become a huge and vital marketing vehicle. As information and people move more easily around the world, that creates opportunity for hospitality com- panies. China and India are examples of countries where new business opportunities abound for those willing to venture out and seek new partnerships. “In many of the fastest-growing places, business is done only face to face, and then only after several meetings where business is not even discussed,” Johnson pointed out. “This bodes well for the hotel sector and all facets of the industry.” Addressing concerns that ongoing improvements in transportation or communication technology might somehow threaten hospitality, Johnson said that his- tory does not support this view. “Every time we see a huge leap in technology or transportation, the hile leading the Hotel School from 2000 through 2005, Dean David W. Butler was known for encour- aging students to make the most of their time at Cornell. Butler dispensed his advice in both formal and informal ways. Here is the guidance he gave during his welcoming speech to incoming freshmen in 2004: First, it might help to understand something about what education is. The essence of a word springs from its roots. “Education” comes from the Latin prefix “ex” or “out” and the verb ducere, “to lead.” And so it means literally, “to lead out.” Our faculty are passionate about their role in the leader- ship process. It is their job to provide rich and structured intellectual opportunities—and they do so with a dazzling array of methodologies. But in the end, leadership rests primarily with you. What you get out of Cornell is what you put into it. The yield on your Cornell investment will be determined by how aggressively you take charge of your learning. But what should you be aggressive about? We will spend the next four years helping you answer that question, but right now let me focus on one thing: Take risks! As the ori- gins of the word “education” suggest, learning requires A BLUEPRINT FOR LEARNING pushing yourself beyond your comfort zone. And remem- ber that in the university, the risk-reward relationship is loaded in your favor. The downside is low, the upside extraordinarily high. Ours is a school of rigorous expecta- tions, not of hard knocks. So, in selecting courses, build on your strengths, but don’t hide in them. Attack your gaps and weaknesses. If you are quantitatively inclined, acquire the verbal facility you will need to sell the results of your analysis—and to Succeed as a leader and as a social being. If you are ver- bally inclined, remember that few people rise high in busi- ness who don’t also understand the numbers. In selecting faculty mentors, pick individuals with reputa- tions for being unusually probing and challenging, even prickly. Supportiveness is only one tool in instruction. Many of our alumni’s fondest anecdotes about their teachers—and deans—seem to involve curmudgeons. In selecting friends, seek diversity in country of origin and in ethnicity, interests, and faiths. In hospitality you will serve the world, and the world is here in this small town. Seek it out, experience every facet. In sharing ideas, in your discussions inside and outside class, don’t “play it safe.” Take risks with what may seem off-the-wall. You may be breaking new ground. Use the whole university. Don’t overdo Statler Hall. If you do your part, our structure will assure that you graduate with a sound base in hospitality management. But leader- ship requires a broader take on human experience. Taste the arts and sciences, music, drama, literature, biology, physics, and astronomy. Do so in courses, featured lec- tures, and performances. A stimulating world moves through this campus. Use the whole university. Think worldwide. Through our executive visitors, you have the opportunity here to sam- ple virtually every side of hospitality: hotels, restaurants, clubs, convention centers, amusement parks, cruise lines, gaming, resorts, vacation ownership. And our internships open virtually every part of the world: ours is a global industry and we are a global school. At the risk of sounding like your parents, let me also remind you: It is unlikely that you will ever again be able to spend four years of your life devoted primarily to improving yourself, much less in an intellectual environment as rich and diverse as this one. Cornell offers a glorious feast of experience and insight. Dine well. Where learning is involved, gluttony is a virtue. hospitality industry has boomed,” he remarked. “Faster aircraft will not reduce the need for lodging. Business is still about people meeting people.” Johnson also pointed to the ever-growing impor- tance of the service economy and the hospitality industry’s position at the core of that economy. To thrive in a service economy, he said participants need to create a strong culture and to live by that culture. “In a service economy, you need to say who you are and what you value. That approach dictates the service you give, Johnson commented. “It’s not like the man- ufacturing sector, where you ask what the customer wants and then adapt to it. In a service environment, your culture dictates what you can accomplish.” Johnson emphasized that service-oriented organiza- tions must constantly reassess their values. As an example he cited the influence of the Internet, which LEADING THE Way 185 HosPITALITY GOES GLOBAL 186 CORNELL, THE “HOTEL” UNIVERSITY While serving as Cornell University’s eleventh president, Jeffrey S. Lehman (’77, A&S) liked to tell a story that demon- Strates the international renown of Cornell’s Hotel School. In summer 2003, then president-elect Lehman was traveling in Ireland. While checking into a hotel one night, Lehman struck up a conversation with the hotel’s general manager. “What is your line of work?” the general manager asked. “I’m about to start a new job at Cornell University,” Lehman replied. “What kind of job?” “I’m going to be the president.” The general manager nodded, and then asked, “So how long have you been in the hotel business?” has caused companies to ask how much they want to rely on technology to replace personal service. “Four Seasons Hotels and other service leaders are being careful not to let electronics substitute for personal greetings such as handshakes and handwrit- ten notes,’ Johnson said. “In our business, you can copy the pillows, you can copy the flat-screen TVs. But personal service will remain the differentiator.” Acknowledging the threat of terrorism, Johnson said we live in an age when people need to be cautious. That said, he hopes that people will avoid generalizations about others and not make narrow interpretations based on limited knowledge or perspective. He also said the terrorist attacks of September 11, 2001, in the United States showed that “Human beings are inherently resilient. People are flying again, people are staying in hotels. In many ways, the hospitality industry reflects the positive spirit and will of people all over the world.” Plans for the Cornell Hotel School PON HIS ARRIVAL JOHNSON understood the Hotel U School’s unique position in business education and the School’s primary strategic goals, including the priorities to pursue to achieve those goals. He noted how the Hotel School’s focus on one industry gives it a clear advantage over most professional schools. “The beauty of the Hotel School is that it focuses on connecting theory to practice within the hospitality industry,’ Johnson observed. “This allows faculty, stu- dents, staff, alumni, and the industry to work together toward common goals. And even though the School focuses on a particular industry, it happens to be the largest industry in the world. The size and complexity of the industry provides abundant opportunities for the Hotel School to innovate and grow.” Building an Excellent Faculty. Even before he came on board at Cornell, Johnson identified three key strategic goals designed to further extend the School’s leader- ship. The first: continue to build an excellent faculty, one that is known for both academic excellence and hospitality-industry expertise. “An excellent faculty enables bright and committed students to have an outstanding educational experience and develop into industry leaders,’ he said. “The faculty must excel at both knowledge generation and its translation into hospitality-industry practice. This requires consider- able effort toward understanding the most important issues facing the industry.” In Johnson’s view, building the professorial faculty requires recruiting and developing candidates in disci- plines central to the School’s research, teaching, and service mission. He cited as an example the School’s record in building global leadership in service opera- tions, where professors conduct practical research in, for example, revenue management and service process optimization. A second example is the School’s unique combination of expertise in real estate, finance, and managerial accounting. In addition to developing the faculty, Johnson planned to continue to tap the expertise of experi- enced hospitality practitioners, who share their wis- dom with students and work closely with faculty members. “We'll find people who have dealt with chal- lenging issues and bring them in to expose our stu- dents and faculty to those issues,” Johnson stated. He lauded the School’s Executive-in-Residence program, whereby (as described earlier) a senior executive spends considerable time over an entire semester advising students on a project and sharing insights in less formal ways. Ted Teng ’79, former president of Wyndham Hotels, and Joseph E. Lavin ’75, a former senior executive with Marriott, are examples of leaders who have shared their expertise with students. In his career at Michigan, Johnson consciously sought to have three different kinds of projects going at once—one for a business-to-business company, one for a business-to-consumer company, and one for a service company. “I have always thought that that kind of approach would give me the best perspective as a business school professor,’ Johnson says. “Now, in hindsight, I can also say that it gave me some perspec- tive on what makes the hotel industry different from other industries.” Broadening the Educational Experience. Johnson's second strategic objective is to expand student educa- tional experiences and employment opportunities. In his view, the School must broaden student learning to keep pace with the increasingly diverse and integrated global hospitality industry. Johnson sees opportunities to expand experiential learning not only in the core hotel industry (such as franchise management), but also in other hospitality markets including gaming, sporting events, and cruise lines. Johnson is a strong advocate of exposing students to real projects in the work world. LEADING THE WAY 187 Above, hangar-like main atrium of the Kempinski Hotel Airport Munich. Opposite page, Burjal Arab Hotel in Dubai, United Arab Emirates, designed to summon the image of a Mideastern sailing vessel. HOsPITALITY GOES GLOBAL 188 “Iam a big believer in learning by doing,” Johnson said. “There is an old saying that those who read about doing some- thing remember it for awhile, those who see someone else do some- thing remember it a bit longer, and those who do something themselves never forget it. For us, the challenge is to apply our academic knowledge and tools in the context of a global service economy.” The School’s Institute for Hospitality Entrepreneur- ship provides students another way to broaden their learning experience. Johnson envisions the institute as a vehicle through which students will grow by inter- acting with successful entrepreneurs across each realm of the industry. They will develop their own business concepts and test them with venture capital. In doing so, students will be encouraged to tap their creative talents and lead the industry in new directions. Serving a Global Industry. The third strategic objective is to serve an increasingly global and diverse hospital- ity industry. “We must continue to attract the best and brightest students from across cultural and economic boundaries. That will allow us to serve effectively and build relationships in a global service economy,” Johnson said. He called the Cornell-Nanyang Institute of Hospitality Management, in Singapore, a defining step in this process. Johnson also emphasized the importance of being able to provide financial aid to ensure a diverse and focused student body. He points out that in schools and universities across the country, qualified students’ need for scholarships is quickly outpacing the money available. Arching over these three strategic objectives is the need for academic leaders and industry executives to collaborate. In the year leading up to his deanship, Johnson spent much time gathering input from alumni on how the School can maximize its engage- ment with industry. “I think the School’s relationship with industry leaders continues to evolve in a positive way, Johnson said. “We have made especially good progress in recent times, and I look forward to work- ing with School and industry leaders to build on that progress.” Expanding the School’s outreach activities will benefit the School in many ways, Johnson noted. Outreach opens up new research opportunities, encourages industry leaders to partner with the School, and leads employers to redouble recruiting efforts at the School. — fu en —_ Oo Z Q < aa — HOSPITALITY GOES GLOBAL 190 BETTER SERVICE AT SEVENTY: OPPORTUNITIES AS BOOMERS AGE rowth in the hospitality industry since the 1950s has been influenced by changes in demographics and technology. Some of these origin, such as the first passenger jet flight on May 2, 1952. Others are linked to long-term trends. For example, the share of married American women who were in the labor force increased from about 25 percent in 1960 to about 60 percent in 1990. The result was a substantial increase in the disposable income of many couples, which meant that more middle-class families than ever before could enjoy frequent visits to hotels and restaurants. Changes in consumer habits will continue to transform the hospitality industry over the next several decades, but this time the fulcrum point will be an aging population. In the United States, the eldest members of the enormous baby boom generation, who were age 60 in 2006, will be 80 in 2026, while the youngest will be 62. Baby boomers have set the agenda for U.S. marketers at each stage of their lives, and they will continue to do so through sheer force of numbers and wealth—they are 77 million people, or one-quarter of the U.S. population, and they spend about $2 trillion a year. The next life stage for boomers is the one we used to call retirement, and it is just beginning (starting, say, around 2006-2010). This social transition is already having multiple effects on the hos- pitality industry. For example, it is causing unprecedented lev- els of demand for vacation homes and timeshares (see chapter 12, especially pages 158-160). Yet the changes we’ve seen so far are only foreshocks of the commercial upheavals to come. Aging consumers are not just a U.S. phenomenon. Birth rates are falling and life expectancy is increasing in most of the transitions and developments have a clear date of world, and the inevitable result is an aging global humanity. The proportion of the population aged 60 and older in devel- oped regions and countries (Europe, North America, Australia, New Zealand, and Japan) will increase from 20 percent in 2006 to 32 percent in 2050, according to the United Nations. Japan has a well-established reputation as having the world’s oldest population, with 27 percent of its population aged 60 or older in 2006, but some of the most rapidly aging countries might come as a Surprise. In China, for example, the share of popula- tion aged 60 and older is projected to increase from 11 percent in 2006 to 30 percent in 2050. In Kuwait, it may increase from 3 percent to 24 percent, and in South Korea, it may increase from 14 percent to 41 percent. It’s often said that aging populations will place huge bur- dens on pension plans and healthcare systems. While these are indeed serious problems, it is also true that most older people are not ill, and that the share of older people who have health problems has been declining. The portion of Americans aged 65 and older who have a chronic disability declined from 26.2 per- cent in 1982 to 19.7 percent in 1999. Moreover, the rate of decrease in elderly disability in the United States has been speeding up, from about 1 percent a year in the 1980s to 2.6 percent a year between 1994 and 1999. What’s happening is that the revolution in health consciousness that happened in the 1970s and 1980s is now paying dividends. People who have taken good care of their bodies throughout life are likely to Stay reasonably healthy until shortly before they die. This means that a new category of travelers is being created— millions of people in their 60s, 70s, and 80s who are ready, willing, and able to travel and play. Hotels and restaurants are already getting a boost from empty nesters—these are married couples that are finished with their child-rearing, throttling back on their careers, and eager to travel. Since spending on hotels, airlines, and cruises remains high among householders until age 75, older hospi- tality consumers represent a much larger and more complex market than does one comprising couples getting away on weekends. Six in ten Americans aged 55 to 64 live in a married- couple household, but the 65-to-74 age group is almost evenly split between married couples and a variety of other living arrangements (i.e., women living alone, men living alone, and unmarried people in multi-person households). The number of 65- to 74-year-olds living alone will also increase rapidly as baby boomers move into this age group, because a higher pro- portion of boomers are divorced or childless. This means that millions of older single Americans will be interested in hospi- tality venues that make it easy to meet people in a comfort- able, secure environment. An aging customer base has huge design implications for hospitality enterprises. Restaurant designers are already making spaces for people over 60, with better lighting and group Seating options for single diners. Hoteliers are studying so-called “universal design,” a movement that encourages products and environments that are usable by all people with- out the need for adaptation or specialized design. Advocates say that universal design benefits people of all ages and abili- ties, and that features allowing people to live independent lives longer work best when they are part of the original structure. The changes can be as small as a door handle instead of a knob, or as substantial as a one-level building that has ramps and lifts wherever possible instead of steps and stairs. A well-designed stairless entrance offers better service to anyone who is 70 years old, regardless of whether that person uses a wheelchair or any other type of mobility aid. As the customer base ages, the labor force will be aging, too. Between 2004 and 2014, the number of U.S. workers under the age of 45 is projected to increase by only 1.6 million individuals, but the number of workers who are age 45 and older may increase by 13 million. This means that customers won’t be the only ones who have trouble seeing in dim restaurants. Most baby boomers in low-income brackets have struggled to save for retirement, so it’s likely that they will be looking for jobs (at least part-time ones) well after age 65. Employers report that older workers have lower rates of absenteeism and require less training and supervision than younger workers do, so this trend could have benefits for companies’ bottom lines. At the Same time, managers will need to spend more time and money to prevent workplace injuries. Aging customers and employees will require hospitality executives to reconsider the nature of appropriate design. Customers will demand places that are stylish and distinctive yet safe and accessible; workers will perform better if their Stations are redesigned for older hands and eyes. Business travelers will be aging, too, as all kinds of corporations struggle to retain skilled workers longer. For the last fifty years, baby boomers have gotten what they want by rewarding businesses that cater to their needs. In the decades ahead, hospitality businesses will grow by catering to the needs of an aging customer base. —by Brad Edmondson LEADING THE WAY 191 EPILOGUE FQ PERSONAL SERVICE Hospitality’s Defining Attribute HOTEL HAS JUST ONE THING TO SELL. That one thing is service, said E.M. Statler. Hotels and restaurants will always compete to provide the best in physical comfort and amenities. But as E.M. Statler knew a century ago, any such tangible advantages are quickly duplicated if not improved upon by the competition. To stand out, hospitality companies must deliver a distinctive brand of personal service that guests will remember and want to experience again. “In the hospitality industry, the product is created when employees interact with guests,’ says Edward A. Evans ’74, executive vice president of human Anthony Fertitta '39 demonstrated how to resources at Allied Waste Management and a longtime executive carry bags when Hotel students took over jobs at the Hotel New Yorker in the 1930s. at ARAMARK. From the general manager to the people 193 HosPITALITY GOES GLOBAL 194 mopping the floors and changing the beds, that is how the brand is defined.” Evans points out that in hotels and restaurants, employees at all levels interact with the guest. There is no large professional sales force to serve as the public face of the organization. “The hospitality industry is different from the consumer-product industry, where professional salespeople sell a product that speaks for itself and has hundreds of millions of dollars in media spending behind it,” Evans says. Many hospitality employees, including bellhops and housekeepers, choose to remain in their jobs through their careers, often working at a single property. That, Evans says, makes hiring the right people all the more important. “Hospitality companies need to hire individuals who understand that our differentiated product is cre- ated by the people,” Evans says. “We need managers and executives who value the importance of human beings in creating the brand. Some companies do this well, others are still learning.” From its beginnings the Hotel School has stressed personal service in the curriculum. One faculty mem- ber known to embody the service ethic is Giuseppe Pezzotti ’84, senior lecturer in food and beverage management. Pezzotti’s devotion to service has made a lasting impression on many of his students and colleagues. “On the first day of class, Giuseppe recited everyone’s names and hometowns without ever having met us,” recalls Sabato Sagaria ’97, now an executive at The Greenbrier. “Since that day, Giuseppe’s service philoso- phies have been ingrained in my head, and I have never lost sight of the importance of guest recognition.” Another of Pezzotti’s students, Peter Karpinski ’99, learned a lesson about service and responsibility the hard way. The morning after renowned chef and entrepreneur Wolfgang Puck hosted a guest-chef din- ner at Cornell, Karpinski was supposed to drive Puck from the Statler Hotel to the airport for an early flight. But Karpinski overslept and Puck had to arrange a ride on his own. When Karpinski admitted his error to Pezzotti, his mentor suggested he apologize—in person. Several weeks later Karpinski happened to be in Los Angeles, and he visited Puck in his restaurant. “He appreciated the effort I made,” says Karpinksi, now an executive with Sage Hospitality Resources. “We struck up a friendship that has lasted to this day.” Indeed, Hotel School students learn that service pervades every facet of business. Says Kevin Fitzpatrick ’76, president of Global Real Estate at American International Group, “I tell the MBA gradu- ates whom [ hire that there is no real difference between what they do and what people in hospitality do. Some people wait on tables, some do financial reporting, but both are forms of service to others.” Mary R. Wright *45, retired consultant, hotel man- ager, and educator notes, “I enjoy rendering service, and the hospitality business is all about service. Even teaching is a service. My willingness to perform com- munity service and volunteer for Cornell projects just comes naturally. I’m a Rotarian, and Rotary Club’s motto is “Service above Self; and that says it all for me.” Some graduates put their service ethic to work outside the hospitality field. Consider, for example, Michael P. Neville ’01, who made his mark as an elementary school teacher in inner-city Atlanta as part of the Teach for America program. Neville was a semi-finalist for Atlanta’s Public School Teacher of the Year 1n 2004. Lee Pillsbury ’69 remembers drawing strength from what he calls the enormous personal commitment the Hotel School faculty made to students. “I can’t begin to count the number of times I had brunch at Vance Christian’s house,” he recalls. “Deans Beck, Lattin, Gaurnier, and several faculty members showed a sincere interest in the students. The personal interest they took in me played a major role in shaping who I became.’* *Pillsbury refers to Professor Vance A. Christian, Dean Robert A. Beck, Assistant Dean Gerald W. Lattin, and Associate Dean “Colonel” Paul L. Gaurnier. DEFINING ATTRIBUTE 195 Appendix HosPITrALItTy GOES GLOBAL 196 The Cornell Hotel Society in Europe Also see pages 50-51 Beginning in the 1950s many Hotel School graduates fulfilled their military obligation by serving in Europe, primarily in post-war Germany, where they operated hotels and military clubs. Frank A. Ready, Jr. ’35 (vice president for Dunham & Smith, Inc.), based in Frankfurt, saw the opportunity to form a European chapter of Cornell Hotel School alumni (“hotelies”) working in Europe, the Middle East, and North Africa, together with expatriate hotelies who stayed overseas after their military service. (Ready had been instru- mental in forming CHS’s Japan chapter a few years earlier—the School’s first alumni chapter formed out- side North America. ) With Ready as adviser, the European chapter’s first board of directors met to establish the chapter’s pur- pose and goals, which were defined as assisting the Cornell Hotel School in whatever ways possible, including the following: - Encourage European students to attend the Hotel School; * Plan and direct a public-relations program in Europe to enhance the prestige of the Hotel School, the Cornell Hotel Society (which at the time was called the Cornell Society of Hotelmen), and the European Chapter (including the Middle East and North Africa); - Assist Hotel School administrators in interviewing prospective students and attend special hospitality events and functions as representatives of the Hotel School; and - Arrange social functions (on behalf of the Cornell Hotel Society) in connection with hospitality industry conventions, shows, and events. First meeting. On February 4, 1961, the inaugural meeting of the European CHS Chapter took place at the Hotel Frankfurter Hof, in Frankfurt, Germany. Among those present were Hotel School Dean Howard B. Meek and soon-to-be-dean Robert A. Beck ’42; sev- eral Hotel School professors; and Hotel graduates from: Cyprus, Egypt, England, France, Germany, Greece, Holland, Iceland, India, Italy, Lebanon, Lichtenstein, Morocco, Norway, Sweden, Switzerland, Turkey, and the U.S.A. Curt Strand ’43, vice president of Hilton International Europe, delivered the welcom- ing address. Ichiro Inumaru ’53, general manager of Tokyo’s Imperial Hotel and president of Imperial Hotel Company Ltd., personally brought greetings from the Japan Chapter. Annual meeting. From the start the plan to get together once a year at an “annual meeting” was a great success. That event soon developed into a three- day extravaganza of educational, networking, and social functions—in other words, a mix of business and fun. The meeting venue moves to a different country each year, and—while the focus is always on education and networking—there’s some competition to out-do the social aspects of the previous year’s meeting. The annual meeting was and continues to be the cornerstone of CHS networking outside North America. Each year it attracts business leaders from around the world and representatives from the Hotel School (such as the dean, faculty members, and vari- ous department directors). Affiliate Members’ Contributions Members of the newly formed European Chapter soon decided to make individuals who had completed professional-development courses at the Hotel School’s “summer school” eligible for affiliate mem- bership in the European Chapter, provided that those summer students demonstrated a genuine interest in the growth and activities of the chapter and were approved by the chapter’s board of directors. (That summer program is now called the Professional Development Program, or PDP, and was previously known as the Center for Professional Development.) Not until 1995 did CHS members at large vote to offer affiliate membership in the society to those students who completed the School’s Advanced Management Program, the General Managers’ Program, or six courses of PDP. The Hotel School’s summer session provides a source of devoted affiliate members who contribute greatly to the success and strength of the European Chapter. For example, Sven Akerstrand, former direc- tor of Operakallaren restaurant, Stockholm, Sweden; Dean John “Jack” Clark, fifth from left, receives from Paris’s deputy mayor, third from right, the Medaille D’Honneur de la Ville de Paris and diploma signed by Mayor Jacques Chirac at the European alumni chapter meeting in Paris in 1985. Others, from left, are former chapter presidents Rudolf Miinster ’62, Germany; Jacques Rougié ’72, France; Lei-Ann Ellis 69, UAE; Ralph Starke ’52, England; Deiv Salutskij ’71, Finland; Pamela Troutman Kessler 66, Switzerland; Leif Evensen ’66, Norway; and Staffan Linder ’72, Sweden. APPENDIX 197 HosPITALITY GOES GLOBAL 198 Joaquin Paredes Alves, owner of Hotel Eduardo VII, Lisbon, Portugal; Elmar Greif, general manager, Kempinski Hotel, Frankfurt, Germany; Niels Olsen, former director of SAS Hotel Scandinavia, Copenhagen, Denmark; Christian Petzold, director of development, Rezidor SAS Hospitality, Brussels, Belgium; Carola and Heinz Schumacher, hotel owners, Tecklenburg, Germany; Helmut Strondl, dean, Salzburger Tourismusschulen, Austria; Fred Tschanz, hotel and restaurant owner, Zurich, Switzerland; and Jurgen Wolf, brewery and restaurant owner, Dortmund, Germany. European Scholarship Programs A huge factor in the growth and longevity of CHS’s activities in Europe has been the society’s focus since its beginning on raising and distributing scholarship funds for qualified students. Summer School Scholarships. In 1964 a scholarship program was started to help promising European hoteliers attend the Hotel School’s summer programs. The first scholarship was possible thanks to the gen- erosity of Dean Beck, on behalf of the Hotel School. By 1977 fifteen scholarships were awarded each year. Many recipients went on to successful hotel careers, including Dieter Huckestein, a native of Germany, who first became president of Hilton Hotels USA, then CEO of Conrad Hotels International, and later president of the International Hotel and Restaurant Association; Thomas Wachs, regional director of Maritim Hotels in Berlin; and Emanuel Berger, general manager of the Victoria-Jungfrau Grand Hotel, Interlaken, Switzerland, who was named Hotels maga- zine 2004 Hotelier of the World. The European alumnus who worked hardest to advance CHS in Europe is arguably Rudy Miinster ’62. Based in Berlin, Germany, Miinster has travelled over two hundred days a year during the past twenty-five years as a worldwide consultant to the hospitality and travel industry; he also served as CHS president in 1996. For twenty-six years he was the driving force behind the European Chapter’s scholarship program, unselfishly devoting extensive time to soliciting schol- arship funds from industry suppliers, hotel compa- nies, and chapter members. Over the years his efforts benefited more than three hundred scholarship recipients. In 1990 Deiv Salutski ’71 (Helsinki, Finland) relieved Miinster of those fundraising duties and was equally successful in attracting funds—sufficient to benefit nearly two hundred additional summer stu- dents by 2006. Salutskij, an experienced and respected industry executive and educator, was appointed CHS European Regional Vice President in 2006. Full-term Scholarships. In 1984 a European Chapter Scholarship was established to benefit European students studying full-time in Cornell’s undergraduate or master’s degree Hotel programs. Peter D. Streuli ’62 (Lausanne, Switzerland), hospitality project developer, spearheaded the fundraising. The scholarship was endowed in less than two years. The next scholarship to be endowed was a memorial fund for Ralph Starke *52. (A regional VP Europe, for both Hilton International and Marriott, Starke was instrumental in developing and promoting the CHS European Chapter from 1962 until he passed away in 1992.) Then, a memorial scholarship for Erik Schau-Larsen °73 (Solstrand-Bergen, Norway) was fully endowed in 2005. Through the generosity of John F. Mariani (’54, A&S), chairman of the board of Banfi Vintners, and his brother Harry, president of Banfi Vintners—both of whom are honorary members of CHS—a Banfi Scholarship was established in 2004 to benefit European students attending the Cornell Hotel School. National Chapters in Europe By the mid 1990s there were over six hundred CHS members living in Europe, the Middle East, and North Africa. To facilitate interaction and camaraderie among so many individuals, it was decided to establish a network of overseas CHS chapters through which local members could meet and keep in touch all year round. The individual chapters’ purpose and goals would be the same as those outlined for the first European Chapter. When Michael Chiu ’66 became CHS president in 1995 he helped form the Kansai Chapter in Japan and the Pan-Hellenic CHS Chapter, as well as one in France. Mitinster succeeded him, and in 1996 a chapter in Germany was launched. As regional vice president in 1996-2003 and CHS president in 2005, Leif R. Evensen ’66 helped form several chapters: London (England), Norway, Sweden, Finland (including Russia and the Baltic), Benelux, and Switzerland. In 2006 the Italy Chapter was formed with the help of Roberto E. Wirth 775 and Carmel A. D’Arienzo, MPS ’88. For more than forty-five years Hotel School alumni living and working in Europe, the Middle East, and North Africa have enjoyed and benefited from a dynamic and enthusiastic fellowship among CHS graduate and affiliate members. —by Leif R. Evensen 66 APPENDIX 199 HosPITALITY GOES GLOBAL 200 The Asia—Pacific Region Also see page 51 The Asia—Pacific region continues to be an important source of students for both the Hotel School and the university. For instance, from 1995 to 2005 the Hotel School’s student population has included, on average, from 6 to 12 percent Asian students. At the same time, the Asia—Pacific region’s heretofore steady evolution began to accelerate so that Pacific Rim nations are becoming a leading economic force. Seventy percent of the population is under the age of thirty, which means that tourism has a bright future for a new mar- ket that is amassing discretionary income for travel. Individual Chapters For many decades, but especially beginning in the 1950s, many Japanese students have attended Cornell’s Hotel School. A substantial number of these students’ families owned Japanese hotels or ryokans (traditional inns), and the graduates returned home to continue the family businesses. Relative to other “Western” schooling options available, Cornell University was preferred by many because of its status as one of the world’s best universities and the Hotel School’s focus on management. Given the increasing numbers of Japanese Cornell graduates, in 1961 Ichiro Inumaru ’53 started the Japan Chapter of the Hotel School’s alumni association (CHS). Other Japanese alumni active in both CHS and the hotel industry include former senior executives of Japanese hotel companies, for instance, Goro Yamazaki 61, managing director of Hotel Okura; Yuji A. Yamaguchi ’61, previously executive vice president and currently senior auditor of Fujiya Hotel Co. Ltd; and Hiroshi Kohda ’64, professor at Rikkyo University College of Tourism and former senior managing director and general manager of the Hotel New Otani Osaka. In the late 1990s Chiaki Tanuma, MPS ’80 (and CHS regional vice president), spearheaded an initiative that invigorated a “young alumni” group for Cornellians living in Tokyo, called Shinjuku Cornell Club. Meanwhile, Kohda formed a Kansai Chapter and became its president. Inumaru stepped up to become a regional CHS vice president. Scholarships. The Japan CHS Chapter offers several scholarships for students to attend Cornell’s under- graduate and summer programs and the Cornell— Nanyang Institute in Singapore. Besides the chapter’s funded scholarship endowment, for instance, the “Green House Hospitality Scholarship Fund for Asian Careers” was established by Tanuma. That fund awards US$22,000 to two Asian undergraduate students attending Cornell each year. The Ecolab—Cornell Scholarship Program, established in 1994, each year affords one or two young potential hotel managers in Japan the opportunity to attend the Hotel School’s summertime Professional Development Program. Outside Japan As the Asia region’s economic prospects brightened, more CHS chapters were established—in large part due to the support provided by Michael Chiu ’66 while he was CHS president, in 1995-1996. Through his own personal and professional experience in Asia, Chiu recognized that as the region developed it would become a hotspot for all aspects of hospitality—and therefore for Hotel School graduates. Chiu was instrumental in supporting the growth of individual CHS country chapters, as well as founding the first Asia—Pacific regional meeting in June 1995, hosted by the Hong Kong Chapter (founded in 1982) under the leadership of Albert I-Ming Wu ’76 and William S. Hsu, MPS ’83. The format of the meeting was modeled after the European Chapter’s regional meetings, with seminars, sightseeing, dining and wining, and networking, and was attended by alumni from Japan, Taiwan, Thailand, Singapore, the Philippines, Europe, and the United States. Since then, meetings have been hosted in Phuket, Thailand (1996); Tokyo, Japan (1997); Goa, India (1998); Singapore (1999); Bali, Indonesia (2000); Seoul, Korea (2001); Yangon & Pagan, Myanmar/ Burma (2002); Ho Chi Minh City, Vietnam (2003); Beijing, China (2004); Kyoto, Japan (2005); Bangkok, Thailand (2006); and Boracay, Philippines (2007). The Singapore Chapter began in 1982; the Indonesia CHS Chapter was founded by John E. Reed ’90 in 1996; the Philippines Chapter by Annabella Santos Wisniewski 65 in 1997; the Korea Chapter by Aejoo Lee, MPS ’81, in 1999; the Taiwan Chapter by Alice S. Lee ’95 in 2000; the Australia Chapter by John van der Wallen ’87 in 2002; the China Chapter by Leo C. Yen 94 and Denis Fasquelle (IMHI ’97) in 2003; and a separate Mumbai Chapter was created by Rohan P. Gopaldas ’o2 in 2006. The India Chapter was formed in the 1970s and I started the Thai chapter, in 1994. —by Liv Gussing ’91 APPENDIX 201 HosPITALITY GOES GLOBAL 202 GLOBAL PARTNERS Also see pages 143-144 By mid-2007 the Center for Hospitality Research had estab- lished more than fifty alliances with leading corporations and media enterprises. These alliances help fund and guide the School’s research. CHR Partners and Sponsors AIG Global Real Estate Investment Corp.; Denihan Hos- pitality Group; Expedia, Inc.; Four Seasons Hotels and Resorts; HVS International; JohnsonDiversey; Kohinoor Group; LRP Publications; Marriott International, Inc.; Marsh’s Hospitality Practice; Mobil Travel Guide; Nestlé; PricewaterhouseCoopers; Proskauer Rose LLP; Smith Travel Research (STR); Southern Wine and Spirits of America, Inc.; SynxXis (a Sabre Holdings Corporation); Taj Hotels Resorts and Palaces; Thayer Group of Companies; Travelport; and Wimberly Allison Tong and Goo CHR Friends 4Hoteliers—Hospitality and Travel News; American Tescor, LLC; Caribbean Hotel and Restaurant Buyers Guide; International CHRIE; Cody Kramer Imports; Cruise Industry News; DK Shifflet & Associates; ehotelier.com; Estrela Marketing Solutions; Fireman’s Fund Insurance Co.; Gerencia De Hoteles & Restaurantes; Global Hospitality Resources, Inc.; Hospitality Financial and Technology Professionals; hospitalityinside.com; hospitalitynet.org; Hotel Asia Pacific; Hotel China; HotelExecutive.com; Hotel Interactive; Hotel Resource; International Hotel Conference; International Hotel & Restaurant Association; iPerceptions; KPMG Japan/Global Management Directions; Lodging Hospitality; Lodging Magazine; PKF Hospitality Research; Real Estate Media; RealShare Hotel Investment and Finance Summit; RestaurantEdge.com; Shibata Publishing Co. Ltd; Lodging Conference; The Resort Trades; TravelClick; Unifocus; WageWatch, Inc.; wiwih.org Cornell Alumni at Other Hospitality Schools Also see page 167 Among the hospitality schools launched and staffed by Cornell Hotel School alumni and former faculty are those at the University of Nevada—Las Vegas’s College of Hotel Administration, where founding dean Jerome “Jerry” Vallen ’50, PhD ’78, built a program that today enrolls more than two thousand students and Robert H. Woods, MS ’87, PhD ’89, is a professor; and the University of Denver, where Hotel School professor emeritus and former administrator Peter Rainsford °68, PhD ’74, served as director of the School of Hotel, Restaurant, and Tourism Management in the Daniels College of Business before becoming the vice president for academic affairs at the Culinary Institute of America. In July 2007 David L. Corsun ’83, MS ’96, became director of the University of Denver program. The School of Hospitality and Tourism Manage- ment at Florida International University was founded in 1972 by Dean Gerald W. Lattin (PhD °49), former Hotel School professor and assistant dean. In 2006 the FIU program was headed by Dean Joseph J. West ’74, former director at Florida State University, and Associate Dean Rocco M. Angelo ’58, former Hotel School professor. The University of Central Florida's Rosen College of Hospitality (named after Harris Rosen 61), in Orlando, enrolls more than 1,900 undergraduates. There Deborah Breiter, MPS °84, is professor and chair of the Tourism, Events, and Attractions department; Carole Clark Dickson, MS ’78, is an adjunct professor; Duncan R. Dickson, MPS ’77, is an assistant professor; Tadayuki “Tad” Hara, MPS ’91, PhD ’o4, is associate professor and senior research fellow in the Dick Pope Institute; Wilfried W. Iskat ’71, MS ’72, is an associate professor; Stephen M. LeBruto ’72 is associate dean and professor; Christopher C. Muller, MPS °85, PhD ’92, is professor and director of the Center for Multi- Unit Restaurant Management; and William P. Fisher 60 (68, PhD) is the Darden Eminent Scholar. (Prior to joining the Rosen School, Fisher was the president and chief executive officer of the American Hotel & Lodging Association and the executive vice-president of the National Restaurant Association. ) Donal A. Dermody ’53, MS ’68, a Hotel School pro- fessor and administrator during the 1960s, 1970s, and 1980s, became founding dean of the Center for Hospitality Management at Florida’s Nova Southeastern University and then chairman of the Cruise Industry Institute. John W. O’Neill °84 is a professor at Pennsylvania State University’s School of Hospitality Management; Dennis E. Reynolds, MPS ’92, PhD ’oo, is a professor at Washington State THE BEST IN THE BUSINESS Cornell Hotel Society members who have received awards from HOTELS magazine: Independent Hotelier of the World 2005 Roberto E. Wirth ’75, Hotel Hassler, Rome, Italy 2004 Ali V. Kasikci,* The Peninsula Beverly Hills, Beverly Hills, CA 2003 2002 2001 1997 1995 1994 1989 1988 1986 Emanuel Berger (AMP** ’99), Victoria-Jungfrau Grand Hotel and Spa, Interlaken, Switzerland Stan Bromley,* Four Seasons, San Francisco, CA Katherine Klauber Moulton ’78, The Colony Beach and Tennis Resort, Longboat Key, FL Jennie Chua ’71, Raffles Hotel, Singapore Richard A. Holtzman ’76, Carefree Resorts, Phoenix, AZ Stephen A. Wynn,* Mirage Resorts, Inc., Las Vegas, NV Christopher B. Hemmeter ’62, Hemmeter Corp., Honolulu, HI Ichiro Inumaru ’53, Imperial Hotel, Tokyo, Japan James A. Nassikas,* Stanford Court Hotel, San Francisco, CA Corporate Hotelier of the World 2002 Kurt Ritter,* Rezidor SAS Hospitality, Brussels 1997 1987 1986 1985 John Sharpe ’65, Four Seasons Hotels and Resorts, Toronto, Ontario, Canada Robert Burns,* Regent International Hotels, Hong Kong ). Willard Marriott, Jr.,* Marriott Corp., Washington, D.C. Howard P. James ’46, ITT Sheraton Corp., Boston, MA *Honorary member of the School’s alumni association, Cornell Hotel Society **Advanced Management Program, a component of the School’s executive-education programs University; and Stowe Shoemaker, PhD ’95, is a professor at the Conrad Hilton College of Hotel and Restaurant Management at the University of Houston (where Gerald Lattin was dean in the 1980s and Clinton L. Rappole *65, MS ’68, PhD ’71, is professor emeritus). APPENDIX 203 Acknowledgments HosPITALITY GOES GLOBAL 204 The Cornell Hotel Society Book Committee The Cornell Hotel Society Book Committee was formed in 1994 with the mission to chronicle the history of the Cornell Hotel School and its influence on the hospitality industry. Since then, the committee has provided executive leadership in the production of this book, Hospitality Goes Global, published in 2007, and its companion, Hospitality Leadership, published in 1997 (© 1996). Short biographies follow on the members of the committee’s executive team. Michael W.N. Chiu, Chairman Michael W.N. Chiu ’66 is founder and president of California- and Oregon-based Prima Donna Develop- ment Corporation, a leading developer and owner of hotels, restaurants, and commercial and residen- tial properties. Born in China and raised in Hong Kong, Chiu became in 1963 only the third student from Hong Kong to enroll in the Cornell Hotel School. He later attended Ecole hételiére in Lausanne, Switzerland, before embarking on a corporate career in hotel management in Europe, the United States, and Asia. Chiu founded his company in 1979. Chiu is a trustee emeritus of Cornell University and is also a Presidential Councilor, the highest honor bestowed on an alumnus. He has been an extraordi- narily committed supporter of both the university and the Hotel School, devoting his time, expertise, and resources in many significant ways. Among his contributions, Chiu was a driving force behind the formation of the Cornell—Nanyang Institute in Singapore; a university trustees’ task-force chairman for six years on redeveloping Cornell’s North and West Campus residential housing projects (with an ageregate value of $240 million); a major architect of the Hotel School alumni network in Asia and California; and a leader of many successful fundraising campaigns for both the university and the School. George M. Bantuvanis, Vice Chairman George M. Bantuvanis ’51, who was commissioned a second lieutenant in the U.S. Army Quartermaster Corps immediately upon graduation, was released from military service soon thereafter due to the untimely passing of his father. Upon returning home, Bantuvanis joined Sylvania Electric Products as a junior industrial engineer. In 1954 Bantuvanis began his professional hospi- tality career, serving as executive chef of the Hotel John Marshall in Richmond, Virginia; owner—operator of the Alps Restaurant in Seneca Falls, New York; manager of the Aurora Inn, in Aurora, New York; and owner-—operator of the Hotel Gould in Seneca Falls for twenty-one years. In 1979 he joined the staff of Cornell’s School of Hotel Administration, where he served in several capacities, including as acting general manager of the School’s on-campus hotel and student-training facility, the Statler Inn. Since 1995 Bantuvanis has served as treasurer of the Cornell Hotel Society and a member of its executive and history book committees. More recently he became secretary—treasurer of the Cornell Hotel Society Foundation. He is a member of the Cornell University Council and the Class of 1951 Council, and served as co-chair of his class’s fifty-fifth reunion. Bantuvanis has served as a director and president of the New York State Hotel & Motel Association, and as a director of the American Hotel & Motel Association. William V. Eaton, Vice Chairman William V. Eaton ’61 has spent his entire career in vari- ous areas of hospitality management, particularly foodservice operation, engineering, and design. He spent the first ten years after graduation with Horwath & Horwath, the Santa Maria Hotel, Marriott, the Macke Company, and ARA. In 1971 he joined Cini—Little International, where today he is a principal and has been president and COO. He is a past president and fellow of the Foodservice Consultants Society International (FCSI) and has held leadership roles with both the Society for Foodservice Manage- ment and the National Restaurant Association’s Kitchen Innovation Panel. Eaton has garnered two honorary “Doctorate of Foodservice” awards, was featured as a 2003 Consulting magazine “All Star,’ and was profiled in FCSI’s publication, The Consultant. Eaton joined the Cornell University Council in 1990 and is now a Life Member. In 2001 he was selected for the Frank H.T. Rhodes Exemplary Alumni Service Award, nominated as a candidate for Alumni Trustee, selected as the Cornell Hotel Society’s Hotelie of the Year, and featured at Hotel Ezra Cornell’s alumni showcase for the Mid-Atlantic Region. For twenty-five years Eaton taught a restaurant design course in the School’s summer Professional Development Program, and he lectured at Cornell during the school year in design courses. Eaton was elected to Cornell University’s board of trustees in 2007. He has served CHS for many years as a member, board member, and president. Eaton’s passion is devel- opment and fundraising for Cornell and other worthy institutions. He is chair of the Washington, D.C., ACKNOWLEDGMENTS 205 HosPITALITY GOES GLOBAL 206 Tower Club as well as the Class of 1961 major gifts committee. Eaton and his wife, Phyllis, annually host many events for Cornell. Along the away three Eaton daughters and one granddaughter have graduated from the Hotel School. Richard H. Kennedy, Vice Chairman Richard H. “Dick” Kennedy ’56 is a U.S. Navy veteran and foodservice industry executive. Early in his career he owned and managed family-style restaurants. Later, he was the marketing director of Gino’s, a New York Stock Exchange-listed fast-food chain and the then- largest KFC franchisee. He spent twenty-four years as an executive with the H.J. Heinz and L.J. Minor companies in foodservice manufacturing, sales, and development. In 1989 Kennedy established WesCap Holdings, a leveraged-buyout firm to buy and grow food manu- facturers. Later, he formed his own company, the R.H. Kennedy Company, to pursue similar buyouts. Kennedy and his partners bought and sold Edwards Baking Company, Lloyd’s Barbecue, the Steakumm Company, and Wisconsin Cheese Group, among others. Since 1974 Kennedy has been a leader of the Cornell Hotel Society and later the Cornell Hotel Society Foundation. He was the Society’s international presi- dent in 1992-1993 and served as chairman of the foundation until 2007. Also, he was a long-time mem- ber of the corporation of the Culinary Institute of America, where he served for ten years on its develop- ment committee, including two years as leader of its annual campaign and another two years on its long- range planning committee. The trio of Kennedy, the late Richard W. “Dick” Brown ’49, and Charles A. “Charlie” Bell ’49 created a joint venture between the Hotel School and the Culinary Institute when David Dittman was dean. In addition, Kennedy has served over twenty-five years with the 70,000-member Navy League of the United States, including as national treasurer and as chairman of its investment committee. Creative Team Bill Summers, author Bill Summers (’82, A&LS) is a principal in The Summers Group, a marketing and public relations consultancy based in Basking Ridge, New Jersey (www.summers-group.com). His clients include phar- maceutical companies, financial institutions, hospital- ity organizations, and technology firms. Earlier in his career, Summers served as founding director of the Hotel School’s office of communication strategy and as head of public relations for several corporations. His first book, The Soccer Starter, was published by McFarland & Company, and his bylined writing has appeared in The New York Times and other publications. Fred Conner, editor Fred Conner (’77, A&LS) served the Hotel School for twenty years, most recently as managing editor of Cornell Hotel and Restaurant Administration Quarterly and, earlier, as director of publication services. He is currently assistant editor at Cornell’s Southeast Asia Program Publications office and an occasional free- lance writer and editor. John Marcham, photo editor John Marcham (’50, A&S) volunteered to be a “photo consultant” on this project and ended up as the photo editor, tirelessly researching and tracking down the images portrayed herein and researching all the captions. He also provided valuable editorial guidance and input throughout the creative process as a mem- ber of the Book Committee. The retired editor of the Cornell Alumni News, Marcham edited the society’s first book, Hospitality Leadership. Phil Wilson, designer Phil Wilson (MFA ’69) created and initiated the design of this book. An Ithaca-based independent graphic designer, he was senior designer at Cornell’s Office of Publication Services during most of the 1980s. Winner of numerous coveted awards, he designed the School’s first history book, Hospitality Leadership. Kat Dalton, designer Kat Dalton is a designer and photographer who stepped in to complete the book design when Phil Wilson became unable to work. She has been Design Director for Living Bird, the magazine for the Cornell Laboratory of Ornithology, for many years. Joyce Leonard, photo researcher Joyce Leonard is program assistant for the Hotel School’s department of alumni affairs and develop- ment. Joyce provided crucial support in researching, gathering, and collating many of the images seen in this book. Without Joyce’s tireless (and always cheer- ful) efforts to find and acquire them, many of those images could not have been included. Proofreading is by Mai Shaikhanuar-Cota. Indexing is by Michael Pastore and coordinated by Larry Clarkberg. ACKNOWLEDGMENTS 207 HosPITALITY GOES GLOBAL 208 Contributors The Cornell Hotel Society Book Committee extends its gratitude to the following individuals, each of whom played an important role in the production of this book. Cathleen Baird was generous with her time and resources in helping us locate images for this book. She was librarian and archivist at the Conrad N. Hilton College of Hotel Administration, University of Houston, before her retirement in 2006. Derrick Brown, reference librarian, School of Hotel Administration Nestlé Library. Derrick and his colleagues proved to be an invaluable resource for tracking down obscure data, photographs, and industry-related statistics. Ruth Devine, administrative assistant, Hotel School’s department of communication strategy. Ruth helped to identify many photos and provided valuable fact- checking duties. Eileen Driscoll (MS °77) is a research and planning associate for the university’s Office of Institutional Research and Planning. Eileen efficiently responded to requests for university data and historical information. Brad Edmondson (’81, A&S) helped draft the prologue to this book, wrote the essay that appears on pages 190-191, consulted with the committee and creative team, and otherwise contributed many useful ideas on the book’s content. Brad wrote the first history book, Hospitality Leadership, copyright 1996. Brad is a vice president of ePodunk.com and a freelance writer. Leif Evensen ’66. Leif provided valued contributions about the history of hospitality in Europe and about the Cornell Hotel Society’s evolution and growth in Europe. Liv Gussing ’92. Liv provided valued contributions about hospitality’s growth in Asia and about the Cornell Hotel Society’s expansion into Asia. Cydney Peters, acting director, Hotel School’s depart- ment of communication strategy. Cydney helped to coordinate much of the on-campus photography in the book. William Steele (’54, A&S). Bill provided substantial editorial contributions, as noted throughout the book. He is the technology and electronic information editor for the Cornell University News Service. Kandace Van Gorder, executive assistant to the Hotel School dean. Kandace, whose service to the Hotel School has spanned several administrations, was helpful in answering questions and locating archival documents. Nancy Wilson, office manager, Hotel School’s depart- ment of alumni affairs and development. Nancy was the administrative leader behind the project, working tirelessly to arrange committee meetings, answer endless questions, and share input over the entire course of the project. Glenn Withiam (’74, A&LS), executive editor, Cornell Hotel and Restaurant Administration Quarterly. Just as he did with the society’s first history book, Hospitality Leadership, Glenn helped to edit this book and con- tributed feedback about its content. Mary R. Wright ’45. Mary, the School’s unofficial “his- torian, and a stickler for good writing, read an early draft of this book and provided many useful insights and ideas that are reflected in the final product. ACKNOWLEDGMENTS 209 Underwriters EY FINANCING FOR Hospitality Leadership and Hospitality Goes Global has been provided by a group of alumni and friends of the School and society, and supplemented by the society. This list reflects financial support dating back to the mid-1990s. Underwriter Business Country Anonymous USA Anonymous Japan George M. Bantuvanis ’51 USA Ann A. Bantuvanis David W. Bentley 64 Nordeman Grimm, Inc. USA Guglielmo L. Brentel H&G Hotel Gast Ag Switzerland Richard W. Brown ’49 Banfi Vintners USA Muriel Welch Brown °47 William J. Caruso ’70 William Caruso & USA Associates, Inc. Jennie C. Chiu ’91 Prima Donna Development USA Corp./Prima Hotels Michael W.N. Chiu °66 Prima Donna Development USA/Hong Kong Corp. /Prima Hotels Shirley N. Chiu Donald M. Coe ’62 Hiram Walker and Sons, Inc. USA 210 Underwriter Business Country Cornell Hotel Society USA John EF. Craver ’52 Horizon Hotels, Ltd. USA William V. Eaton 61 Phyllis W. Eaton Pamela Eaton-Berlin 91 Michael S. Egan *62 Fred J. Eydt 52 Richard D. Fors Jr. 59 Robert A. Freeman 763 Peter R. Galliker David P. Hanlon ’66 Erik Lars Hansen ’71 Bjorn R. L. Hanson ’73 Hilton Hotels Corporation Richard A. Holtzman ’76 Margelia L. Jones ’78 J. William Keithan ’50 Faye Y. Keithan Cini-Little International, Inc. USA Alamo Rent-A-Car, Inc. USA Medallion Hotels, Inc. USA Resser Management Corp. USA California Café USA Restaurant Corp. Galliker Restaurant Switzerland International Game USA Technology Arthur Andersen, LLP USA Coopers & Lybrand USA Hospitality Consulting Group USA Carefree Resorts USA The Plasencia Group, Inc. | USA USA Underwriter Business Country Richard H. Kennedy 56 ___R.H. Kennedy Co. USA Kay P. Kennedy Caren Whiteman Kline 75 Wyndham Hotels & Resorts USA J. Peter Kline *69 Bristol Hotel Company USA Charles A. LaForge Jr.’57 Beekman Arms USA Joseph A. Los 66 Financial Consultant The Netherlands John Marcham ’50 USA Jane H. Marcham ’51 Virginia Mariani ‘82 Banfi Vintners USA The Mexico, Central, and Central and South America Region South America of the Cornell Hotel Society Robert W. Miller ’55 Search International, Ltd. Hong Kong Judith H. Monson ’69 Seagram & Sons USA Rudolf W. Miinster ’62 RWM Hotel Consult GmbH Germany Charles J. Mund ’51 Service Dynamics Corp. USA Drew A. Nieporent ’77 Myriad Restaurant Group USA Norwegian Group Norway of the Cornell Hotel Society Rolf Oberloskamp Biro fiir Bauplanning Germany Underwriter Business Country Thomas V. Pedulla ’60 The Pedulla Company USA Philip Pistilli 54 Raphael Hotel Group USA Radisson Hospitality USA Worldwide Philip D. Rowe Jr. ’48 Dempsey Restaurants, Inc. USA Deiv Salutskij ’71 Elanto Cooperative Finland Eugenia Brown Sander 66 EBS Enterprises USA Rudolphe W. Schelbert 55 Sophisa/H6tel Fleur du Lac Switzerland Paul A. Schoellkopf ’41 USA Carola Schumacher Germany Heinz Schumacher Leslie W. Stern ’60 Sullivan & Company USA Madeline Stern Frank T. Stover III ’65 The Chicago Club USA Carol Gibbs Stover ’65 Fred Tschanz Switzerland Madeleine E. White, M.E. White Hospitality USA MPS ’81 Enterprises, Inc. Yuji A. Yamaguchi ’61 Fujiya Hotels Co., Ltd. Japan UNDERWRITERS 211 Sources HosPITALITY GOES GLOBAL 212 Notes on the Text The following is an informal, noncomprehensive list of sources used to write Hospitality Goes Global. Corresponding page numbers from this text are shown in parentheses. EPIGRAPH Epigraph (p. v) Floyd Miller, Statler: America’s Extraordinary Hotelman (New York, NY: Statler Foundation, 1968), page 193 (quoting from Hotels Statler Company’s house organ, Salesmanship). PROLOGUE E.M. Statler and Cornell University (pp. 1-3) Stanley Turkel, Great Hoteliers: Pioneers of the Hotel Industry (Jefferson, NC: McFarland and Company, 2006); Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Tourism as the World’s Largest Industry (pp. 2, 4) Helene von Magius Megelhgj, tourism consultant, Pannell Kerr Forster: “According to the World Tourism Organisation (WTO) and the World Travel and Tourism Council (WTTC), travel and tourism is now the world’s largest industry.” Hospitality Statistics (p. 3) World Travel and Tourism Organization, 2003 David W. Butler (p. 4) Personal interview with William Steele BIRTH OF AN INDUSTRY AND A SCHOOL The Three Kings Inn (Drei K6nige am Rhein) (p. 7) www.wcities.com/en/record/,121161/124/record.html; www.exemplar- tours.com Yard of Ale (p. 8) www.britannica.com Colonial Inns (p. 8) “Accommodations often meant sleeping on the floor of the ‘long room,’ with one’s feet turned toward the fireplace and one’s head on a rolled-up coat, alongside a dozen or more other persons of both sexes. It meant a quick cold-water wash in an outdoor basin and gingerly use of a communal towel. A warning blast on the landlord’s cow horn meant all hands to table, ready to tackle breakfast with fingers and knives.” — Leslie Dorsey and Janice Devin, Fare Thee Well (New York, NY: Crown Publishers, Inc., 1964) Ryokan (p. 8) japaneseguesthouses.com/about/ryokan/index.htm Heianky6 (Kyoto) http://en.wikipedia.org/wiki/Kyoto The First Hotels (p. 8) Stephen Rushmore ’67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002); Stanley Turkel, Great Hoteliers: Pioneers of the Hotel Industry (Jefferson, NC: McFarland and Company, 2006) César Ritz (p. 10) www.expertmagazine.com/EMonline/RC/part1.htm Hotelleriesuisse (p. 10) ww.hospitalitynet.org/web/154000429/11008184.search?query=associa- tion+des+hoteliers+de+suisse Needed: Better Transportation (p. 10) inventors.about.com/library/inventors/bl|Duryea.htm Buffalo, N.Y., Statler (p. 11) Walter Rutes, Richard H. Penner, and Lawrence Adams, Hotel Design, Planning and Development (New York, NY: W.W. Norton & Company, 2001) A School is Founded (p. 12) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) The Crash (p. 15) Stephen Rushmore ’67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002) Sidebar—E.M. Statler and “Hotel Ezra Cornell” (p. 15) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) HOSPITALITY AND CORNELL MATURE Great Depression, Impact on Hotels (p. 17) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996); Richard H. Kennedy ’56, personal interview; Stephen Rushmore °67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002); www. hilton.com/en/hi/waldorf/index Conrad Hilton (p. 18) Conrad N. Hilton, Be My Guest (New York, NY: Prentice Hall Press, 1957) Road to Recovery (p. 19) Stephen Rushmore ’67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002) Meek Builds the Program (p. 21) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) The War and Women (p. 23) en.wikipedia.org/wiki/National_Highway_System Four LANES AND JET PLANES Highways (pp. 27-28) www.inventors.about.com; Malcolm A. Noden, personal interview; Stephen Rushmore ’67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002) Sidebar—Kemmons Wilson, the Man Behind Holiday Inn (p. 28) C. Kemmons Wilson III, MMH 705, personal interview; www.britan- nica.com/ebi/article-93 14231 Kemmons Wilson and Innovations (p. 29) www.termpapergenie.com/success_secrets.html; www.britannica.com/ebi/article-93 14231 Holiday Inn (p. 29) eindhoven.holiday-inn.com/location/conc2.html; www.holidayinn.com; en.wikipedia.org/wiki/Holiday_Inn Marriott (p. 30) Robert O’Brien, Marriott: The J. Willard Marriott Story (Salt Lake City, UT: Deseret Book Company, 1977, 1995) Twin Bridges Marriott Motor Hotel (p. 30) www.ahla.com/products_lodging_history.asp New Motel and Hotel Brands (p. 30) www.aha.com; www.hilton.com; www.ichotelsgroup.com; www.starwoodhotels.com/sheraton/about/his- tory.html Largest Real-Estate Transaction (p. 30) Floyd Miller, Statler: America’s Extraordinary Hotelman (New York, NY: Statler Foundation, 1968) Carlson Companies History (p. 30) www.carlson.com/aboutus.cfm Motel 6 (p. 31) www.motel6.com/about/careers/facts.asp Super 8 (p. 31) http://hotelfranchise.cendant.com/our_brands/super8/history.cfm Sidebar—The Waldorf’s Special Guest (p. 31) Allen J. Ostroff, personal interview; www.newsscan.com Into the Wild Blue Yonder (p. 32) www.inventors.about.com American Airlines (p. 32) www.aa.com/content/amrcorp/corporate Information/facts/history.jhtml BOAC de Havilland Comets (p. 33) http://planetruth.com/comet.htm; http://en.wikipedia.org/wiki/De_Havilland_Comet The 707 Era (p. 33) www.ihgplc.com/index.asp?pageid=35; http://en.wikipedia.org/wiki/Pan_Am Ueltschi’s Computerized Flight Simulator (p. 34) The flight simula- tors that first appeared in the 1920s, and which were later used to train WWI aviators, were designed primarily to teach pilots how to fly using instrument readings only. wwwa.britannica.com/eb/article-9034578; www.business.appstate.edu/ceo/past/nurkin.asp Airline Deregulation Act (U.S.), 1978 (p. 34) Mary H. Tabacchi, per- sonal interview. Deregulation was overseen by Cornell professor Alfred Kahn, the Robert Julius Thorne Professor of Political Economy Emeritus, who was chair of the U.S. Civil Aeronautics Board at the time of airline deregulation (under President Carter). Airlines’ Passengers, Revenue in U.S. (pp. 34-35) Federal Aviation Agency, FAA Statistical Handbook of Aviation (Washington, DC: Federal Aviation Agency); www.bts.gov/programs/airline_information/air_car- rier_traffic_statistics/airtraffic/annual/1954-1980.html Club Méditerranée History (p. 36) www.clubmedjobs.com/history.htm A New Home for the Hotel School (p. 36) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) “West Point of the Industry” (p. 39) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) SOURCES 213 HosPITALITY GOES GLOBAL 214 EXPANDING AROUND [THE GLOBE Jet Age (p. 42) www.about.com; Worldwatch Institute Aérospatiale—-BAC Concorde (p. 42) www.bbc.co.uk/bristol/content/concorde/2003/10/14/webguide. shtml; http://en.wikipedia.org/wiki/Concorde The Rise of Worldwide Brands (p. 42) Charles A. Bell ’49, “Agreements with Chain-Hotel Companies,” Cornell Hotel and Restaurant Administration Quarterly, Vol. 34, No. 1 (February 1993); Curt R. Strand ’43, “Lessons of a Lifetime,” Cornell Hotel and Restaurant Administration Quarterly, Vol. 37, No. 3 (June 1996); Charles A. Bell ’49, “Cross-Cultural Construction—Designing Hotels Overseas,” Cornell Hotel and Restaurant Administration Quarterly, Vol. 27, No. 2 (August 1986) Sidebar—Around the World with Curt Strand (p. 44) Adapted from “Lessons of a Lifetime,” Cornell Hotel and Restaurant Administration Quarterly, Vol. 37, No. 3 (June 1996) Kenji Osano (p. 46) http://time-proxy.yaga.com/time/archive/print- out/0,23657,903669,00.html Respecting Other Cultures (p. 47) Malcolm A. Noden, personal interview; Hospitalitynet.com; Bjorn R.L. Hanson ’73, personal interview Worthy Competition (p. 47) Stephen Rushmore ’67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002); in.rediff.com/money/2005/may/25quiz.htm Japan’s Suzuka Circuit (p. 48) www.american.edu/TED/formulal.htm; http://en.wikipedia.org/wiki/Suzuka_Circuit; http://world.honda.com/news/2005/c051219_b.html The Hotel School Goes Global (p. 49) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Alumni Bonds (p. 50) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Executive Education (p. 51) Leif R. Evensen 66, personal interview; David W. Butler, personal interview: Judy A. Siguaw, source Cornell-Nanyang Institute of Hospitality Management (p. 52) www.domainb.com/news_review/200506june/20050623newsd.html Worldwide Academic Partners (p. 52) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Worldwide Research Partners (p. 53) Joseph D. Strodel, source; Chekitan Dev, personal interview; Cornell University Registrar’s Office Sidebar—The Roman Prince of Hospitality (pp. 54-55) Karyn Strauss, “Living His Impossible Dream,” Hotels, November 2005; Roberto Wirth ’72, personal interview Sidebar—Giving while Living (p. 57) Conor O’Cleary, “One Life to Give,” Irish America Magazine, December 1, 2003; Charles F. Feeney 56, personal interview; Michael W.N. Chiu 66, source; www. irishabroad.com/irishworld/irishamericamag/octnov05/fea- tures/20-greatest-interviews.asp#chuckfeeney New Ways TO OWN AND MANAGE Franchising Changes the Industry (p. 60) The Essentials of Lodging Investing (New York, NY: Goldman Sachs Global Investment Research, June 2005) RE!Ts Make a Comeback (p. 60) www.reitnet.com; www.realestateportfolio.com Enter the Management Contract (p. 61) Leland C. Pillsbury ’69, personal interview; Charles A. Bell ’49, “Agreements with Chain-Hotel Companies,” Cornell Hotel and Restaurant Administration Quarterly, Vol. 34, No. 1 (February 1993); www.hyatt.com; www.sunstonehotels.com; www.sagehospitality.com Stevens Hotel (p. 62) www.encyclopedia.chicagohistory.org Uneven Evolution (p. 63) Robert E. Kastner 78, personal interview Sidebar—Pillsbury Knows Hotels (pp. 64-65) John B. “Jack” Corgel, personal interview; Leland C. Pillsbury *69, personal interview; www.thayerlodging.com/company.htm; Thayer Hotel Investors IV, Private Placement Memorandum, 2004 Savings-and-Loan Fiasco (p. 67) www.felcor.com New Kinds of Properties (p. 68) www.marriott.com Homewood Suites and Hilton (p. 68) www.hospitalityfcu.org/history.htm Sidebar—Street Smart (p. 69) Marc J. Falcone ’95, personal interview; Bill Summers, “Wall Street Warrior,” Cornell Hotel School Magazine, Fall 2005 Mixed-Use Grows (p. 70) Michael W.N. Chiu ’66, source; Mixed Use Development: New Ways of Land Use (Washington, DC: Urban Land Institute, technical bulletin); American International Group, Global Real Estate, Atlantic Station brochure; Kevin P. Fitzpatrick ’76, personal interview Niche Segmentation (p. 72) Stephen Rushmore ’67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002); www.smithtravelresearch.com Buy and Consolidate (p. 72) Stephen Rushmore ’67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002) Sidebar—Top Ten (p. 73) www.hotel-online.com/News/PR2006_2nd/Apr06_TopTenGroups.html Industry Statistics (p. 74) www.smithtravelresearch.com Tough Times in the 2000s (p. 74) www.smithtravelresearch.com Keeping Pace (the School’s Beck Era) (p. 74) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) THE First RESTAURATEURS Model T (p. 77) www.hfmgv.org/exhibits/showroom/1908/model.t.html Highways (p. 77) www.about.com Drive-ins (p. 77) “Modern Marvels” video, The History Channel Howard Johnson’s First Restaurants (p. 78) www.answers.com/topic/howard-johnson-s Eating Out (p. 78) www.nra.com Franchising Firsts (p. 79) www.dairyqueen.com Sidebar—)J.W. “Bill” Marriott, Jr. (pp. 80-81) Leland C. Pillsbury ’69, personal interview; Stephen P. Weisz ’72, personal interview; Maurice O. “Bus” Ryan, Jr. 54, personal interview; www.marriott.com Fast Food and More (p. 82) www.mcdonalds.com; Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996); www.kfc.com; Christopher C. Muller MPS ’85, PhD ’92, personal inter- view; Giuseppe G.B. Pezzotti 84, MPS ‘96, personal interview Sidebar—Chuck Mund: A Burger King (p. 84) Charles J. “Chuck” Mund ’51, personal interview G.I. Bill of Rights (p. 86) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Middle Management (p. 86) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Enter the Interstates (p. 86) Christopher C. Muller, MPS ’85, PhD ’92, personal interview BECOMING THE [THIRD PLACE Joseph H. Baum ’43 (p. 89) Gael Greene, “Remembering Joe Baum,” The Insatiable Critic, NewYorkMetro.com; www.baumwhiteman.com Windows on the World (p. 90) 911.meetingsnet.com/ar/meetings_windows_world/; Dennis J. Sweeney 64, personal interview The Cellar in the Sky (p. 90) www.winespectator.com/Wine/Archives/ Show_Article/0,1275,1976,00.html Theme Dinnerhouses (p. 92) Christopher C. Muller, MPS ’85, PhD 92, personal interview; www.fridays.com; Giuseppe G.B. Pezzotti ’84, MPS °96, personal interview Sidebar—Sack Full of Good Ideas (p. 93) Burton M. “Skip” Sack 61, personal interview Going Upscale (p. 94) Giuseppe G.B. Pezzotti 84, MPS °96, personal interview Sidebar—Nieporent’s Manhattan Makeover (p. 95) Drew A. Nieporent “77, personal interview Ming Tsai (Ming-Hao Tsai) MPS ’89 (p. 96) http://simplyming.org/ming.html SOURCES 215 HosPITALITY GOES GLOBAL 216 “Fast Casual” Dining (p. 96) Katherine Azzaro, “Entrepreneurs Prove ‘Healthy Fast Food’ Is No Oxymoron,” Cornell Hotel School Magazine, Winter 2005 International Growth (p. 97) www.nra.com; “The Top 100 Chain Rankings & Company Rankings: Annual Comparisons,” Nation’s Restaurant News, Vol. 29, No. 30 (August 7, 1995); “Franchising: The Top 50 Chains,” Restaurant Business, Vol. 94, No. 16 (November 1, 1995) WOMEN, AFRICAN-AMERICANS RISE UP Industry Bias, Pioneers (p. 99) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Cornell Enrollment Statistics (pp. 100-101) Cornell University Office of the Registrar; Eileen Driscoll, Cornell University Office of Institutional Research and Planning Sidebar—Mary Wright Joins the “Inn” Crowd (pp. 102-103) Mary R. Wright ’45, CHA, personal interviews and correspondence More Women Succeed (p. 104) Julie Milligan Flik ’63, personal inter- view; Bill Summers, “Entrepreneurial Instincts,” Cornell Hotel School Magazine, Fall 2004; Cheryl S. Farrell, personal interview Knorr: A Top Manager (p. 106) Antoinette F. “Toni” Knorr ’77, MPS 01, personal interview Leo-Andrieu: Manager, Designer, Award-Winner (p. 108) Ron Bernthal, “Leo-Andrieu Brings Elegant Touch to Paris Properties,” Cornell Hotel School Magazine, Winter 2005 Gussing: Multinational (p. 108) Liv Gussing ’91, personal interview; Bill Summers, “Passport to Adventure,” Cornell Hotel School Magazine, Spring 2005 Mellen: Smart, Independent, and Dedicated (p. 109) Suzanne R. Mellen ’76, personal interview Sidebar—Arthur Keith Makes His Mark (p. 111) Arthur Keith ’84, personal interview; Eric Zawid, MMH ’06, “Standing Tall: Arthur Keith Makes His Mark,” Cornell Hotel School Magazine, Summer 2006 Sidebar—James “Bud” Ward: Leading the Way (pp. 112-113) James H. “Bud” Ward 52, personal interview Mie ~=(OMPUTERS CHANGE EVERYTHING Hospitality Technology (p. 115) www.sabre.com Hospitality Technology (overall) Preston Clark, personal interview with William Steele; Leo M. Renaghan, personal interview with William Steele Sheraton, Holiday Inn (p. 116) www.ahla.com/products_lodging_his- tory.asp; Leif R. Evensen 66, personal interview; Stephen Rushmore ’67, MAI, and Erich Baum, Hotels and Motels: Valuations and Market Studies (Chicago, IL: Appraisal Institute, 2002) NCR and Cornell Experiment Together (p. 117) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Sidebar—Bob Chase’s Great Discovery (p. 118) Robert M. Chase, personal interview with William Steele Minicomputers (p. 119) Timothy J. Durnford ’93, personal interview with William Steele Competing for Customer Loyalty (p. 120) Sabato D. Sagaria ’97, personal interview; Professor Gabriele Piccoli, personal interview with William Steele; Karyn Strauss, “How to Own Your Customers,” Hotels, March 2004 Enterprise Systems (p. 121) Professor Erica Wagner, personal inter- view with William Steele; www.micros.com Sidebar—Microcomputing: A Drive to Excel (p. 121) Mark P. Talbert °89 and Leo Renaghan, personal interviews with William Steele The Internet Changes Everything (p. 122) Karen E. Tepper ’03, source A Cashless Environment (p. 122) Diane Snyder, “At Atlantis, Cashless Equals Control,” Accuvia Publishing Distribution Channels (p. 123) The Essentials of Lodging Investing (New York, NY: Goldman Sachs Global Investment Research, June 2005) Toward a Better Future (p. 124) Bjorn R.L. Hanson ’73, personal interview; www.htng.org; www.hitis.org; www.westin.com First Movers (p. 124) www.ahla.com/products_lodging_history.asp ifm FROM PEANUTS TO HOTELS ARA/Aramark (p. 127) www.aramark.com Managed Services Industry (overall) William V. Eaton ’61, personal interview; Richard H. Kennedy ’56, personal interview Food Service Takes Flight (p. 128) www.premium-hoovers.com; www.galenet.galegroup.com; www.marriott.com A Sporting Endeavor (p. 129) Marc A. Bruno 793, personal interview More Study at the School (p. 129) Kimberly Dorony ’04, “School, ARAMARK Combine on Unique Learning Experience,” Cornell Hotel School Magazine, Spring 2004; Edward A. Evans ’74, personal interview Alumni Build Careers (p. 130) Michael Z. Kay 61, source Food Service of Epic Proportions (p. 131) Marc A. Bruno 793, per- sonal interview; Bill Summers, “Food Service of Epic Proportions,” Cornell Hotel School Magazine, Spring 2004 Sky Chefs (p. 132) www.I|sgskychefs.com/Isg/company/en/jsp/company_history.jsp Sidebar—Julie Flik: From Clams to Catering (p. 132) Julie Milligan Flik ’63, personal interview Steven M. Wells ’86 (p. 133) Cornell Hotel School, Center for Hospitality Research, Leadership Roundtable booklet, 2005 Sidebar—Remembering Alamo (p. 133) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) An Enlightened Approach in Japan (p. 134) www.greenhouse.co.jp Sidebar—Cornell Dining (p. 134) www.dining.cornell.edu/ 97m HE STOPWATCH AND THE [TUB E.M. Statler and Meek (p. 137) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Vendo Corporation (p. 139) www.scripophily.net/vendocompany.html Malcolm A. Noden (p. 140) Personal interview Of Computers and Mattresses (p. 140) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) New Research Partners (p. 143) David W. Butler, source Center for Hospitality Research (p. 143) Cathy A. Enz and Gary M. Thompson, sources; www.hotelschool.cornell.edu/chr/; Joseph D. Strodel, personal interview Sidebar—Making Cornell Quarterly Whole (p. 146) Glenn Withiam, personal interview with William Steele REST AND RELAXATION, REDEFINED Spas: Redefining Leisure Travel (p. 149) Condé Naste Traveler, April 2004; Professor Mary H. Tabacchi, personal interview Putting Fitness First (p. 152) Christopher Elliott, “Hotels See Gain in Letting Guests Feel Pain,” The New York Times, January 8, 2006 Sidebar—Membership Clubs (p. 152) www.massmoments.org/index.cfm?mid=18 Holiday Inn Select and Nautilus (p. 153) www.nautilus.com/catalog/cataloghome.jsp?FOLDER%3C%3Efolder_id =2534374302026496&bmUID=1 148932506277 Golf: Getting in the Swing (p. 153) www.clubcorp.com Gaming Goes Mainstream (p. 154) www.pokermag.com; American Gaming Association, “2004 State of the State: The AGA Survey of Casino Entertainment”; Mark A. Birtha ’94, personal interview; www.casinochecker.com; “It’s Vegas, Baby!,” Time, July 26, 2004 Bed and Breakfast Inns (p. 157) Professional Association of Innkeepers International (www.bedandbreakfast.com) Cruise Lines (p. 157) www.carnival.com Vacation Ownership (p. 158) Susan Dominus, “Club Med for the Multimillionaire Set,” The New York Times Magazine, March 5, 2006 Sidebar—Bjorn Hanson: Voice of the Industry (pp. 158-159) Bjorn R.L. Hanson ’73, personal interview SOURCES 217 HosPITALITY GOES GLOBAL 218 Co-Branding (p. 160) Michael W.N. Chiu ’66, source; Chris Woodyard, “Subtle Sell: Top Hotels Chauffeur Guests in Luxury Cars,” USA Today, April 14, 2004 Theme Parks (p. 160) www.Wikipedia.org Eurodisney (p. 160) www.eurodisney.com/en/0110.php; http://home- pages.which.net/~ian/history.html; www.sikhnet.com/sikhnet/discus- sion.nsf/0/d6402b26cf4fb3b4872569e000521b98?Open Underwater Hotel (p. 161) www.impactlab.com The W Means Business (p. 161) Bradford G. Wilson ’84, personal interview Bathhouses (p. 163) Mei Fong, “China’s Cheap Sleeps,” The Wall Street Journal, October 25, 2005 ie@ Movinc EACH OTHER FORWARD Orbiting Hotel (p. 165) www.npr.org/templates/story/story.php?storylId=5555718 Beginning with the Basics (p. 166) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Hotels Grow Bigger (and Better) (p. 166) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Future Plans (overall) David W. Butler, personal interview with William Steele; Leo Renaghan, personal interview with William Steele Many More Schools (p. 167) www.chrie.org Food-Facilities Engineering (p. 168) William V. Eaton ’61, personal interview Big Plans Under Beck (p. 169) Brad Edmondson, Hospitality Leadership (Ithaca, NY: Cornell Society of Hotelmen, 1996) Sidebar—Steve Rushmore: Defining Hotel Value (pp. 170-171) Stephen Rushmore ’67, personal interview Teaching New Finances (p. 172) Cydney Peters, “Quan Shedding New Light,” Cornell Hotel School Magazine, Winter 2004; John B. “Jack” Corgel, personal interview; “Teaching Timeshares,” Cornell Hotel School Magazine, Summer 2004; David S. Sherwyn, source Sheryl E. Kimes (p. 173) Cydney Peters, “Top Notch on the Top Line,” Cornell Hotel School Magazine, Winter 2004; Bill Summers, “Staying Connected,” Cornell Hotel School Magazine, Winter 2004 An Executive Presence, Roundtables (p. 174) Cydney Peters, “Holding Court,” Cornell Hotel School Magazine, Winter 2004 Extra Fields to Study (p. 173) David S. Sherwyn, source; Leo M. Renaghan, personal interview Overseas, Too (p. 176) Leo M. Renaghan, personal interview Combining Theory and Practice (p. 176) Leo M. Renaghan, personal interview A Broader Education (p. 178) Leo M. Renaghan, personal interview Commitment to Entrepreneurship (p. 178) David W. Butler, source A Grand Addition (p. 179) www.hotelschool.cornell.edu Sidebar—Enabling Entrepreneurship: Hotel School Receives Record Gift (p. 179) Leland C. Pillsbury ’69 and Mary Pillsbury, personal interview LEADING THE Way Michael D. Johnson (p. 184) Michael D. Johnson, personal interview A Blueprint for Learning (p. 185) David W. Butler, source Plans for the Cornell Hotel School (p. 186) School of Hotel Administration: Vision, Mission, and Strategy Statement, 2006 Sidebar—Better Service at Seventy (pp. 190-191) by Brad Edmondson EPILOGUE Hospitality’s Defining Attribute (p. 193) Edward A. Evans ’74, per- sonal interview; Sabato D. Sagaria ’97, personal interview; Peter J. Karpinski ’99, personal interview; Kevin P. Fitzpatrick ’76, personal inter- view; Mary R. Wright ’45, personal communication; Leland C. Pillsbury 69, personal interview Michael P. Neville (p. 194) Katherine Azzaro, “A Different Kind of Service,” Cornell Hotel School Magazine, Spring 2005 Notes on the Illustrations In these listings the page number of the illustration is followed by the name of the photographer or original owner, if known. The lender of the illustration is listed in italics. Abbreviations used: CHS = Cornell Hotel Society CUP = Cornell University Photography DRMC, CU = Division of Rare and Manuscript Collections, Cornell University Library NYHS = New York Historical Society SHA = Office of Communication Strategy and Nestlé Library, School of Hotel Administration, Cornell University UH, HIA = University of Houston, Hospitality Industry Archives ii Mori Building Company Ltd PROLOGUE s GF 2 Buffalo and Erie County Historical Society. DRMC, CU 3 DRMC, CU 4 CUP 5 Steve Hanagan Associates BIRTH OF AN INDUSTRY AND A SCHOOL 6 NYHS 9 Christoph Grunig. Hotel Les Trois Rots 10 George S. Bolster Collection, Saratoga Springs History Museum 12 Top: DRMC, CU Bottom: CUP 13 John Troy. DRMC, CU 14 John Troy. DRMC, CU HOSPITALITY AND CORNELL MATURE 16 18 19 20 24 NYHS UH, HIA NYHS Drucker & Baltes Co. DRMC, CU SHA. DRMC, CU Four LANES AND JET PLANES 26 28 a2 30 a4 3 35 36 oF 40 43 48 49 50 51 a4 a Skyliners Aviation UH, HIA Pennsylvania Turnpike Commission Wyndham Hotel Group Munich Airport Authority Evergreen Aviation Museum/Hughes Flying Boat Photograph Archive Las Vegas News Bureau Fred Conner (77, Ae>LS) C. Hadley Smith, SHA. DRMC, CU EXPANDING AROUND THE GLOBE Wimberly Allison Tong & Goo Hilton Hotels Corporation Diners’ Club Sol Golderg (46, A&LS), CUP. SHA Leif R. Evensen ’66, CHS European Region CHS Thailand Chapter Left: Charles Harrington, CUP. SHA; Right: Cornell-Nanyang Institute of Hospitality Management, Singapore Institut de Management Hotelier International SOURCES 219 HosPITALITY GOES GLOBAL 220 54 Hassler Roma 56 CUP. SHA New Ways TO OWN AND MANAGE 58 CUP. SHA 60 From the Estate of Ernest & Bertha Hanlon of Nahant, Massachusetts 66 CNL Hotels & Resorts 69 Robert Barker, CUP. SHA 70 Robert Miller. Ritz-Carlton San Juan Casino Puerto Rico 71 Foxwoods Resort Casino THE First RESTAURATEURS 76 Nicole Bengiveno, The New York Times/Redux 78 Texas/Dallas History and Archives Division, Dallas Public Library 79 Courtesy Marianne Hardart 82 McDonald’s LLC USA 83 Burger King Corporation 84 CUP. SHA BECOMING THE ~ THIRD PLACE” 88 NYHS 90. CUP 91 CUP CUP mee) =WoMEN, AFRICAN-AMERICANS RISE Up 98 Left and top: Theo Delhaste. Bottom: Laurence Tremolet 100 Booklet, Hotel Ezra Cornell: The Way We Were, about 1975, SHA. DRMC, CU 101 Underwood & Underwood. DRMC, CU 102 SHA 104 Sol Goldberg (46, A&LS), CUP. SHA 105 Carlos Pascoal, SHA 107. Drew Altizer. Toni Knorr 109 Rio Helmi. Liv Gussing ’91 110 CUP, SHA 111 Gaylord Opryland Resort & Convention Center 112 Sterling Ward COMPUTERS CHANGE EVERYTHING 114. UH, HIA ll/ SHA 118 SHA 122 CUP. Collection of Stephen Rushmore ’67 125 CUP. SHA 1— FROM PEANUTS TO HOTELS 126 Marriott International 131 Photis Karapiperis. SHA 132 Bobby Friedel. Julie Flik 134 CUP. Cornell Dining 135 Green House Group Ltd. 77 THE STOPWATCH AND THE [UB 136 CUPI6HA 138 DRMC, CU 140 DRMC, CU 141 Sol Goldberg (46, A&LS), CUP. DRMC, CU 146 CUP. SHA REST AND RELAXATION, REDEFINED 148 NCL Corporation 150 Mary Nichols. Four Seasons Bali at Jimbaran Bay, Indonesia 151 Marcus Gortz. Four Seasons Bali at Jimbaran Bay, Indonesia 153 Mert Carpenter Photography, Los Gatos, CA. 155 Westin Hotels & Resorts 156 ResidenSea 158 Bachrach 162 Joe Aker, Aker Zvonkovic Photography. Ritz-Carlton MovinGc EACH OTHER FORWARD 164 Frank DiMeo, CUP. SHA 170 Stephen Rushmore ’67 i72 CUP. SHA 173 Frank DiMeo, CUP. SHA 174 CUP. SHA i7S CUP. SHA 177: CUPLSHA 178 CUP. SHA 180 CUP. SHA 179 CUP. SHA 181 CUP. SA LEADING THE Way 182 Chester Ong, The Hive. Shangri-La Hotels and Resorts 184 CUP. SHA 188 CUP. SHA 188 Engelhardt/Sellin. Munich Airport Authority 189 Jumeirah EPILOGUE 192 SHA APPENDIX 197 CHS European Region ACKNOWLEDGMENTS 204 CUP. SHA SOURCES ode Index HosPITALITY GOES GLOBAL pa IP} Page numbers in bold type refer to illustrations. A Accor, 47; top-ten company, 73 Ader, Jason, 69 African-Americans and hospitality industry, 111-13; and Arthur Keith, 111; and James “Bud” Ward, 112-13; first faculty member, 50 air travel, 32-34; Airline Deregulation Act (1978), 34; and airline safety, 34; and air-traffic-control system, 34; American Airlines, 32; Boeing Aircraft Company, 33; Boeing 707, 26, 33-34, 42; Boeing 747, 42; British Overseas Airways Corporation (BOAC), 33; and the Cold War aftermath, 33; Concorde, 42; Douglas DC-10, 42; engineering advance- ments, 32—33; Federal Aviation Act (1958), 34; Federal Aviation Administration, 34; first passenger flight, 190; impact of the jet age, 42; Lockheed L-1011, 42; number of miles Americans air-traveled, 34; number of passengers flying, 34; Pan American World Airlines (Pan Am), 32; post-WW II economic boom, 34—35; supersonic service, 42; transcontinental nonstop service, 32, 33; Trans World Airlines (TWA), 32; United Airlines, 32 Akerstrand, Sven, 197 Alamo Rent-A-Car, 133 Ali, Muhammad (boxing champion), 131 all-suite concept, 68; and Marriott, 68 Alter, Robert A., ’73, 63 alumni, Cornell Hotel program (1929), 20 alumni, of Cornell Hotel School (“hotelies”): at other hospitality schools, 167, 202-3; awarded Corporate Hotelier of the World, 203; awarded Independent Hotelier of the World, 203; careers in managed services, 130-35; Cornell Hotel Society, 22, 50-51, 196-201; Cornell Society of Hotelmen (CSH), 22; employment of, 22; leaders in hotel ownership and management, 63; overseas, 196-201; teaching Hotel School students, 174; and WW II, 23. See also Cornell Hotel School alumni; Cornell Hotel Society Alves, Joaquin Paredes, 198 American Express card, 48 American Hotel Association (AHA), 13, 48 American-Indian casinos, 155—56 Anderson, Harry, 128 Angelo, Rocco M., ’58, 202 ARAMARK, 129-131, 135 Arison, Ted, 157 Atlantic Philanthropies, 57, 181 Automat, Horn & Hardart, 79 A&W Root Beer: first franchise, 78; 86 Ayers, Helen, 101 B Baird, Cathleen, 208 Baizer, Matthew A., ’90, 96 Baker, Robert C., 172 Banfi Vintners, 211; scholarship, 199 Bangs, Ernest O., 168 Bantuvanis, Ann A., 210 Bantuvanis, George M., ’51, ix, 101, 204-5, 210 Baryshnikov, Mikhail, 95 Bass PLC, 35; purchase Holiday Inn (Promus), 68 Baum, Joseph H., ’43, 88, 89-92, 174; cupping a dirty ashtray, 92; and innovation in restaurant business, 89; and Rainbow Room, 91; and Restaurant Associates, 90; and theme restaurants, 89; work worldwide, 92 Beaudin, Richard L., 60, 168 Beck, Jan M., 105, 105, 181 Beck, Robert, ’42, PhD 754, ix, 21, 51, 52, 74—75, 181, 195, 196, 198; academic career, 75; and equal opportunity for women, 105; and experiments with early computers, 117—18; and initiatives in industry research, 139; service and sacrifice in WW II, 74-75; teaching at IMHI, 53; greeting audience, 181; work at Cornell Hotel School, 75 Becker, Neal Dow (05, Law), 37 Beckert, John A., ’75, 154 bed and breakfasts (B&Bs): in rural settings, 157; revenue from, 157 Bell, Charles (“Charlie”) A., ’49, 43, 206 Bennett, Robert S., ’73, 118-19 Bentley, David W., ’64, 210 Berger, Emanuel, AMP ’99, 198, 203 Berger, Florence, 111 Berk, Morgan R., ’04, 131 Best Western, 30; top-ten company, 73 bicycle, 10 Bigelow, Robert, 165 Binns, Joseph P., ’28, 18 Birdsall, J. Frank, Jr., 35, 103 Birtha, Mark A., 94, 155, 157 Bland, Thomas, 22 Blitz, Gerard, 36 Blixseth, Tim, 159 Boeing 707 jet, 26, 27, 33, 42; Boeing 747 jet, 42 Boggs, Robert W. (26, ME), 15 Bollenbach, Stephen, 73 Bonaparte, Napoleon, 7 Boomer, Lucius M., 102 Bouley, David, 94 Boulod, Daniel, 94, 157 Bovard, Walter, ’26, 15 Boys, Jessie, 15 Bradley, Omar, 19 Bradley, Richard J., 63, 92 Breiter, Deborah, MPS ’84, 203 Brener, Stephen W., 170 Brentel, Guglielmo L., 210 Briggs, Frank H., °35, 102 Bromley, Stan, 203 Broten, Paul R., ’47, 140—42 Brown, Dennis A., 31 Brown, Derrick, ix, 208 Brown, Muriel Welch, ’47, 210 Brown, Richard W., 49, 210 Bruno, Marc A., ’93, 130, 131; and dining services for Olympic games, 131; employment with ARAMaRK, 131; partnership with Hotel School, 131; quantity of food consumed by athletes, 131; serving 60,000 meals per day, 131 Brush, Robert M., ’34, 19 Buffalo Statler, 2, 11, 84 Bulgari, 72, 160 Burger King, 83, 83, 97; and Chuck Mund, 84; and franchises, 83; Insta-Burger machine, 83; “the Whopper,” 83 Burjal Arab Hotel (Dubai), 189 Burns, Robert, 203 Butler, David W., ix, 4, 52-53, 143-44, 145-46, 169, 177, 177, 179, 181, 184-85 C Canina, Linda, 147 carhop, first 78; Mary R. Wright °45, 102 Caribe Hilton in Puerto Rico, 43 Carlson Companies, top-ten company, 73 Carlson, Curtis L., 30 Carroll, William J., 124 Caruso, William J., 70, 210 Carvell, Steven, 147 casino industry, 154-57; technology, 121; see also gaming industry Castro, Fidel, 43 Cendant, 53, 72-73, 144, 146; in China, 163; top-ten company, 73 Center for Hospitality Research (CHR), 53, 56, 143-47; CHR friends, 202; and Cornell Quarterly, 56; global partners and sponsors, 202; media outreach, 146; original research reports, 56; popular publications, 145; and Professor Chekitan Dev, 56; publicity program, 56; supporters, 53, 56, 202; website access, 145—46; recent research projects, 146—47; website downloads, 147; wide readership, 147 central reservation system (CRS), 116 Chanut, Piyaoui, 47 Chase, Robert M. (59, ME; MBA ’61), 110, 118, 118-19; creating computer programs, 118; and “discovery learning,” 118 Chiu, Jennie C., 91, 210 Chiu, Michael W.N., ’66, ix, 47, 51, 199, 201, 204, 204, 210 Chiu, Shirley N., 210 Choice Hotels, 72; technology use, 124; top-ten company, 73 CHRIE. See Council on Hotel, Restaurant, and Institutional Education Christian, Vance A., 61, MS 765, 49, 50, 105, 106, 195 CHS. See Cornell Hotel Society Chua, Jennie K.Y., ’71, 105, 203 Cini, John C., 54, 168 Clark, John J. “Jack,” Jr. (PhD ’69, EE), 110, 169, 172, 174, 197 Clark, Preston, 125 Clarkberg, Larry, 207 Cline, Roger S., 170 co-branding, 160 Coe, Donald M., ’62, 210 Cohn, Ira R., MPS ’83, 130 Compton, Richard A. “Dick”, 117 computer technology, 115-25; and Cornell Hotel School, 125; advances at Cornell Hotel School, 117; before computers, 116-17; breakthroughs, 124; central reservation system (CRS), 116; computers in Statler Hall, 118; databases of guest preferences, 120; enterprise systems, 121; front-desk accounting systems, 117; future challenges, 124-25; games (CHASE, CRASE, CHESS), 118; Holidex, 116; Hospitality Information Technology Integration Standards (HITIS), 125; Hotel Technology Next Generation (HTNG), 125; incompatibility of systems, 120; Internet and Worldwide Web, 122-24; magnetic-strip cards, 122; management software, 119; Mark P. Talbert’s work, 118; mini- computers, 119; “Mom and Pop” roadside lodgings, 116; National Cash Register (NCR) inventions, 115, 117; programming courses at Hotel School, 119; programs by Robert M. Chase, 118-19; Reservatron, 116; Semi-Automatic Business Research Environment (SaBre), 116; tracking customer spending habits, 121 Conner, Fred, ’77 (A&LS), ix, 207, 219 Connick, Harry, Jr., 109 Coppola, Francis Ford, 95 Corcoran, Thomas, 67 Corgel, John B. “Jack,” 65, 69, 143, 172, 177 Cornell Dining, 134 Cornell Hotel and Restaurant Administration Quarterly. See Cornell Quarterly Cornell Hotel program: alumni (1929), 20; and AHA, 13-14; enrollment growth, 13; H.B. Meek, 12—14, 21—25; opening date, 12 Cornell Hotel School: academic partners worldwide, 52-53; Alice Statler Auditorium, 39; Australia International Hotel School, 52-53; “burger- ization” of France, 52; Center for Hospitality Research (CHR), 53, 56; combining theory and practice, 176—77; courses in other Cornell schools, 178; curriculum changes, 168-69; Dean H.B. Meek, 167-68; E.M. Statler, 2; enrollment after G.I. Bill, 24; enrollment of women, 3; executive-education programs, 51-52; global alumni base, 49; Hotel Ezra Cornell, 176; IMHI (Institut de Management Hotelier International), 52; independent university unit, 39; industrial collabo- ration, 168, 188; industry changes, 169; industry partnerships, 166; influence of Dean Robert A. Beck ’42, 74—75, 169; international stu- dents, 39, 49; leader in hospitality-management education, 3; Michael D. Johnson, 184—88; new home in Statler Hall, 38-39; origins of, 2, 166; overseas education, 176; partnership with CIA, 178; partnership with hospitality industry, 4; partnerships in Asia, 53; plans for future, 186-88; primary strategic goals, 186; quality of programs overseas, 53; research partners worldwide, 53, 56; technological advances, 117-19 Cornell Hotel Society (CHS), 22, 50; Asia-Pacific chapters, 200; Asia-Pacific region, 200-201; Asia-Pacific scholarships, 200—201; chapters outside Japan, 201; European chapter, 196-99; European scholarship programs, 50, 198-99; first overseas chapter, 50; meeting in Bangkok, 51, and Zurich, 50; Mexico, Central, and South America region, 211; Norwegian group, 211; national chapters in Europe, 199; worldwide membership, 50 Cornell Hotel Society Book Committee, viii—ix, 204 Cornell Innkeeper, The, 49 Cornell job fair discussion, 178 Cornell—Nanyang Institute of Hospitality Management (CNI), 53, 144, 188, 200 Cornell Quarterly (Cornell Hotel and Restaurant Administration Quarterly), 44, 56, 104, 139, 140, 142, 144-46, 146 Cornell Society of Hotelmen (CSH), 22. See also Cornell Hotel Society Cornell University School of Hotel Administration. See Cornell Hotel School Corrigan, Leo, 44 Corsun, David L., ’83, MS ’96, 202 Council on Hotel, Restaurant, and Institutional Education (CHRIE), 39, 167, 202; and H.B. Meek, 167 Courtney, John, ’25, 13, 102, 139 cradles of liberty, 8 Crandall, John M., ’25, 22 Craver, John F., 52, 210 credit cards, 48 cruise business, 157—58; activities for kids, 157; affordable for middle class, 157; array of amenities, 157; Queen Mary 2, 157; world’s largest ship, 157-58 INDEX 223 HosPITALITY GOES GLOBAL 224 Culinary Institute of America (CIA), 178 Cullen, Thomas, 177 D Dairy Queen, 79, 82, 97 Dak bungalows, 8 Dalton, Kat, ix, 207 D’Arienzo, Carmel A., MPS ’88, 199 Davidson, Davre, 127—28 Davis, Stanley W., 141 Day, Edmund E., 37, 38 DeBoer, Jack, 68 De Nicola, Michael Angelo, ’80, 67 DeNiro, Robert, 95 deregulation of airlines, 34 Dermody, Donal A., ’53, MS 68, 203 de Roos, Jan A., ’78, PhD ’94, 146-47, 172, 177 Dev, Chekitan, 56, 56, 177 Devine, Ruth, ix, 208 Diana, Princess, 54 Dickson, Carole Clark, MS ’78, 203 Dickson, Duncan R., MPS ’77, 203 Diehl, Thomas M., 68 (MBA ’70), 118 Dietrich, Marlene, 108 Diners’ Club card, 48 Di Pasquale, Vince J., ’48, 102 Disney resorts and theme parks, 159-61, 172 Disney, Walt, 160 Dittman, David A., 142—43, 146, 169, 173, 181, 206 Doody, Alton F. “Rick,” MPS ’84, 96 Driscoll, Eileen (MS ’77), 208 drive-through, Wendy’s first, 85; cashless, 122 Drucker, Peter, 86 Dubé, Laurette, MPS °88, PhD 790, 144 Dunkin’ Donuts, 85, 97 Duryea, Charles, 10-11 Duryea, Frank, 10-11 E Eaton, Phyllis W., 210 Eaton, William V., 61, ix, 168, 205—6, 210 Eaton-Berlin, Pamela, 91, 210 Ebeling, Welf, 153 Ecolab-Cornell Scholarship Program, 201 Ecole hételiére de Lausanne, first hotel school, 10 Edgerton, David R., ’48, 83, 84 Edmondson, Brad (’81, A&S), ix, 191, 208 Edward VII (king), 9 Egan, Michael S., ’62, 133, 210 Eisenhower, Dwight D. (U.S. president), 19, 25, 27, 54, 60 Ellis, Lei-Ann, 69, 197 English, Todd, 157 Enz, Cathy A., 144-45, 147 Ericson, Myrtle, 104, 104 Evans, Edward A., ’74 (MBA ’75), 130, 193-94 Evensen, Leif R., 66, ix, 51, 117, 197, 199, 208 extended-stay concept, 68; Thayer Lodging, 65; with fitness centers, 153 Eydt, Fred J., 52, 103, 210 Eyster, James J., Jr., 69, PhD 77, 75, 142 F Falcone, Mark J., ’95, 69, 69; recognition in top-analyst rankings, 69; work at Deutsche Bank, 69; work with Hotel School colleagues, 69 Farrand, Livingston, 15 Farrell, Cheryl, 105, 106 Fasquelle, Denis, IMHI ’97, 201 Feeney, Charles F. “Chuck,” ’56, 57; and Atlantic Philanthropies, 57, 181; at Cornell Hotel School, 57; Duty Free Shops (DFS) retail empire, 57; and legacy of “giving while living,” 57; and Tourists International Duty Free Sales, 57 Felderman, Tom, ’82, ix Ferguson, Dennis H., 111 Ferris, Richard J. “Dick,” ’62, 46 Fertitta, Anthony, °39, 192 Fidelio Software, 119, 121—22; and Micros, 122 financial aid, 188 Fisher, William P., 60, PhD 68, 129, 203 Fishman, William, 128 Fitzpatrick, Kevin, ’76, 178, 194 Flamingo casino-hotel, 35, 36, 154 Flickinger, Robert D., ’47, 129 Flik, Julie Milligan, ’63, 104—5, 132, 132-33; advice to women, 113; growth of Flik International, 132; Hotel School education, 132; service to National Restaurant Association (NRA), 132; work at Sarah Lawrence College, 132 Flik, Ruediger, 104—5, 133 Flower Inn, 7 food preparation lab, 13 Forbes, J. Murray, 152 Ford, Gerald (U.S. president), 54 Ford, Henry, 11 Fors, Richard D., Jr., 59, 83, 210 Four Seasons Bali: massage, 151; spa, 150 Foxwoods casino (Connecticut), 71 franchising, 29, 32-35, 47, 59-63, 68, 78-87, 93-94, 97, 116, 134, 143, 159, 162, 167, 171, 187, 206 Frank H.T. Rhodes Exemplary Alumni Service Award, 84, 205 Freeman, Robert A., 63, 92, 210 G Galliker, Peter R., 210 gaming industry, 154-57; American Gaming Association, 155-56; annual Nevada revenue, 154; in Asia, 48; in Atlantic City, 155; casinos in America, 155-56; casinos worldwide, 156—57; Las Vegas, 154—55; legalization in Nevada, 154; Native American casinos, 155-56; number of casino visitors, 156; revitalizing economies, 157; roots of, 154; see also casino industry Garcia, Manuel A., 65, 83 Gates, Bill, 54, 159 Gaurnier, Paul L. “Colonel,” 195 Geiler, William R. (’73, ’70, A&S), 63 Geist, Kenneth J., 80 (MBA ’82), 63 Gifford, Hilda Longyear, ’26, 100 Gifford, John P., ’29, 100 Gogolak, David P., ’97, 96 Goldberger, Paul, 90 golf, 153-54 Gopaldas, Rohan P., ’02, 201 Grace, Anna F., 100, 102 Grand Central Terminal (NYC), 6 Grande Lakes Resort (Florida), 66 Great Depression, 15, 17, 21, 78 Green Dragon Tavern, 8 Green House Hospitality Scholarship Fund for Asian Careers, 200—201 Greif, Elmar, 198 Grice, Winthrop W. “Bud,” ’53, 80, 112 Grissom, F. Dewayne, 60, 168 guestrooms, number in U.S., 3 Gussing, Liv, 791, 51, 108-9, 109, 201, 208; HEC managing director, 109; managing hotels worldwide, 109; multinational background, 108; on selecting the right business, 109 H Hamburger University, 82 Hanlon, David P., 66, 210 Hansen, Erik Lars, ’71, 210 Hanson, Bjorn R.L., ’73, ix, 47, 73, 124, 158, 158-59, 210; effects of 9/11 on industry, 159; employment as consultant, 158; forecasting performance, 158-59; four areas of work, 159; guest lecturer, 174 Hara, Tadayuki “Tad,” MPS ’91, PhD °04, 203 Hardy, Hugh, 91 Hart, Christopher W., ’72, PhD ’82, 58 HEC. See Hotel Ezra Cornell Helmsley, Harry, 170 Hemmeter, Christopher B., ’62, 203 Henderson, Ernest, 18-19, 30 Henry, Patrick, 8 Herman, Francine A., 105 Hicks, Frances, ’32, 101 Hilton, Carl, 44 Hilton, Conrad N., 18, 31; contractual strategy, 45; first national hotel chains, 18; Hilton International, 43-45; international expansion, 42—43, 45; investment in hotel industry, 18; lesson about political develop- ments, 43-44; major hotel acquisitions, 30; managed agreements, 45; management sensitivity, 43; standardizing operations, 18; the “handi- capped” waiter, 31 Hilton Hotels, 210; Hilton Corporation, 45; Hilton International, 42—45; Hong Kong (1963), 44; hotel in Puerto Rico (1940s), 42—43; interna- tional expansion, 42—45; Istanbul Hilton (1955), 44; Madrid (1953), 44; reservation center, 114; top-ten company, 73 Hilton International, 42—45 Himmel, Kenneth A., ’70, 71 Hinkin, Timothy R., 147 Holiday Inn: amenities package, 29; first, 29; fitness centers, 153; extended- stay segment, 68; franchising of, 29, 35, 61; growth of chain, 29; overseas growth without airline partners, 46; technology use, 116 Holidex: Holiday Inn’s first CRS, 116 Holtzman, Richard A., ’76, 203, 210 Home Economics building 1922 (Cornell Hotel program), 12 Hoover, Herbert (U.S. president), 19 Horn and Hardart Automat (1940s), 79 Horwath, E.B., 102 hospitality education, 165-81; four-year degree program at Cornell, 167; and Cornell Hotel School, 3, 167; Beck Center, 179-81; brand management, 176; CHRIE, 167; competing schools in 1980s, 167; Dean Robert Beck, 169; E.M. Statler, 2; Ecole hételiére de Lausanne, 10; growth in twenti- eth century, 3; hospitality boom, 167; industry and academic alliance, 165; industry transformations, 167—69; Institute for Hospitality Entrepreneurship, 178—79, 188; labor relations, 173; law, 173; modern challenges, 165; need for experts, 166-67; real estate and finance courses, 172—73; real estate valuation, 170—71; revenue management, 173-74; vacation-ownership courses, 172—73. See also Cornell Hotel School hospitality industry: African-Americans, 111—13; annual revenue, 3; as world’s largest industry, 2; business conference centers, 36; complexity of modern, 165; computer technology, 115-25; E.M. Statler, 2; elements of, 165; growth of, 2, 35; impact of Korean War on, 41; impact of transportation improvements, 35; impact of WW II on, 41; increased disposable income, 2; innovations in, 149-63; innovative concepts, 36; merger of hotel and airline companies, 45—46; minorities, 99-113; personal service, 193-95; research for improving, 137-47; restaurant revenue drivers, 173; scope of, 2-3; U.S. workforce, 2; women, 3, 99-113; world employment, 3. See also hospitality industry, history of; hospitality and international markets; hospitality education; trends in hospitality industry hospitality industry, history of: City Hotel (first U.S. hotel), 8-9; coast-to- coast highway travel, 25; colonial inns and taverns, 8; crash of October 1929, 15; Dak bungalows, 8; early U.S. hotels, 9; first hotels in America, 8—9; Great Depression, 15; hotel occupancy in the 1920s, 15; Hotel Stevens, 15; hotel technology “firsts,” 124; impact of automobiles, 11; in Asia and Pacific rim, 8; inns in England, 7—8; international expan- sion, 42—43, 45; jobs in hotel management, 11—12; national road system in 1921, 11; origins, 4, 7; post-WW II middle-class prosperity, 24-25; post-WW II transportation improvements, 25; railroads, 9; ryokans, 8; shift from rural to urban employment, 11—12; spas, 9-10; transporta- tion, 10; WW I, 11. See also hotel industry, history of hospitality and international markets, 41-57; auto racing, 48; brands world- wide not U.S. owned, 47—49; Cornell Hotel School, 49-57; expanding airports and airlines, 47; gaming in Asia, 48; hotels in China, 48—49; hotels to serve businesspeople, 49; impact of credit cards, 48; Malaysia, 47; Mediterranean, 48; respect for other cultures, 47; Thailand, 47—48; U.S.-based and U.S.-owned hotels, 41—46 Hospitality Leadership, viii, 204, 207—209, 210 Hostage, Michael (58, A&LS), 133 Hotel Ezra Cornell (HEC): and E.M. Statler, 15; inaugural event in 1926, 14, 15; historical meeting in 1927, 15; waitresses derby 1944, 24 hotel industry, history of, 17—25; alliance with airlines, 45—46; bankrupt hotels, 18; crash of October 1929, 17; gifts to Cornell hotel program, 22; glut of hotels, 18; government road projects, 19, 21; Great Depression, 17, 21; Ernest Henderson, 18-19; Conrad N. Hilton, 18; hotel technology “firsts,” 124; impact of WW II, 23; H.B. Meek, 21-25; mid-century boom due to new highways, 28-29; motels, 29-30; new brands, 30; occupancy during 1920s and 1930s, 17; Prohibition, 18, 21; Statler Foundation gifts, 22; tuition, 21 Hotelleriesuisse, 10 Hotel Management magazine, 15 Hotel New Yorker laundry room, 101 hotel ownership and management, innovations in, 59-75; all-suite hotels, 68; brand exposure, 59; consolidations in 1990s, 68; dubious underwriting INDEX 225 HosPITALITY GOES GLOBAL 226 procedures, 60-61; economic downturn, 74; Eisenhower’s tax breaks, 60; example of Holiday Inn, 61; finding skilled staff, 60; franchising, 60-61; industry statistics, 74; Kemmons Wilson, 60; management con- tracts, 61-63; Marriott during 1980s, 62; master limited partnerships, 66-67; mergers and acquisitions, 72-74; mixed-use developments, 70-71; money-making methods, 59; overseas markets, 61; professional hotel-management companies, 61; properties for specific guest-types, 68; Real Estate Investment Trusts (REITs), 60-61; savings-and-loan fiasco, 67-68; segmentation, 72; separation of ownership and manage- ment, 62; sources of revenue, 61; top hotel companies worldwide (2006), 73; top management companies (2004), 61 hotels, the first, 8-10 (sample listing: Astor House, Baltimore City Hotel, Biltmore, Broadmoor, Brown Palace, Carlton, Catskill Mountain House, Claridge, Cloisters, Coney Island House, Exchange Coffee House, Fifth Avenue Hotel, Grand Union Hotel, Greenbrier, Hotel Del Coronado, Mansion House, New York Hotel, Palace, Palmer House, Ponce de Leon, Ritz Hotel, Ritz-Carlton, Sagamore, Savoy, Tremont House, Waldorf Hotel); the first national chains, 18 Hotels magazine award winners, 203 Hotels Statler, Inc., 15, 22; Alice Statler, chair, 101; at first HEC, 100; purchased by Hilton, 30, 104 Hot Shoppes, 30, 78, 80, 128, 168; James Ward °52, 112—13; van delivers airline meals, 126, 127. See also Marriott Corporation; Marriott, J. Willard, Jr. Howard Johnson’s, first restaurant, 30, 32, 78, 86; first motor lodge, 30; in 1936, 60 Howie, John “Uncle Jock,” 12, 138 Hsu, William S., MPS ’83, 201 Huckestein, Dieter, 198 Hughes, Howard, 33, 154 Hyatt Hotels, 73, 152; the first, 30; first atrium, 30; top-ten company, 73 Hydropolis (underwater hotel), 161 I ice sculpture at Hotel School, 91 Ile de France bellmen, 5 IMHI (Institut de Management Hotelier International), 52 INNovation: Creativity Techniques for Hospitality Managers, 111 innovations in hospitality industry, 149-63; bathhouses, 163; bed and break- fasts (B&Bs), 157; co-branding, 160; cruise business, 157—58; extended- stay market, 153; gaming industry, 154—57; golf, 153-54; gyms at hotels, 152-53; Hydropolis (underwater hotel), 161; membership clubs, 152; personal trainers, 153; ski the tropics, 161; spas, 149-52; Starwood’s W hotels, 161-63; theme parks, 160-61; time sharing, 158-60 InterContinental Hotels Group, 42, 47, 61; budget segment, 163; and Pan Am, 32, 46; and Fidelio, 122; top-ten company, 73 International Council on Hotel, Restaurant, and Institutional Education (CHRIE), 39, 167, 202; and H.B. Meek, 167 Inumaru, Ichiro, 53, 50, 196, 200, 203 invitation to the first Hotel Ezra Cornell, 14 Irving, Frank J., ’35, 103 Isenberg, Walter L., ’80, 63 Iskat, Wilfried W., ’71, MS ’72, 203 J Jaeger, Arthur A., 134 James, Howard P., 46, 203 Johnson, Dorothy Daly, ’26, 99 Johnson, Howard, 86 Johnson, Michael D., ix, 184, 184-88 Johnson, Wallace E., 29 Jones, Margelia L., ’78, 210 K Kappa, Margaret McCaffrey, ’44, 100 Karpinski, Peter J., 99, 63, 194 Kasikci, Ali V., 203 Kastner, Robert E. ’78 (MBA ’80), 63-64 Kay, Michael Z., ’61, 131-33 Keane, Douglas R., ’93, 96 Keith, Arthur, 84, 111; advice to hotel students, 111; awards received, 111; work with Florence Berger, 111; work with Gaylord Opryland Resort & Convention Center, 111 Keithan, Faye Y., 210 Keithan, J. William, ’50, 210 Kemmotsu, Kakumaro, ’28, 49, 50 Kempinski Hotel Airport (Munich), 32; atrium, 188 Kennedy, John F. (U.S. president), 54, 159 Kennedy, Kay P., 211 Kennedy, Richard H., ’56, ix, 206, 211 Kentucky Fried Chicken (KFC), 83, 85, 97 Kessler, Pamela Troutman, 66, 197 Kimes, Sheryl E., 147, 173-74, 184 Kirby, Jesse, 77 Kish, Al, 102 Kline, Caren Whiteman, ’75, 211 Kline, J. Peter, 69, MS ’71, 35, 211 Knorr, Antoinette “Toni,” ’77, MPS ’01, 106—7, 107; about diversity, 107; education in Paris, 106; managing capital budgets, 107; work in hotel management, 107; work with Hyatt, 107 Kohda, Hiroshi, 64, 200 Kooser, Ronald P., 61, 168 Korean War, 41 Kroc, Ray, 82 L LaFleur, Robert A. ’88, 69 LaForge, Charles A., Jr., °57, 211 Lancaster Hotel, 98, 99 Lattin, Gerald W., PhD 749, 51, 195, 202-3 Laughlin, W.P., 128 Lavin, Joseph E., ’75, 187 Laws of Innkeepers, The, 166 LeBruto, Stephen M., ’72, 203 Lee, Aejoo, MPS ’81, 201 Lee, Alice S., 95, 201 Lee, Daniel R., ’77 (MBA ’80), 174 Lee, Peter E., 63, 92 Lehman, Jeffrey S. (77, A&S), Cornell president, 186 Leo-Andrieu, Grace, ’77, 98, 108 Leonard, Joyce, ix, 207 Letchworth, Edward H., 23, 38 Linder, Staffan, ’72, 197 Loeber, Greg, ’95, 69 Los, Joseph A., ’66, 211 Lynn, W. Michael, 147 M MacArthur, Douglas, 19 MacLennan, H. Alexander, ’26, 15, 49, 139 magnetic-strip key cards, 122 Major, John, 54 Malek, Frederick V., 64, 67 managed services, 127-35; ARAMARK, 129-30; Marc A. Bruno, 131; Cornell Dining, 134; Cornell Hotel School, 129-34; Cornell Hotel School alumni, 130-35; enlightened approach in Japan, 134—35; Julie M. Flik, 132—33; food service in the air, 128—29; healthful food, 134—35; hospitality brands, 135; Hot Shoppes, 78, 128; leisure-services market, 129; Christina M. Lofton, ’04, 130; serving a broad client base, 135 management contracts, 61-63, 66-68, 99, 169; first textbook, 75 Marcham, Jane H., 751, 211 Marcham, John (’50, A&S), ix, 207, 211 Mariani, Harry: Banfi Scholarship, 199 Mariani, John F. (’54, A&S): Banfi Scholarship, 199 Mariani, Virginia, 82, 211 Marko, Joseph A., ’78, MPS ’80, 119 Marriott, Alice, 80 Marriott Corporation, 30, 45, 46, 47, 152; Big Boy, 86; Bulgari, Courtyard, Fairfield, Renaissance, and Ritz-Carlton, 72; extended-stay market, 68; hotel management, 62, 64; Hot Shoppes, 78, 128; Hospitality Valuation Services, 170—71; Internet reservations, 123; James Ward 52, 112-13; Saga, 129; theme parks, 161; top-ten company, 73; vacation intervals, 159, 172 Marriott, J. Willard “Bill,” Jr., 80-81, 171, 203; caring for his employees, 80-81; credo, 81; Marriott Marquis in Times Square, 81; work with Marriott projects, 80-81 Marriott, J. Willard “JW,” Sr., 80 Marriott, Richard, 81 Marriott’s Renaissance Club Sport (gym), 153 mattresster (mattress durability tester), 140, 141 McCarthy, Reneta, 69 McCullough, Alex, 79 McCullough, J.F., 79 McDonald, Maurice, 82 McDonald, Richard A., 82 McDonald’s restaurant, 82; franchising of, 82; Hamburger University, 82; Ray Kroc, 82; origins, 82; overseas sales, 97 McGregor, Janet, 101 McKowne, Frank, 23, 38 McLamore, James W., ’47, 83, 84 McNamara, Frank, 48 Meek, Howard Bagnall “HB,” 12, 12-13, 37, 39, 196; building Statler Hall, 36, 38; building the Cornell Hotel program, 21-25; challenges after WW II, 24; Cornell Hotel alumni, 22; Cornell Quarterly, 146; death, 39; definition of service, 12; employment for graduates, 21; enrollment growth, 21; G.I. Bill educational benefits, 24; goals for hotel research, 138-39; Great Depression, 21; HEC, 15; Hotel School and industry alliance, 166; observing Statler, 138; professional-education courses, 21; retirement, 39; student recruitment, 21; women students, 99-101 Mellen, Suzanne R., ’76, 109-13, 110; discrimination against women, 110; fading sexism, 112; formula for hotel appraising, 110; gift for public speaking, 109-10; Hospitality Valuation Services (HVS) International, 110—11; HVS in San Francisco, 171 Meyer, Carrie Connell, ’30, 100 Meyer, Danny H., 94 Micros Systems, 122; and Micros—Fidelio, 122 Miller, Robert W., 755, 57, 211 Missoni, 160 Mittleman, Carl M., 97, 130 Model T Fords, 11, 77; at the United States Hotel, 10 Monson, Judith H., ’69, 211 Moody, Dwight L., 103 Moore, Richard G. (67, EE; MBA ’70), 52, 118-19 Moore, Robert, 30 motels: amenity creep, 30, 68-69; budget, 31, 68, 70; copycats of Holiday Inn, 30; features of, 28—29; first successful national chain, 29; franchis- ing, 29; first and growth in 1950s, 29-30; new brands, 30 Motel 6, 31, 70 motor hotel, 31 Moulton, Katherine Klauber, ’78, 106, 203 Mueller-Elmau, Dietmar, MPS ’80, 119 Mullen, Edna, 101 Muller, Christopher C., MPS ’85, PhD 92, 85-87, 92, 96, 203 Mund, Carol (’52, HE), 84 Mund, Charles J. “Chuck,” ’51, 83-84, 84, 211; advice, 84; award, 84; Burger King franchising, 84; education and early work, 84 Mund, Eric W., 84, 84 Miinster, Rudolf W. “Rudy,” ’62, 50-51, 99, 197, 198, 211 Murray, Bill, 95 Muthappa, Uttam B., MMH 05, 174 Muttscheller, Alexander E., 03, 161 Myers, Linda, 145 N Nanyang Technological University (Singapore), 52, 53, 144, 188, 200, 204 Nassikas, James A., 203 National Cash Register (NCR), 115; computer (1957), 117 National Restaurant Association, 78 Nation’s Restaurant News, 90 Natsios, Christine, 85, ix Needham, William R., ’25, 22 Nelson, Curtis C., 786, 92 Nelson, Marilyn Carlson, 92 Neumeyer, Zachary T., ’80, 63 Neville, Michael P., 01, 195 Newton, Isaac, 184 Nicandri, Marck C., ’94, 96 Nieporent, Drew A., ’77, 76, 77, 94-95, 211; at Cornell Hotel School, 95; helping at 9-11 Ground Zero, 76, 77, 95; importance of location, 95; importance of service, 95; restaurateur work, 95 Nixon, Richard, M. (U.S. president), 54 Noden, Malcolm “Mac” A., 28, 46, 140—42 Norwegian Cruise Line ship, 148 INDEX éo7 HosPITALITY GOES GLOBAL 228 O O’Neill, John W., ’84, 203 Oberloskamp, Rolf, 211 Olds, Ransom Eli, 11 Olive Garden, 94 Olsen, Niels, 198 Olympic games: and inexpensive accommodations, 163; feeding athletes, 131 Osano, Kenji, 46 Osborn, Edna “Eddy,” 101 Ostroff, Allen J., 31 P Palace of the Lost City (casino-hotel), 40 Panayotis, Georges (MKG Consulting), 73 Pastore, Michael, 207 Pastoukhoff, Boris, 108 Pedulla, Thomas V., ’60, 211 Penn, Sean, 95 Penner, Richard H. (’68, ’72, Arch.), 96, 110 Pennsylvania Turnpike, 29 Persian Gulf War (1990-1991), 67, 120 personal service, 193-95; advice from E.M. Statler, v, 193; employee—guest interactions, 193; in the curriculum, 194 Peters, Cydney, ix, 208 Petzold, Christian, 198 Pezzotti, Giuseppe G.B., ’84, MPS 796, 54, 93, 94, 96, 177 Piccoli, Gabriele, 121 Pig Stand (first drive-in restaurant), 77, 78 Pillsbury, Leland C. “Lee,” ’69, 62, 64-65, 67, 179, 195; and Bill Marriott, 80-81; development strategy, 64; founding Grand Heritage Hotels, 64; Institute for Hospitality Entrepreneurship at Cornell, 179; off-market purchases, 65; on Sternlicht’s strategy, 163; work with Cornell Hotel School, 65; work with Marriott corporation, 64 Pillsbury, Mary M., 179 Pistilli, Philip, 54, 211 Portman, John, 30 Price, Robert L. 96, 96 Pritzker, Jay, 30 Prohibition, 13, 18, 21, 78 Promus (Holiday Inn), 68; merge with Hilton, 72; first web site, 124 Puck, Wolfgang, 194 Pudong (Shanghai) skyline, 182 Quan, Daniel, 147, 172, 177 Quayle, Dan (U.S. vice president), 159 R Radisson Hospitality, 211 Radisson Hotel, 30 railroads, 9 Rainsford, Peter, 68, PhD ’74, 202 Ramada, 30 Rappole, Clinton L., ’65, MS °68, PhD ’71, 203 ready-food packet, 138 Ready, Frank A., Jr., °35, 50, 196 Reagan, Ronald (U.S. president), 54 Real Estate Investment Trusts (REITs), 60—61; Interstate, Sunstone, 63; overpaying, 64—65; 1990s, 67 Recknagel, Helen J., 104, 139, 146 Redlin, Michael H. (67, ME; PhD ’74), 110, 168 Reed, Elizabeth A. Harlow, ’85, 106 Reed, John E., ’90, 201 REITs, see Real Estate Investment Trusts Renaghan, Leo M., ix, 121, 143—44, 177-78 research and the hospitality industry, 137-47; A Study of Fifty Hotels, 139; Center for Hospitality Research (CHR), 143-45; CHR and Smith Travel Research (STR), 144; CHR mission statement, 144; CHR’s success, 145-47; funding by Statler Foundation, 138-39, 142; goals of H.B. Meek, 138-39; initiative by Robert Beck, 139; mattresster, 141—42; Meals-Ready-to-Eat (MRE), 142; Meek’s expansion of research, 139; microwave technology, 141; R&D center in Statler Hall, 140; ready- foods research, 139-40; School’s focus on management topics, 142; Statler’s devotion to details, 137—38 restaurant industry, after 1970: adage about rooftop restaurants, 90; America’s “third place,” 97; American alcohol consumption, 93; casual theme restaurants, 94; celebrity chefs, 96; fast-casual food, 96; food- dollar spending, 96; franchised restaurants overseas, 97; international growth, 97; number employed in, 93; number of overseas restaurants, 97; restaurants with bars, 94; Burton M. Sack ’61, 93, 94; sales at over- seas restaurants, 97; sales in U.S., 93; theme dinnerhouses, 92; upscale restaurants, 94-96; Windows on the World, 88, 90 restaurant industry, origins of, 77-87; A&W (first franchise), 78; brand loyalty, 87; Dairy Queen franchises, 79, 82; drive-ins, 78; fast food, 82-86; fast-food franchising, 78, 82-83, 85-86; G.I. Bill, 86; Great Depression, 78; influence of automobile, 77; limited-menu franchise businesses, 86; mid-price chain restaurants, 78; middle management, 86; Pig Stand (first drive-in restaurant), 77, 78; Prohibition, 78; McDonald’s “speedee service system,” 82; spending on outside-of- home meals, 85; surge during WW II, 79; U.S. interstate highway system, 86—87 Reservatron: Sheraton’s first CRS, 116 Restaurant Saboten (Japan) meal, 135 restaurants, number in U.S., 3 Reynolds, Dennis E., MPS ’92, PhD ’00, 203 Risley Hall dining room, 14 Ritter, Kurt, 203 Ritz-Carlton: first luxury chain, 10; Aspen Highlands (Colorado), 162; Boston, 15; Orlando, 65; San Juan Casino Puerto Rico, 70; owned by Marriott, 72, 81, 160 Ritz, César, 9 Rivett, Ron, 31 roads, impact on hospitality industry, 19, 21 Robert A. and Jan M. Beck Center, 164, 179-81; atrium, 180 Robert Purcell Marketplace Eatery (Mongolian Wok), 134 Rockefeller, David, 91 Roosevelt, Franklin D., (U.S. president), 25 Rosenberg, Robert M., °59, 85 Ross, Diana, 19 Rougié, Jacques, ’72, 197 Royal Caribbean, 157—58 Rowe, Philip D., Jr., °48, 211 Rushmore, Stephen, 67, MAI, 73, 110, 147, 169, 170, 220; author of books and articles, 171; HEC advisory board, 171; Hospitality Valuation Services (HVS), 110-12, 170-71; HVS overseas offices, 171; real-estate valuation, 170—71; seminars, 170; Valuation of Hotels and Motels, 170; work with Marriott, 171 Ryan, Maurice O. “Bus,” Jr., 54, 80-81, 112 ryokans, 8 S SABRE, 116 Sack, Burton M. “Skip,” ’61, 93; benefits of college degrees, 93; investment in Applebee’s, 93; National Restaurant Association, 93; work at Howard Johnson’s, 93 Safran, Jennifer L., 96, 131 Sagaria, Sabato D., ’97, 120, 194 Salutskij, Deiv, ’71, 51, 197, 198, 211 Sander, Eugenia Brown, ’66, 211 Sanders, Colonel Harland, 83, 85; as celebrity, 85; growth of his business, 85 Sarno, Jay, 154 Sayles, Charles “Chuck” I., ’26, 13, 38, 117, 140-41, 141 Scandling, William, 128 Schau-Larsen, Erik, ’73, 199 Schelbert, Rudolphe W. “Ruedi,” ’55, 51, 211 Schoellkopf, Paul A., °41, 211 Schrager, Ian, 160 Schumacher, Carola, 211 Schumacher, Heinz, 198, 211 Seidler, Alice. See Statler, Alice Shaikhanuar-Cota, Mai, 207 Shanghai’s financial district skyline, ii Sharpe, John, ’65, 203 Sheraton Hotel chain, 18-19, 30, 46; technology use, 116 Sherry, John E.H., 166 Sherry, John H., 166 Sherwyn, David S., 147, 173, 176 Shoemaker, Stowe, PhD ’95, 203 Sieburgh, Jules A., 72 (MBA ’74), 119 Siegel, Benjamin “Bugsy,” 36, 154 Siguaw, Judy, 53, 144, 177 Silverman, Henry R., 73 Sinatra, Frank, 19 Sipple, William G., ’79, 174 Smith, Blair, 115 Smith, C.R., 115 Smith, Laura Lee, 104 Smith, Randy, 74 Smith Travel Research (STR), 74, 144, 202 Sobeck, Stephanie E., MMH ’99, 172 Somerville, Harry, 15 Southworth, David C., 81, 144 spas, 149-52; and Asian rituals, 151-52; and hotel occupancy rates, 152; at luxury hotels, 151; and the personal touch, 151; types of, 151; word origin, 149 Spencer-Charpentier, Abigail A., ’95, 130 Spruce Goose aircraft, 33 Starck, Philippe, 108 Starke, Ralph M., ’52, 51, 197, 199 Starwood, top-ten company, 73 Starwood’s W hotels, 161—63; focus on Generation Xers, 163; interaction- friendly design, 162; philosophy, 162; use of music, 163 Statler, Alice (nee Seidler), 37; building Statler Hall, 36, 38; chair of Hotels Statler, Inc., 15; and cornerstone of Statler Hall, 38; death, 39; gifts to Cornell hotel program, 22-23 Statler, Ellsworth Milton (E.M.): advice about service, v, 193; against Prohibition, 13; AHA, 13—14; Cornell Hotel School, 1—2; credo, 1; death, 138; devotion to details, 137—38; famous line, 173; first modern commercial hotel, 11; Hotel Ezra Cornell, 15; as “Hotel Man of the Half Century,” 2; Hotel School and industry alliance, 166; learning by doing, 12; motto on plaque, 4; personal service, v, 1; plaque at Cornell Hotel School, x; rule for success, v; and Statler Hall, 38; as young man in 1890, 3 Statler Foundation, 15, 22, 38, 39, 138 Statler Hall, 38; cornerstone, 37; entrance, 174 Statler Hotel: first, 2, 11; in 1988, 175 Statler Inn, 36; student chefs, 90 Steele, William (54, A&S), ix, 84, 118, 146, 208 Stern, Leslie W., ’60, 211 Stern, Madeline, 211 Sternlicht, Barry S., 73, 162-63, 176 Stillman, Alan, 92 Stormont, Richard M., ’58, 63 Stover, Carol Gibbs, ’65, 211 Stover, Frank T., III, 65, 211 Strand, Curt R., ’43, 44-45, 196 Streuli, Peter D., 62, 199 Strodel, Joseph D., Jr., 144-45 Strondl, Helmut, 198 Sturman, Michael, 146 Summers, Bill (82, A&LS), ix, 206—7 Super 8, 31, 70; in China, 163; owned by Cendant, 73 Susskind, Alexander, 131, 147 Sweeney, Dennis J., 64, 90, 91, 92, 174 Swiss Hotel Association, 10 T Tabacchi, Mary H., 151 Talbert, Mark P., ’89, MPS ’93, 118; courses in computing, 121 Tanuma, Chiaki, MPS ’80, 134—35, 200 Taylor, Elizabeth, 54 Teng, Ted, "79, 174, 187 Tepper, Karen E., ’03, 123 T.G.I. Friday’s, 92 Thatcher, Margaret, 54 Thayer Lodging Group, 56, 64-65, 66, 202 theme parks, 160-61 Thiyagaratnam, Nami, MPS ’85, 50 Thomas, Dave, 85 Thompson, Gary M., 136, 145, 146 Three Kings Inn (Drei Kénige am Rhein, later Les Trois Rots), 7, 9 time share, 158-60; annual sales, 159; explained, 158; luxury, 159 Tisch, Laurence A., 30 Tisch, Preston Robert, 30 toll-free 800 number, 116 top-ten hotel groups worldwide, 2006 (by rooms), 73 Toth, Louis, 102, 166 tourism industries, 42 Tracey, J. Bruce, 147 INDEX 229 HosPITALITY GOES GLOBAL 230 transportation: affordable air travel, 25; air travel, 32-34, 42; Duryea brothers’ “motor wagon,” 10-11; Federal-Aid Highway Act of 1956, 25, 27; hotel industry history, 10; jet age, 42; National System of Interstate Highways, 25, 28; post-WW II improvements, 25; transatlantic transit time, 41 trends in hospitality industry: aging populations, 190-91; communication advances, 184; demographics, 191; disposable income, 190; growth since 1950s, 190; Internet, 185; personal service, 186; technological advances, 184; terrorism’s impact, 186; toll-free 800 number, 116; transportation advances, 184; universal design, 191 Trice, Donald R., 61, 63 Trippe, Juan T., 33, 34 Tsai, Ming, ’89, 96 Tschanz, Fred, 198, 211 Tschumi, Jacques, 10 U Veltschi, Albert L., 34 underwriters of this book, listing of, 210-11 V vacation-ownership industry: explained, 172; sales worldwide, 172; number of units, 172 Vail, Carl W., Jr., 61, 168 Vallen, Jerome “Jerry,” ’50, PhD ’78, 202 van der Wallen, John, ’87, 201 Van Gorder, Kandace, ix, 209 Victoria Station, 92 Vinnicombe, Edward J., Jr., °33, 22, 103 W Wachs, Thomas, 198 Wagner, Erica L., 121, 125 waitresses derby at HEC (1944), 24 Waldorf-Astoria Hotel: as Art Deco masterpiece, 19; guest Conrad N. Hilton, 31; new (built in 1931), 16; NYC landmark, 19; on Park Avenue, 19; original, 19; size of, 19 Walsh, Kate, 177 Walt Disney resorts and theme parks, 160-61 Ward, James “Bud,” ’52, 112, 112—13; and Dean H.B. Meek, 112; on discrimination, 112; first African-American graduate, 112; and his own company, 112; motto, 113; speech to Marriott managers, 112—13; work as diversity consultant, 112; work for minority advancement, 113; work with Marriott, 113 Weisz, Linda, 81 Weisz, Stephen P., ’72, 80-81, 172-73 Wells, Joshua J., 93, 133 Wells, Martin (°83, Law), 133-34 Wells, Steven M., 86, 133-34 Wendy’s International, Inc., 85, 97 West, Joseph J., ’74, 202 Westin Kierland Resort and Spa, 155 White, Madeleine E., MPS ’81, 211 Whiteman, Michael, 90, 92, 174 Willan, Anne, 106 Williams, Robin, 95 Williams, Walter, ix Wilson, Bradford G., 84, 107, 162-63 Wilson, Charles Kemmons “Kem,” II], MMH/MBA ’05, 28 Wilson, Gary, 170 Wilson, Kemmons, 28, 28-29, 60; and first Holiday Inn, 29; on Time Magazine cover, 29 Wilson, Nancy, ix, 209 Wilson, Phil (MFA ’69), ix, 207 Windows on the World restaurant (New York City), 88, 90 Winfrey, Oprah, 54 Wirth, Oscar, 54 Wirth, Roberto E., ’75, 54, 54-55, 199, 203; athletic accomplishments, 55; and communication technology, 55; contribution to Gallaudet University, 55; education in U.S., 55; family legacy in hotel business, 54; Hotel Hassler (Rome), 54; influence of America on, 55; overcoming deafness, 54; on personal service, 55; work with Silent Aloha magazine, 55 Wisniewski, Annabella Santos, ’65, 201 Withiam, Glenn R. (’74, A&LS), ix, 146, 209 Wolf, Emile, 108 Wolf, Jiirgen, 198 women and the hospitality industry, 99-113; Myrtle Ericson, 104; Julie Milligan Flik, 104—5; Liv Gussing, 108; Toni Knorr, 106—7; Grace Leo-Andrieu, 108; Suzanne R. Mellen, 109-13; Helen J. Recknagel, 104; Alice Statler, 101-2, 104; Mary R. Wright, 102—3; Council on Special Education Projects, 105; designer hotel movement, 108; enrollment growth, 100, 106; fading sexism, 104; impact of WW II, 100; Hotel television program, 105 Woods, Robert H., MS ’87, PhD ’89, 202 World War II: and Cornell Hotel School alumni, 23; enrollment of Cornell women students, 23; hospitality industry, 23, 41; shortage of hotel rooms, 23 World, The (floating condominium resort), 156 Worldwatch Institute, 42 Wright, Mary R., ’45, CHA, ix, 100, 102, 102—3, 195, 209; acceptance at Cornell Hotel School, 102; consulting work, 103; developing course materials, 103; gender imbalance, 102; hotel-manager work, 103; reasons for success, 102; teaching accounting courses, 102 Wu, Albert I-Ming, ’76, 201 Wynn, Stephen A., 154, 155, 203 7 Yamaguchi, Yuji A., 61, 51, 200, 211 Yamazaki, Goro, ’61, 200 Yen, Leo C., 94, 201 i Zhang, Dian “Teddy,” ’97, 65 a H a mu aa Pi es Hebe, ae Be ae ¢ ae Peel N ™ [continued from front flap] As the industry has evolved so has the educational commitment to it. Up until the 1950s only a handful of institutions offered any formal education in hospitality management. Yet by the end of the century over 600 colleges and universities provided some form of hospitality education. As the first degree-granting school in the United States to serve the industry, the Cornell Hotel School has had a unique advantage—and responsibility—in preparing its graduates. This book relates the story of how the modern hospitality industry evolved from the early 1900s to become the largest and most important industry in the world. It is also the story of how the Cornell Hotel School became the first collegiate hospitality- management program, and how that program has evolved and matured in step with the industry. It is the story of an industry and a school closely linked, one influencing the other, to the benefit of both. Cornell Hotel Society Book Committee (2007) Michael W.N. Chiu, chairman George M. Bantuvanis, vice chairman William V. Eaton, vice chairman Richard H. Kennedy, vice chairman Leif Evensen Tom Felderman Bjorn Hanson John Marcham Christine Natsios Walter Williams Jacket design by Kat Dalton and Phil Wilson Front jacket: photograph by Frank DiMeo, Cornell University Photography Back jacket: Photo at top left courtesy of Las Vegas News Bureau; photo at bottom left courtesy of University of Houston, Hospitality Industry Archives; photo at top right courtesy of Jumeirah S > 4 x tah Gere + Gav patheterass Pst See asecasees risiet We a ’ eect ; ee i he AR Seats Set a ie co crest eae ee ‘! < a 4h t = ees t Te Saget peaets de ¥¢ Y ices ef ae eth ie atee i eeceiht em mechs petete Saaseee eet a ie scoters eS ae 8 é BES a ce i Seiten etek ; oe e ae eas a He a site i er ee ai Be ; oe oe et 3s ait of eestor: i sighs sriseseeete esha ste ee roaae sakshe ‘ setae on) sate este Hse eictrtaey a attic — ee a & a te Beatie nee stg ies Shs seiatets ‘s fe a es ¢ Seana ee x need peesisns ihe ssctieice tient sete es ; toca cnnt seicies Gore Oe ae ehstetas oe Stet eo cttnict sa aes ats oi sent eee tet behcees ici ees eects oh ihs cogs eerste paged caecenenrtte sae sai obi ’ ‘ oe ke eae Seite sr ? i Fs este oS | eens oe aa een steaceatiste cone se tats as chaser ‘ isis i ees - . 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