Sunday, March 27, 2011
Some memorable flights
Dick flew many thousands of miles with our pilot Ray and pretty well covered the mainland USA. I went on a few of the business trips with them, but we also took advantage of having a seven seater plane (six up front and one on the potty!!), and took some employees on fun trips. I mentioned the one to Montreal in an earlier blog, the one where we had our main supervisor and his wife, our construction supervisor and his wife, together with Ray our pilot. This was the one that we were not allowed to fly around a huge thunderstorm, but made to go through it and we all truly believe that it was only because of Ray's superb calm and handling the plane that we made it. The drops, bangs, shakes were something none of us wanted to experience again. How many of you have seen glasses full of liquid float up into the air? Mine was a bloody Mary that turned upside down and went straight into my purse! Another highlight of this trip - although this was a good one - was flying over Niagara Falls. Talking about flying over - Dick wasn't content with just going over this time - he had to go INTO!. This was a trip where we took our office manager Dee with us and we did fly over the White Sands in New Mexico, the big Crater in Arizona and later over the Salt Lake after an overnight stay in Las Vegas. But Dick wanted to give Dee a special view of the Grand Canyon and actually flew the plane below the rim for quite a distance. This isn't allowed any more. That was quite a trip for Dee, who had never been any further from home (Southern Illinois) than St. Louis Missouri - some 60 miles away. It was summer time when we took this trip and I don't think Dee ever believed me that the big thermometer on the roof of the airport building really did say it was 104 degrees when we landed there around 11pm. Another fun trip - this time two other supervisors with their wives - was to New Orleans. Our secretary June wasn't very impressed with the Eggs Benedict with two olives in the middle of the lightly poached eggs that looked back at her at breakfast - this was after a typical New Orleans night the evening before. Another young girl in our office came with us on a West Coast trip. We also had our engineer/draftsman with us on this one as well as brother Bill. Donna had never really traveled anywhere before and especially delighted in Dick going all the way down the California coast just a short distance off shore at a low elevation. One of the scariest trip I remember was one that Dick, Ray and I took to Washington (State) where we were going to meet Bill to look at a site in Spokane. This was before we had the pressurized plane and it was winter. We ran into bad weather after reflueling in Montana and there was a chance that icing would start to form on our wings. We were in solid clouds and were losing contact with the traffic controllers. They were having to relay messages to us from commercial flights that were flying above us - AND above the clouds and bad weather. The combination of flying 'blind' through the mountains at an elevation which was lower than some of the peaks, relying totally on messages relayed to us, and all the time using the flashlight to check the wings to see if ice was forming - did not lead to a relaxed trip. We arrived safe - and I remember as we were going from the airport to the motel that Bill had reserved, he turned to me and asked if I wanted to go to Church the next morning (Sunday) - I told him it wasn't necessary - I had been praying for the last four hours!! On the commercial traveling, there are a couple that stand out in my mind. One was Dick and I to New York for the annual Motel/Hotel Days Exposition, where Dick was to be a speaker along with the President of Days Inn and Scottish Inns. It was a fascinating and fun-filled three days and we are able to do a little sight-seeing on our own. I think Dick's highlight was going to Madison Square Gardens and seeing the New York team play the San Antonio Spurs. We were invited to a special banquet put on by the New York Hotel/Restaurant Association and were seated at a table with four young people from the local Culinary School and three retired Master Chefs. The entertainment was Lionel Hampton and his band and I had a great time dancing with the three Chefs! The whole meal was impressive. The following year we let Bill and Frances, along with Leroy and Betty go to the Expedition instead of us. We have a ton of stories about some of these flights, but I hope you've enjoyed what I have told.
Sunday, March 13, 2011
GUESS WHAT? (by grandpa)
I am going to go back in time again. Can you believe that?
I have been writing about our growth and success, but how did we do it? I learned two valuable basics at Motel 6: #1 Location, location, location and #2 the OPM system (other people's money).
Location was first because without a good location you would not be successful in the long term, because you would not have a good profit with a poor location. But why OPM? Because you could never have enough money on your own. You had to have some as it always took a little bit here and a little bit there - Bill and Paul with Motel 6 started with $70,000 borrowed by Bill to get started. But let's say you wanted to build and operate a 100 unit motel. The site would cost you $120,000, then it would cost another $450,000 to have it built, $80,000 in furniture for a total cost of $650,000. The lenders would not go over 75% loans so you had to come up with the $165,000 shortage in cash. If your goal was 100 motels you would need $16,500,000. The answer came in two parts. First you did your own building at cost (no profit to you), which would save about $50,000 in the general contractor profit, then you would buy your furniture with long term contracts with suppliers and get the discounts involved there. This would save an additional 30% or approx. $25,000 . Savings to date $75,000.
The second part was the big one. You would approach the landowner not on a purchase, but on a long term lease - usually 20 years, with six 5-year renewal options. The lease would be based on 10% of the land value (with cost of living adjustments every five years). The hardest part would be to persuade the landowner to subordinate his land to the first Deed of Trust - i.e. the value of the land would be taken into account by the lender and would back up the loan. We in turn would guarantee that we would not exceed 70% of the appraised value of the land and finished motel in the amount we borrowed. The net result was that we ended up with a motel with little or no money invested in it, which allowed growth without cash investments - only time and effort. That's the O.P.M. system.
At Motel 6 I wasn't involved in site work or building, but took over responsibilities with furnishing and operating the motels. At Regal 8 Inns, the duties and responsibilities rested squarely on us. Margaret and I had site work, lender preparation, feasibility studies and presentations for the lenders etc. I also did all the negotiations for build-to-suit and lease-backs, plus long term leases on acceptable existing properties, plus out-right purchases of existing properties (with limited downpayments of course!). Added to that was the franchised motels to others. But no matter what means we acquired the motel, the goal was always to doing it with the OPM system.
The big key to carrying this off was to always show a successful operation - show that we were making good profits from every existing motel, so the bottom line was the operations of the motel and of course location, location, location.
I'll try to lighten up on the next blog, but thought some might be interested in the logistics.
I have been writing about our growth and success, but how did we do it? I learned two valuable basics at Motel 6: #1 Location, location, location and #2 the OPM system (other people's money).
Location was first because without a good location you would not be successful in the long term, because you would not have a good profit with a poor location. But why OPM? Because you could never have enough money on your own. You had to have some as it always took a little bit here and a little bit there - Bill and Paul with Motel 6 started with $70,000 borrowed by Bill to get started. But let's say you wanted to build and operate a 100 unit motel. The site would cost you $120,000, then it would cost another $450,000 to have it built, $80,000 in furniture for a total cost of $650,000. The lenders would not go over 75% loans so you had to come up with the $165,000 shortage in cash. If your goal was 100 motels you would need $16,500,000. The answer came in two parts. First you did your own building at cost (no profit to you), which would save about $50,000 in the general contractor profit, then you would buy your furniture with long term contracts with suppliers and get the discounts involved there. This would save an additional 30% or approx. $25,000 . Savings to date $75,000.
The second part was the big one. You would approach the landowner not on a purchase, but on a long term lease - usually 20 years, with six 5-year renewal options. The lease would be based on 10% of the land value (with cost of living adjustments every five years). The hardest part would be to persuade the landowner to subordinate his land to the first Deed of Trust - i.e. the value of the land would be taken into account by the lender and would back up the loan. We in turn would guarantee that we would not exceed 70% of the appraised value of the land and finished motel in the amount we borrowed. The net result was that we ended up with a motel with little or no money invested in it, which allowed growth without cash investments - only time and effort. That's the O.P.M. system.
At Motel 6 I wasn't involved in site work or building, but took over responsibilities with furnishing and operating the motels. At Regal 8 Inns, the duties and responsibilities rested squarely on us. Margaret and I had site work, lender preparation, feasibility studies and presentations for the lenders etc. I also did all the negotiations for build-to-suit and lease-backs, plus long term leases on acceptable existing properties, plus out-right purchases of existing properties (with limited downpayments of course!). Added to that was the franchised motels to others. But no matter what means we acquired the motel, the goal was always to doing it with the OPM system.
The big key to carrying this off was to always show a successful operation - show that we were making good profits from every existing motel, so the bottom line was the operations of the motel and of course location, location, location.
I'll try to lighten up on the next blog, but thought some might be interested in the logistics.
Tuesday, March 1, 2011
Random memories from those early 70's
I don't know if it is age and time that blurs the memory of the early 70's years, or whether it was simply a matter than our life was really one long blur. We literally worked from 9 to 9 on a regular day and more sometimes. Time away from the office (for me) and being on the road (for Dick) was mostly for company affairs, an occasional trip (usually combined with business), and social events with the partners.
We were introduced to the 'high life' by our partners, and by the partners in the CW group. We learned what it was like to eat in the best of restaurants, go to the races, have social events in their homes and go to night spots. Money flowed easily with them and the standard procedure was to have every couple throw $100 into the hat (and remember this was the early 70's) and one person would be in charge of paying for everything. This was usually Al from the CW group. If he ran out of money, we all chipped in again.
We had some fun company events - an awards dinner and dance each year, a Christmas Party at the main office, and a company picnic in the summer. When we were in the big new office and our staff had grown, we would often bring in a large pot of stew, or home made soup into the office, with french bread and everyone would help themselves. Dick also got quite a reputation for his spaghetti and we would announce that he was serving in the local park that evening and the employees would show up with their families.
We tried to be good bosses, and were quite flexible with work hours, only asking that they got their job done to the best of their ability. We put a washer and dryer in the main office, so that the working moms and wives could bring in their washing and do it there.
Dick mentioned that I made a trip to Oklahoma City to try and secure the financing on our proposed Oklahoma motel. That actually had some amusing angles to it. To begin with, I was treated royally by the Bank - eating lunch in the private lounge for VIPs only, but I was really out of my league on some of the terminology of getting loans. This had always been done by Don Geary and he himself was not able to do this one and wasn't too happy that Dick had sent me instead of doing it himself. Things were going well until the banker brought up the requirement of a corporate guarantee on the loan (meaning that the corporation would back up the loan as well as having a lien on the property itself). I understood that what he was wanting was a personal guarantee from the owners themselves and I knew that they wouldn't go for this, so I kept arguing the fact and basically thanked the man for his time, and started to leave. He suddenly gave in and gave us the loan without the corporate guarantee, which was the first loan we had ever been able to get like this. Needless to say, Don Geary was impressed!!! If he had only known!.
Having Bill, Frances and the boys come back there was great for me. It was the first time I had family around me for many a year and I learned to cherish that part of it.
The memories actually flood in, but most of them would not hold the reader's interest as they would mine - and to be honest some are quite personal in nature and therefor not able to be told. By that I mean mostly about some of the employees. We tried to be as much help to them as possible, and sometimes got involved more than we would have liked. We ended up playing marriage counselors, financier for some family issues, detective for a partner in his familyproblem, and an advocate for others. Our 'family' was a major part of our life. We baled people out, and put some in jail.
Only one wife of our partners are alive now, and many of our employees have left us. Each Christmas seems to bring one card less. A thousand faces can be recalled, and a lot of names, although we struggle with most of them now. But they are all part of the memories of Dick's and my early life together.
We were introduced to the 'high life' by our partners, and by the partners in the CW group. We learned what it was like to eat in the best of restaurants, go to the races, have social events in their homes and go to night spots. Money flowed easily with them and the standard procedure was to have every couple throw $100 into the hat (and remember this was the early 70's) and one person would be in charge of paying for everything. This was usually Al from the CW group. If he ran out of money, we all chipped in again.
We had some fun company events - an awards dinner and dance each year, a Christmas Party at the main office, and a company picnic in the summer. When we were in the big new office and our staff had grown, we would often bring in a large pot of stew, or home made soup into the office, with french bread and everyone would help themselves. Dick also got quite a reputation for his spaghetti and we would announce that he was serving in the local park that evening and the employees would show up with their families.
We tried to be good bosses, and were quite flexible with work hours, only asking that they got their job done to the best of their ability. We put a washer and dryer in the main office, so that the working moms and wives could bring in their washing and do it there.
Dick mentioned that I made a trip to Oklahoma City to try and secure the financing on our proposed Oklahoma motel. That actually had some amusing angles to it. To begin with, I was treated royally by the Bank - eating lunch in the private lounge for VIPs only, but I was really out of my league on some of the terminology of getting loans. This had always been done by Don Geary and he himself was not able to do this one and wasn't too happy that Dick had sent me instead of doing it himself. Things were going well until the banker brought up the requirement of a corporate guarantee on the loan (meaning that the corporation would back up the loan as well as having a lien on the property itself). I understood that what he was wanting was a personal guarantee from the owners themselves and I knew that they wouldn't go for this, so I kept arguing the fact and basically thanked the man for his time, and started to leave. He suddenly gave in and gave us the loan without the corporate guarantee, which was the first loan we had ever been able to get like this. Needless to say, Don Geary was impressed!!! If he had only known!.
Having Bill, Frances and the boys come back there was great for me. It was the first time I had family around me for many a year and I learned to cherish that part of it.
The memories actually flood in, but most of them would not hold the reader's interest as they would mine - and to be honest some are quite personal in nature and therefor not able to be told. By that I mean mostly about some of the employees. We tried to be as much help to them as possible, and sometimes got involved more than we would have liked. We ended up playing marriage counselors, financier for some family issues, detective for a partner in his familyproblem, and an advocate for others. Our 'family' was a major part of our life. We baled people out, and put some in jail.
Only one wife of our partners are alive now, and many of our employees have left us. Each Christmas seems to bring one card less. A thousand faces can be recalled, and a lot of names, although we struggle with most of them now. But they are all part of the memories of Dick's and my early life together.
Subscribe to:
Posts (Atom)
