In an interview with hotel investor and disruptor Leland Pillsbury published on August 13, the industry sage talked about finding opportunity amid the chaos. He is targeting technology with next-gen solutions for two significant ongoing challenges: labor costs and productivity.
He also is launching a fund to invest in hotel real estate. Although the ceiling hasn’t been set and there is no stated timeline, it’s likely to be in the US$200 million range.
Contributed by Mary Scoviak
Here, Pillsbury shares with HOTELS his industry history, investment philosophies and some of his proudest moments.
Born: February 12, 1947, in Rochester, New York
Is he part of “that” Pillsbury family — as in the baking products giant: No. As he typically responds, “All the fame, but none of the dough.”
Fell in love with the hotel industry: Age 5. His family stopped at a motor inn during a driving vacation from their upstate New York home to Florida. While his road-weary parents checked in, the enterprising staff took their young guest on a tour of the hotel that ended in the kitchen with Pillsbury, a couple of spoons and 5-gallon tubs of chocolate and vanilla ice cream. The “fun” of the experience, the enthusiasm of the staff, and, obviously, access to ice cream, stuck with him. By the time he was in high school, he knew he wanted to go to the hotel school.
First hotel job: Age 16, as a soda jerk at a Howard Johnson’s.
Education: Graduated from the School of Hotel Administration at the Cornell SC Johnson College of Business in 1969. “My father was a construction worker. I wouldn’t have been able to afford to attend Cornell without a scholarship.” Received his executive MBA from J.L. Kellogg Graduate School of Management at Northwestern University in 1982.
Fell in love: During his freshman year of college, he met Mary Milne working as a cook at a Rochester country club. They married in 1969. He counts his father-in-law, George Milne, among his mentors along with Bill Marriott Jr. and Frederic Malek (former president of Marriott Hotels and Pillsbury’s boss for six years).
First general manager job: Age 24, at the Marriott hotel in Bloomington, Minnesota.
Career path: 19 years with Marriott International; Thayer Lodging Group, co-founded with Malek in 1991; founder and partner in TIG Global Internet Marketing Co.; EMC Venues, representing conference centers and resorts; HQuant Lodging Real Estate Index Group; chairman of the board, TenX Healthcare; managing director, Thayer Ventures; launched more than 20 companies.
What he’d like to do over: Revenue management systems. Copying the system Bob Crandall developed at American Airlines for the hotel industry was only “half-correct” — yes, it makes sense to raise prices if demand increases, but not drop them if it decreases. Several major research studies have proven this mistake, but “the conceptual and analytical error my team and I made in 1983 continues to plague our industry almost 40 years later,” Pillsbury said.
Proudest pay-it-forward moment: In 2006, when the Leland C. and Mary M. Pillsbury Institute for Hospitality Entrepreneurship (PIHE) was founded at the School of Hotel Administration at Cornell University. PIHE sponsors the Annual Business Plan competition, offers over a dozen courses in entrepreneurship to more than 500 students each year, hosts entrepreneurs in residence to work with students, sponsors, and offers internships and numerous other programs.
What he looks for before deciding to invest: “To convince anyone, I first have to convince myself.” Entrepreneurs who want to help him to that need to show him research that is analytically rigorous and conceptually complete. Do the homework, and answer these questions:
1. What is the total addressable market? What is the scale?
2. How big is the problem you’re solving? Are you going to make a meaningful difference to customer you’re selling to?
3. How many units have you sold? Are you satisfying or not delivering for your customers?
4. How good are you as a jockey?
The payback: A lot of mentoring. Pillsbury brings his 51 years of experience to helping entrepreneurs expand their vision. “I had dozens of great mentors,” he said. “I know the impact mentors can have. I want to do that for these young business people.”
Early bird or night owl: Definitely early bird — up at 5:30 a.m, working by 5:45 a.m.
Wave rider or high flyer: Both. He and his wife escape to the ocean near their Fort Lauderdale, Florida, home on their yacht, Double Eagle, or their single center console boat, Intrepid. Both are licensed jet pilots.