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Good While it Lasted
“It always started with a dream.”
Years ago, when my kids still wore arm floats to swim, I got roped into a “vacation” at a Great Wolf Lodge. If you’ve never been to one, find a reason to keep it that way. There are now twenty of them in existence, each a supersized indoor waterpark with arcades and crowd-pleaser food, temples of capitalism and pre-diabetes, owned by Blackstone, and expertly marketed to the Monster Energy crowd. Imagine Bass Pro Shops with a municipal pool, but super expensive.
Anthony Bourdain said: “Your body is not a temple, it’s an amusement park. Enjoy the ride”, something Great Wolf Lodge guests take to heart.
As genius as Great Wolf Lodge is, the concept isn’t new. In the 1970s when the once-dominant Holiday Inn franchise began losing its luster, a handful of locations added “Holidomes” - huge glass structures adjoining the hotels to enclose swimming pools, shuffleboard, and tiki bars. They were a huge hit with families, and I wonder if whoever founded Great Wolf Lodge ever stayed in a Holidome.
Holidomes, though they had a good run, eventually met their demise - some say the costs required to maintain the glass hothouses ushered the end.
Sometimes the best real estate businesses are not owners of properties, but businesses that solve problems for owners of properties. CoStar, AirBnB, and First American Title might come to mind, but a few years ago I met the guy behind what has to be the best non-real estate real estate business ever created.
While on an extended business trip, staying in a janky hotel, he had a weird dream about what it must cost to wash so many towels. I don’t wash my towels every day at home, he thought, although they could probably could’ve used a bit more wash frequency than they got in his bachelor household.
Bored between sales calls, he did some figuring and came up with some rough math on laundry costs and checked it with the hotel manager who told him he’d underestimated the cost. By a lot.
On a whim, he went to a nearby print shop (raise your hand if you remember Kinko’s) and had 100 laminated cards printed that said something like “Save the planet, do your part and hang your towels if you don’t require them washed during your stay”.
His idea was altruistic - wouldn’t it be great to cut down on water usage a bit - but with a healthy dose of greed. He approached his hotel manager with the cards and explained how they could be put in each bathroom and they just might cut down on the laundry bill.
“What do you want for them?” the manager asked.
Surprised at the response, he fumbled a bit and then blurted “$1 a piece”.
Motivated by the easy money, he went back to the print shop and with more conviction went to another hotel and made another sale. And then he did it again. And again.
His close rate was near 100%. And when word got out that the cards actually worked his sales became a juggernaut. Soon, by his estimation, 40% of the hotel rooms in the country had his cards in their bathrooms.
The best part - the cards, on average, due to loss or damage, got replaced every year. It became a beautiful business - re-ocurring revenue, ridiculously high margins (he ended up investing in a printer and laminating machine), no inventory to speak of, and a single employee.
Finding himself bored with the glorious success of his annual one-dollar-per-millions-of-hotel-rooms caper, he bought a boat and took his girlfriend on an around-the-world adventure. Before leaving, he abdicated all decision-making, telling his one employee to run it however he saw fit. Don’t call me, he said, I’ll be back in one year.
Upon his return, still rich but with a better tan, he learned the business had grown by 30%.
Like Holidomes, though, nothing in hospitality lasts forever. Whereas for years his product was the cheap and easy solution for reducing laundry costs, hotels eventually decided the cards were a branding opportunity and began producing the cards themselves.
It’s hard to hide the obvious forever - sooner or later people wise up - but that doesn’t mean you can’t have a good run until then.
Maybe the real reason for the Holidomes’ demise wasn’t costly maintenance, but customers coming to the same realization I had while looking at my Great Wolf Lodge poolmate dads: you couldn’t pay me enough to get in a bathtub with any of those guys, and what is this pool if not an oversized bathtub?
If you’re reading this, you’re probably interested in real estate.
And you know how - despite a developer’s best efforts - sometimes the vibes are off and a place feels sterile and fake? While other places just feel right and have a terrific energy that makes you want to spend time there?
If you want to know how wonderful places are created, and how they can increase surrounding real estate values, sign up for the Tacos & Patios Workshop - a free online gathering where we unpack the how and why behind unique mixed-use developments.