Innovation Starts Here: Removing Barriers in the Hospitality Industry - Adam Zembruski

Josiah: I recently had a great conversation with Visit Napa Valley's CEO, Linsey Gallagher, where we talked about the opportunities for hospitality companies to collaborate more effectively, attract more visitors, and drive business. Today, I'm excited to bring back Adam Zembruski, whom we've been learning from over the past couple of days, and shared a really thoughtful response to that conversation with Linsey, diving deeper into the systemic barriers that hold hoteliers back from true collaboration. I've linked to Adam's post in the show notes, but I wanted to bring him on the show today to expand on his experiences and the practical steps needed to foster a more creative and collaborative culture in hotels. It's not just a good idea here that we're talking about. Collaboration is crucial for our industry's future, but we need to talk about what it will take actually to make it happen. So, without further ado, here's my conversation with Adam.

Josiah: In your post, you mentioned that collaboration is often an afterthought for hotel owners. What are the reasons for this and how can we change that mindset that would allow us to collaborate more?

Adam: The FDD, the Franchise Disclosure Document, is where it starts. So, if you and I went to buy a hotel and we wanted to make it a Hilton or Marriott, and I mentioned those two because I'm a current and former franchisee of them, and I hope that they know how much I love their companies. And it's sometimes over 120 pages long of the things that they can do and the things that you can do and the things you can't do and the things that you, and so that starts the what can I do and what can't I do and the mindset of usually, okay, you think about the amount of risk that somebody comes in and when they buy a hotel and they go out and get the loan and the debt and everything. Of course, it's human nature to be like, I don't want to test the waters on something that might be risky, and it might be horrible, or it might be not so good, or maybe it's going to be great. We don't know. I think that when we say collaboration, I think about co-marketing and co-branding. I think about personal branding. Here's an example that I get a lot of negativity around: we have some front desk agents throughout the country that already have their own brand, right? They're on TikTok, saying, hey, I'm doing this, and maybe they're doing some makeup stuff, or maybe they're starting to knit something or make new coasters, and they all have their new brand. And they could potentially be selling to the hospitality industry. And so the idea of one of these people, I think, they have customers. And so I saw this happening. A few years ago at a hotel that I was kind of working at or helping out and the front desk It was a fully independent hotel and the front desk person was interviewing a guest like, you know on a whatever with the FaceTime or something they were recording the interview and they're saying how much do you like the hotel? How much do you do this and the supervisor or the boss or somebody came over there? Like, hey, what are you doing? Like, you can't do that. It's going to get in trouble. Like, what if they posted? What if, what if, what if, what if, what if? All this stuff. So that's why a lot of these things don't happen. Now, granted, sure, there are a lot of what-ifs, and I completely understand the risk of something like that. But being told no, and then being told no again, we should be careful about that. We should not just say, you can't do that, and then walk away. We should have that conversation and be like, listen, if you want to do something like that, maybe try this instead. Because that is the barrier to true collaboration. Because especially in, I'll call it small town America, but I come from a very small town, born in Rhode Island, a small town called Voluntown, Connecticut. And there's something about growing up in a small town that keeps me connected to the mentality of, say, operating, it could be a gigantic hotel. It could be a luxury hotel in a large market. But the idea of like, hey, what is in our pantry, for example? What are we selling? Is it all Lay's potato chips? I think I use that as an example. Is it all the brand national and international brand names? At what point did we say, Oh, we can't just find a local potato chip company? Like there are probably four just within an hour's drive of me. And what's holding us back from saying, Hey, do you want to start selling your chips in here? Again, it's a lot of paperwork. It's a lot of time. When somebody starts doing something like that, a lot of times, I just base my decision on what I've been learning. they're being told, no, you really shouldn't do that. Or no, you can't do that. Leave that up to the brand or leave that up to, you know, your, uh, chief of development for the company or something like that. So it's not depressing, but it's, it's sad because we as an industry, I don't care if it's a housekeeper, bartender, front desk person, massively creative people, excellent at problem-solving and I have not had any issues with solving a problem, call it, or getting good ideas from the people that are in the field, doing it every day. But I have a lot of problems when I say, why don't you sell chips, Mr. Management Company owner, right? And I've been that. I know that. I've been the one to say no. I have, and I've realized that. I was like, I'm not doing that anymore. Continue the conversation. So the example that I shared on LinkedIn, Josiah, back to your point, is, and I'll give them a shout-out if I can, the town of Boone, North Carolina. Every chance I get, I share my experience there because it is a very special place. It's only a couple hours from me. I was very lucky to have been asked to help an owner or a potential owner buy a luxury boutique hotel called the Horton Hotel in downtown Boone, North Carolina. And I was in that role of like in between management. And there are a lot of names that I can mention, but I'll mention Jason Boehm with Aileron Management. He's the management company owner and CEO. The people at the property level. Andrea Morton and John Cardonia actually came on board with Hospiamo and me to help with this whole process. It was a combination of asset management and rebranding or refreshing the brand, and we did a lot of cool stuff and worked with the management company. I say Boone is special because of the collaboration that you said. I have never experienced the kind of collaboration in a town or even a city then as much as what I experienced in Boone. What made that possible? I think it was the people that were at the helm of three organizations. There was the Chamber of Commerce, his name's David Jackson, the Tourism Authority, and then the Downtown Economic Development Authority. Those three, and then the small businesses in the area. I mean, everybody, it's a small place, but there are 20,000 students at the Appalachian State University. And I was told it's Appalachian, not Appalachian. I got yelled at. I'm glad I wasn't the only one. Yeah. They say, throw an apple at you. That's what Denise Loven and Fulton Loven told me. They were the ones that actually built or converted the historical hotel to the Horton. And so, there is this collaborative spirit that already exists. Okay. I started to be like, wow, we can do this, we can do that, but I was wrong in almost everything that I assumed could be done there because it was the conditions. for that were already laid for probably decades, right? Because then it made everything easier for me and for my team and everybody that worked there. So we had six or seven different items that we were selling. They didn't even have a gift shop. So we, I look back at it now, and it wasn't very long before we started selling 6, 7, 8, and 10 local items out of this little closet that existed in this little hotel. And it was a wonderful experience. And so you just think about all those companies lifting up together and getting their own branding. Then, the number of Instagram followers went from 4,000 to 11,000. And it's like, I can't take credit for any of that, you know? And Andrea Morton had been working there for several years. And I will answer this, OK? I will answer with a very specific thing. So Denise Loven and Fulton Loven were the ones that converted the old furniture store or so over to the Horton. And Andrea Morton was the general manager. Before they even opened, they started asking for feedback from the community for the types of colors, the types of design. And then they started to bring people in to say, what do you think about this? What do you think about that? That was key. I didn't find that out until much later, but that was absolutely key to getting the community involved into these major decisions from these people that were actually taking a significant risk. So what did they do? They did it anyway. And so that goes back to your original question of why, how do you get connected? How do you stay connected? You just do it. You just do it anyway. If you see something that makes it, Make sense to kind of explode that creativity or collaboration. You have to do something. You can't go to one of those conferences and talk about how You say you're going to do it, right?

Josiah: Thanks for sharing that story, Adam, because I think it's really helpful to you know. Last Friday, we talked kind of big ideas and Napa Valley. Here's what it looks like in this part of the world, you know on a you know a dmo level, you know you as an owner, an operator, an advisor, you kind of saw that take place there. I wonder, the kind of follow-up to that that I want to ask you about is a challenge I feel on this show is I'm trying to inspire people on what's possible, try to show them my ideas, but I fully recognize it's not just about ideas. There are systemic things going on. So it's not enough to just say, you know, there's this new activity or this new partnership you can do. You spoke earlier to all of the stakeholders in the hospitality industry, from owners and investors to management companies to brands. I wonder if you could briefly speak to people that are listening to our conversation that may work in each of these roles about how they can move their organizations forward. to become more collaborative? Because a lot of this is systemic. It's not just enough to say, hey, you should partner with local businesses. So maybe kind of starting out with the owners, investors, what would be your message to them on how they might evolve to become more collaborative and reap the benefits of doing so?

Adam: Learn about ESOPs. Learn about ESOP, Employee Stock Ownership Plans, okay? Private companies in the United States, I think there's 5,600 employee-owned companies. Publix is employee-owned, okay? So my son works there, okay? And what employee-owned means is that you are actually part, every single employee works there. You get vested. Every hour you work, you increase your vesting. And the hospitality and hotel industry is at the bottom of the barrel as it relates to the, call it the share of employee ownership of those 5,600 private companies. It's at the bottom. Upwards at the top is construction. So if you think about that, this started to happen, construction companies started to see what we saw in our scene in the high turnover, You know, these people don't want to work kind of attitude, which I think is, I won't say the word, but it's not true. Okay. These young people don't listen. You know, these people don't want to have a job. It's absolutely ridiculous for us to say that about an entire generation, which I don't find to be true at all. And I've been doing that, like I said, I've been speaking to them, hundreds of them, and it's not true. So, the construction industry, they are, I think they're 20 or 25% of all employee-owned companies in the United States are construction-related. And I know one of them; it's a phenomenal company out of Atlanta and Charlotte also called Chote. So if you want to look them up, wonderful company. They went employee-owned well before COVID. And so I know that every company struggled during COVID. We had supply issues. We had labor issues. You can always ask them. They did not struggle as much. Had to do with the fact that their employees are owners. Okay, TPI Hospitality. I encourage you, Josiah, if you're not aware of them, they're out of Minnesota. They are a fascinating company. I don't know any of them, but I follow them, and I know that they are employee-owned, TPI. There's one here in North Carolina that have two absolutely beautiful hotels. One is called the Proximity Hotel in Greensboro, North Carolina. They were the first platinum-lead hotel, and they're fully independent. That company, a big restaurant group in North Carolina, is also employee owned. And so when a guest walks up and says, hey, how's your day going or whatever, they're talking to an owner. So I've done a lot of research on all that. So I would encourage owners and investors to learn about it. And now, here's the big reason. If they want to be selfish, so our generations that are the majority owners of management companies and ownership groups, but mainly management companies with a lot of employees, They're getting up there in age, and it is very difficult to exit a hotel management company for a number of reasons. It's a contract business, right, so it's very legal. There's a lot of red tape and, you know, time involved. But converting to an ESOP is actually an exit strategy. And it's a lot easier said than done, but you find a bank that wants to buy the company and the bank buys it and sets up a separate entity where you put all of the employees in that entity and they now own the management company. Okay. That's what converting to an ESOP is. And so I've made a lot of posts about it. There are several parts of the research on my hospital website on the blogs. I did a podcast episode about ESOPs. I would say that would be the number one thing. If you don't know about that, learn about it. And if you're one of those people that say, Oh, I know all about that. You can't do this or that. I would say, well, then you need to get out of the hotel business because it is an avenue. And that attitude of saying, Oh, I already know about that. Those are the people that are telling all of our creative collaborative, collaborative people. No, you shouldn't do that. And so that's one thing. And the other thing Josiah is the advice to the people in the field, right? The operators. Anywhere from a housekeeper to a front desk agent to a bartender, this has almost become a cliche, but the, the personal branding. I really do believe that the future of our industry is not going to be about companies. It's going to be about a network. It's going to be about your personal network of people that you can call and help you. They will be your reference. I am bothered by the fact that hiring managers and recruiters are still asking for, hey, can you send me your references? And if I send them people who have reported to me in the past or my peers, they say, oh, I need your supervisor. Okay, I'll give you that, too, but you'd better call both of them, right? Because you gotta get a full idea about who those people are. And so I think that the network is the future of it. People are already saying, and I believe this is to be true, They're complaining the fact that this millennial generation or the Z. Gen Z, yeah. They said the same thing about my generation too, but they're saying that they're not loyal. And that's a very archaic way of, I'd say, it's a reason that there isn't any kind of continuation of conversation around that. Okay. So if you continue that conversation, it's true. They're not loyal to you, the company. There are many reasons for that, but mostly because you walk in the target and you have 15 different kinds of toothpaste. Okay. They have a lot more options than I had. A lot more options than they had when these people are saying they're not loyal, but who are they loyal to each other? The general managers of the world stay and are retained. It's not because there are amazing hotel management companies out there, and I can name you a whole bunch of them. I celebrate them all the time on LinkedIn, but they're not loyal to the company as much as they used to be. They're loyal to each other. So, if a general manager. gets an offer to go across the street to manage a new hotel, and they say, Hey, we'll give you a 20% bump in salary. They're not thinking about what it's going to be like to work for a different company. They're thinking about leaving their team and what they're going to think. That is powerful. That is what we should be thinking about over the next 15 or 20 years.