Risk, Reward, and Relationships: David Tart’s Proven Playbook for Hospitality Success

Josiah: Raised in a military family, David Tart entered hospitality by developing a Hampton Inn on his family's farmland. Today, he runs Development for Raines, an integrated hospitality company with both branded and independent hotels. In this conversation, we get into what he's learned about relationship building and how crucial it is in navigating the hospitality industry, especially in development where risk is high and trust becomes vital. That was one of the biggest takeaways for me from this conversation. There's so much volatility in hospitality, especially now, and relationships built on trust are essential for success. So without further ado, let's get into my conversation with David. 

[intro]

David: I was one of those students in college that didn't know what I was going to do. I did migrate into the sciences. I have a biology degree and I had thoughts of med school and then sort of fell into the process of doing everything that you should do, all with this question in my mind if that was the career I wanted to pursue. And so as I was taking some time after I graduated, my family grew up in a small town in North Carolina. I moved around a lot. My dad was in the military, but this small town in North Carolina was kind of always home. We ended up moving back to the Raleigh area when I was in high school. And this town is just outside of Raleigh on the eastern side of Raleigh off of I-95. As it turns out, my grandfather and my great-grandfather had a lot of farmland before I-95 had got built through our property. And so as things would progress, the farmland turned more into commercial development opportunities. Some things were going good and some things were going not so good.

And so my dad and I decided that we needed to try to help. And again, my father was a pilot and we didn't know anything about commercial real estate, but we like to roll our sleeves up, get our hands dirty and try to fix things. And so we were in the process of trying to fix some things and deals and development around the interstate. And lo and behold, there was about a three acre parcel. And I had a close friend of mine in Charleston at the time. I had moved to Charleston who was in the hospitality business. And it was like so many phone calls, "Hey, I got this piece of dirt and I'm sure this is a great hotel site." I get those calls today, right? "Hey David, I got this great hotel site."

Well, as it turns out, it was a pretty good traditional prototypical interstate hotel site. And so we dove in with both feet. I tried to surround myself with people in the industry that knew what they were doing because I had no idea. But I thought this would be good. I get pretty excited about taking something from start to finish. And so that was the instance. I remember I had just enough money in my bank account to buy a Hampton Inn franchise. I bought the franchise and then just really buried myself in the development of a hotel and then transforming it. And again, I had no operational experience, nothing like that. So of course hired a management company and that was just prior to 2008. The timing. Yeah. Very interesting timing as we all know in our industry, right?

Josiah: David, I wonder if we could spend just a moment though, unpacking how you learned about this new area, right? Because a lot of listeners are either new to hospitality or they're new to the world of development, right? So you have this piece of dirt, you want to build a hotel. What did you find most useful in learning how that whole process works?

David: I think probably when you are attacking something that is in my world at the time seemed very risky. A lot of what I was doing was what all developers do. When you're trying to put a project together, you're meeting with the municipalities, I'm meeting with the mayor of Dunn. We're discussing why a hotel can be a real value add to a community. Now I have a hundred stories about that in different projects we've worked on, but at the time it was 120 room Hampton Inn off the interstate in a town with a population that was no more than 10,000 people. But seeing the impact that that had on a community, the drivers to other businesses in the community, the excitement around it, I mean, that's what got me hooked.

Josiah: Did you know that before you started or was it something that became more clear to you as time went on?

David: No, absolutely. I didn't, again, I'm the first to admit, I had no idea what I was doing. I was excited again about developing something and starting it and then finishing it. But the real value add that you see, it's a multiplier, right? It's not just building a proforma to say, I want this hotel to be profitable and make money and then maybe sell it one day or something like that. It was the jobs that you were creating. Again, the impact to other businesses in the community. Because you see it in that role, we had other commercial properties around. Like I said, it used to just be old farmland. And so we were affecting everybody around us in a positive way. And then we were creating jobs. And again, I think the hospitality industry in general is infectious. And so I was then attending some Hilton meetings and learning more on the operation side. And at that point, I'm like, wow, this is just a fun business to be in. I'm enjoying the people I'm interacting with and I'm learning every step. And I still am. I mean, I've been doing it over 20 years now and there's not a project that I do that I don't learn something new.

Josiah: Well, it sounds like a lot of that learning is coming from relationships, too. I think before you've talked about learning from people like David Swinter and Dwayne Parrish, and it feels like a lot of how you learn new things, learn about where things are going, is through some of these relationships.

David: Oh, absolutely. I mean, David Swinter was a very close friend of mine that I met while I was in college. He happened to be an alumni from the university that I went to, and he was partners with Dwayne at the time. And I joke about, there's no way I would have gotten a Hampton Inn franchise without those guys helping me out. And now Dwayne is still a close friend. Dwayne works for the state. He's the head of South Carolina's Parks and Recreation and Tourism. And so that relationship that started 20, 25 years ago is carried forward still and everything. And I know we'll end up talking about what we're doing in Columbia right now. And one of the first people I called when we were embarking on the lantern in Columbia was Dwayne and I went and sat down and I said, "Hey man, look at what we're doing here." It was really exciting. And it's that that gives me goosebumps of how it all started to still carry and having those relationships today that have lasted all of this time.

Josiah: Whether it's with those two guys or with Grey Raines, it feels again, relationships are central to your life and work. I wonder if you could speak a little bit to what you found on building kind of the strength and depth in these sort of relationships. I imagine you enjoy spending time with them, but are there other factors maybe our listeners can learn from in terms of what you found useful or productive and enjoyable in building these kind of long-term relationships over time?

David: If I'm speaking to anybody in our industry or folks that want to get into our industry, probably I think the biggest lesson I learned and whether it was my early relationships of folks that I met in the industry, or I'll point to my dad more than anybody, was, I remember when we were going to do the Hampton Inn in Dunn, and then going forward, it was the ability to get comfortable with taking that kind of risk, because they're big projects, they're complex projects. I've developed a couple office buildings now. Well, one in particular that I did it. And I remember thinking to myself after the fact that was really easy now, at least stuff, of course. And I thought that compared to what I've been doing forever in the hospitality industries, what we do is complicated. You have to have a certain degree of risk tolerance, especially too with the cycles that we go through. We used to say that, gosh, in the hospitality industry, we're the first one that the lenders turn away from in any type of cycle. And that's probably again, maybe not necessarily true. It feels that way sometimes.

I remember one time my dad said to me, he goes, "It's just money." And it's not because we had money or a lot of it, or what he was saying is if we fail, that's fine. We'll figure it out, because we were writing checks and getting involved in deals early on that I was maxing out, right. Just to be able to get something to the very next step. Once you can get comfortable with that, I got very comfortable and I made a lot of mistakes and we still do, but you have to be able to do that and then figure out how to get through whatever the next challenge is. And I love it. If you stay at it and you work hard at it and you learn from it, things kind of work out. It's a tough industry sometimes, but when you build that hotel and you open it and you finally see guests arriving, it's pretty rewarding.

Josiah: And I appreciate you speaking to the cyclical nature of the hospitality business, right? Because the economy goes up and down and you feel the impact of that. I'm just thinking about what you've shared around relationships have been a through line throughout your career and everything that you've done. And I'm kind of putting that in the context of what you mentioned around this environment, especially in development, where there's a lot of risk, right. And I imagine relationships can foster a level of trust that helps you navigate this highly volatile environment, right. So I feel like relationships are always important in business, but especially in this environment, especially this corner of this industry of development in hospitality. It feels like this just underscores the power of relationships and trust in being vital.

David: Yeah, Grey Raines, now my business partner, he was a friend first. One thing that he's taught me is the strength of relationships in our business, whether it's on the investment side or on the brand side or on the lending side or how we raise money. Nobody builds relationships better than Grey Raines. And that's really helped me. Sometimes I just put my head down. I'm a fixer, right? If there's a problem, I want to fix it. Or if we're attacking a project, but the relationship side of the business is really what's got us to where we are as a company now. And they're extremely valuable in every step of everything that we do going forward. And then we carry that into now we've got close to 3,000 employees and we stress the culture of our company and how we operate hotels and maintaining relationships. Yeah, so it's everything in our business. But again, I think that's why I love the business too. At the end of the day, whether we're going through the great recession or we're going through COVID, we'll go to the next conference and sit down with the people that we love in our business. And we talk about relationships and we're all smiling at the end of the day, no matter what we're going through at the time.

Josiah: Yeah. For sure. I wonder if we could spend a few minutes talking about the journey of yourself and Raines. You alluded to this earlier, building this Hampton Inn. What happened in the years that followed? Because a lot happened today, leading Raines' incredible portfolio across different assets. But walk us through that journey from your perspective and from owning and developing that Hampton Inn until today. How did that all unfold?

David: Yeah, I mean, I think the natural progression of a lot of people that maybe kind of got into development in my business was, do you get on the operation side? And I think I kind of had a desire for that. I mean, we would build a hotel, open a hotel, I'd hand the keys over. I worked with some really good management companies, great ones, but I liked to be on property. I liked interacting, I liked understanding who we were hiring and why we were hiring them, just because I wanted to be involved.

And again, Grey and I knew each other. We were looking at deals together. I was just a small developer, but had established a small portfolio of hotels where it maybe made sense to look at creating a management company, starting a management company. And Grey's family already had established a reputation in operations and all of it was based out of Florence, South Carolina. And we still have our main office in Florence.

But we were talking and I said, "Grey, I'm going to start a management company." And he's like, "Well, why don't we do this together? I mean, I want to grow my business." And I joked still to this day that the best way to ruin a friendship is going to business with somebody. And so what we decided, we had a kind of a creative way to do that, where we created a smaller company that was managing some hotels here in Charleston. And that was our way to decide if we could work together and not be at each other's throats. And it turned out great.

And so therefore then we were able to methodically sort of move through how we then bring everything together and then think about how we grow the business from there. It took time. It probably added some complexity, but I probably wouldn't have it any other way. I mean, I think you really do have to learn a little bit more when you're partnering with someone, because we've all had good partnerships, bad partnerships in this business, but it really worked out. I mean, we really do compliment each other. I think we don't always agree on everything, but we always work through everything, best practices.

And so it was a nice marriage, not only from what we wanted to do in the business, but also geographically. And people always say this and it sounds cliche, we don't grow just to grow. We really have tried to be thoughtful, intentional about where we grow and how we maintain the culture of what we set out to do in the beginning with our people and our leaders. And again, that carried forward into the acquisition of HP Hotels. And Kerry Ranson, who's a partner and our president of operations, that all happened in a similar fashion. Once we understood Kerry's desire to grow in our business, it really fit with what we wanted to do. And again, geographically it worked out. And so sort of focused in the Southeast that allowed us to take the next step. And so now we were growing hospitality products that we either organically developed and had ownership in, but also then on the third party side. And it continues to go in that direction. It's pretty exciting.