Making a family-owned hotel business work
 
Making a family-owned hotel business work
31 AUGUST 2016 7:41 AM

It can be difficult to balance work time and personal time in a family business, but establishing guidelines helps families thrive in business together. 

REPORT FROM THE U.S.—Hoteliers who work in a family-run business have the distinct challenge of not necessarily being able to escape from work simply by going home for the day.

Family-run hotel companies, even among independents, come in all shapes, sizes and types. Some families own and manage single properties, such as Judy Paul, who as CEO runs the Washington Square Hotel in New York City along with her husband, Marc Garrett, after taking over ownership and operations from her parents.

On the other end of the spectrum, some families create and run ownership companies, such as the Marquis family at Pacifica Hotels.

Regardless of the size, combining family with business means working through the best and worst aspects of each in order to run a successful operation.

Starting out
Paul’s grandfather and great-uncles started out in the hotel business years ago, and eventually helped her parents purchase the Washington Square Hotel in New York’s Greenwich Village in 1973. At one point, Paul’s family owned three hotels in Manhattan. When her relatives split up the partnership, her parents held on to the Washington Square Hotel.

“When the family business didn’t work, they found the solution of dividing up the properties,” she said, adding that everyone came out of it happy.

She joined her parents in the hotel business in 1991 after a career in finance, and her husband came to work at the property as well. While she and her husband are now in charge, Paul’s parents are still involved, she said.

For Matt Marquis, CEO and president of Pacifica Hotels, his road to his current family business was an evolution over time as well.

He and his father, Dale Marquis, started a partnership that grew into a family business. Now Marquis works with two of his brothers in management while the other two sit on the company’s board.

Common goals
Paul said she and her family care deeply about the Washington Square and they feel their goals are always aligned.

When they all meet to discuss strategy, she said, it’s important everyone is going in the same direction considering what the property means to them and what it should mean to guests.

“We listen to each other,” she said. “It’s important that no one’s ideas get shut down. With so much love and respect, we can brainstorm without being in a threatening way. There’s a lot of comfort because it’s family.”

Marquis formalized the process of making sure the family stays on the same page at Pacifica Hotels, he said. The family wrote a constitution that lays out certain guiding principles to follow, such as honesty, trust and integrity. Having those traits written down and reviewing them to remember what the company is about allows his family to be strategic about how they run the company, he said.

“One of the big benefits having family business is the common ownership and vision families can provide in what you want to have in a company,” he said, adding that’s helpful for a multigenerational business.

Working together
It’s important that work doesn’t come home, Paul said, and if it does, it can create more conflicts. She and her husband have a policy that once they leave the property, it’s time to focus on their personal life, not their business.

“That’s a really important element,” she said.

Having boundaries and separating work life from personal life can be a challenge within a family, Marquis said. The time to talk business is when everyone is on the clock, he said, but after they head home and during family gatherings, they don’t talk about it.

“We try to make it so we’re not on the clock 24/7,” he said. “That’s hard to do in a family business.”

Family members might have different opinions how to run the business, Marquis said, and ideas need to be discussed respectfully as one would with any other co-worker. Sometimes it’s difficult for a parent to treat a child as anything other than a kid, he said, and that can sometimes take a while to overcome.

“You have to sit down and have a discussion about it,” he said. “You have to treat each other as co-workers, not family members.”

Having defined roles for each person from the outset helps keep things clear, Paul said. People have their respective strengths, she said, and letting people focus on their strengths can keep family members from stepping on each other’s toes.

Family but formal
It might be tempting to try to keep things casual within a family operation, as everyone knows one another and there is intrinsic trust among them, but that’s not always advisable, said Sylvia St. Clair, associate with Faegre Baker Daniels.

Although details and statutes of limitations vary by state, oral agreements are as enforceable as written contracts, she said. Having only an oral agreement without written details can cause problems if someone forgets something or changes his or her mind.

“What happens if you’re having an information conversation with a family member and you decide one thing, but you turn around to do something else?” she asked.

If someone is in business with family members, treat them like any other employee, St. Clair said. If a nonfamily member would have a contract, there’s no reason not to do the same with family. If there’s agreement about a decision and its terms, there’s no harm in memorializing them into writing, she said.

Another area requiring formal arrangements is pay, even for employees younger than 18. While specifics vary by state, children employed by their parents at a hotel would fall under child labor laws, she said.

“If you want to employ children, you have to adhere to whatever child labor law is in place and pay wages as well,” she said.

There are also potential issues with bias and favorable treatment of children and other family employees, she said, so be aware of hiring guidelines and employee evaluations.

“You should hold them to the same standard as you would anyone else for that matter,” she said.

To help prevent claims of discrimination and bias, St. Clair said some companies have a written policy against nepotism while others have guidelines about hiring based on qualifications rather than familial status. When it’s possible, avoid having someone supervise a family member, she said.

“It’s not an issue until one employee feels he was treated unfairly or that a family member was treated more favorably because of a shared characteristic,” she said.

1 Comment

  • Radha Patel September 2, 2016 11:07 AM Reply

    Disappointed that the phenomena of Indian American family ownership structures was not mentioned in this article. Indian Americans represent 50% of the ownership of hotels/motels in America and to leave them out of an article specifically about family owned hotels is negligent.

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