Trump's Brand Continues To Deteriorate In The Hotel Business

Trump's idea to go into welfare residential hotels fails

After visiting the never officially opened Trump Tower hotel in Baku, Azerbaijan-- before criminals Trump had partnered with tried burning it down for insurance money-- I fancied myself an expert in Trump's shady hotel business. "Expert" in the sense that I try keeping up on further news about how the business has continued-- like his brand in general-- to fall apart. Yesterday, Steve Eder, Ben Protess and Eric Lipton brought New York Times readers up to date on the continuing collapse. The Trumps blame the "political climate" for their failures.

Remember when they realized that they were dead in the water in normal places for hotels? They decided they would build hotels in backward, rural places where Trump in popular... like in shopping malls in Mississippi... albeit even there with brands that didn't include the now toxic Trump name-- like Scion. That whole idea has now been abandoned. Scion-- and another brand, "American Idea," have been "shelved indefinitely." The Times reported that "As a practical matter, that means calling off just one agreement, in Mississippi, though two years ago the Trump Organization said it had as many as 30 potential deals in the pipeline."

Why, if it was such a good idea as a way of exploiting the "fame" of the president-- albeit illegitimate president-- two years ago, has it been shit-canned today? "The retrenchment comes," writes Eder, Protess and Lipton, "as the company faces growing scrutiny from federal prosecutors and congressional investigators, and as a former employee, Michael Cohen, heads to prison for multiple crimes. With Democrats now in control of the House of Representatives, any new hotel deals could have provided investigative fodder for critics of the president."

The decision to walk away from the hotel plans is the latest and clearest sign of the perils of running a family business whose owner occupies the White House. As Eric Trump and his brother Donald Jr. downsize the Trump Organization’s hotel ambitions, the president has lamented the toll that elected office has taken on the company. “I lost massive amounts of money doing this job,” he told the New York Times in a recent interview. “This is one of the great losers of all time.”

Some of those losses stem from an ethics code that Mr. Trump was encouraged to adopt: It has prevented the company from doing new business abroad during his presidency, halting the global growth that for years brought in millions of dollars in fees. But other wounds have been more directly self-inflicted. In the United States, where the company intended to open the Scion and American Idea hotels, Mr. Trump’s divisive rhetoric and polarizing politics have turned his brand into a target for opponents.

The Trump Organization, which the president continues to own, faced local opposition to potential Scion deals in cities like Dallas and St. Louis. Some potential development partners were also scared away by the prospect of intense media coverage and legal and financial vetting from the company’s outside ethics adviser, people briefed on the matter said.

The people said that as of Thursday the Trump Organization was walking away from more than a dozen potential deals in Washington, D.C., and at least five states.

...[S]ome senior executives at the Trump Organization expressed concern that expanding the hotel operation could backfire and reflect poorly on the president, according to the people briefed on the matter, who spoke on the condition of anonymity because they were not authorized to discuss it. The executives worried that any potential new deals could lead to accusations that the company-- and its owner-- were profiting from the presidency.

In late 2017, Eric Trump foreshadowed a shift in strategy, indicating in an interview that the company would concentrate on its existing golf, real estate and hotel properties.

“If we have to take a break for an eight-year period of time or a four-year period, then it is what it is,” he said, referring to new business opportunities.

At the outset of the presidency, Mr. Trump’s sons inherited a company that was coming off a decade of growth, having opened a slate of golf courses and luxury hotels from Chicago to Las Vegas. Marketing deals put the Trump name on properties around the world, as well as on suits, mattresses and a host of other products.

The presidency proved to be a game changer.

The Trump name became so toxic in some places that the company was paid to remove it from hotels in Toronto and New York. The majority owner of the Trump hotel in Panama took a more drastic step, ordering the T-R-U-M-P letters pried off the property with a crowbar.

In the last two years, the company has also been under scrutiny from federal investigators and Democrats in Congress, particularly after Mr. Cohen pleaded guilty to arranging hush money payments during the presidential campaign to two women who said they had had affairs with Mr. Trump. The Trump Organization reimbursed Mr. Cohen for one of those payments, and is itself a focus of the ongoing investigation.

The company has also faced a torrent of negative media coverage, most recently over revelations, first reported in The Times about its employment of undocumented workers. The reports, which prompted a review of its properties’ staffs and the firing of more than two dozen workers, came at a time when Mr. Trump was denouncing illegal immigration as a threat to national security.

Still, the presidency has not put a damper on all aspects of Mr. Trump’s business. Some international deals that were in the works before the election have moved forward, including a Trump-branded hotel in Vancouver and a golf course in Dubai that opened in early 2017, and other plans that are still underway in India, Uruguay and the Philippines.

The Trump International Hotel in Washington, which opened in 2016, has surpassed expectations, with its lobby regularly packed with Republican officials and operatives. It has also caused headaches for the company, having prompted lawsuits claiming that Mr. Trump is illegally profiting from the presidency. Two cases now working their way through the courts focus on whether patrons of his hotels hail from overseas or state governments, a potential violation of the emoluments clauses of the Constitution.

Mr. Trump brushed off those concerns in the recent interview with The Times, suggesting that any new business dealings were more than offset by lost opportunities. During the presidential campaign, about six months before his surprising victory, Mr. Trump told The Times that he had about 120 deals in the pipeline. His executives had been working on hotel projects across the globe, including in Israel, Saudi Arabia and China.

After the election, the self-imposed prohibition on new development in foreign countries caused the Trump Organization to cancel some proposed deals and its pipeline to rapidly shrink, the company has said. Just before taking office, Mr. Trump said his company had turned down a potentially lucrative deal in Dubai.

Closer to home, where fewer restrictions applied, the company focused on the prospect of new hotel lines in cities such as Cincinnati, Nashville and Valley Forge, Pa.

The hotels were intended to target an audience different from the patrons of the existing five-star Trump properties. The Scion, a four-star line, would be a hipper boutique option. American Idea, a chain of budget-friendly hotels, would feature hints of Americana. Scion was announced before Mr. Trump’s election, and the concept for American Idea materialized after the Trumps spotted an opportunity during the campaign to expand into farther-flung markets with fewer hotel options.

Potential partners, though, were put under a microscope.

The company aborted a Scion deal that was under discussion in Dallas, after The Times reported that the prospective partner had ties to Russia and Kazakhstan and the Trumps’ outside ethics adviser raised questions about the potential deal. The Times also reported that the Chawlas, the partners in Mississippi, had turned to the state government for millions of dollars in support through a tax rebate program.

New business activity slowed even further last year, and the company announced no new hotel deals. The Trump Organization briefly managed a Livingston, N.J., hotel owned by the family of Jared Kushner, Mr. Trump’s son-in-law, and were in talks to open a Scion on the Jersey Shore that the Kushners would have owned.

Still... absolutely sounds like a great SNL cold-opening skit. Perhaps the Trumps, the Chawlas and other partners from parts of the world where gangsters dominate the economy can try their hand at by-the-hour motels. Sounds right up Trump's alley.