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The gold is starting to lose its shine, as Donald Trump steps out of the presidential limelight and faces repercussions after the breach of the U.S. Capitol by his supporters.
The hotelier was caught up in multiple scandals during his time in office. This time, the blowback will severely impact his hospitality businesses, according to experts. It’s a blowback that will likely spread further than political donations and stumbling blocks to sell a Washington, D.C. property.
This month, several organizations have spoken up.
New York City will cancel its contracts with the Trump Organization for two ice rinks, the Central Park Carousel and the Trump Golf Links in the Bronx, according to the New York Times.
The Trump Organization is the parent company of the former president’s many business entities, including his hotels, Trump National membership golf clubs, real estate developments and licensing agreements, and a vineyard. But the company’s revenues tumbled even before the Capitol Hill riots, dropping from at least $446 million in 2019 to at least $278 million during the span of 2020 and first weeks of 2021, according to the Wall Street Journal.
Trump’s sons, Donald Jr. and Eric, oversaw the company while their father was in the White House. Trump is now returning from Washington to a company in massive disarray.
The Professional Golfers’ Association of America has also said it will no longer hold its PGA Championship at Trump’s New Jersey golf course next year.
Additional corporate fleeing now puts Trump’s hotel businesses and their future viability in jeopardy.
Making a Statement
The CEO of electric bike and scooter rental firm Lime has blacklisted Trump hotels from his company’s travel program.
“Lime has committed to never spending a dime at Trump owned businesses,” said Wayne Ting on Twitter.
Wang not only asked Lime’s corporate travel agency, TripActions, to block out the hotels from any search results inside the booking tool; he also wants TripActions to ask other clients to do the same, according to a TechCrunch report.
“When Lime contacted our customer success team, we allowed them to do that,” Ariel Cohen, TripActions’ CEO and co-founder, told Skift. “Customers have different needs.”
But Cohen said he would not influence other customers’ choices. “We are not going to get into customer policies. If they need us to do something, we’ll support it — as we did with the Lime case. But we’re not going to change other customers’ policies without their approval.”
The statement by Lime CEO’s places TripActions in a difficult position.
“It is normal for a customer to expect their agency to manage a policy on its behalf. And if a customer wishes them to promote, or block, a supplier for them, that is fine. However, the customer’s influence would normally stop there,” said John Harvey, managing partner at consultancy Harvey & Heywood.
Hitting Where It (Financially) Hurts the Most
The Trump-fueled riots on Capitol Hill are likely to leave more of a lasting legacy with corporate relations at the Trump Organization than with some of its hotel guests or club members, experts say. While Trump himself still has many supporters, companies that previously did business with the former president are fleeing.
“You still have a few people who value Trump and support him,” said Nicolas Graf, associate dean at New York University’s Jonathan M. Tisch Center of Hospitality. “The biggest hit is going to come from the corporate travel side of it and sending people to Trump hotels. The other piece is businesses that partnered with the Trump Organization on any kind of joint investment. People very likely want to pull out. I don’t think anyone wants to be publicly associated with Trump.”
The decision made by the CEO of fast-growing Lime, which has about 500 employees, now raises several questions. Is this the beginning of these types of political statements? Are they company wide, or based on individuals? And to what purpose does a hotel boycott serve?
“What is particularly interesting is the political standpoint,” said Bex Deadman, managing director of Blue Cube Travel. “We speak regularly to our clients about them setting up ‘their’ rules, regarding how they travel and where they spend, that suit their company culture. If Ting’s company is in agreement, and his staff agree, then why not? It’s more worrying if this isn’t decided at board or employee level and is just the will of one executive.”
The merging of politics into business angered some customers of Expensify in October last year, when its CEO emailed customers urging them to vote for Biden. “If you are a U.S. citizen, anything less than a vote for Biden is a vote against democracy,” wrote David Barrett.
“Time to find a new expense app,” replied one customer on LinkedIn.
Boycotts in tourism, or course, are nothing new. In 2019, hotels owned by the Sultan of Brunei came under scrutiny following the introduction of strict laws that made gay sex punishable by stoning to death. George Clooney, Ellen DeGeneres and other celebrities weighed in and called out several luxury hotels across Europe and the U.S.
The nation backtracked on the introduction of the punishment the following month.
Meanwhile, there’s an argument to be made that boycotts against Trump’s properties are more likely to impact hotel staff far more than they would their owner.
Reimagining a Brand
Along with the PGA pulling hosting duties from Trump’s New Jersey golf club, commercial real estate brokerage firm JLL ended its agreement to market the sale of Trump’s hotel in Washington, D.C., in light of the Capitol Hill riots. It would be logical companies would issue bans on booking stays in Trump hotels when corporate travel returns.
“It’s going to be choppy for all of those travel brands and the Trump brand in general,” said Makarand Mody, a professor at Boston University’s School of Hospitality Administration. “If you’re somebody who is leaning more toward the middle politically, I suspect you’re going to start questioning if you’re going to want to associate with the Trump brand.”
Trump’s existing hotel portfolio could dwindle as a result of both the pandemic’s catastrophic impact on the travel sector and now the D.C. riots turning people away from the brand.
Revenue at the D.C. hotel is down nearly 63 percent from 2019, Reuters reports. Trump’s Las Vegas property is down nearly 61 percent. Revenue at the Trump National Doral golf course in Florida is down nearly 43 percent.
A former Trump-branded hotel in Toronto eventually rebranded as a St. Regis during his presidency. While the project was mired in a variety of investor issues surrounding lower-than-expected occupancy under the Trump flag, it was also criticized for the branding after Trump launched his presidential campaign in 2015 and made disparaging remarks about immigrants.
While the Trump brand flag still flies over a hotel in Vancouver, the owner of that property filed for bankruptcy last year in light of the pandemic and accompanying depleted revenue. The Trump Organization doesn’t own the property but licensed out the branding. Industry analysts have predicted owners of such distressed assets during the pandemic may work with lenders on survival strategies that often include new branding, a deal known as a conversion.
It’s unlikely owners would stick with the Trump hotel flag.
“If I’m a hotel developer right now and I’m trying to project revenues, I don’t think the Trump brand is going to allow me to project revenues with any certainty at all, given how tumultuous everything has been,” Mody said. “You’d have to be a very ardent supporter to put money on the Trump name right now.”
Trump’s brand is almost certainly irreparably damaged, and rebranding is one potential option — though, rebranding efforts have failed in the past when it came to the Trump family attempting to use “Scion” instead of their own name on hotels.
“In the short term, any rebrand — which everyone will rightly assume to be a cynical rebadge — can only be a sticking plaster,” said Anthony Bryan, strategy director at Row-A, a branding and creative communications agency.
“But in time it could enable the hotel brand to heal, putting a perceived distance between product and proprietor. However, the real danger is that as well-known organisations publicly dissociate with Trump Hotels, the policy becomes an ethical marker; and there’ll be a tipping point where progressive brands and businesses are expected to follow.”
Resurrecting an Old Idea
While 75 million voters turned up to the polls for Trump in November, it is highly unlikely that entire voting bloc remains committed to his cause or companies. Members of his own cabinet like former Secretary of Transportation Elaine Chao and former Secretary of Education Betsy DeVos resigned in protest due to the Jan. 6 attacks.
But a defunct hotel proposal could be a way for Trump to have a future in hospitality.
“It depends on what he does from here. If he throws himself back into the hospitality business, consumers may figure politics is in the past,” said Richard Clarke, a senior analyst covering global leisure and hotels at Bernstein. “If he continues to push the far-right wing rhetoric, that may throw people off the brand.”
Following Trump’s election in 2016, his sons, Donald Jr. and Eric, announced plans for a midscale hotel brand called American Dream. While the Trump family’s eponymous hotel brand included luxury hotels in so-called “blue,” or liberal-leaning, markets, American Dream would focus on expanding in parts of the country that tended to vote for the now-disgraced ex-president. The first American Dream hotels were supposed to be in the Mississippi Delta.
But the hotel version of the American Dream was not meant to be: the Trump Organization called off plans for the new brand in 2019.
“We live in a climate where everything will be used against us, whether by the fake news or by Democrats who are only interested in presidential harassment and wasting everyone’s time, barraging us with nonsense letters,” Eric Trump said in a statement at the time.
Would the current political climate, where Trump has a smaller but arguably even more devoted base, be the right time to revisit opening hotels closer to where those supporters live? The idea would be to fill hotels with Trump loyalists, similar to what was seen with much scrutiny at the D.C. hotel during his presidency, rather than the general traveling public.
“The theory [behind American Dream] was you had a lot of hotels in cities where he wasn’t popular but not hotels in states and towns where he was popular, so maybe he’ll reposition himself for that,” Clarke said.
But Clarke and others interviewed for this story recognize even that could be a difficult business to launch. Institutions like Deutsche Bank, which typically finances Trump’s real estate deals, are dropping the Trump Organization as a client.
“I don’t think he will have sufficient cash to invest to create a new brand altogether, and I don’t think he’s going to be able to find it somewhere else,” Graf said.