Billionaire Bob Rowling is not shirtless.
The son of a geologist who made a fortune in the oil and gas business, Rowling decades ago ventured into the capital-intensive hotel business — without knowing a whole lot about it.
Even his dad joked about his prospects.
“He said, ‘Well, you’re going to lose your shirt in the hotel business,” Rowling recalled recently. “I laughed and said, ‘Well, you may be right.'"
Twenty years after purchasing the Omni hotels brand — a disparate group of inns, some of which were in varying states of disrepair — the son gets the last laugh.
Initially launched as a bid to diversify family holdings beyond the oil and gas business,
now brings in more than $2 billion in sales. It ranks as the largest revenue contributor to Rowling’s Dallas-based TRT Holdings Inc., which also owns Gold’s Gym.
In an exclusive interview with
The Dallas Morning News
, the media-shy Rowling reflected on his purchase of Omni in early 1996 and its evolution from “broken” brand to an award-winning chain.
The company now has 60 hotels, including 44 wholly owned and branded properties, nine sites managed for other owners (including the city of Dallas), five joint ventures, and two franchised properties.
Rowling’s initial foray into the field that made Conrad Hilton and Bill Marriott household names was almost an accident.
“There was no grand strategy here,” said Rowling, 62, seated in a spacious conference room at the company’s Oak Lawn headquarters. “We were taking a step at a time.”
Omni has “evolved a lot over the years in terms of what we’ve done, I think uniquely,” he added. “With Omni, it’s gotten better and better and better. We didn’t have a vision at first, but we caught it pretty fast.”
And as Omni evolved, Rowling became more innkeeper and less bean counter.
“Before Omni, people referred to me behind my back as ‘bottom line Bob,’“ he joked. “That’s all I cared about, was how much they made. And I think there’s some truth to that because I wasn’t trying to protect a brand.”
‘Scared to death’
As a youth growing up in Corpus Christi, Robert Brian Rowling was attracted to basketball (he tops 6 feet) and golf. As a tween, he envisioned a life as a professional golfer.
Instead, along with his father, Reese, Rowling helped create Tana Oil & Gas, a Corpus Christi-based oil production and pipeline company. Much of the company was sold to Texaco in 1989 for a reported $480 million.
That deal helped provide seed money for Rowling’s next venture.
“The hotel business in 1990 was in recession, and we bought a couple of properties ... in Corpus Christi, that had actually gone into receivership,” said Rowling (rhymes with bowling). “Both of them were bought out of bankruptcy basically. And that started our journey in the hotel business. … It was almost an accidental purchase.
“We knew what these things cost to build. We were buying them for pennies on the dollar, literally.”
In four years, they spent about $150 million on eight hotels.
“And we were scared to death,” Rowling said.
The “we” includes Jim Caldwell, president of TRT Holdings and Omni’s chief executive, and Omni president Mike Deitemeyer.
With the first eight hotels in his fold, Rowling became more interested in actually being a hotelier and operating the properties. With Omni, he decided it was time to take the brand to the “upper end of the quality standard.”
His family bought the 35-hotel brand at auction in early 1996 for a reported $500 million. The deal included ownership of nine hotels and management contracts for 26 more, for a total of 35 properties.
His dad was “an encourager” but did wonder about the purchases. The press fretted that the oilman paid too much and knew too little about the hotel game.
On a roll
After the purchase, Rowling was the proud owner of “a brand that was honestly pretty broken 20 years ago. The product was very disparate in terms of the quality. ... The operating team was pretty dysfunctional.”
Deitemeyer noted that the hotels didn’t even use the same guest room soap.
One part of the package was the Omni Parker House, located on the Freedom Trail in Boston and the birthplace of the Parker House roll. Opened in 1855, Omni Parker House ranks as one of the longest continually operating hotels in America.
“And it hadn’t been touched” with an upgrade in some time, he said. “So we ended up spending $60 million at the Parker House right out of the gate.”
More acquisitions followed, along with construction of large, full-service properties with ballrooms and banquet space.
Asked about his personal imprint on the brand, Rowling demures.
The work has been a team effort, he says. The hotels are designed to reflect the local flavor, not his personal taste.
Except, perhaps the decision to remove X-rated movies from the in-room entertainment lineup.
“That was probably more of a personal decision,” he said. “I’m not a purist. ... There were R-rated movies, and we saw it move more and more to hard-core pornography, and that was just something we didn’t think was good for our customers, our families.”
Full-service edge
As the brand has evolved, two features — building big boxes and maintaining ownership of most of them — set Omni apart from most of its competitors. While peers such as Marriott and Hilton continue to operate large hotels, both brands have largely given up ownership of the actual buildings in favor of the Wall Street favored approach called “asset light,” in which investors own properties that are managed by well-known brands.
“Today the publicly traded companies are very much specializing,” said Jan Freitag of STR, formerly known as Smith Travel Research. “You are either an owner through a real estate investment trust vehicle or you are a manager/franchisor. It’s rare to have ownership, management and branding under one umbrella.”
Building large, full-service hotels gives Omni an edge with the convention crowd.
“It’s really impossible to have a meeting with 1,300 people at the breakfast bar of a limited service hotel,” Freitag joked. “The people who build full-service hotels today are positioning themselves well for the future.”
The privately held Omni generally declines to release sales figures but offered that 2015 revenue was “in excess of $2 billion.”
Rowling, who holds spot No. 286 on Forbes’ 2016 listing of the world’s billionaires, has an estimated net worth of just under $5 billion.
Rowling is proud of his success in diversifying the portfolio, especially given the current oil field challenges.
"Right now, when you see oil at $35 a barrel and I see the energy business and people struggling and I see our hotel business and how incredibly well it’s doing I thank the Lord that we diversified into some other businesses," he said.
Food upgrade
Most Omnis fall into three categories: convention hotels, resorts and business-focused hotels.
Six of the largest resort properties, including five golf resorts, came via a 2013-’14 purchase from KSL Capital Partners, the private equity firm that formerly owned Dallas-based ClubCorp.
Costing a reported $900 million and the largest acquisition by Omni since the brand was purchased by Rowling, the move was met with trepidation by some golf aficionados. They worried that Omni would not be able to keep up the properties, some of which were compared to Ritz-Carltons.
“KSL had some of the finest golf courses that were at the very top, exclusive level,” said James “JJ” Keegan, who tracks golf and is the longtime operator of the Golfconvergence.com Web site.
“Omni is not a Four Seasons,” he said. “When I read about [the sale], it gave me pause.”
Rowling allows that there may have been some furrowed brows when the deal was announced. But he said he feels Omni has improved operations at the resorts, in part by focusing more keenly on its highly praised food and beverage operation.
“The culinary side of Omni is really important to us,” Rowling said. “I think it helps us overcome the fact that we don’t have 3,000 hotels.”
Three Omnis are currently under construction, including two using the buddy system.
The Omni Frisco Hotel, expected to open next year, is a partnership with the family of Dallas Cowboys owner Jerry Jones. A new Omni in Atlanta is being built in partnership with the Atlanta Braves. And a $300 million hotel in Louisville is also in the works.
While building and owning the hotels is expensive — Rowling says he’s spent billions — it gives the company control over everything from artwork (which Rowling helps pick) to personnel.
“As an owner operator, we have our own people, we can train our own people,” Rowling said, adding that he interviews every general manager. “The biggest thing with franchises is that you couldn’t control the service.”
Service is one area Rowling thinks Omni can stand out in a field dominated by much larger players. He notes that the brand ranked highest among “upper-upscale” hotel brands in the J.D. Power 2015 North American Hotel Guest Satisfaction Index Study. It was the sixth first-place finish in the past 15 years, a survey executive said.
Looking to the future
Rowling said the phone rings fairly regularly with bankers and brokers wondering if he wants to sell.
He doesn’t, and he doesn’t expect that to change.
Expansion outside of North America?
“That could change,” he said, with a smile. “We’ve looked at several foreign acquisitions over the years across the pond. We’ll continue to look internationally.”
Rowling also said he has no interest in moving the headquarters out of North Texas, the company’s home since 1997. In 2013, the company moved into a newly built office that includes a fitness center and cafeteria where Rowling is said to be a frequent patron.
Near Rowling’s office is the office of his son, Blake Rowling, who is a director with TRT Holdings and has been with the company for nearly 10 years.
Bob Rowling now sees Omni as his chance to build something, take ownership of it, and pass it along as a family legacy.
A narrow strip of paper taped on the stand-up desk in his office is a daily reminder of his mission.
From Acts 20:24, the verse speaks of finishing your course with joy and staying true to your ministry.
Twitter: @krobijake
Q&A with Robert Rowling
In a 90-minute interview, the publicity-shy billionaire Robert Rowling talked about the evolution of the Omni brand and his evolution as a hotelier. Here are a few excerpts.
On the hotel business:
After the first few years “I really liked the business and the reason I liked it was because in the energy business you’re always in a treadmill. The day an oil well comes online, it’s one day closer to death (it’s going to deplete its reserves over time.) I liked the idea of hotels in really good locations that would hold their value. And that’s really turned out to be true.”
On the decision to remove X-rated movies from Omni rooms:
“That was probably more of a personal decision … I’m not a purist. There were ‘R’-rated movies, and we saw it move more and more to hard core pornography and that was just something we didn’t think was good for our customers, our families. We had a few associates who said ‘This is going to cost us some business.’ But by in large, the Omni associates have been proud of that decision.
“It cost us money because we had to go buy all of our own TVs. Back in those days, the providers of the in-room movies would pay for all of your televisions. So we spent millions of dollars buying our own televisions.
“I don’t think it cost us any business. .... There were literally tens of thousands of letters of support.”
On supporting conservative causes:
“It depends on what you mean by ‘conservative causes.’ Conservatives are .. you care for the poor. That’s what I mean when I say ‘conservative.'"
Twitter: @krobijake