A simple piece of wood, about three inches thick and not quite perfectly round, is brought to the table at Smyth, the recently opened restaurant at The Iron Horse Hotel in Milwaukee. Warm bread sits on the plate, partially obscuring the small branded black logo with the letters ‘I’ and ‘H’ in the shape of a horse’s head.

The wood isn’t really simple, at least not its story. It’s a sliver cut from an old red oak tree felled by lightning at the lake-house community also developed by hotel owner Tim Dixon. A carpenter by trade, Dixon and his eldest son Henry cut the fallen timber into several dozen breadboards. The subtle placement of the logo is the work of Dixon’s partner, Brigette Breitenbach, the marketing expert and part owner who methodically built and now protects the hotel’s emerging brand.

The Iron Horse Hotel defies all expectations. Just a block from the new Harley-Davidson Museum, the independent boutique hotel easily caters to a seemingly divergent mix of bikers and business travelers. Reconstructed in a century-old warehouse, its design is elegant and durable, a mix of vintage and modern, dubbed “industrial chic.” Even the numbers don’t add up: The hotel was constructed for a big-city cost of $26.5 million, but is only valued at a beer-and-brat-like $22 million, yet it’s already profitable and Dixon’s wisest investment.

The Iron Horse would be a gem in any city, but in Milwaukee, it’s the diamond in the rough. Dixon’s vision was to create a one-of-a-kind luxury boutique hotel, the kind you’d find in Chicago or New York. He didn’t have any hotel experience, but Dixon believed the two things he’s known for—“developing old buildings and throwing the best parties in town”—would make this possible.

Research & Development
When Dixon purchased the six-story building in early 2006, the former Berger Bedding and Furniture factory and warehouse was being used for cold storage. Dixon, a longtime urban developer in Milwaukee, had built just about everything besides a hotel: “residential, offices, restaurants, low income, condos, apartments,” he says. He ran three scenarios for the building: loft condos, apartments or a hotel.

Two weeks after Dixon signed the purchasing agreement, Harley-Davidson unveiled plans for a $75-million museum just a block from the property. Two days later, Dixon bought a Harley-Davidson—“research and development,” he told his wife—and the decision was made: The 102-year-old building at 500 West Florida Street would become a boutique hotel.

Dixon and Breitenbach, his workout-partner/PR specialist, headed to New York City that October for more research. They visited 37 boutique hotels in two days, sitting in lobbies, ordering drinks and taking notes. The final hotel they saw was the Soho Grand; Breitenbach had purposely saved her favorite for last. “I loved it,” Dixon says. “They delivered that fine industrial feel. What they built, I already owned. Now we just had to color it in.” Dixon dictated the business plan for the hotel to Breitenbach on the return flight. The hotel would cater to bike enthusiasts—the Harley museum draws an estimated half-million visitors a year—and business travelers alike. It would have a lobby scene locals would go out of their way to find.

The challenge, of course, was building a luxury hotel with the detail and craftsmanship Dixon envisioned at a price that made sense. “The reason why boutique hotels like this aren’t in secondary markets is the cost to develop is almost identical to a Chicago, in labor, materials; land is a little different, but not significant though,” Dixon explains. “Here in Milwaukee, our revenue opportunity is 84 percent less. On good nights, we get $179 (room rates) and they’re getting $279 or $379. You can’t afford to do it. You can’t build an exceptional hotel in a secondary market. I knew that, and to me, that was my edge.”

The Formula
The Iron Horse Hotel, from land acquisition to ff&e, cost $26.5 million to construct, but the initial stabilized value was just $22 million, making financing a significant challenge. Dixon, and his team of tax experts and attorneys, brought down the cost a whopping $9.2 million through New Market Tax Credits and federal, state and local historic tax credits and incentives. That money made up his portion of the loan, leaving $11.8 million for conventional financing. The remaining $5.5 million came from Dixon’s personal cash and an investment from Breitenbach, the principal of Company B Brand Marketing.

“Many people throughout the process said to Tim, ‘You don’t have to spend what you are on this hotel, you don’t have to put all this cash in since you’re getting all this free money. You can cut back,’” says Breitenbach, whose offices are housed in the same building as Dixon Development. “But he never wavered from what his vision was. Everything that this hotel has become is a result of his dedication.”

When Dixon was told by the National Parks Service his wooden-beam building wasn’t significant enough to earn historic status, he got the entire neighborhood declared a historic district because it was the last intact industrial warehouse site in the city. “All those things brought me to a more realistic cost that justified the revenue potential,” Dixon says.

His “research” on the new Harley mixed with Breitenbach’s marketing expertise led to the idea of catering to bikers and business travelers. “When you look at the average boutique hotel guest, they’re 40-something, college educated, affluent and have a family,” Dixon says. “The Harley rider, the motorcycle enthusiast…the demographic is exactly the same.” Breitenbach led focus groups with the staff of a Harley-Davidson dealership and female business travelers to come up with the design and service strategy for the hotel.

“We want to make sure you’re comfortable in your dirty buckle boots or high heels,” Dixon says. He also makes it very clear: “The hotel is not motorcycle themed. We’ve got one motorcycle in the lobby; it’s art. But we take care of you if you’re a rider.”

Inside The Hotel
The Iron Horse Hotel opened floor by floor beginning last September until all 100 rooms were open this May. Bikers are welcomed with 38 covered motorcycle parking spaces (the only onsite parking, the rest is valet), rag bins and check-in carts for carrying saddlebag contents to the room. There’s an onsite bike wash and the hotel even offers rental motorcycles and will arrange for a guest’s bike to be shipped in. Corporate travelers arriving in cars and cabs also get plenty of attention: free wireless Internet access, large and functional desks in the guestrooms, plenty of meeting space, copying and fax services and 24-hour business kiosks.

At an average of 450 square feet, the loft-style guestrooms are spacious, comfortable and striking. A durable porcelain floor tile and wall surface greets guests when they enter. At the end of the wide hallway is a wood bench with four sturdy metal hooks above it, in the shape of the Iron Horse logo, providing the perfect spot to remove dress shoes or riding boots and hang a heavy leather coat or briefcase.

Plush bedding and furniture provide comfort, while Dixon’s long-time friend and famed Milwaukee artist Charles Dwyer handles the striking with huge mixed-media murals of provocatively posed and dressed local women adorning an entire wall in each guestroom. Original hemlock and heart pine posts and beams, Cream City brick walls and fire doors give the hotel a rugged feel. “With Harley-Davidson the parts of the bike are exposed and celebrated, not covered with plastic,” says Michelle Olsen, of Wisconsin-based Kubala Washatko Architects, who’s designed Harley dealerships, Dixon’s home and now The Iron Horse, her first hotel. “When we design for Harley-Davidson, we match that aesthetic by creating spaces with a lot of exposed steel, chrome, exposed fasteners and a very honest expression of the materials we use. We felt the same way about Tim’s building.”

When guests leave their rooms, they converge on what has become the premier lobby scene in the city. Four distinct f&b outlets surround the two-story atrium. Branded provides a classic Milwaukee bar experience, while Smyth is Milwaukee-native Chef Thomas Schultz’s take on American comfort food with a flair for local cuisine, like Dixon’s favorite Blue & Blue (crusted Lake Erie bluegill fillets with Wisconsin Billy Blue Cheese tartar sauce).

The Library, a breakfast room with beautiful sunlight, communal tables, couches and plenty of reading material, was an idea born from Dixon’s parochial schooling and can become a quiet refuge when the rest of the lobby comes to life. The Yard, an outdoor lounge, offers covered sectional seating, a huge bar and seasonal grilled favorites. The coolest venue isn’t even open yet: The Boiler Room, a huge adult hot tub/chilling pool depending on the season, with yet another bar, will open this fall in the lower level of the building. Its entrance is through what was originally the door to the boiler pit.

The lobby scene has grown thanks to the buzz of the bikes parked out front—“leather attracts leather,” Dixon says—and the social networking of Breitenbach. A recent and glowing review in Milwaukee Magazine described The Iron Horse as “the most exclusive dining and imbibing address in town,” although Dixon would certainly dispute one of those words. His hotel, and parties, are inclusive. Breitenbach, wearing a dark leather outfit, and the ponytailed Dixon, with his typical jeans and a colorful shirt, seamlessly blend in at Smyth while other diners wear anything from shorts to suits.

Meeting Desires
Dixon built the hotel and Lady B, as she is called by the staff, brought the brand, but both know The Iron Horse wouldn’t be anything without the execution. While developing the property, Dixon was well on his way with a traditional management company, but the two owners didn’t feel they had its full attention. Breitenbach, as she often did then, was Googling for a hotel education and stumbled across a company matching Dixon’s vision as outlined in an early version of the business plan: “Our corporate culture will be to anticipate guest needs and desires rather than simply responding to requests. We will know what our business and leisure guests want, when they want it, and how to make their stay as personal as possible,” it read.

Without knowing it, Dixon and Breitenbach perfectly described Tecton Hospitality’s Desires Hotels, one of the industry’s top boutique operators. Breitenbach emailed Dixon, who called Desires and the duo was on a plane bound for Miami. “You can’t help but fall in love with them…the passion for their vision and now the asset. It’s been a great union,” says Tecton and Desires President Raul Leal.

The Iron Horse has hit its projected annual occupancy (68 percent) in a down economy, ADR ($169) continues to climb and RevPAR Index remains at 120 percent. The Iron Horse is TripAdvisor’s top-rated hotel in Wisconsin and Condé Nast Traveler ranked it as one of the 140 hottest hotels in the world.

The success has Dixon and Breitenbach thinking sequel. Picking the right opportunity is the challenge. They are pursuing a property in Columbus, OH, but it won’t be an Iron Horse. Instead, Dixon will use the same formula of bringing down the cost through tax credits to create a one-of-a-kind experiential hotel in a secondary city. Leal and Desires will be along for the ride. “We have I think delivered the perfect hotel product, but without the operator delivering all the other pieces it would have been a nothing hotel,” Dixon says. “I will never build another hotel without them. I’ve got no passion to do anything other than more hotels. I’ve never been challenged or enjoyed doing something more.”

The passion is evident every morning when Dixon and Breitenbach have breakfast at The Library and meet with General Manager Anna Anderson. One morning the discussion turns to whether two thicker slices of bacon would be better than the four thin ones served in their usual order. Could they be too involved? “If they didn’t do that,” Anderson says smiling and then opening up her arms, “we wouldn’t have this.”

WHAT'S IN A NAME
“The name of The Iron Horse Hotel reflects the duality of our unique location. Native Americans (Tim Dixon’s heritage on his maternal side) referred to the train as the ‘iron horse’ as it sped through prairies. Today, the hotel remains nestled along a historic yet active railroad. Located at the origination and termination point of the tracks means the guest is treated to the slow chug of freight cars a few times each day. Today’s pop culture also refers to the motorcycle as the modern iron horse, a name befitting our location near the new Harley-Davidson Museum, a monumental achievement by this Milwaukee-based manufacturer. After the name was chosen, it was discovered that the building’s century-old distinct carved capitals serendipitously resembled an ‘I’ in the shaped of a horse head and an ‘H.’ The icon was born and now subtly graces areas of the hotel.” — Brigette Breitenbach