Locals Help Drive Iron Horse’s Success

How a mid-market boutique hotel used the credit crunch to drive creativity and revenue through local ambassadors

In September 2008, The Iron Horse Hotel opened in Milwaukee, Wisconsin, on the same day brokerage firm Shearson Lehman Brothers collapsed, causing the market to crash and hotel investors to flee. With no working capital, the 100-room independent boutique hotel was forced to weather the worst economy ever to hit the hotel industry. Yet in over three years, the hotel has become one of the most successful properties in the industry, based on rate, occupancy and food and beverage operations. Owner Tim Dixon, a long-time developer but first-time hotelier, talks about how turning locals and guests alike into ambassadors has been the key to their success.

Tim Dixon, the owner of the Iron Horse Hotel in Milwaukee

Most developers who venture into hospitality view the independent boutique hotel as their baby — the most draining, hand wringing and rewarding property in their portfolio. For the Iron Horse Hotel, it has been a particular labor of love because our hotel opened simultaneously with the worst credit crunch in U.S. history. That meant opening $7 million short, with no working capital and in a secondary market.

These challenges forced creativity in how we operated and marketed the hotel, and it put our food and beverage outlets front and center. Food and beverage in a 100-room hotel can’t survive on guests alone. Reaching out to locals was vitally important and it has turned out to be the key to our success overall. Turning locals and guests into ambassadors and making the Iron Horse Hotel a destination is the result of our ongoing commitment to the guest experience.

Telling a story
When the local headline the day you open a $39 million hotel in a mid-size market reads, “Shakeout Pounds Market,” you start to get creative with how you market your hotel. We reached out to every major travel writer and publication from New York to LA to get our hotel on the map. As the first and only luxury boutique hotel in Milwaukee, we believed we had a story to tell. We also embraced email marketing, hosted lots of events to invite the public in and jumped on the new “social media” called Twitter and Facebook, which has become the cornerstone of our customer engagement. But most importantly, we focused on giving our guests and locals something to talk about.

I was recently in a meeting with a young entrepreneur who coined a great phrase that summarizes my belief in why the Iron Horse Hotel is successful: “People connect through stories.” The Iron Horse Hotel is a complete story — from beginning to end. And at each turn, each experience, the hotel adds layers to that story.

I believe a great boutique hotel is like a great novel. It has a prelude, a body and a conclusion — and if the story is well written, it leaves you wanting more. From valet and check-in, to the room itself to the food and beverage experience, a hotel has the opportunity to engage the guest. The associates are characters within our novel and essential to narrating our story. We give our guests something to talk about throughout their stay, and most importantly, share with others.

It all starts with the development of the property. I believe the experience we deliver has as much to do with the development of our brand as the physical space. The Iron Horse Hotel is housed in a 100-year-old factory. Built at the onset of the Industrial Revolution, the year 1907 says as much about Milwaukee’s history as it does our building. That history is told to our guests today through vintage furnishings and antiques to era-driven cocktails and a restaurant called Smyth that delivers “new Wisconsin” cuisine. Each associate, from the front desk to housekeeping, is trained to tell our story and give a guided tour to anyone who asks. And a self-guided tour booklet offers a tool for those too shy to ask. Through our culture, associates envelop guests in the story and deliver customer service that goes beyond excellent to personalized.

Why tell a story? Because they are retold. It was once said that everyone knows 100 people. With the onset of Facebook, Twitter, TripAdvisor and Yelp, a single individual can tell their story to tens of thousands of people.

So how does a 100-room hotel in Milwaukee tell its story and ultimately rank among the top hotels in the nation, ranked by Condé Nast Traveler, Tablet Hotels and TripAdvisor? Our strategy was to couple the brand experience with turning locals into ambassadors.

The Iron Horse's summer outdoor venue, The Yard.

In a secondary market, extraordinary is unexpected. While luxury finishes and destination dining are common in Miami and Chicago, in second-tier cities they are rare. The Iron Horse Hotel was built on the premise that to stand out, we had to be outstanding — in design, service and amenities. And while 100 rooms can’t support an extensive food and beverage operation, it can if it attracts locals who, in turn, embrace the property and “make it their own.”

At any time that I’m traveling, for business or leisure, I seek out venues that reflect the local culture. What we’ve done is not only delivered a true Milwaukee experience, but we’ve brought the local culture to our hotel. And through design and configuration, we’ve created “opportunities for interaction.” Ultimately, the hotel and its various venues deliver authentic experiences.

Bringing in locals
Before opening, we were told by one f&b operator after another that a small hotel in Milwaukee would never do more than $2 million in food and beverage sales. Food and beverage revenue was vital to our business plan, so ultimately we decided to do it on our own. Our hotel and f&b would share the same management team, thus ensuring a seamless guest experience. I like to say that the front desk is as concerned about the guest in the lobby who appears to need another glass of wine as my maitre de is about the guest that is struggling with their luggage. But we also realized to achieve our f&b sales goals, we needed to reach out to locals.

So our pricing was aligned with Milwaukee’s upscale bars and restaurants. And our menus were designed to deliver an authentic experience for locals and visitors alike. While it may appear that this is an f&b strategy, it actually turns out to be a significant rooms driver.

In 2008, Milwaukee didn’t have a hotel lobby scene. For months, locals would sheepishly walk in and ask if it was OK to look around. “Of course! Can we give you a tour!” was our staff’s immediate response. Milwaukeeans would be told the story of the Berger Bedding Company that built this last timber frame construction warehouse in 1907. They’d see the 200-year old posts that still support the building today and local Cream City walls and metal fire doors that served as the “insurance policy” at the turn of the century to protect inventory in case of a fire. Staff would point out vintage furnishings from as far away as London and as close as our neighborhood antique shops, as well as the four giant custom wrought iron chandeliers made with throwing knives and motorcycle gears in the lobby. And in the guestrooms, where all tours would lead, locals could take pride in Kohler bath fixtures, locally made artwork and the finest in-room refrigeration units by hometown manufacturer Perlick. In the end, the curious would be shown a menu and encouraged to have a drink in the bar, Branded, or lounge in the lobby (“yes, you can sit here!”) and stay for a great Wisconsin-inspired meal.

Local events from a Prohibition Repeal Party and an annual open-to-the-public New Year’s Eve balloon drop to Thursday Bike Nights and Sunday brunch, were all heavily promoted on the website, through social media and strongly branded emails, posters and check presenters. Without a dollar of advertising spent, the Iron Horse Hotel became known as the place to be, and the hotel to recommend.

Business at the Iron Horse often bubbles over outside the lobby.

Ask any local, “where should I stay?” The answer here is, more often than not, the Iron Horse Hotel. In a short time, locals have embraced the hotel as a destination and source of pride. And nearly 14,000 who ‘like’ us on Facebook and follow us on Twitter have become part of our story given a high level of feedback and engagement.

Investing in the repeat guest
Read our TripAdvisor reviews and you’ll glean a sense of the “Iron Horse” experience. Ranked No. 1 in Milwaukee nine weeks after opening, No. 1 in Wisconsin just a few short months later and No. 11 in the nation in 2010, we are humbled by the reviewers that take the time to include great detail about their stay. While none of our associates wear a nametag, reviews call our the staff by name all the time. Guests write about feeling “at home,” and part of the family. Our strategy of attracting locals and consistently telling our story through our own communications channels and authentic guest experiences is also turning first-timers into repeat guests. From business travelers that make our hotel their home away from home to leisure guests who tell us they actually turn a trip to Milwaukee into a vacation and rarely leave the property, we have become a destination.

The reward for this loyalty is our ability to maintain the position of being Milwaukee’s rate and occupancy leader, both on weekdays and especially weekends. And today, f&b revenue is more than double our original pro forma. But with this comes a sense of responsibility we take seriously. Guests chose to stay with us; less than 5% come through OTAs and third-party sites. Their expectations are high, and our associates are trained to deliver an exceptional level of customer service whether it’s someone’s first or 100th stay. From housekeeping standards for our guestrooms to the dining experience at Smyth and Branded, satisfaction is vital and continuously measured.

I like to say, “I am my customer.” It’s the premise by which this hotel was built. And I’m proud that the Iron Horse Hotel has been called “iconic” by members of the press, Stash Rewards and the Boutique & Lifestyle Lodging Association (BLLA). But it’s the opinions of locals and our overnight guests that make the biggest impact on our bottom line. Our marketing efforts and every aspect of the guest experience are aimed at cultivating ambassadors, engaging with our guests and telling the story of a truly authentic experience.

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