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John Davids
This guy couldn't find a cheap hotel room, so he bought the hotel and now it makes $260 million a year. His name's Harris, and I'm gonna tell you exactly how he did it and so many lessons that you can get from this story and use in your business right now. That's coming up in just a sec. Welcome to the podcast. My name's John Davids, but you can call me J.D. i'm the CEO of Influicity. And on this podcast, I'd like to share the stories of some of my favorite businesses and the people behind them. And if that's your thing, go ahead and subscribe wherever you're listening to this, Share this show with a friend and leave a rating. That's how I know to keep making these things. Get my best stuff to your inbox@johndavids.com and now let's get to the show. You're listening to Making it with John Davidson. All right, so let's go back to the year 1974. Harris wants to take his kids to Disney World, but it's super expensive and the hotels are a fortune. He tries to find a cheaper place to stay nearby and there's no luck. He can't find one. This is crazy. You see, Disney World in 1974 is a hot new theme park. Lots of families are starting to go every year. Why aren't there any affordable places to stay? And that's when Harris gets a big idea. Harris cashes in his life savings and buys a crummy motel. It's eight miles out from Disney World in Orlando. Then he moves in and rolls up his sleeves. He's running the place all by himself. He's working the front desk, he's cleaning the pool, he's changing the light bulbs, everything, getting this place into tip top shape. And pretty soon the rooms are starting to fill up. Word spreads that Harris runs a clean, budget, friendly motel right near Disney World. And soon the rooms are totally packed and the cash is flowing. So Harris goes ahead and keeps all his profits because he's going to spend them on something really important. And that happens. One year later. He picks up a second motel just down the street. And then he runs the exact same playbook. He's running the place himself, keeping the rooms tidy and bright. He's got friendly service and low prices. And again, the rooms are filling up. So he does it again and again and again. He keeps plowing all of his cash back into the company and buying more hotels and fixing them up and making more and more money. Fast forward to 2025. The company has 6,200 rooms across seven properties. Still, with plenty of room to grow, Harris ran a very simple playbook with phenomenal execution. Here are just a few of the big takeaw that I'm going to get into in a lot more detail over this episode. So Harris focused on lean operations from day one. He ran a very tight ship, keeping costs super low while providing a clean, friendly experience. And that's what's important. Next one, Harris grew on cash flow. There's zero debt in this company. He doesn't owe banks any money. Harris bought the hotels with his own cash and ran them profitably. This means slower growth, of course, but total control. And three, Harris built in a growing market. This part is critical. Orlando had 4 million visitors a year when he started in 1974. Today it's got 74 million visitors a year. When your market grows by 20x, it's hard not to win. That's how you make 260 million bucks with a hotel. Alright, so you guys really loved this story when I shared it on social media. Millions of you saw my one minute video across Instagram, Facebook, LinkedIn, TikTok, YouTube. And there are so many really big business lessons that you can get just from looking at this story and how Harris built this company. Let's get into the first big one right now. And it happens at the very beginning of the story. Mm, I'm hungry. You guys hungry? I could go over some fried chicken right now from Jollibee. And no, this is not a commercial for Jollibee. This is a commercial for Influicity. That's my marketing agency. And Jollibee is one of our amazing clients. You can see how we help drive more foot traffic to their restaurants across America. @influicity.com Check out the case study. And hey, while you're there, check out all the other case studies from the amazing clients we work with. Influencer marketing, podcasts, social media content, AI and so much more. And if you want to work with us, just hit the let's talk button over at the top of the website. That's influicity.com and I'll see you there. So we'll go back to 1974 and Disney World has been open for about three years. Disney World Orlando had opened in October of 1971, and Harris Rosen buys that first hotel in 1974. Now this is a rundown quality inn on International Drive in Orlando. It's got 256 rooms. Just a few miles away from Disney World. Now, he puts down $20,000 as a down payment, which is all the savings he has. And the total purchase price at the time is probably somewhere between 500,000 and a million dollars for this Quality Inn. I couldn't find the actual price tag, but that's what other similar hotels were trading for at the time. So he gets a mortgage for somewhere between $480,000 and $980,000. So right there, if you're in the real estate business, you'll already know this. But if you're not, you, it's worth pointing out that real estate is the most leverageable asset in the world. With just $20,000, this guy's able to buy a million dollar asset. He covers just 2% of the million dollars. That's $20,000. And the lender or the bank will cover the other 98%. Because real estate is a proven asset. And hotels have been around for thousands of years in one form or another. So if you're wondering how a guy who's not incredibly wealthy can buy a hotel, I just told you, that's the math. It's also worth pointing out that in 1974, Harris has a background in hotels. He's actually worked at Disney. He helped to plan hotels for this theme park, Walt Disney World, and before that he worked at Hilton. So he knows the hotel business. And that, of course, is going to make lenders happy as well. All right, so Harris picks up this hotel, he renames it from Quality Inn to Rosen Inn International, and then he moves in. He actually has a wife and a few young kids at the time, but he moves in all by himself. He chooses one of the standard guest rooms and makes it his home. And this is where the real work begins. He does every job in the hotel by himself. He works the front desk during the day, he works as the gardener in the afternoons, and he's the security guard at night. I said he moved into the hotel all by himself. I'll be more specific. He moves in with his dog, a German shepherd named Rin Tin Tin. And I guess the dog comes in handy for security. And in the evenings, Harris puts on a clean shirt and heads up to the buffet, where he personally carves roast beef for all the guests. This is 100% true. He apparently carves roast beef every night for two years at the Rosen Inn International. According to company legend, Harris lives at that hotel for 16 years now. A lot of company stories with any company, not just this one. There's always a mix of reality and Mythology. So while I'm sure he did have a room at this hotel, I really doubt that the guy lived there for 16 years away from his family. He probably had a place to crash at the hotel and but lived with his wife and kids. I hope so at least. But that's just a guess. Anyways, even if there's some exaggeration in this company's version of the story, it's still really important to point out. Think about it. The guy who owns the place is carving the roast beef. And this isn't just a way to save money on labor. It's actually a shortcut to learning. By being there, Harris gets a front row seat into every part of the customer experience. He sees what's broken before it becomes a complaint. He hears about feedback directly from the customers without any filters. He knows which rooms book the fastest, which ones guests avoid, and maybe why they avoid them. He can just ask. He figures out how to make check in feel smoother after a long drive. And he watches in real time how tiny touches turn a tired traveler into a lifelong customer. And this kind of proximity is rare for a lot of business owners, right? Let's face it, we all have egos. And it's very different from sitting behind a a desk and looking at a spreadsheet and trying to optimize from a distance. Now, I'm not saying every business owner should be doing every job in their business, but early on, you definitely should be, so you can experience it and understand it viscerally. I like to tell people that at my agency, Influicity, I've done pretty much every job. Now, as we've gotten bigger and grown and added more services, I haven't literally done everything, but for the first five years I actually did. And it helped me learn and scale this agency so much faster than I possibly could have otherwise. And that's what Harris is doing. It's the same reason Howard Schultz, who built Starbucks into the biggest coffee chain in the world, spent a lot of time early on behind the counter at Starbucks, pouring the shots, steaming the milk, blending the drinks. Because he wanted to feel what the customer felt, to understand the business at the ground level. It's the same reason Sam Walton, the founder of Walmart, famously would drive across state lines just to walk through a competitor's store. Sam Walton was notorious for strolling the aisles of Kmart and Price Club, holding his yellow notepad and jotting everything down that he saw. They didn't even care. They knew who he was. They were fine with it. He once Said that he actually spent more time in Kmart stores than, than any Kmart executive. And Sam Walton actually had a term for this. It's an acronym, and I love this. He called it picking their pockets. P O C K E T S, which stands for prices, operations, culture, key item, promotion, expenses, talent and service pockets. This really shows a lot of humility, right guys? Sam Walton was doing this when he was the richest man in the world, running the biggest store in the world. Howard Schultz at Starbucks continues to do it. And yes, Harris Rosen does this early on at his hotel and does it for years. By the time he opens his second hotel one year later, he's basically starting it like it's year two, not year one. And that's a hell of a head start. And this segues nicely into the next big iceberg of a lesson in this story. And that is how Harris bootstraps this entire thing. Let's go all the way back to the beginning one more time, because this is too good to miss. Okay, in 1974, Harris puts down again $20,000 to buy this hotel. And we're going to look at exactly how he pays for this because there's a ton to learn. The financing playbook for this entire business, all seven hotels, all $260 million in annual revenue today can be explained with the business model on that very first property. So I'm going to do the worst thing in the world now. I'm going to do podcast math. But don't worry, I'll keep it straigh super simple. I promise. Okay, hotel number one, Rosen Inn International. It's got 256 rooms. And in 1974, the average daily room rate at a place like this would be somewhere between 20 and 25 bucks a night. So let's say Harris is getting 50% occupancy, which means that the hotel is half filled every night on average, which is super conservative because he's got a hotel right by Disney World. So it was probably way above 50%, but let's just say 50% occupancy. So he's pulling in $2,500 a day in revenue, which is about $900,000 a year. Okay, now let's look at the cost side. Well, our boy's running everything himself, so his margins are ridiculously high. He's not paying anybody, right? He's not paying a general manager, he's not paying a sales team. He's not paying cleaners or gardeners or marketers. It's just him and Rin Tin Tin. So within the first year, this motel becomes profitable. And instead of pulling the money out, he does something almost nobody does in the hospitality industry. He just lets the profit sit, and then he rolls it forward into the next one. And here's a little twist to the story. So I told you. Harris buys his second hotel just one year later in 1975. But here's how he does that. It's kind of a lucky break. He gets the second hotel on a five year lease to own agreement. So the way it works is whoever owned the hotel before Harris says to Harris, I'll lease you my hotel for five years. You pay me every month for those five years, and then at the end of that period, you own it. It's 100% yours. And this is a real sweetheart deal because Harris can just run it and use the profits, which we know he has, because this guy runs profitable hotels to pay the seller. And after five years, the hotel belongs to him. So let's do some back of the napkin math. If hotel number two is also pulling in $900,000 a year in revenue, just like hotel one. And let's say he's running at a 15% profit margin, which is $135,000 a year, Harris could have leased the hotel for $135,000 a year. And then after five years, it's his 100%. All it cost him was five years of profit, and then he gets a full hotel for the rest of his life. Like I said, it's a sweetheart deal. And by the way, guys, the term for all this is seller financing, or a seller's note, which literally just means the seller is giving you the financing to buy the thing from them. And it's how a lot of acquisitions are done in real estate and in private businesses. The seller sometimes finances 25% or 50% of the asset, or it could even be 100% of the asset. I've seen all three and plenty of variations in between. Okay, so that's how Harris gets hotel number two. And today that hotel is called the Rosen Inn. It's pretty close to Universal Studios in Orlando. Now let's look at hotel number three, which happens a full decade after hotel number two. This is in 1984. So he's got hotel number one in 1974. Then hotel number two comes in 1975 pretty quick, because he had that lucky break. And then finally, in 1984, he lands hotel number three. But this one is very different, totally different, which is probably why he needed a full decade to save up for it. You see, the first two he just acquired. Remember, these were already existing hotels, which he bought, refurbished, rebranded, and then just ran as his own. But for hotel number three, he's going to build it from the ground up, entirely by himself. So he acquires 14 acres of land and builds a hotel and names that hotel the Rosen Inn at Point Orlando. He actually names it something else initially, but today it's called Rosen Inn at Point Orlando. So I'm just going to call it that. So just to recap, that first hotel we talked about is 256 rooms. The second hotel was just over 300 rooms. And the third hotel is a big jump. It's over 1,000 rooms. And this is a great move. You see, it's really compounding growth. It's actually the same amount of work. It's just more rooms with a bigger outcome. Now, to be clear, it's probably a little more work at the beginning. I mean, you got to build the hotel, of course, and I'm sure there's a lot more work and a lot more money versus just buying an existing hotel. But he's been at this for 10 years, so he can do it. He's probably making like $5 million a year in revenue at this point. With all the growth, he's got plenty of. Prof. Coming in from those first two hotels. He's got cash flow coming, and he's got a bunch of it saved up. And ironically, here's the crazy part. With all this cash and over a decade of experience, now this is when banks and lenders are probably begging. They're begging to give our boy money because they know that he's a safe choice. This guy's a master. But Harris isn't taking any of it. He. He pays for the third hotel himself. 100% zero debt. And he owns hotel number three outright, just like he owns hotels number one and two outright at this point. And just to wrap up the rest of the seven hotels, I won't go through all of them individually. Hotel number four happens in 1987. It's another 640 rooms. Number five is in 1991, 800 rooms. And this is also an important one because up until now, Harris has just been serving the tourist market. It's a single market of tourists, people who are going to Disneyland and eventually Universal Studios and SeaWorld. Now with number five, he breaks into the convention market. Ooh, convention money. Woo. I love this. People come into Orlando for conferences. He builds this one beside the Orange County Convention Center. There's a lot of cash there. And then he doubles down on that hotel. Number six is another one beside the same convention center, adding another 1300 rooms. And finally, grand finale number seven is an even better concept. Oh, this guy's got variety. It's actually a luxury resort. We got golf, we got a spa, we got more convention center space because he loves that juicy convention center money. Who wouldn't? So with these seven hotels, Harris has got over 6,000 rooms, and he's targeting everybody. Tourists, families, businesses, wealthy travelers, budget travelers, old, young. He's tapped into every person. Basically, if you want to go to Orlando, you can stay at one of Harris's hotels. It's so smart. This guy's cornered the market. All right, let's finish up with probably the most important big picture lesson that you can get from this entire story. If you're spending more than $50,000 a year on marketing, I've something for you. It's a playbook I wrote called how to build a Social Media Selling Machine. You can grab it now for free@johndavis.com playbook. This is the nine step formula we use for our clients at Influicity to turn their social media channels into reliable revenue engines. Grab it right now@johndavids.com playbook. There's so much talk around strategy and tactics and execution and culture and. And this stuff is super important. I talk about it a lot myself. But there's a big piece of the pie that many business builders don't think about, and that's just picking the right market to be in. Right? As Big W always says. And of course, I'm talking about Warren Buffett. I'm not sure why I just said Big W. Maybe it'll catch on. But as Warren Buffett always says, when a management team with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it's the reputation of the business that remains intact. In other words, bad businesses destroy good managers. I don't care how talented you are, don't pick a bad business because you are probably going to fail, period. But here's the other side of that coin. The reverse is also true. If you're a half decent manager, you're kind of good, you sort of know what you're doing, you don't mess things up too bad too often, and you're in a ridiculously amazing business and an amazing market, you're gonna do great because the business fundamentals matter more than how good you are. Put your ego aside. It's true. So what does that mean for Harris Rosen. Well, I'm not saying Harris wasn't a talented entrepreneur or a good leader. I assume he was because so many people on my social media when I talked about him had such great things to say. They love the guy. But what I do know for sure is that this dude picked a ridiculously good business to be in. Oh, what a market. He starts a hotel business in Orlando in 1974. I mean, does this guy have a crystal ball or something? Check out these numbers, guys. 1974, there are 4 million tourists a year in Orlando. And now in 2025, there are 74 million a year. That's an 18.5x increase, not percent, a multiple of 18.5 times. And by the way, I actually left something out, but I'll mention it. Now, Disney world opens in 1971, Sea World opens in 1973, and Harris opens his first hotel in 1974. So he already has those two parks before he even opens his doors for business. And then Universal Studios opens in 1990. There's Epcot, which opens in 1982. Hollywood Studios opens in 1989. The Wizarding World of Harry Potter opens in 2010, which supercharges the attendance at Universal Studios. And then Legoland opens in 2011. Now, Harris obviously couldn't have predicted all this back in 1974, but he didn't need to, because in 1974, he's just building one single hotel. And there's no question that that one hotel will do well, because again, we've got Disney world, we've got SeaWorld. As more attractions open and tourism is clearly growing, he just keeps building. He just goes where the waves are going. He doesn't need to have the greatest hotels in the world. He just needs to do it well in Orlando, which isn't that hard based on all the numbers I just gave you. Let me give you another example, and this one's a bit older. One of the classics, really. One of my favorite examples of someone building in such a brilliant market. So back in the 1950s, there's this guy named Harland Sanders, and you might know him better by the name of Colonel Sanders. Yes, that Colonel Sanders, the KFC guy. Now, he's in his 60s at this time and basically broke. You've all probably heard the story about how Colonel Sanders didn't have his big success with KFC until he was well into his later years, which is true. But here's part of the story that you probably haven't heard before. So Colonel Sanders had owned a little restaurant in a small town in Kentucky for a few decades in the 1930s and 1940s. And that's where he actually comes up with his famous fried chicken recipe, the 11 herbs and spices. And his restaurant is actually doing well for a couple decades. And then in the early 1950s, he starts to see way fewer customers, and the business starts to crater. It eventually goes under. It goes out of business. He loses the whole thing. And this restaurant's been running for decades. It's all he has. And that's why this is terrible. He goes broke. And the reason for all of this was because the US Was building out the interstate highway system. So drivers who would previously drive through a lot of small towns to get across the country were now bypassing all those small towns like his small town in Kentucky, and driving straight by it, probably on the i75. So this is bad because obviously he's out of business. He doesn't have any more foot traffic. There's no more travelers passing through his little town in Kentucky and coming into his restaurant. But the Colonel has a hunch. He's broke, he's not doing well, but he's still got his mind. And he realizes that this interstate highway system is going to change everything. Everything. It's going to make it possible for people to drive across the entire country on highways which didn't exist before at all. It used to be that you would drive through all these small towns to go from one state to the next. Now you can go straight down the road, and that means you're going to need places to eat without getting off the highway. And that insight is why we have KFC today and why KFC grew like crazy. The 11 herbs and spices, they didn't just come out of nowhere. They came because of this insight. So the Colonel starts pitching little diners near highways all across the US and his pitch is very simple. Serve my fried chicken. People love it. I'll give you the recipe. I'll teach you how to cook it in a pressure fryer. And all you got to do is pay me a nickel every time you sell a chicken. It's basically a modified franchise model, and there was probably more to it, but that's the simple idea. So he starts this in the 1950s, and by 1964, there are over 600 KFC franchises serving that famous fried chicken on highways all across the US he picked highways he couldn't fail. So remember this lesson, my friends. Pick a market that's going up, because when demand grows, you grow. And that's the best kind of business to be in just like Harris Rosen. So that's the story of Harris Rosen Rosen Hotels and Resorts. And it's sort of a sad, poetic ending, I guess. Harris actually passed away recently, in April of 2024 at the age of 84. And like I said again, so many people when I posted this story had such great things to say. People who worked with him, for him, around him. On top of all his business success, he was also a philanthropist, giving away plenty of money in the areas of education and community development. And hopefully you've learned a thing or two from how he ran his business. I know I did get my best stuff to your inbox@johndavids.com.