Transcript: Episode 227: Next Up, Locusts
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[00:00:00] Susan Barry: This is Top Floor with Susan Barry, episode 227. You can find the show notes at topfloorpodcast.com/episode/227.
[00:00:14] Narrator: Welcome to Top Floor with Susan Barry. This weekly podcast ride up to the top floor features tangible tips and excellent stories from the experts and characters who elevate hospitality. And now your host and elevator operator, Susan Barry.
[00:00:32] Susan Barry: Welcome to the show. Gary Brown began his career as an attorney and CPA. A side hustle with his brother flipping Manhattan townhouses drew him into property and ultimately into hospitality. Leveraging a family background in high-end furniture and design, they began furnishing their own apartments, stumbled into the corporate housing world, and built Furnished Quarters into one of the largest providers in the United States with core lease inventory across greater New York City, Boston, Cambridge, and the Bay Area. Gary's team runs a 24/7 service-first operation, powered by tech and an in-house design studio. Today, we are going to talk about corporate housing as hospitality, but before we jump in, we need to answer the call button.
Call button rings…
The emergency call button is our hotline for hospitality professionals who have burning questions. If you would like to submit a question, you can call or text me at (850) 404-9630. Today's question was submitted by Shona and Shona asks, what is the worst piece of business advice you've ever been given? What do you think, Gary?
[00:01:57] Gary Brown: First of all, thanks for having me on the show. Boy, that's a question I've never been asked before. Well, I can tell you that earlier in my career, well, for myself, personally, I resigned from the small law firm I was working for and people came to me and say to go into real estate because my brother and I had been investing in real estate for a few years prior to that. And someone came to me and said, Gary, I said, your mom and dad spent a lot of money on your education. The hearing was a CP attorney, all that. Spent a handful of years in a professional role. I said, what are you doing? You're giving up a career. So it gave me some pause for someone to second-guess where I was going. I had two young children at the time, and there I was embarking on a brand new career. I had to earn my way. No one was paying me to come to work every day. So that was bad advice and I'm glad I didn't take it.
[00:02:59] Susan Barry: Excellent. Well, after you started as an attorney and a CPA. What was the moment where you knew the sort of spreadsheet world wasn't for you?
[00:03:11] Gary Brown: Oh, pretty early on. Didn't like having to track every phone call. Well, back then, we weren't emailing. Any document I had to edit, etc., you had to track your time, especially as an attorney and that wasn't much fun. And I also thought counseling clients in the business world opened me up to many sorts of businesses and I said, boy, I could do that. I'd rather be the owner than the professional giving the advice.
[00:03:45] Susan Barry: I know that your family's furniture design roots show up in your business, probably even still today. Talk about that, how you learned about taste and sort of design standards and probably hustle, I would guess, from your family business.
[00:04:02] Gary Brown: That's a great question. Not a great question for me. My partner is my brother Steve and he inherited my dad's design gene. I didn't inherit any part of that. So I'll talk about my brother. So he goes twice a year to North Carolina to the furniture show. My brother had been to Germany a couple of times for this ginormous houseware show. Anything that you would find in your kitchen or bathroom can be found there. And of course, great help going to that show to furnish our apartments.
[00:04:36] Susan Barry: Was your mom in the family business or just your dad?
[00:04:40] Gary Brown: My mom raised three boys. We were quite active and she spent a lot of time with us for sure growing up. But I think as we got older, she would spend more and more time in the office and she definitely did help my dad for sure.
[00:04:55] Susan Barry: Maybe you got the CPA attorney genes from her, if your brother got the design genes from your father.
[00:05:01] Gary Brown: Perhaps. My dad told me when I was thinking about my career in college and all that sort of thing, he says, you know what? You can do anything you wanna do in your life in the business real, but as long as you're a CPA attorney, I'm good with that. He had a really good friend who was both an attorney, CPA. In fact, my second job as an attorney was working for his good friend, and that lasted a couple of years. Before I realized this was not the best road for myself.
[00:05:28] Susan Barry: Gotcha. Well, you mentioned your brother. You have been partners with your brother since you were in your 20s. I'm curious if the two of you have any rules to keep the peace and if you've ever broken those rules, like I cannot imagine being in business with my sister. I love her. Could never be in business with her.
[00:05:49] Gary Brown: That's a really, really good question. We say to each other all the time, get outta my lane. Sometimes I'll step into his purview and vice versa. But we really approach our businesses from a totally different angle. We have pillow fights sometimes in front of the kids that I call them when we're on with our team. And we may wanna argue a point. It’s a pillow fight. It's nothing that'll ever cause any long-term harm. We certainly have disagreements now and then, but we can really finish each other's sentences. We know what the other one's thinking before we even ask the question. So we've been very fortunate since, in our early 20s, we started investing in real estate together at a very young age. And it's really about 40 years. Pretty incredible.
[00:06:38] Susan Barry: And that is pretty incredible. You refer to furnished Quarters as a hospitality company versus like a corporate housing company. For someone who is picturing what you do is like Airbnb, but longer. What is the biggest misconception you would correct about that?
[00:06:59] Gary Brown: Well, people might think of us as a real estate company. Sure, the asset is the actual apartment, but that's like 10% of what creates a good stay with and it's not just the apartment, the apartments gotta be great, of course. That's the barrier to entry. You gotta have some nice, but service, service, service relationships with your clients, that's everything. Meeting your clients' expectations once things go wrong every day. Things go wrong in an apartment, right? The lights could go out. All sorts of things can go wrong. So, it's how you meet that client's expectation. Talk to 'em on the phone and say, “Alright, we got a problem here. Here's our next step. You're gonna hear from me in an hour, two hours the next day.” And you gotta communicate with your client, but it's all about service.
[00:07:56] Susan Barry: I think moving to a big city sometimes requires a reality check for people about things like, I hate to say this word out loud, but rats, noise, construction, all that kind of stuff. How do you prepare guests for the New York of it all without scaring them? Or do you just not worry about scaring them?
[00:08:18] Gary Brown: We deal with that every single day. The typical problem comes when someone's coming from, let's say, where I live part-time, Southern California. Southern California living versus Manhattan. You're right in Manhattan, there are rats in the street, mice do make it into homes sometimes, there are cockroaches, all those sorts of things. So we do actually connect with our clients and let 'em know that, especially when you're in New York. Now we're in a bunch of markets other than New York, but certainly in Manhattan. Keep your food inside lock containers, inside the refrigerator, etc., because of the inherit insect problem. So we do give 'em a heads up before they move in. And then we do our best for sure. I mean, there's nothing you can do about the rats in Manhattan. They just exist. Okay? You come out at night, my wife and I walk the city. It freaks her out. Honestly, anytime she comes across a rat, but they exist.
[00:09:13] Susan Barry: Right? It's like roaches in the south. They're here. They just are. It's not a reflection on your housekeeping.
[00:09:19] Gary Brown: There you go. There you go. But we do tell people and we have exterminators come into our buildings often to do preventative maintenance. So they're aware of it in that way for sure. And there's a noise issue. I talk about that Southern California client, they're not used to that noise and I'm not so sure we really prepare them ahead of time. But when things do come up, you can be on the 50th floor. That noise can tunnel up to your apartment. There's not much you can do about it. Unfortunately, it's just part of the experience of living in New York City.
[00:09:52] Susan Barry: Yeah. You have to hand out earplugs as everybody arrives, right?
[00:09:55] Gary Brown: Well, we actually do offer noise machines for sure. And we suggest the earplugs as well. Yes.
[00:10:02] Susan Barry: Excellent. Well, I get the sense that two of your big segments of business are relocation and entertainment. Can you talk about what makes those sorts of verticals different operationally? Like, do they have different budgets, different lead times? How are those two things different and how are they the same?
[00:10:25] Gary Brown: You're spot on again with your questions. Those are major verticals for us. Relocation, it said, where's our revenues come from? Half of it's due to relocation. And candidly, that business is down right now for a lot of reasons. The political environment, this issue that’s going out here in the US. Folks hearing negative stories about the United States coming to the US has certainly reduced that volume. So those major companies that handle corporate relocation are seeing a downturn in their business. Entertainment's been strong. Entertainment was the first vertical that came back after COVID. Those studios, they were doing double seasons, so they would book instead of six months at a time. We do work with HBO, Netflix, and all those production companies. And maybe they'll bring a crew for six months to Brooklyn, New York, wherever, New Jersey. They were doing double seasons back to back, so that was really good for our business.
[00:11:35] Susan Barry: And you are housing like the super famous movie stars or a crew or all of the above?
[00:11:41] Gary Brown: Occasionally, the names that we all heard of. We not get Tom Cruise, but we get other A-list type actors as well. But as cinematographers, it's the assistant director's crew. All sorts, when you shoot a movie in New York City, some you gotta live somewhere. You certainly don't wanna live in a hotel for six months. So you get a fully equipped apartment, nice space versus a cramped hotel room, your own kitchen, etc. But it is a major vertical for us, for sure.
[00:12:10] Susan Barry: And how do you find out about the schedules for that stuff? Or do they just come to you?
[00:12:15] Gary Brown: Well, in any business, it's relationship selling. People certainly know of us, but we have sales folks on our team that have those lifelong connections. One woman who works for us, I don't wanna name the actress, but one of these A-list actresses, one of her best friends. So she's very, very, very close. Yeah, for sure. It's an end. And that certainly helped. And we've had models and all sorts of folks that we all have heard of. So the team gets excited about those types of things, but we have to be quite discreet, that's for sure. Sometimes we sent out doorman lists, sometimes we don't even put out the real name.
[00:13:02] Susan Barry: Oh, that's interesting. We like to make sure that our listeners come away from every single episode of Top Floor with some practical, specific tips to try either in their businesses or their lives, or both. What are a couple of things that you have implemented to reduce the move-in day complaints or like those first couple of days? I know we rented out our house for a year when I was doing a project in another city and the company was like, don't worry. They're gonna complain about everything for the first like week or two weeks, and then it'll stop. And it was right. How do you make that not happen?
[00:13:45] Gary Brown: Oh boy. I keep on complimenting you, but honestly, really great question, because the number one thing about a successful stay is the first moment you enter that apartment and how you get there. So it is just so critical. So prior to the guests arriving, we do a lot of things. We have our housekeeper come in and we have a furnished quarter employee, inspect the apartment and make sure there are no issues. We often do a pre-move-out inspection to see what we're running up against. Do you need a paint job? Some touch-up, replacement of some of the items in the apartment, because a lot of times we'll book. Could be someone leaves on a Monday and someone's coming in on Tuesday afternoon, so we gotta be really ready. But we typically allow two or three days between stays just to really make sure we have enough time to set the apartment and make it look perfect. It's gotta be mink condition when they move in. Besides the physical part of the apartment. Very detailed movement instructions. If it's a lockbox, it's a picture lockbox where it is in the code. And people, unfortunately, sometimes don't read their emails, but it's really critical that they are aware of that. The other thing that we do is we do call our guests after arrival and make sure they're happy. What can we do for you and make sure that things are going well. But of course, there are things that can go wrong on move-in, and we can talk about that another time, but on this call, I think there's time for that but we'll talk about those issues too.
[00:15:17] Susan Barry: Well, I know attending conferences, or I'm guessing this is a part of your sales strategy, tends to be the case in hospitality that getting together makes a big difference in terms of moving deals forward. Are there any commonalities about the events that really make deals happen that sort of move your pipeline forward, versus things that are just like a waste of time and money?
[00:15:43] Gary Brown: Wow. We do spend a lot of time at conferences, especially since COVID, getting that FaceTime with a client or potential client is so critical. If you can secure a meeting with someone ahead of a conference is certainly. I think most of the work you do at conferences ahead of time, securing those appointments. I believe that your close rate will be much higher when you're actually in front of that person. So that is just so critical. It's so difficult when you go to a conference unless you're exhibiting. We certainly exhibit at plenty of conferences. A lot of conferences. We don't just randomly find someone who's the right person to talk to. It's difficult. You are just frankly lucky. You gotta be very social at those cocktail hours and at sessions that you may go to. Very difficult. So our team focuses on the pre-conference work. Really, really important.
[00:16:38] Susan Barry: That makes a lot of sense. From my perspective, I love to go to conferences. I go all the time. I think that one thing, like if a listener is thinking about adding this to their sales strategy. You need to be committed to multiple years, one year in and out of a conference does not sales strategy make because, as you said, it's really hard to just show up and meet people and make deals. You need to build those relationships over time, after time, after time.
[00:17:09] Gary Brown: Oh, totally agree. And also, I wanted to add as far as conferences. We have sales folks across the country, but we really encourage them to spend time in their local markets, going to meetings, joining associations, because you just never know who you're gonna meet. It's a small world. You're sitting in North Carolina. You never know who's attending these business-type conferences and what needs they may have across the globe. And we're a global company. Not only do we serve our local markets that we carry inventory, but we also have partners that we can book anybody literally across the globe.
[00:17:46] Susan Barry: That's a really good tip. I don't think I would've thought of that, 'cause when you've got a remote Salesforce, they're sort of like clickety clocking at their desk every day. Maybe not thinking about going to the Rotary or whatever.
[00:17:57] Gary Brown: Right? Oh, absolutely. A hundred percent.
[00:17:59] Susan Barry: Interesting. Well, we have reached the fortune telling portion of our show, so you are gonna have to predict the future, and then we'll come back and see if you got it right. What is a prediction that you have about the future of corporate housing and extended stay hospitality?
[00:18:17] Gary Brown: You know, since COVID, no one knew what the heck. What is the future? What is the new normal? I think finally we have settled in. Not just post-COVID, but the political environment has changed dramatically. But now we've settled into this new normal. They always say Wall Street's concerned about the unknown. I think the know now is there's gonna be a lot of talk, a lot of disruption as far as what the political commentators are talking about, what that means for our country and our economy. But we're kind of used to that noise. So I think companies now where they were holding back on investment and business travel and relocations and so forth. I think they're just used to that noise. We're way past COVID and the new normal is what we have today. So we're fairly optimistic, frankly, we talk to our clients all the time. We have quarterly meetings with our major clients and we try to figure out what their plans are for the future. And we're hearing from clients that they are investing in their people and they're growing. So we're fairly optimistic, but we're also very cautious. We learned a lot of lessons from COVID. We certainly learn lessons from in recessions in the past 9/11. I can go that far back. And we come out of those events more cautious. And as we're 28 years now into this business, we know there's cycles, but we're pretty confident in our future, and we have clients telling us that they're out pretty positive, so we're that way as well.
[00:19:53] Susan Barry: That's good news. Well, if you could wave a magic wand and change one thing about how corporate housing works right now, what would that be?
[00:20:02] Gary Brown: Wow, that's an interesting question. I'll just say what I used to say. I used to say that corporate housing was a sector that no one knew about. I'm very active in our national organization and we always talk about having a media campaign. You have to spend millions and millions of dollars from going back a number of years now to really let someone understand that other than hotel or extended say there's something called corporate housing. But now with Airbnb, that really is a game changer. Everybody's aware of this type of hospitality. So that's really helped our business. We actually are on Airbnb ourselves. Not a big vertical for us, but we are on there.
[00:20:51] Susan Barry: Oh. How do you manage that inventory? Like, how do you decide what to offer? Or do you just have someone who's doing it all the time?
[00:20:58] Gary Brown: We have someone. You have to actually have an individual name on there so someone can call. But we do have someone, but we have a whole team behind it. It's not just one person who has to work 24/7 because Airbnb, you've gotta respond very quickly, certainly within 24 hours. But we have a team behind that but it's helpful. We get bookings and occasionally a single booking turns into a corporate client. Companies like ours are really striving for. We do a fair amount of individual business, but again, individual business can turn into a large corporate account. It happened many times before, for sure.
[00:21:34] Susan Barry: Okay, folks, before we tell Gary goodbye, we are going to head down to the loading dock where all of the best stories get told.
Elevator voice announces, “Going down.”
[00:21:47] Susan Barry: Gary, what is a story you would only tell us on the loading dock?
[00:21:52] Gary Brown: Okay, I've got a story for you. It happened just a few months ago. So we landed this one major account, I'll just say it's a Fortune 100 company and so excited about this account and it's all about service, right? So literally like two weeks into the account. We had a really bad day, we had two events happen that has never, ever happened before at Furnished Borders. And one was that the electricity in the apartment was shut off. Hundred percent shut off the super goes in. Can't figure it out. Can't figure it out. Can't figure it out. But luckily, in this particular guest, as we call 'em, I don't call them tenants, this guest was super, super nice. They're in a nice one-bedroom and we're able to transfer them to a two-bedroom, very close by. We paid for the Ubers and so forth. Turns out the next morning. Well, why do they have an old electric? Well, we called the local utility ConEdison, New York, and they turned off the meter. They shut 'em down and they shut off the wrong meter. Someone else had to pay their bill. We couldn't figure that out. It was like three or four in the afternoon, like, “What the heck is going on?” So this is one, the same day, like an hour earlier, another of our guests in the same building. Their bathroom got flooded, like a really bad flood from the unit above them. That's the thing about vertical living, right? Someone's got a leak. So that one, again, we had to do a transfer, not our fault. And these are things that you cannot plan for.
[00:23:23] Susan Barry: Were you just like waiting for locusts to come next? Like, what, how many plagues are you gonna have?
[00:23:29] Gary Brown: I tell you, I tell you. So I always say that, when things go wrong in the apartments and we run a pretty large company and things go wrong every single day, it's all about the client. Now it's an opportunity for client recovery. So we give 'em a gift card for dinner and we move them and pay for their Ubers and all that kind of thing and move 'em back and all that sort of thing. So it's just holding their hand while these disasters are happening. Look, most people who stay with us their lives are turned upside down. They're moving, they're getting divorced. There's a hospital stay, all sorts of reasons why. And it's, it's tough enough. So we really gotta be there to hold their hand and make things right, especially when they go wrong. Unfortunately, that was a tough day.
[00:24:20] Susan Barry: Well, here's hoping that you do not encounter any more days like that in the coming year. Gary Brown, thank you so much for being here. I know that our listeners learned a lot about corporate housing, and I really appreciate you riding with us to the top floor.
[00:24:35] Gary Brown: Susan, thanks so much. I really enjoyed it.
[00:24:38] Susan Barry: Thank you for listening. You can find the show notes at topfloorpodcast.com/episode/227. Jonathan Albano is our editor, producer, and all-around genius. He even wrote and performed our theme song with vocals by Cameron Albano. You can subscribe to Top Floor on Apple Podcasts, Spotify, or wherever you like to listen, and your rating or review will go a long way in helping us give you more of what you like.
[00:25:15] Narrator: Thanks for listening to the Top Floor podcast at www.topfloorpodcast.com. Have a hospitality marketing question? Reach us at 850-404-9630 to be featured in a future episode.