Transcript: Episode 252: Parking Lot Brawl

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[00:00:00] Susan Barry: This is Top Floor with Susan Barry, episode 252. You can find the show notes at topfloorpodcast.com/episode/252.

[00:00:13] 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. Nick Falcone is an entrepreneur, developer, and hospitality innovator whose career spans restaurants, real estate, hospitality, technology, and branding. After getting his start in food and beverage and building a successful BurgerFi franchise portfolio, he co-founded Rentyl Resorts, a company pioneering purpose-built branded residential resorts that blend the best elements of hotels, vacation rentals, and lifestyle destinations. Rentyl Resorts works with major hospitality brands, including Hard Rock and Margaritaville, managing thousands of units across multiple states. Through a unique combination of development, management, branding, and tech, Nick is helping to redefine what hospitality looks like for the next generation of travelers. Today, we are going to talk about all things branded residential, 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 David. David asks, "In the hotel business, people are often classified as either F&B people or rooms people. What is the biggest learning curve for a restaurant person, an F&B person, to be successful in the lodging business?" Such a perfect question for you. You're probably gonna say nothing. I just slid right in, and it was no problem at all, but what do you think, Nick? 

[00:02:23] Nick Falcone: Yeah, thank you for the question, and Susan, thank you so much for having me on the show and for that wonderful intro. I'm flattered. Great question. I would say that there are a lot of nuances that are very different between food and beverage and hospitality. From a learning curve perspective, I would say probably the biggest things that took a little bit of time and effort were really understanding distribution and the complexities of distribution, the various different channels, the technology on how to connect to these channels, and how to maximize the flow through. That was the one that really stuck out to me. 

[00:02:56] Susan Barry: That's interesting. I think I was anticipating that you were gonna say something about inventory, that in a restaurant you don't cook the food until it's ordered, whereas in hotels, all the rooms are there whether you fill them or not. So it's an interesting commentary on the state of distribution that was even more challenging than sort of that inventory nuance.

[00:03:19] Nick Falcone: The foreign nature of the distribution was definitely a challenge, and probably the second one was just sales in general. When I'm cooking burgers and selling fries and whatnot, there wasn't a lot of sales, especially on the B2B level, pitching brands and pitching developers and whatnot, and that was a big learning curve as well for me, but something that we have a lot of fun with.

[00:03:40] Susan Barry: Well, speaking of your successful BurgerFi franchise, what attracted you to that? Why franchising instead of just like a mom-and-pop shop? And I'm curious what you learned from scaling that company or scaling your part of that company. 

[00:04:00] Nick Falcone: Definitely. Yeah. So with franchising, I really chose that path for multiple reasons, but BurgerFi specifically and franchising through BurgerFi, the main decisions were the product. Love the product. When I first came and was introduced to BurgerFi, they only had two locations, so that was another factor that was really attractive was getting in on the ground floor. And feeling a belief in the concept, a belief in the product, being able to get in at that early stage was extremely attractive. And then I think what really took it over the edge for me was the fact that it wasn't just a franchising agreement, it was actually an entire territory that we were able to purchase and get the exclusive rights. So we actually had exclusivity for all of Miami-Dade County, and then we were able to do a few locations in Broward County as well.

[00:04:46] Susan Barry: It's interesting, too, because when you're in that early, you do have the opportunity to put your stamp on what the franchise becomes. So I'm assuming you had the master franchise agreement for that territory. One thing that I don't know how this works, just curious as usual then you have the master franchise, are you then able to go and find other franchisees, or do you still franchise each location yourself? Does that question make sense? 

[00:05:18] Nick Falcone: It does. Yeah, so theoretically, we were able to do both. We chose the route of doing them ourselves and self-performing on the stores, but we had the flexibility to do both. I also just wanna go back to your first question. You asked, as kind of the second part, what did that teach us about scaling and working with the franchisee, a franchisor. And I would say that probably some of the biggest learning lessons were staying clustered, especially in an operational lens. When you're doing an operating business, you don't wanna be too spread out. That's a major factor that I think hurts a lot of operators and hurts scaling companies. And then I would say also just the investment and the importance of investing in your people. The talent, the infrastructure, the way that you could provide training and just culture to really make your company something that people really wanna be a part of. I think that that's an absolute necessity when it comes to scaling a business. 

[00:06:13] Susan Barry: You may be the only person I've ever met that talked about the restaurant business ultimately getting boring, and I know you didn't mean it like the day-to-day was boring, but how did you know it was time to move on, time to pursue a new opportunity versus sort of staying focused where you already were?

[00:06:33] Nick Falcone: Definitely. Yeah, so I'm the type of person that's always looking for what's next, and I'm always looking for how I could push the envelope and take things to the next level. And my team would tell you that as well, that we're very big in celebrating our successes and our wins, but then looking at what's next and how do you take it up a notch. So for us, I think the moment where I would say it became boring was when we just ... We had a lot of people and a lot of process and procedure that were allowing the businesses to run without really my involvement. My brothers, who are my partners, and it got to a point where obviously going into the stores was something that we're always doing, but I noticed that the teams were really lock and step on how we wanted to operate. They were following the procedures. They were motivated. To give you an example, in our first BurgerFi restaurant, we were able to train and certify through our training program 20 managers that became the base for the next four or five stores. So having that base of incredible people really allowed us to start thinking about what's next and how to really go into other areas and really diversify the business. And so that's kinda what I meant by it got boring because at first it was very challenging. When we came into BurgerFi, they had very little process established, especially on the management level, the franchisor, they were very new, so they hadn't established a lot of that yet. And so there were challenges up front where we had to establish that. We had to really create a lot versus just being handed a playbook. And once we got past that, and the teams were really working really well together. Again, it was time to look for something else and see how we could really elevate.

[00:08:14] Susan Barry: Well, and that came out of, I think, a dinner table conversation. You guys sort of conceived of the idea of rental resorts. When you were having the conversation, did it feel like a pipe dream, or did it feel like more than just sort of an interesting idea? Like, how did you decide, "Okay, we've been chatting, but this is actually a real business"?

[00:08:37] Nick Falcone: That's a great question, too. So the dinner table conversation was not that epiphany moment. There was something here that I wanted to explore moment. So to kind of explain to the audience what I mean by that, the conversation was with my family. My father's a developer, a very prominent developer across the state of Florida and in the United States, and he had mainly in his career done single-family home developments that were for primary homebuyers who wanted to live in the home. And this community that he was developing in Orlando was the first time in his career where the owners, the buyers, were not looking to live there. They were looking to rent and do it as an investment. And so he was explaining to me that he had to go hire two rental companies to represent him. He was selling the home, but without being a licensed securities-registered broker, you can't really sell the investment side of it. So you have to pass it off to a rental company to represent that. And he was explaining how these companies, in some cases, were representing the developer well. In other cases, it was hurting sales, and they weren't representing well. At that time, I had never worked in a hotel, never stayed in a vacation rental. I had no knowledge of it whatsoever. And I was just intrigued by the conversation and the fact that he needed assistance, and he needed better support in regards to complementing his business. So the next step was, "Let me go stay in a vacation home and learn about the industry." And as I mentioned to you in our previous conversation, it was probably the worst experience I could ever have, but that's really when I had that epiphany moment that we could do something different than everyone else in the space, and we could really transform vacation home in a way that I think, looking at what we've done now with our platform, you could really, elevate and enhance the industry. And that's what we did. 

[00:10:22] Susan Barry: Well, before we get into that, you have to talk about your first vacation rental experience because I know that it was something else. So what did it reveal about the vacation rental industry that maybe others were missing? 

[00:10:36] Nick Falcone: I didn't know what to expect. I'm used to going to a hotel. You go, and you get your confirmation email, you show up at the hotel, there's a nice check-in and welcome, and the whole nine yards. And at this particular experience, I did the same thing. I pulled up the check-in, I went to the address, and I'm at the house. There's no instructions on what to do, so I'm kinda confused. Where do I go? Who do I speak to? How do I get in? So I called the number on the confirmation email. The gentleman answers and says, "Hi. I represent ABC Rental Company. How can I help you?" I explained to him, "I'm at the house. What do I do?" And his response to me was, "I'm at McDonald's getting lunch." "I'll be there in about 30 minutes or so with your key." 

[00:11:16] Susan Barry: Okay. So what? Sit in your car till then? 

[00:11:20] Nick Falcone: Sat in my car and hung out. By the time he got there, we walked in. The house was messy. There were garbage bags from the previous renter that were still by the front door. It just wasn't a good welcome experience. And then the final straw that is kind of unbelievable is I go into the bathroom, and for whatever reason, I don't know what happened, but the tub in the bathroom was covered in blood. And I can't make this up. 

[00:11:43] Susan Barry: I know I shouldn't laugh, but that's kind of sounds like a movie, right?

[00:11:46] Nick Falcone: Honestly, I was looking over my shoulder like, "Is this a horror movie?" "Do I need to run?" And so I got out of there as quickly as humanly possible. From that point on, I realized, wow, there is something here. We could really focus on elevation, creating expectations, standards, just really do things differently.

[00:12:08] Susan Barry: Well, talk about how you took that experience and created the idea of branded residential resorts. Like what exactly is that? How is it different from your vacation rental experience or a condo, hotel, all of the other sort of lodging options? 

[00:12:26] Nick Falcone: So first and foremost, a branded residential resort, by how we define it, is a purpose-built resort that's made up of homes, with amenities and services like a traditional hotel resort. So imagine you come to a place where you don't sacrifice all those great things you get, like the check-in experience, like the restaurants and the room service and great amenities, 24/7 service. You get all that, but you get that spaciousness and togetherness of being in a home as large as 13 bedrooms. So that to me is what the product is, and again, it was born out of that experience and then follow-up experiences. 'Cause not only did that first experience kind of open my eyes to the opportunities, but then I stayed in many other vacation homes, and the key thing that I found was just the inconsistency. You can go to 10 houses. 

[00:13:13] Susan Barry: So not blood then. 

[00:13:13] Nick Falcone: Not blood. Thank God. Not blood. 

[00:13:15] Susan Barry: Okay, good. I'm glad. 

[00:13:16] Nick Falcone: Yeah, no more blood. So we got that out of our system. 

[00:13:19] Susan Barry: Excellent. 

[00:13:20] Nick Falcone: But yeah, the next ones, I mean, some were amazing. Some were Ritz-Carlton, Four Seasons level, and some were not so much, and in the same community. And that's when I realized, wow, I can go to 10 homes in the same community and have a completely different experience. What about people that wanna know what they're getting, and again, wanna get the best of both worlds, that togetherness with the experience of a resort? And so that's really what we've developed and what to us a branded residential resort is.

[00:13:47] Susan Barry: So I wanna underline this distinction because it took me a minute to get it, so I'm sure for the listener, same thing. That this is not you're snapping up single-family homes in existing neighborhoods and putting a little spit and polish on them. You are building whole neighborhoods to be resorts.

[00:14:07] Nick Falcone: Correct. We're the brand and the management company, and then we work with developers. The developers are building these resorts. We're providing them the brand standards, the playbook on how to do it. Just like a Marriott would provide a developer a playbook on how to do a Marriott branded hotel, we're doing that for our development team as well as third-party developers all over the country, and really guiding them on how to build it and then once it's built, we manage it, we brand it, and we ensure that those standards are kept that I was mentioning before.

[00:14:38] Susan Barry: What are some of the amenities that someone could expect if they went to one of your, I keep wanting to say neighborhood resort. 

[00:14:47] Nick Falcone: Yeah. So imagine, I'll paint a picture. The first one that we did, the Encore Resort at Reunion, you drive in there, and we have what would typically be looked at as a residential clubhouse that becomes our resort amenity center. So we have everything from the check-in to the concierge. We have multiple tennis courts and pickleball courts. We have a soccer field. We have multiple basketball courts, three restaurants. We have a full waterpark, but like big slides, kids' playground area in the waterpark, you name it, cabanas, and just an incredible amount of services that also go to the house too. So imagine, the spa can come to your house. You can get a manicure, a pedicure, and massages right in the house. I can go on and on. Chef services. It's very amenitized. So that's just an example. But golf courses, family entertainment centers, it's incredible what we've been able to do in these residential community resorts.

[00:15:43] Susan Barry: Got it. What do you think, what traveler behaviors are changing or evolving right now that make this model particularly attractive? Could someone have done this 30 years ago and they just didn't think of it, or is there something in the market happening now? 

[00:16:01] Nick Falcone: So I think that I'll answer that question in two different ways. I'll answer from a consumer perspective and a B2B perspective, 'cause I do believe that the latter is what's driving a lot of the market to go in this direction. But from a consumer perspective, I believe that really the trend is just people wanting to travel in multi-generational groups. We see a lot of that. There's a lot more of that happening across the country as well as the international. So kids, mom and dad, grandma and grandpa, let's say, traveling together and wanting to be together in one house. A great example: I have four young kids, and if my wife and I wanted to go on vacation, we didn't have this option. We're typically having to split up in different rooms 'cause my kids aren't old enough to be in a room by themselves. So now all of a sudden, unless I'm able to cram all. I have four of them, so like to put six of us in one room is not very easy. So, we either have to find something like this and/or split up. And so then prior to us having this business, when we would find a vacation home, that was great, but then we missed all the resort experiences. We didn't have all those great things. So I think that that's a big driver is people wanting to be together, wanting to have those experiences, not just in the daytime, but being able to go back to the house, barbecue, hang out by the pool, be together. 

[00:17:19] Susan Barry: That's always the most fun part of a family trip is just the downtime when you're hanging out, making cooking dinner, all that stuff. 

[00:17:28] Nick Falcone: Yeah. And that's what we see people really love about the product or whatnot. So I think that trend is really driving a lot of the travel behavior. We're also seeing corporate groups, which is interesting. Just as a quick segue, we're seeing corporate groups wanna stay in houses, again, for that same reason, bringing their teams together and having those bonding experiences and whatnot in those downtimes. So that's been a major trend. But then, as I was mentioning on the B2B side, what I think is really driving a lot of residential properties is the financial and economic side of it. So what we've been seeing, and I actually had this conversation with one of the CEOs of one of the top four hospitality companies in the world, being Marriott, IHG, Hyatt, Hilton, I won't mention which one, but the CEO said to me, "You know, five years ago, if they got 100 hotel applications, maybe one of them had Resy in it as, as a component of the property." Whereas today he's saying that over 75% of those 100 applications are coming with Resy. And the reason why we believe is because underwriting a hotel today is very difficult. Build costs have gone up, whereas RevPAR hasn't gone up at the same level. So it really hurts the underwriting of these properties, and the lenders are seeing that. Whereas in a residential, in a lot of the states around the country, you could sell houses and then use the deposits from the sales as part of your cap stack, and that really lowers your equity requirement and makes deals easier to underwrite. And so I believe that that's the major trend of why we're seeing this, and we're gonna continue to see it in the near future. So it's a beautiful trend for us. It really supports our business model. 

[00:19:05] Susan Barry: That makes a lot of sense. And that whole residential married to a hotel people have dabbled in that. I opened a hotel that had a residential component, but I don't know that anyone has it down yet. I don't know that there is an operator who has the solid playbook. So that'll be interesting to see evolve. 

[00:19:27] Nick Falcone: Yeah. And I will say that that's what we are. So we're filling that gap.

[00:19:32] Susan Barry: Besides you. Besides you, of course. 

[00:19:34] Nick Falcone: Yeah. Well, no, to your point, that's one of the things we're also really blessed with is we don't really have a true competitor. There are people that will manage a condo hotel, but they just don't have the same expertise. There are a lot of nuances. You have to understand HOAs, associations, club structures, how to sell houses, and whatnot. How the whole rental program works and how to work with hundreds of owners potentially versus one hotel owner. So the blessing for us is that that's where we cut our teeth, and that's what we've been doing for 11 years straight. So we have a major leg up, and I think the fact that you're not really seeing people break into that space is because the vertical integration required to understand it all is just intense. You have to be a developer. You have to understand hospitality brands and software. There's a lot that comes into play to really maximize your position in that space.

[00:20:28] Susan Barry: Yeah, it's sort of a unique mix of skills. We like to make sure that our listeners come away from every single episode of Top Floor with some specific practical tips and ideas to try either in their businesses or in their lives. When you are evaluating a new market, what indicators tell you that a branded residential resort specifically could succeed there?

[00:20:57] Nick Falcone: There's a lot of factors, so I'll kinda touch on maybe one or two just 'cause I could talk for hours on this. But I would say one of the biggest gut checks for us is doing a comparison of sale price to rev par in the market. So for us, a branded residential resort, it really starts before you open the door to the guests. It has to make sense to the home buyers that are coming in to invest in the properties. 'Cause most of the time when we build these purpose-built resorts, you will have some homeowners that will live there and wanna live in a hotel resort experience. Most people are doing it maybe stay a week or two out of the year and then rent it the rest of the time. First and most important thing is to ensure what the market sales price is and what the rev pars are create a potential return for the homeowner or at least cover costs so that the appreciation in the home allows a lift for them. Because if that doesn't happen, you're gonna start selling, and by the time you get maybe a quarter or halfway through the sales, you start operating, and people see that it's upside down, and it kills the rest of your sales. So I would say that's number one, probably the most important thing when it comes to evaluating a location, along with demand factors would be probably the second thing I'll highlight is, once you know that it pencils for the homeowner, then you just have to make sure that you have great travel demand. You're in a space that has natural amenities or potential manmade amenities that drive people to the area and desire for travel to that market. So I'd say those are probably the two biggest ones. 

[00:22:27] Susan Barry: You may not wanna answer this, and also if you don't, I will happily cut it, but I'm just nosy. What is an example of a market where this would not work? 

[00:22:38] Nick Falcone: Let's see. What's an example of a market where this wouldn't work? It really evolves and changes, right? So I would say that it's hard to pinpoint a specific market because, as you know, markets change so drastically. So, like I'll use an example of one. I would say is maybe not the greatest example, but it's one that comes to mind. If you go into the mountain towns, right? A lot of the mountain areas, especially in Colorado in recent years, the price per square foot of homes has almost doubled. Like, if you look in Aspen as an example, which is one of the highest-end markets, there are homes now selling for over 4,000 a foot in Aspen. So when you look at that, have the revPARs doubled? No, they haven't. Now, would that mean that it's not a good investment and you couldn't make money on owning a home in Aspen and renting it? No, I'm not saying that. But I'm saying that the returns have definitely shrunk because of the fact that the real estate's gone up so much and the revPAR hasn't followed suit at that same rate. So I think that's the key thing is just having your finger on the pulse on both of those things and trying to match it as best possible and having a little bit of a crystal ball to say, "Well, where's the market gonna go in the future?" Obviously, none of us have that, but we like to think three to five years ahead on where the market trends are going. 

[00:24:00] Susan Barry: Gotcha. Well, and so would it be accurate to say, like in Aspen in that example, would maybe just require a different time horizon, or is it just you gotta wait and see?

[00:24:14] Nick Falcone: It's just a different appetite, I think. Certain investors are IRR-driven investors, time, speed of money, return. Others are more, "Hey, I wanna have the best real estate and the best locations and sit on it for a long time." So I think it depends on the appetite of the investor. There's no one size fits all. But I think it really matters on how quickly you want that return of capital. 

[00:24:37] Susan Barry: Hospitality is, some would say, overcrowded, certainly crowded with brands and sub-brands. How do you determine whether a brand actually adds value? 

[00:24:50] Nick Falcone: I love that question. So I wanna answer this question carefully 'cause we are partnered with many brands and we think very highly of all the brands. And I think that each one of them, especially more of these traditional hospitality companies that are larger, they have places where they're extremely effective. So I think that's something to be said, and they have a model and a footprint that they've replicated and works over and over. So I think that for those brands, they know what works, they know where their locations work, where their product works. And I would say let's put that aside for a second. What we look for is really authenticity. So what a lot of the brands have done, and I would say this is where maybe they've diluted a bit, is they keep creating more and more of what looks like the same product with a different name on it, and I don't believe in that. I think that for them, there's a reason for it. AOPs wanting to get more volume of product and all that good stuff. 

[00:25:51] Susan Barry: Say what AOPs are in case somebody doesn't know what that means.

[00:25:54] Nick Falcone: An area of protection. So that would be an area in which you can't open another branded hotel of that same brand. 

[00:26:00] Susan Barry: Like this sort of geographic fence.

[00:26:02] Nick Falcone: Exactly right. So I think that on one side there's that, but for us, it's authenticity. I'll use an example of that, hopefully they're listening, and they hear this, and they'll give us some kudos, but I'm not doing it for that reason. Margaritaville, great example. When you think of Margaritaville, and I think anyone could probably say this, it's not just a name, there's an essence behind it. Whether you're a Jimmy Buffett fan, and that's where you learned about it, or whether maybe you stayed at one of the properties or you drank one of their mixed drinks or whatever it is, there's an experience, there's an authenticity, and there's something that people expect when they come to a Margaritaville. You almost get transported to a different place. And so for us, when we're thinking about brands, we like to think about not just what's gonna power the distribution, but what's gonna create an amazing, authentic identity behind the product and behind the property. And so I would say that's the biggest thing that we look for when we're selecting a brand.

[00:27:01] Susan Barry: That makes a lot of sense, and I could not agree more about Margaritaville. That people throw the word lifestyle around all the time, and Margaritaville is a true lifestyle brand. You know what exactly what to expect and what you're going to get with a Margaritaville branded anything. You have, at this point, built businesses, restaurants, hospitality, real estate, technology, operations. You've done it all. What advice do you have for entrepreneurs who want to diversify without losing focus? Asking for a friend, her name is Susan Barry. I am a multi-passionate entrepreneur, and I sometimes get feedback that I need to be more focused.

[00:27:49] Nick Falcone: I think that if you're an entrepreneur, I think you're always going to maybe go down that path where you have to kind of reel it back in and say, "Let's keep the guardrails on and stay focused." So I will say that we're all guilty of that. With that being said, growth and diversification to me is a good thing if it's done in a measured way, in a structured way, and if it's complementary to the base of what you already have. So I think that what I wouldn't recommend to people is just build five businesses at the same time. There are a lot of challenges, a lot of complexities. Most likely, 99 out of 100 times you're not gonna be successful. So first and foremost, layer the businesses. Master one, and then figure out how you can complement that potentially. What's something that you could do to take that business to the next level? So a great example in our world, we built rental resorts. Maybe about five or six years later, we developed our own in-house marketing agency because I was using a lot of third parties, and I was realizing two things. Number one,  they have 20 different client types. Everything from every industry known to man, hundreds of clients, and maybe you're not getting the A-team and the people that really understand your business. But then, also what I started realizing was I'm paying so much in fees to these agencies that I could just build an in-house team and save money and have people that are dedicated to my account. So that was a measured, calculated way to build a new business, but it wasn't done in a way that was out of cadence or trying to do too many things at the same time. So that'd be my biggest recommendation. And then going back to something I said earlier, stay clustered. If you're an operational business, you don't wanna be everywhere. That's the death of a lot of operational companies. So I would always recommend building a clustered market, build the infrastructure for that before you go to a new market.

[00:29:51] Susan Barry: I totally agree, and I think that is advice that is often ignored in our industry. Well, we have reached the fortune-telling portion of our program, so now you have to predict the future. And I will let you know, if you get it right. No big deal. What is a prediction that you have about the future of branded residential resorts?

[00:30:14] Nick Falcone: For all the reasons I mentioned, the financial reasons and underwriting, the fact that people are demanding these larger accommodations, I do believe that's gonna be a big component to the hospitality industry as we move forward. The other thing that I'll project and predict and, and something that we're really focused on is not just having these products in a condo vertical hotel format, where you're building up, but more of a horizontal format. I believe that's where these products will actually have the most success, and I think that's also where there's the most uniqueness behind the product of people being able to stay in these large, up to 13-bedroom houses with amazing amenity packages and private pools and everything else. It's just an incredible experience, and I do believe that a lot more is gonna be heading in that direction. And the reason I feel that is that I believe it's less risk with high reward. And what I mean by that, when you're building a tower, if it's an 80-story tower, you can't stop at floor 50, theoretically. I guess maybe you could change the plans and try to put a roof on floor 50.

[00:31:18] Susan Barry: Might be a little awkward. 

[00:31:19] Nick Falcone: Yeah. When you have entitlements and architectural design, you can't just change that midstream, right? The risk you're taking on having to top that building off and the expense and whatnot, what happens if your sales don't go the way you expect? You could lose a lot of money. Whereas in single-family, you can kind of do an even flow. You could sell as you go. You could stop building. You're building one house at a time, so the risk level is much lower. Whereas at the same time, these houses generate incredible revPARs. And so if you are successful and you're able to build out the entire property, the upside that that creates compared to a traditional, let's call it condo hotel format, is just off the charts. I think a lot of product is really gonna drive in that direction in the near future. 

[00:32:07] Susan Barry: Okay. Do you think if you look into your crystal ball 10 years down the road, 15 years down the road, what do you think that travelers will expect from hospitality that they don't expect today? I mean, this is a billion-dollar question, so maybe you don't wanna tell me what you really think. 

[00:32:27] Nick Falcone: No, I think that more and more consumers. I would say if years ago it was more about, "I need a place to sleep," "I'm going somewhere, I need a place to sleep." Obviously that's continued to evolve where now it's experience-based. There's so much data out there. I'm not saying anything that probably a lot of people don't know. But there's so much data out there in regards to people making travel decisions based on experiences, not even location or dates anymore. It's "Here's what I wanna do. Let me go find it and find a time in which I can do it." So I think that that's gonna continue to happen. But I think that the expectation, especially with AI and technology and things becoming less human, to me, I think that's actually gonna create a reverse where if you look forward 15 years, I think that human-based service is gonna be something that a lot of people are gonna wanna demand and want to have. And not lose that human touch and that integrity behind the real feeling you get from a hospitality person or whatnot. So, to me, that's what I would predict in my crystal ball is that there's gonna be a lot of desire for more of that human touch and that high level of service.

[00:33:36] Susan Barry: I think you're totally right. There's this phrase that's been sort of rolling around in my head, which is friction as the new luxury. And I don't know if that's the exact right way to phrase it, but it's sort of like an ROI calculation. Like, the most difficult things to measure always have the highest return on investment. The thing that is the most difficult to get or achieve or experience might just be the most luxurious. And is the friction of that somehow the counterbalance to like AI everything? 

[00:34:17] Nick Falcone: Yeah. Yep, I agree. Yeah, I think we're gonna see a lot of balancing, especially as it becomes more prevalent.

[00:34:25] Susan Barry: If you could wave a magic wand and change one thing about hospitality development as a discipline, what would that be? 

[00:34:34] Nick Falcone: I'm surprised this hasn't been done yet, and my father and brothers and I talk about this all the time, but the automation this is kind of going backwards on what I just said regarding service, but I'm not anti-tech. I love tech, but you think about the permitting process and how broken that is in most areas. How is that not automated through a computer system mind-boggling to me because that's the bane of most developers' existence in today's world. If you're doing a new build project, it's pretty much, at minimum, almost a five-year timeline to get it built and developed because of permits, entitlements, everything you have to go through. So if there was one thing that I think could change is put that through an AI or a tech program and have it where permits are approved and/or giving feedback in less than 24 hours. 

[00:35:25] Susan Barry: Yes, but then where will bribery and grift fit in a technology? 

[00:35:30] Nick Falcone: I'm right there with you. Yes. I'm sure someone smart can build that into the tech.

[00:35:35] Susan Barry: Yes, exactly. Just put in, like, an extra 1% fee. And that can be the bribery charge. Okay, folks, before we tell Nick goodbye, we are going to head down to the loading dock, where all of the best stories get told.

Elevator voice announces, “Going down.”

[00:35:53] Susan Barry: Nick, what is a story you would only tell me on the loading dock? 

[00:35:56] Nick Falcone: Okay, so a loading dock story. As you can imagine, being in food and beverage, hospitality, and other things, we have quite a bit of them. I'll keep it, not knowing the audience and whatnot, I'll keep it a little bit more PG-13 or whatnot, versus X-rated here. But I would say that one that really sticks out to me was actually one of the first experiences I had in my first restaurant. I was a young man, 24 years old at the time, and so we had a landlord that was a very interesting character. The landlord actually owned a business that was a restaurant that was two doors down from our restaurant.

And I swear to you, it must have been a front for something because I never saw people actually eating in there, and it was very interesting, a little shady. 

[00:36:42] Susan Barry: And he was the Burberry and grift restaurant, for sure. 

[00:36:45] Nick Falcone: Yeah, 100%. We had an up-and-down relationship with these individuals. They were a little bit unique. And so, for those that are familiar with South Florida, we had our location in Fort Lauderdale, right across from the Galleria Mall. And that was the entrance every year. That was kind of the main entrance to the Air and Sea Show that happens once a year in South Florida, and it's a massive event. I wanna say every year it brings out probably half a million to a million people to the beach. And we were so excited. My brothers and I, we were counting down the days. We were projecting the sales. We were all ready to go. We had a huge team there. And we were the last stop, literally, before you would go to the beach. And we said, "Man, this is gonna be the best day we've ever had." 

[00:37:30] Nick Falcone: And so we get to that day, and I pull up to the parking lot, and the parking lot's chained off, and there's a sign. And the landlord had people out there saying, "Pay for parking," "$50 for parking." They literally cut off our entire lot, okay? So I immediately go, and I check my lease, 'cause I'm like, "Man, this is gonna kill our entire day. This is crazy." And I see in the lease that they can't do that. We have access to the parking. They can't charge for parking, all this stuff. So I politely go to the landlord, and I ask them, "Can you please take down the sign? This is a really important day for us. I need the parking." They refused, which was kinda interesting. So I will be very direct and honest. I have a tendency to not like to take no for an answer, especially when I'm legally correct. And so as politely as I could, I went out, and I moved the sign, and I opened up the chain, and I said, "I'm going to allow my guests into the parking lot today." The next thing I know, it was like four ninjas came around me in, like, all areas. I had four representatives, as well as one of them being the landlord, surround me, and next thing I know, I had them all jumping on me, attacking me. Like, I kid you not. And so I'm trying to throw them off. I'm not trying to literally get in a fight with my landlord, so I try to throw them off and just get away, and next thing I know, one of them pretends to drop to the ground, and next thing I know, the next day they come to my store, and they say, "The person died." They, they make up a whole story. I swear to God, they said, "The person died," and they're trying to, like, serve me a lawsuit, and next thing I know, a week later, I see the person walk into the restaurant. So, yeah. 

[00:39:08] Susan Barry: Did you think he really died? No, definitely not. Like, did they get you for a minute? No.

[00:39:12] Nick Falcone: No, no, 'cause I didn't do anything, like, physically harmful to the person, so I'm like, there's no way. This was probably, like, three months into owning my first ever business, and I'll never forget that experience. It was incredible.

[00:39:26] Susan Barry:  Oh my Lord. So that's one of many lessons. That sounds like a Carl Hiaasen novel. So you were only three months into what? A five-year lease? How long were you there? 

[00:39:40] Nick Falcone: I wanna say, we literally just exited that store after 15 years. 

[00:39:46] Susan Barry: How did you make that work for 15 years? 

[00:39:50] Nick Falcone: A lot of patience, and luckily I had, as I mentioned, a lot of good people, so I was able to focus on the next stores and allow people to manage that one. So I had minimal face time from that point moving forward with the landlord. 

[00:40:04] Susan Barry: Holy moly. That is crazy. 

[00:40:09] Nick Falcone: It was definitely a wild experience, definitely something I did not expect when I went into work that day. 

[00:40:14] Susan Barry: Nick Falcone, thank you so much for being here. I know our listeners learned a lot, and I really appreciate you riding with us to the top floor.

[00:40:23] Nick Falcone: Thank you so much for having me. It was an absolute pleasure. Really appreciate you. 

[00:40:27] Susan Barry: Thank you for listening. You can find the show notes at topfloorpodcast.com/episode/252. 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.

[00:41:03] 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.