For 2 Hoteliers, A Freewheeling Business Style
By JOHN HOLUSHA
Sunday July 4, 2004
THE organization owns or has interests in 20 one-of-a-kind Manhattan hotels with more than 4,000 rooms. It is preparing to develop a hotel in TriBeCa with Robert DeNiro as a partner, is converting a landmarked office building at 90 West Street into residences and has several other residential projects under way.
The organization consists of two guys with cellphones.
Richard Born and Ira Drukier manage properties as diverse as the Mercer Hotel in SoHo and the Travel Inn on West 42nd Street without a staff. They work out of separate offices. While one is developing a project, the other is out looking for investment opportunities.
Despite their unorthodox operating style, the two have built up one of the largest independently owned portfolios of property in Manhattan over the last 20 years. In addition to the DeNiro project, they are refurbishing the old Gorham Hotel on 55th Street, which has been renamed the Blakely, and developing residential condominium projects at Perry Street and at Bond and Lafayette Streets in Greenwich Village -- the latter with another noted hotelier, Ian Schrager.
And they are participating in the reconstruction of 90 West Street, a 1907 building designed by Cass Gilbert, which was badly damaged in the World Trade Center collapse.
They did not come to real estate development by a traditional business school route. Mr. Born is a medical doctor who dropped out of a surgical residency program in 1985 to dabble in real estate. Mr. Drukier has a doctorate in electrical engineering and did research at RCA Laboratories before founding several technically oriented companies.
He joined Mr. Born in 1985 -- they knew each other because their fathers had been business partners -- and the two have been operating in their unorthodox style since then.
"We did a deal with an opportunity fund once," Mr. Born said, "and they asked us about our corporate structure. I put my cellphone on the table and so did Ira. That's it. We don't have assistants, we don't have a C.F.O., we don't have people."
Each property, he said, is run as an independent business with its own management and staff. Because the hotels are in a variety of categories -- some large, some small, some expensive, some for those on budgets -- no attempt has been made to develop them as a brand, he said.
Having each one stand on its own avoids the complacency that can develop in a larger organization, Mr. Drukier said. "We have hotels that compete against each other," he said. "Each one does its own purchasing and its own marketing. This way they stay competitive."
Despite the number of hotel rooms they control, the two do not see themselves in the hospitality business in the traditional sense. "We are in the real estate business and opportunity driven," Mr. Born said. "We are looking to acquire assets and bring them to their highest use."
Because they have no fixed business model, the partners create ownership structures based on the circumstances of each particular deal. In their world, competitors can become partners and partners competitors, sometimes overnight.
For example, when the Maritime Hotel on Ninth Avenue between 16th and 17th Streets was sold in 2001, Mr. Born and Mr. Drukier were outbid by Sean MacPherson and Eric Goode.
"The next day Eric Goode called us," with an invitation to join the deal, Mr. Born said, and they are now partners in the project, where the rooms have porthole windows.
When Henry Kallan, who now owns and operates several hotels in Manhattan and one in Prague, wanted to buy his first, the Hotel ElysŽe on East 54th Street, he sought assistance. "Henry came to us and said, 'I need your help,' " Mr. Born said. "So the three of us bought it. This sort of thing has happened many times."
And not every project develops strictly according to the original plan. A few blocks to the south of the Maritime, at Ninth Avenue and 13th Street, Mr. Born and Mr. Drukier bought a trapezoidal-shaped piece of land as the site of a future hotel.
After the attack of Sept. 11, however, they decided not to go ahead with new construction, but leased the land to William and Michael Achenbaum, a father and son team, who have built the Hotel Gansevoort on the site. They, in turn, have hired Mr. Kallen to manage the property.
Mr. Born said he and Mr. Drukier can manage their holdings and seek acquisitions without a staff because almost all of their portfolio is on the island of Manhattan. "I can visit five properties on a given day, and I know the faces of the people at all of them," he said.
He added that direct contact with property managers means he gets unfiltered information. "From a management point of view, the more people between us and a property means the less accurate information we get," Mr. Born said.
Mr. Born and Mr. Drukier see their unusual backgrounds as an advantage in dealing with the crises that arise in real estate development.
"When I was a surgical resident at Bellevue and they brought in a bunch of cops and robbers with knife and bullet wounds, I learned how to take a deep breath and slow down and not panic," Mr. Born said.
Mr. Drukier added, "And what we are doing is real estate, not life and death."
Mr. Drukier said the new hotel in TriBeCa at North Moore and Greenwich Streets would not have gone forward without the participation of Mr. DeNiro. "He owned the land and wanted to build a hotel," he said. "After talking to all the usual suspects, some mutual friends put him in touch with us."
The hotel, which has not yet been named, will be "very upscale," Mr. Born said, "with many very large suites." He said it would be designed for people who have to relocate to New York for a period of months -- such as actors making a movie in the city.
Mr. Born admits he has a tendency to dive into the details of a deal, arguing with lawyers about clauses in a contract and with accountants about the financial structure. Once, when he was pressing an interior decorator about materials and colors for a hotel renovation, the decorator remarked that he seemed to be the type of person who told doctors what to prescribe.
"That" said Mr. Drukier, "is the only thing he is qualified to do."