After graduating from Cornell University, Richard Fertig did something that would foreshadow his role now as a hospitality investor, developer, and operator.
“I always valued quality of life and experiences, so turned down the jobs I was recruited for initially, waited tables, and skied for 3 months in Crested Butte, Colorado. I’ve never regretted that. To this day, I tell anyone who is facing life decisions it’s in the inspiration and creativity that we perform our best.”
After this experience, Richard moved to Chicago and started working at the Mercantile Exchange as a clerk. Within 30 days, he was promoted to trader. That began a career in finance that spanned several decades and included roles at companies such as Warburg and Blackstone, and ultimately earned him a role as managing director and co-head of investments at a hedge fund, Ramius Capital Group.
But this isn’t a story about finance – it’s about providing hospitality, and Richard shared a story from his hedge fund days that stood out to me.
Learning from Claridge’s in London
One of the hotels Richard frequented was Claridge’s in London, and the way they made him feel left a big impression.
“I would travel monthly from New York to London, and would get off a red-eye flight Monday morning to stay the week. That hotel was my home away from home. But there was a period of time when I didn’t visit for a few months. When I finally returned, it was a rainy, gloomy night and the person that open my taxi door greeted me by name. ‘It’s been a while, Mr. Fertig, hasn’t it? It’s lovely to see you.’ It’s remarkable how those few words at the right time when I was cold and wet and away from my loved ones made me feel a warm sense of belonging and loyalty.”
Richard’s goal in providing hospitality today
Today, Richard is the founder and chief investment officer of Stomp Capital, which develops, owns, and operates properties such as Edgecamp Sporting Club, and has boutique hotels coming soon to Costa Rica, Palm Springs, and Southampton.
The goal for each? To make guests feel welcome and at home.
“Great hospitality feels easy, comfortable, warm, and welcoming. It feels natural. You don’t have to look for stuff. You’re never missing anything. You don’t need to ask for help. You feel like you’ve been here before. Everything just works, so it’s easy to have a great time and create memories.”
From consistency to excitement
Developing imaginative concepts is key because people want more out of their travel than ever before.
“It used to be that hospitality just meant consistency. That’s boring today. We take consistency for granted and expect a baseline of quality, cleanliness, and service. But that’s not all we seek. We also seek experiences, adventure, and excitement. Sports and activities are a key way of driving this.”
“Nobody talks about having a really consistent experience”
Being different and unique is the best form of marketing in Richard’s view.
“When you create something different and unique it’s memorable, and people spread the word for you.”
This is the opportunity for the brands he is building to stand out from more conventional lodging.
“Not a lot of people are saying, ‘Hey – I had a really consistent experience on my last stay at the Holiday Inn.’ That’s not something you talk about.”
Undifferentiated lodging also misses an opportunity for leveraging its location.
“Too often there’s no sense of place. I could be in Kansas City or Dubai. That’s why in all of our locations we invest heavily in creating a sense of place. We want to engage people emotionally immediately on arrival.”
Their goal is to do this in a modern way, relying on design to eliminate the need for a large staff. “We want to bring costs down but retain the warm feeling of hospitality.” Operating smaller properties gives them an advantage here.
Advantages of operating smaller properties
“Since we’re operating with a very lean staff, we have to be very thoughtful about experience design. We need to know who is coming, what they’re coming for, what they want to do – and plan accordingly.”
By developing purpose-built lodging, they can tailor-make experiences for each guest in a way that’s harder to do in large properties.
But Stomp Capital’s goal is also to build a large business, so Richard and his team think about what providing this type of hospitality at scale requires. The key? Something they call “niching down.”
“We know the demographic and the tribe that we’re trying to attract, and that helps us prepare and give our guests what they want.”
Building for yourself
While inspiration can come from anywhere, Richard has found it helpful to start with his own curiosity.
“We look for ‘blue ocean’ opportunities – a chance to create things in locations that don’t exist.”
Research plays a key role in understanding what’s currently in a market, but identifying what’s missing and what could be done requires imagination.
Richard’s passion for adventure sports and the outdoors has led them to develop a surfing concept in Costa Rica and purpose-built rentals on Hatteras Island (North Carolina) geared toward kitesurfing.
Enabling experiences
Richard sees the role of hospitality providers as enabling experiences.
“We are creating opportunities for people to do things they couldn’t do otherwise. And we’re doing that in a way that’s bespoke for the ways they like to do those activities because we know our guests deeply.”
In his view, this deep understanding of guests will become more and more important moving forward.
“Experiences trump luxury all day, and people will pay more for luxurious access to experiences. That’s how you drive premium pricing.”
The average daily rate of Stomp Capital properties significantly exceeds industry averages, and this opportunity for pricing power is what attracted Richard to short-term rentals.
$40,000 on lodging, $120,000 on amenities
To illustrate, Richard shared the example of a recent guest who was an avid kiteboarder.
“He was celebrating his 60th birthday and had been coming down to the Outer Banks for a long time. But for a long time, there’s been nothing new built in this area, and certainly nothing designed specifically for hospitality at scale.”
When this person saw Edgecamp Sporting Club under construction, he said he wanted to rent it for his 60th birthday. He ended up doing that and flying down 13 of his best friends, some of whom were partners at Goldman Sachs and big venture capital firms.
“They came down and they spent about $40,000 on lodging, which is a big number down here. But more remarkable, they spent about $120,000 on the amenity package that includes chefs and daily massage and yoga and cleaning and live music and DJs and fire dancers and all sorts of entertainment. It was like they had a mini resort all to themselves for a week.”
“This is the future”
One of those guests was a partner at Sequoia and funded Airbnb early – so was very familiar with that model.
“The thing that really blew my mind was that person said, ‘I don’t know what you’re doing here. But it’s different and it’s remarkable. This is the future of Airbnb.’”
Bespoke hospitality – with lean operating costs
Creating remarkable experiences sounds expensive – and it can be. To ensure the profitability of his business, Richard focuses on ways to provide these experiences within a lean operating framework.
“We offer a la carte amenities that you would normally associate with a full-service hotel. The beautiful thing is that it creates a bespoke guest experience. Guests are happy to pay for what they want and don’t have to pay for things they don’t want. Too often, whether the guest uses the gym or not they’re paying for the gym. If the guest doesn’t need a spa, they’re paying for the infrastructure for the spa. That doesn’t happen with us. If they want spa services we have an in-house masseuse. All of our providers are independent, third-party contractors so we don’t have the overhead of labor costs. They are just activated on request from our guests.”
Staying inspired
Today, the outdoors remain an inspiration for Richard as much as they did when he first graduated from college.
“I love action and adventure sports. I love anything to do with water and I love views. So in my personal life, I’m upgrading my homes to either be on the water or have great views. I want to wake up every day and see natural beauty and be inspired. That’s how I do my best thinking and I am most creative.”
—
Follow Richard Fertig on Twitter or LinkedIn – or learn more about Stomp Capital here.
