Jeff Raymond (MS ’72), President of The Raymond Group, has a long and accomplished career building and operating best-in-class hotels. His hotels rank highly, often in the top 25% (if not top 5%) in terms of guest satisfaction, revenue per available room and quality. Mr. Raymond has a proven track record investing in real estate, but he came to the Wisconsin School of Business’ Real Estate Club to talk about something much more central to his and his company’s success.
“Jeff is what I call a ‘Real Entrepreneur’,” noted Michael Brennan, Executive Director of the Graaskamp Center for Real Estate, as part of his introduction of Mr. Raymond. In 1978, six years after graduating with an MS in real estate from the UW-Madison, Mr. Raymond created Raymond Management Company (“RMC”). Currently the company manages 27 properties and is developing four more. RMC has agreements with multiple franchisors and possesses a strong competitive advantage in market selection and guest service.
Speaking to a room full of real estate students, he focused on what he considered the most important element to creating value: his people. Mr. Raymond does not fixate on real estate risks, but more so on having a healthy, strong work culture. With great people at the helm, risks can be inherently mitigated. The Raymond Group’s healthy culture is in large part responsible for the production of high quality assets and high quality service at all Raymond Group hotels. It’s why RMC can confidently have a “no sleep, don’t pay” policy for their managed hotels; if a fire alarm inadvertently goes off or if an elevator breaks down, the guest does not pay for the night’s stay.
Of course, there is no such thing as “no risk” in real estate. The first question from the student-based audience immediately seized upon RMC’s ability to weather the recent financial crisis. At first his take on the situation was anecdotal, when he noticed fewer guests at his hotel; then suddenly, occupancies dropped 60% in one week. Not long after, the bankers were at his door.
In response to the situation, Mr. Raymond told his team, “First things first – no one gets laid off; the most valuable thing we have is the brain power in these buildings.” The experience was personally grueling, as lenders and franchisors started to push for concessions. “It was like I was playing football and someone says ‘Now we’re playing hockey’ – the rules changed and I don’t even have skates on!”
The years since the crisis have been positive, having developed nine hotels since 2009. As a result, RMC can continue building on its core business: building high quality and well-branded assets, and operating exceptional service hotels. By creating and fostering a people-based company, Mr. Raymond has been able to create a solid platform for his company from the very beginning. He takes sincere pride in interacting with people on all levels within the company - from the hotel cleaning staff to his day-to-day operations staff. We would like to thank Mr. Raymond for visiting with students of the Real Estate Club and sharing his valuable insights. We wish him and his company continued success!