The FORT Podcast: Bo Aughtry – Deep Dive into Hotel Development and Lessons Learned Through Many Cycles
Bo Aughtry, Chairman & CEO of Windsor Aughtry Commercial, entered the real estate business out of college and in 1975 helped found Small and Aughtry, a real estate development and brokerage firm. In 1980, Bo established The Aughtry Company, a commercial real estate development and brokerage firm, and Aughtry Securities Corporation, an NASD Broker/Dealer, serving as president of both. In 1988 the companies merged with Windsor Properties, Inc., then a Greenville-based home-building firm, thereby forming Windsor/Aughtry Company, Inc.
On this episode, Bo discusses lessons learned through many economic cycles and Short Term Rentals as a competitor. Chris and Bo also chat about how WAC develops hotels – selecting markets, sites, construction, and partnering with hotel brands. Enjoy!
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(02:03) – Bo’s Background and Career in Real Estate
(05:41) – Bo’s Experience During the OPEC Oil Embargo
(10:40) – When you think back on the cycles you’ve experienced, could you sense them or did they come unexpectedly?
(13:33) – What are the chain of events that happen during an unraveling?
(17:54) – Are you sensing anything right now?
Psychology of money by Morgan Housel
(25:13) – When the interest rates went to 21.5% prime, how long did they stay that high and what happened during that period?
(28:46) – How did you get into hotel development?
(32:03) – How do you select sites when developing a hotel?
(35:43) – Who is your average guests when building in a college town?
(39:12) – Do you try to sign contracts with universities?
(40:57) – How do you select the brand of hotel?
(42:28) – What’s the differentiation of risk between you and the hotel brand?
(44:58) – Do you have to follow the specs of the hotel brand or do they give you freedom of design?
(47:11) – What’s an affinity program?
(47:53) – Who purchases the furniture for the hotel?
(50:47) – What does Hilton provide to you beyond a booking system and marketing?
(52:08) – Thoughts on Construction
(56:43) – Thoughts on AirBnb & STR’s
(1:03:29) – Why do you pursue heads-up deals and what matters to you in partnerships?
(1:09:39) – If you could go back and tell your 35-year-old self some wisdom, what would it be?
Episode Summary
Bo Aughtry, a luminary in the real estate sector, was the distinguished guest on Chris Powers’ esteemed podcast. With a rich tapestry of experience, Aughtry’s journey is emblematic of the quintessential real estate magnate, replete with challenges, lessons, and invaluable insights.
Diving deep into the intricacies of real estate, Aughtry underscored the prolonged exposure of projects to multifaceted market risks. He vividly recalled the complexities of navigating the commission-based landscape, elucidating on periods of financial uncertainty that are emblematic of the industry’s cyclical nature. Such candid revelations serve as a testament to the unpredictable, yet rewarding, realm of real estate.
A significant portion of the discourse revolved around market downturns. Aughtry’s elucidations painted a multifaceted picture, highlighting rapid downturns juxtaposed with more gradual economic lulls. He astutely observed that prosperous epochs can inadvertently sow the seeds of complacency, potentially leading to suboptimal decision-making.
A compelling narrative emerged as Aughtry narrated his foray into hotel development in Columbia, South Carolina. This Hilton-branded endeavor, born from a Request for Proposal (RFP), epitomizes the challenges and triumphs of real estate development. Aughtry’s preference for locking in deals at single-digit financing rates provided a glimpse into the strategic underpinnings that have bolstered his success.
The conversation seamlessly transitioned to the essence of location in hotel development. Proximity to urban hubs, entertainment centers, and notable city attractions emerged as non-negotiables. College towns, with their unique clientele, presented a different paradigm. Aughtry postulated on the diverse guest profiles, ranging from visiting parents to sports enthusiasts.
A salient theme was the symbiosis between hotel developers and brands. Aughtry, while lauding his collaboration with Hilton, emphasized the broader canvas of partnerships that have been instrumental in his ventures. This segued into a poignant discussion on the burgeoning realm of short-term rentals, epitomized by platforms like Airbnb. The hospitality sector’s evolving dynamics, spurred by these platforms, underscored the need for traditional hoteliers to recalibrate their strategies.