CITING POLITICAL PRESSURE, Trump Hotels has pulled its plans to build the first of two new brands in Cleveland, Mississippi, a Scion and two American Ideas. That has led the developers of the project, Chawla Hotels of Cleveland, in the lurch.
But the Chawlas, brothers Dinesh and Suresh, are taking it in stride, at least publically.
“We’re fine financially. We’re on schedule to open this fall,” Dinesh Chawla said in a Facebook post announcing the decision of two other brothers, Don Jr. and Eric Trump, to pull out of their multimillion dollar project, though the Chawlas appear to be carrying it through. “You guys see all the whirlwind of activity out there on the construction site. With a bit less rain, we’d be cranking it even more.”
Trump Hotels had announced the upscale full-service lifestyle Scion brand in fall of 2016, a month before Donald Trump Sr. was elected president. The company announced American Idea, a three-star conversion brand that introduces Trump Hotels to the business of franchising, in June.
The Trump brothers blamed last week’s decision on the tremendous amount of scrutiny the company had experienced since their father, Donald Trump, was elected president, according to the Washington Post.
“We live in a climate where everything will be used against us, whether by the fake news or by Democrats who are only interested in Presidential harassment and wasting everyone’s time,” Eric Trump said in a statement Thursday.
Eric Danziger, CEO of Trump Hotels, had express similar concerns at the beginning of last year.
“The process to announce a hotel development in our company, to a factor of a thousand, is harder than [for] any other company. And the reason is the founder of the company is president of the United States,” said Danziger last January during an exclusive interview with Asian Hospitality.
Indeed, the Post reported that, even though the Trump Organization, the umbrella operation over Trump Hotels, had given up billions of dollars in foreign deals, critics had continued to accuse it of conflicts of interest. Previously, Danzinger said every deal the organization considered was sent through ethics and business review commitees.
“The good news is, we are a private company, a family company, and we are playing the long game,” Danziger said at the time. “If it’s a year until you get the next 10 projects announced, so what? But it’s frustrating because we are ready to go and can’t go.”
The Trumps made it clear that their decision was not meant to close the door entirely on the Chawlas.
“We have great respect and admiration for the Chawla family and their father, the late Dr. V.K. Chawla,” the Trump brothers said, and they appeared to greenlight the continuation of the project. “We have enjoyed our time working together and know that when complete, under the leadership of Dinesh and Suresh, their hotel in Cleveland will be an absolutely spectacular project.”
In an official statement, Dinesh and Suresh Chawla said they completely understand the Trumps’ position and they “hope that when the time is right, we can work with Trump Hotels again.”
It is not clear from either the Facebook page or the statement what brand the Mississippi project would bear. The Chawlas had already begun construction of the hotel before Trump Hotels approached them about making it a Scion.
Also unclear is what the Chawlas will do with the two Mississippi hotels a Comfort Inn in Clarksdale and a Rodeway Inn in Greenville, that were being renovated and opened this year as the first American Idea hotels.
Regardless, Dinesh Chawla said the split with Trump Hotels was never discussed in negative tones, and he learned many innovations and new processes from them.
“My kids were disappointed. They were excited that Papa had made the big time,” Chawla wrote on his Facebook post. “I’m still going to get there. But my route is a bit more serpentine than before. And I’m looking forward to the journey.”
Trump Jr. also said when “politics are over, we will resume doing what we do best.” However, Tucker Johnson, an instructional assistant professor at the University of Houston Conrad N. Hilton College of Hotel and Restaurant Management-San Antonio, has another theory.
In an article, Tucker points out that that the Trump Hotels decision comes at a time when some economists are forecasting a slowdown in the industry over the next two years as supply exceeds demand. In light of the fact that President Trump’s approval rating hasn’t changed much since his election, and since the announcement of the Scion and American Idea brands, he thinks the cause of the suspension is more economic than political.
“In talking with developers, I have been told that construction costs and labor costs have been increasing,” Tucker said. “From what I have seen, the Trump Organization has always been more concentrated on being pragmatic than political. As an owner or operator, I would take this decision by the Trump Organization as a possible sign (or confirmation) of a slowdown to come in the future and be ready to make adjustments as needed.”