From Steve Jobs all the way back to 1800s business magnate Andrew Carnegie and beyond, the entrepreneur has and always will be an integral part of our world’s economy. Today, with so much connectivity, some might argue that it’s easier than ever to become an entrepreneur. But the real truth is, aside from the lucky few, no entrepreneur finds success without putting in the work. When you speak with Tim Hentschel, CEO and co-founder of HotelPlanner.com, you can tell he has put a tremendous amount of effort into his business.
The 39-year-old entrepreneur, alongside business partner John Prince, started HotelPlanner.com back in 2003 by the grace of a few uncommon financial engineering decisions. The company is essentially a reverse auction that lets hotels bid on travel groups. Regardless of the subject matter: a family reunion, wedding or just a getaway, groups can input their destination, how many rooms they’d like and companies will compete for their business. But HotelPlanner is much more than just accommodations, these bids also extend to industry leaders in areas like wedding planning for instance. They now do just under a million groups annually—a number which makes up roughly 10 percent of the global market.
However, things were never easy for the CEO. There was a lot of bootstrapping involved with getting his business off the ground and ultimately, he raised a lot of money from friends and family. In the beginning, Hentschel worked out of his Southern California apartment, essentially doubling as the company’s 24/7 support. But that’s just the sort of tenacity you have to have when starting a business, and Hentschel always knew that. Today, HotelPlanner is 100 percent employee-owned and has completed arrangements for over 5 million groups (about 4,000 groups a day during the weekdays). He attributes the success they’ve had to a combination of technology and people, and because of all the groups they’ve worked with, their system’s AI brain is able to forecast rates and identify the right properties. Recently, he and HotelPlanner hosted the European Group Travel Awards in Berlin, and Hentschel himself was named Innovator of the year by Cornell. I caught up with the HotelPlanner CEO, who is now based in London, to learn more about his background, business acumen and perspective on hospitality.
You’re someone I would classify as having the “entrepreneurial gene.” Did you always know you would be an innovator? What was it like growing up?
I definitely did. I was raised by two parents who were both entrepreneurs. I was adopted, so I came into my family. As a child, I was living in a car in South Central with a single mom, became a ward of the state, then was adopted by my parents in Bel Air. We moved to Hawaii for a bit where my parents were developing a hotel so I was there for grade school. Then they started buying hotels in Carmel, CA when I was in high school, and eventually I moved out east for college at Cornell. My father was an executive with Hyatt for 15 years and left to start developing and running his own hotels. He owned as many as four hotels in California at one point. My mother, she didn’t even go to college but she started her company from nothing at the time. She was involved in a tour operation business when she was working for British Caledonian, they were taking calls from Europeans that wanted to do a full-package trip into the U.S. where everything was included. She was looking around trying to direct them to somebody but there wasn’t anybody doing that, so she thought, ‘Wow I’m getting so many calls with all this interest, I should supply that.’ That’s when she started her company, American Tours International. It grew into quite a big company, bringing a million people into the U.S. every year from countries all over the world.
Was there ever an ah-ha moment that led you to hospitality?
I went to Cornell for Hotel Management and after I graduated I went to New York, as a lot of my peers did. I got a job as an analyst for a private equity bank called Commonwealth Associates. Then 9/11 happened and times got tough in the city, I was laid off and had my ah-ha moment playing basketball in Queens in the middle of the day while trying to shop a resume. I said to myself, ‘What am I doing? I’m a Cornell graduate and I’m shooting basketball in Queens in a public park.’ That’s when I decided I never wanted to work for anybody again because I wanted more control over my own destiny. That’s when I decided to be an entrepreneur like my parents. I moved back to California, raised some money, and luckily I had a background from being an analyst for a private equity bank, where I was looking at business plans all day long. I knew how to write a pretty good one. Then I raised money from friends and family to start HotelPlanner. I also took classes at engineering school as well in computer science because I knew online travel was going to be big — we were using sites like Expedia and Priceline when I was at school in 2001. It’s something that I was always interested in and then when I saw the niche for group travel online in 2003, it made perfect sense for the background from hotel sales from working at my family’s hotels and also the group travel side from my mother’s business.
Tell me about the launch of HotelPlanner. What was your vision?
We wanted to do large bookings, we weren’t really that focused on groups at first. We just wanted to have hotels bid on people’s businesses but saw that the demand at that time was for bigger bookings because nobody was touching that market. That was what spurred more hotel interest too, we could get more bids from hotels if the business was bigger. Then we set our name as HotelPlanner but in part became wedding planners, event planners, meeting planners, and acquired Meetings.com and began licensing our technology out to other distribution channels. After that, we started building more tools specifically around helping hotels book large groups and meetings.
What are your company’s core values?
At our core, we feel like we’re making a difference in the world. We’re bringing people together for special occasions and meaningful events. That’s why we put a lot of high touch into it and why we call ourselves HotelPlanner, because we have planners located all around the world. If you go to Rome, you get somebody dedicated and based in Rome. If you go to New York, you get somebody based in New York who knows what’s going on and knows all the best places. There’s a lot of high touch, and you don’t pay any money for that. We do feel like we’re making a difference for the better because we’re giving these people the opportunity to connect with individuals who have 10 years plus in the industry in their local market.
What was the key to growing your business and domain?
We were an early adopter of Google. I remember pushing Google ads back in 2003 and 2004 when we would be the only advertiser, even before some of the big guys. We were one of the first people invited up to the GooglePlex that’s at the Fairmont. Our span didn’t really balloon like the other guys because in the niche market of group travel there’s just not as many searches per day. So that kind of plateaued for us in the early years but that definitely helped us gain momentum and volume in a very short amount of time. Then we expanded more to strategic planning: partnerships with the NBA, NHL, NFL, MLB—so we could go in and sponsor teams and set up their travel and we still do that today. We kind of took this into a lot of different directions. We started getting into big entertainment, concerts and things like that—we’ve got a ticket package, so we have taken our group’s core and expanded into all these events and sports.
In your opinion, what’s the most important thing that every entrepreneur needs to know?
There’s a lot of things. I was told from the very beginning—something that I pass on all the time—is don’t give up in the first three years, and quit your day job. You have to have some savings, you might have to borrow some money too, but you have to quit your day job because you have to be all-in. Nobody is going to believe in you if you don’t believe in yourself. The stats are that 90 percent of businesses fail in the first year, 80 percent in the second. So less than two percent of businesses make it to the third year. Until you’re past those first three years, don’t expect big partnerships to come. The statistics are against you so banks don’t lend you money but once you hit that three-year mark, things come in very quickly when you prove to the market that you’re there and you believe in your idea. I can’t tell you how many entrepreneurs I’ve seen that expect to be an overnight success. It’s not going to be an overnight success if it’s real. If it’s private equity-backed and pump-and-dump, yeah, I’ve seen a ton of those, we all know how that story ends.
We grew organically. The bubble bursts I’ve went through in 2001 and then we saw it in mortgage meltdowns again in 2008, these created opportunity for us because we had competitors at the time that were private equity-backed and [venture capital] backed, those guys got their funding cut and we picked up all their partnerships. We also bought one of those companies for next to nothing because of that. Work on the fundamentals, making 90 cents into a dollar is always the best way to grow. If you buy your revenues, you’re not fooling anybody. People will see through that when they look at the numbers. ‘OK great, you’ve got this kind of revenue but how much did you spend to get there?’ If those revenues aren’t growing, it shows the customers aren’t really seeking you out. That’s why I like organic growth. If I’m making 90 cents into a dollar, the customer is seeking me out because I’m doing something good for that person.
Knowing your role in hospitality, where’s your favorite place to stay and unwind?
That’s a tough one. I really have to say, I love The Breakers in Palm Beach. I’ve been there with my kids, it’s right across from our corporate offices in West Palm Beach. Our headquarters actually overlooks the resort from the boardroom—it’s just so iconic. They have a presidential suite where the balcony oversteps onto the beach and onto the sand. If you’re on the balcony at night, you’ll notice they put some light onto the beach and the water and you feel like you’re totally there on your own even though it’s a massive resort. It’s an amazing experience. It’s a romantic place to take your [significant other], and a great place to have a meeting—the NFL has their annual meetings there. You can set up a meeting there anytime and you’re going to get a deal done because it’s such an amazing place. You can take the kids there too. It’s just everything in one place, and I’m probably not telling anyone anything new who knows. Also, I’d have to say my family’s resort Stonepine in Carmel Valley, CA. It’s a 165-acre resort with 60 thoroughbred horses that you can ride, and it’s only 22 rooms.
As someone who has achieved great professional success, what does luxury hospitality mean to you?
You know what, in my opinion, luxury is more service than anything else. Yes location is a part of it, but you can be in the nicest hotel in the nicest location, and if you have poor service, nothing is going to fix that. If you have great service, it’s so memorable. You’ll go back there for the people every time. Working on the hotel side, I know how difficult it is to deliver great service because you don’t ever want to feel like you’re hovering. It’s hard to give great service in a luxury environment. It goes back hundreds and hundreds of years, it’s the finest art if you can get it right…people will pay big bucks for it. It’s the difference between that hotel that’s getting a $250 room rate and the other that’s getting $1,000. There are some brands that have done it really well, the Ritz Carlton comes to mind, ‘Ladies and Gentlemen, serving Ladies and Gentlemen.’ Mandarin Oriental is another brand that’s done it well. There’s been boutique hotels that do it really well, too.