Inside Tablet10: Tim Dixon

We spoke to Tim Dixon at the Iron Horse Hotel in preparation for Volume 8 of our Tablet10 magazine, and he had more to say than we had space for. Here’s the whole conversation.

Why hotels? How did you get into this crazy business?

I’m an urban developer. Carpenter by trade. Put myself through college doing carpentry. I worked for a guy who renovated old buildings. I fell in love with buildings, and of course started buying my own buildings, and ultimately my projects got bigger and bigger.

The owners of this building called me. You look around, it’s an old industrial park. It’s actually a historic industrial park. This is a historic preservation. And walked through the building. For me it was heaven. Heavy woods, big beams, the brick, the whole bit.

I ran three scenarios. Loft apartments, which I’d owned and done before. Loft condos, which I had already five years ago looked in my crystal ball and said this is way too crazy. And I thought about a hotel.

For whatever reason, I had always wanted to get into the hotel business. And I’ll tell you straight out, this is all I want to do for the rest of my life. Best project, most fun, most intense, most creative. Everything demanded things from me. Because what you’re doing, you’re meshing real estate, which I’m good at, with business. Every inch is either revenue or an expense. And that creative process forced even more creativity.

So I signed the purchase agreements. A little bit of a weak location for a hotel. I was thinking it was probably going to be loft apartments. Two weeks later they announce the Harley-Davidson museum. Their projection says 350,000 people a year. So it’s got to be a hotel. The misnomer, of course, is that everyone thought it was going to be a motorcycle-themed hotel. Which it is not, as you can see.

The first thing I did was I flew to New York and went to thirty-seven boutique hotels. The whole idea was, I am my client. I am the exact person I’m looking for. I’m the guy that will go on a business trip, and drag it through as a leisure trip. Go on a Wednesday, get all the business done.

Thirty-seven hotels in two and a half days. The Soho Grand — what I said when I walked away was, what they built from the ground up, I already own. They built a hotel to look like an old industrial building. And then they did what we did, used metal and kind of refined details in an industrial way.

Then I went to LA and went to the Standards. Went to Chicago. And then wrote a business plan saying that what Milwaukee needs is an experiential hotel, but also combined with a lobby scene. Milwaukee doesn’t have a hotel that has a lobby scene. When I go on vacation, I’m constantly trying to find the culture. I don’t want to go to the tourist trap, I want to go where I can meet the people.

Well, we bring the people here. The locals support us like crazy. Friday and Saturday nights are nuts, and the yard is nuts. What we do here is create opportunities for interaction. It just works. It feels great.

The typical demographic of a luxury business boutique hotel guest is forty-something, married, college educated. That’s the exact same demographics for motorcycle riders. Twenty million in America alone. So basically what you’ve got is somebody, male or female, maybe in a suit during the week, and on the weekends, put on their leathers. They’re very approachable. That’s what bikes do — you don’t know whether you’re talking to a janitor or a CEO.

They bring about ten per cent of our volume here, but they bring about ninety per cent of the atmosphere. We have European bikers who show up here for a week. The word gets out that the Italians are here, suddenly people show up.

Do they come because of the bike services, or the museum?

We have a partnership with Harley-Davidson. They support us very well. When they fly in their people to train we get a lot of them. But this has become actually a destination in itself. Our biggest draw is from Chicago, people staying for the weekends.

The building is amazing. You obviously had to do some work on it.

Yeah, but when we bought it it was a document storage facility. Basically clear floors, post-and-beam, six stories plus two basements. We had to sandblast everything, and then came back and sanded it afterwards, because sandblasting raises the grain. The floor is a replica of what a factory floor would be. They did end-grain floors for two reasons: it would absorb the pounding better, and as it wears a little bit you get more traction.

Is it hard to build here in Milwaukee?

As a carpenter and as a developer I’m sure you could say it is. But we like to say every problem is really an opportunity. The project that ended up being one of my best project is always the project that had the most challenges. This was this one. Those challenges force creativity to come up with an answer.

For example we had a focus group. We went out to motorcycle riders. Actually got in front of twenty managers of Harley-Davidson dealerships. These are business travelers and riders. We want to accommodate you as a business traveler but we want to accommodate you as a rider as well. And this one woman was fantastic. Outspoken as hell. And she said If you’re really serious about that, then I’d better be comfortable walking through your lobby in my dirty buckle boots or my pumps. That became our mantra.

Everything we did from that day forward we thought of it that way. We don’t have white-tablecloth fine dining. We have hardwood tables that are approachable, when you’re a biker or when you’re a business traveler.

Tell me more about challenges, problems, solutions.

The first challenge was to get it historically designated. What you’re looking at here is a hotel that could not, with this level of finishes — the revenue potential in Milwaukee is not there for it. So what you have to do is get different incentives to buy down those costs.

Short story: Chicago, Milwaukee. An hour and fifteen minutes away. If you go to Chicago right now, you’re going to spend $279 a night. Here, $179. Well, the cost of construction is the same. The cost of financing is the same. Cost of labor is the same. Acquisition, plus or minus, about the same. And yet they’ve got a greater potential revenue. So how do you afford something like this?

I got historic tax credits. Some local tax credits, some state historic tax credits. So the biggest challenge was to get this thing designated as a historic structure. And ultimately we made the entire street a historic district. It’s one of the only intact historic industrial parks.

The second challenge is working with the historic designation. The windows had to be single-pane, original restored. The glass was seeded glass — they had a big tray, they literally just poured it on, and there’s little variations. Some windows still have that. Big points for that. The floor in here, big points with the historic people. It’s kind of a formula. You bring that kind of an authentic historic feel.

So they subsidize it because you’re taking care of the old building.

Under the rules of historic tax credits, if you follow their criteria when you’re restoring, they give you tax credits. We sell the tax credits, take that cash, and use it to buy down the costs. That’s kind of the deal.

A good room should feel like it was put together over time. You can’t, in a hotel. But we went out and found a ton of these things. Granted, these vintage things don’t hold up to hotel wear, but they give a feeling, and they gave us direction on the custom stuff we did as well. The ground floor we kind of went with 1907, the year the hotel was built. So the theme is industrial chic.

More cities should have something like this.

I’d love to build more Iron Horses. I’d love to build more hotels — I promise you, I’ll be building more hotels. But I really like the idea of building hotels like this in secondary markets. There’s a need for these. If you think about it, now you’re the big fish in the small pond. This would be cool in New York, but it would just be another cool hotel. Here, with all due respect to my competitors, it’s the hotel right now, because it’s extraordinary in a market that can’t afford this level of finishes.