Trumps’ plans for hotel chain raise concerns
Some government experts worry about ethics in turning to outside money
The Trump family is launching a new hotel chain in a bold expansion of a company that critics say is already too big and opaque for an enterprise whose owner sits in the Oval Office.
The chain, called Scion, will feature the first Trump-run hotels not to bear the family’s gilded name. The hotels will feature modern, sleek interiors and communal areas, and offer rooms at US$200 to US$300 a night, about half what it costs at some hotels in Trump’s luxury chain.
And they’ll be dozens of them, possibly a hundred, opening across the country in just three years. Or at least that’s the plan.
“It’s full steam ahead. It’s in our DNA. It’s in the Trump boys’ DNA,” said Trump Hotels CEO Eric Danziger. The “boys” are Eric and Donald Jr., who are running their father’s company while he is president.
The bold expansion plan raises some thorny ethical questions.
The Trump family won’t be putting up any money to build the hotels. Instead, their company, the Trump Organization, plans to get local real estate developers and their investors to foot the bill, as do most major hotel chains.
One of the first going up could be in Dallas. A development company there originally planned to raise money from unnamed investors in Kazakhstan, Turkey and Qatar, but recently told the Dallas Morning News that it now will tap only the company’s U.S. partners.
Government ethics experts say turning to outside money, whether foreign or American, raises the spectre of people trying to use their investment to gain favour with the new administration — like contributing to a political campaign, but with no dollar limits or public disclosure. “This is the new version of pay-to-play: ‘Get in there and do business with the Trump Organization,’ ” said Richard Painter, who was the chief ethics lawyer to president George W. Bush.
The Trump family will have to overcome some political obstacles, too. Already, politicians in a few cities mentioned as possible sites have vowed to fight the first family, raising the prospect of a struggle to get zoning and other permits to start building.
The son of German and Polish refugees from the Second World War, CEO Danziger is no stranger to long odds. He never went to college, instead taking a job as a bellman at a San Francisco hotel at 17. He worked himself up over the decades to CEO spots at several major hospitality companies.
When Danziger led Starwood Hotels and Resorts in the 1990s, he expanded the number of hotels from 20 to nearly 600. The 62-year-old executive has similar ambitions for the Trump family. He said he hopes to open 50 to 100 Scions in three years, and already has letters of intent with more than 20 developers. He said he also is planning to add to Trump’s existing line of luxury hotels.
Danziger took over Trump’s hotel business in August 2015 with hopes of adding to the company’s string of properties abroad. A review of trademark databases shows the Trump family has applied for rights to use the Scion name in several countries, including Canada, China, Indonesia, and 28 nations in Europe. An application for trademark rights in the Dominican Republic was approved as late as December.
Then President Trump held a news conference the next month and basically killed the international plans. A week before he took office, he pledged that his company would strike “no new foreign deals” while he was president to allay concerns that foreigners might try to influence U.S. policy by helping his business abroad.
At a recent hotel industry conference, Danziger said the U.S. offers plenty of opportunity for expansion. As possible cities for new hotels, he mentioned Seattle, San Francisco, Denver and Dallas.
This is the new version of pay-to-play: ‘Get in there and do business with the Trump Organization.’