Tuesday , July 17, 2018

Mr. Hospitality

     Voted Entrepreneur of the Year in 1997 by the Charlotte Chamber of Commerce, the president of Panos Hotel Group must have done something right. He has developed, owns and operates eight hotels in the Charlotte area and has four more under construction. Future plans include two office and retail developments. All of this development has taken place at breakneck speed – the first four hotels opened within three years.
     He says the first time anyone asked him how he got where he is, it stopped him dead in his tracks.
    “Well, I just did,” Panos laughs. “You go through life and never really stop to think about what you’re doing until somebody asks you. It’s like driving from this point to that point. You make a right turn and then a left turn and then you’re there.
     “I’m a risk taker. I don’t have any children so my thrill in life – since I’m such a lousy golfer – is this business. I like putting deals together.”  
    Panos says he was fortunate to move here and become involved with real estate lending. But, he credits one man for the push into the hotel business. “I guess I have to thank a gentleman named Charlie Johnson who really bounced my ears one day. I was in the finance business and was talking about getting into the hotel business. He said, ‘Either get the heck in or get the heck out. Nobody can do anything they’re not committed to.’ “
     That remark was like releasing the break on an idling locomotive. “I built the Comfort Inn in Monroe in 1986 along with two partners. It was a $1.5 million deal. One partner put in $42,000 cash. Then I helped him get financing and develop a Comfort Inn in Matthews. By the time it was opening, I had a piece of property in Kannapolis under contract. I obtained full interest in the hotel in Matthews. Then we acquired the Lake Norman property for that Comfort Inn.
     “The timing was incredible. We were acquiring cheap property going on the Atlanta theory that everything would grow out to you. We built four hotels in ’86, ’87 and ’88. We were working about 80-100 hours a week just flat out.
    “I’d never run a hotel in my life. The experts have all these designations in the hotel business and they’ll give you a mountain of reasons why you shouldn’t have been able to do what I did. I just wasn’t smart enough to know I couldn’t do it,” he jokes.
     “These hotels were exterior corridor, 60-90 room hotels so they were going to come under stiff competition. We sold them for $12.25 million. Our interest was worth $3.25 million.”
     A large trust out of Chicago bought them in January 1995 as part of an 18-hotel package.
     “It was like a Wall Street movie with those long tables where everyone sits around putting merger deals together. There were lawyers, legal assistants, title people…there were 40 people in this room and they were really cooking.
    This lawyer was signing and distributing checks. In the midst of all the chaos, he stops dead in his tracks and says, ‘What in the world is this check for $42,000 doing here?’
     “Our attorney Smithy Curry, a great Southern gentleman drawls, ‘Well, that’s the original capital that went into this.’
     “There was this dead silence. Then he said, ‘You mean to tell me this whole thing was built on $42,000 cash?’
     “Well, we were cash flow starved from the day we started,” Panos chuckles.
     “We like kind exchanged most of our profits into the Hampton Inn in Matthews in ’95 and in Concord in ’96 and the Hampton Inn and Suites in Pineville in ’97. Now we had more competitive hotels with interior corridors.”
      Panos says he sees his heritage laying the groundwork for what he does now.
     “In a Greek family, if you work for other people you are viewed as unsuccessful. I was constantly being asked why I didn’t own my own business. I guess it took coming of age in my 40s before I could focus in on what I wanted to do.”

Destination: Charlotte
     “I came to Charlotte from Atlanta in 1977, kicking and screaming. Back then the town only had a semi-pro football team and they’d just gotten liquor by the drink. Now I see it was the greatest thing that ever happened to me. I had the experience of watching Atlanta grow from a kind of small town. Now I saw Charlotte duplicating that growth and I had some insight as to what was going to happen here.
     “I ended up working in commercial lending, making loans for hotels and restaurants in the early  80’s – great preparation. I needed to understand money – how to borrow it, how to prepare loan packages, how to talk to lenders.
     People brought me their dreams and laid them on the table every day and I saw the good way to do it and the bad way to do it. I was in Charlotte when it exploded. Back then Atlanta banks could only operate in five counties. Charlotte banks were statewide so they had a lot of clout and leverage. BINGO!”
     Panos now owns one Hampton Inn and is a partner in two Hampton Inn and Suites, including one at Phillips Place in South Park. He owns two Hilton Garden Inns, and one Comfort Suites in Gastonia. Under construction, are the Hilton Garden Inn and the Hampton Inn downtown, a Hilton Garden Inn in Rock Hill and a Comfort Suites at Harris Blvd. and I-77. Each has a story.
     “I got this call in 1996 from Lee Curry, a CPA in Gastonia, who had property he wanted me to look at for a hotel. I said, ‘Look, I don’t have any more money, I’m tapped out.’ But he said not to worry about it. Three weeks later I met with him.
    “He said, ‘I’ve checked up on you. I know who you are. You’re a nice businessman.’ He whips out this folder with clipped articles on us for the last three years. He represented a gentleman named C.W. Smith who invented the process of rebuilding transmissions for car companies. Lee asked me to put together a package on this property for C.W. I want you to build it because you guys know what you’re doing, he said.
    “I put the package together and saw it was going to take about 25 percent capital, with the land worth about $600,000. But it would probably take another $500,000 in capital to put this thing together. I worried about the numbers.
     “I go out there and here’s C.W. on a tractor in his overalls smoking a huge cigar, grading this piece of property. I’m in my suit getting my shoes dirty.
     “I make the presentation in a conference room and C.W. asks, ‘What’s this money for a feasibility study? What’s this money for points?’ Well, I said, if you have a loan you have to have a feasibility study and pay points. C.W. said we didn’t need any of that because he was going to finance the whole hotel.”
     Panos laughs incredulously. “I said, ‘Obviously you don’t understand because we’re going to need $5.8 million to do this hotel.’ He says, ‘I understand and I want you to get started in 60 days. We shook hands on the deal and never looked back and built the Comfort Suites in Gastonia.”  

The Steam That Turns the Wheels
     Panos identifies three key ingredients to his success: faith in himself, commitment and honesty.
     “A lot of people don’t have enough faith in themselves to tackle things,”he says. “I’ve bought property and never had any idea in the world how I was going to do the deal. I’ve barely had enough to get the earnest money up but I’ve put together deal after deal after deal.
     “The reason is commitment,” he hits an emphatic note. “I commit myself to do something and I’m going to spend every waking minute figuring out how.”
     In the face of disappointments he perseveres. On one project he was turned down 37 times for a loan before a bank in West Virginia finally lent him the money.
     “Every time I’ve had a disappointment I’ve learned something that became invaluable down the road.”  
     The honesty that was built into his early business relationships has paid off.
     When he bought a site downtown and had no idea where the capital for development would come from, Smith stepped in. Numerous other developers vied for the opportunity they were granted at Phillips Place. 
     “If you’re honest, you develop relationships with The Harris Group or C.W. Smith that go down the road with you. That doesn’t mean we don’t make mistakes. We make mistakes everyday but are honest about them and have enough faith to recover from them.”

Riding the Rails
     “We soared 2,600 hotel rooms in Charlotte last year. Occupancy spikes up and spikes down. But we have six million square feet of office space under construction: four million in the suburbs, two million downtown. That alone is the emphasis to support development. We just need to slow down some of the building of hotels. I think that will take place over the next 18 months. Let the market absorb this number of hotels and then we’ll move on.
     “Charlotte’s economy is going to be strong over the next five years. We’re having trouble slowing it down. That’s the problem. The real estate business is taking the brunt of all the exuberance on Wall Street because the only way to slow it down is to raise interest rates.”
     Panos says there’s a difference between now and the 1970s to mid ’80s that makes the business cycle stronger.
    “All the deals have real equity in them now. That has changed the dynamics of the business, too. Before, people built for tax benefits and didn’t care if they lost money. This time around, you have to be an experienced operator. You’re also required to put replacement reserves in escrow so every real estate deal will have money to refurbish, insuring fewer rundown hotels in the marketplace.
    “Automation allows you to run hotel operations with a lot fewer people. We have 250 employees. We only added two people when we increased to eight hotels from five. When we can bring on exponentially fewer people and more hotels, everything gets more profitable.
     “I no longer have to wait 45 days to figure out how we did in June. Running eight hotels requires constant information so I can make changes in rates, changes in schedules, in all different categories instantaneously.”

The Track Ahead
     “I’m exhausted. This last round has gone on since ’97. The market is getting overbuilt here and we need to stop.”
    Panos says he looks to his wife, Barbara, to help him slow down.
    “She’s the perfect fit for me. She’s low-key and happy-go-lucky. She settles me. We travel to places like California or Miami Beach and just cool it. We do what we want to do when we want to do it. We eat at nice restaurants, go to the beach, play some golf.”
     Some of his ideas for community however, are just gathering steam. Along with his business interests, he is deeply involved in the Charlotte Chamber, serving on the Advisory Board as well as the Convention & Visitors Bureau, the Hospitality Tourism Alliance and Destination Charlotte. 
     Panos longs to make lasting contributions and his group has searched for ways to use their hotels to significantly benefit people. They finally found it with Presbyterian Hospital’s Hemby Children’s Hospital.
     “We learned we have families who come in from out of town when their children need medical help and may not have the resources to spend days or weeks here. Their children fall between programs and the parents’ stay isn’t covered by insurance. Our downtown facility is only going to be one mile away from Presbyterian Hospital.
    “The project is a perfect marriage. Their needs and our needs fit perfectly giving all of us a sense of putting something back.
     “I feel like this [business] thing is put together for a purpose. Maybe I don’t know what it is, but I feel it will be beneficial down the road. I feel we’ve done over the years, we’ve been led to, so it’ll find its way.”

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