Margaritaville CEO explains how far the Jimmy Buffett brand can go
John Cohlan was all smiles at a recent major hotel investment conference in New York — and for good reason. While the ’70s produced many hit songs, only Jimmy Buffett’s Margaritaville became a stepping stone to a multi-billion brand extension empire – an empire that includes several profitable hotels. Cohlan, CEO of Margaritaville Holdings, has been instrumental in achieving this goal.
The Margaritaville empire started a bit by chance. A fast-casual restaurant chain attempted to make the “Margaritaville” brand a signature drink, and Buffett won a lawsuit against it. In 1985, the music star opened a t-shirt shop, followed by cafes.
With 33 hotels, resorts and other accommodation concepts open, and 150 restaurants, bars and cafes, the challenge for the Buffett universe is to loosen the brand’s ties with the 75-year-old artist while strengthening its association. with the emotions evoked by the music. It’s unclear how much Buffett makes from the private holding company, which reportedly generated around $1.5 billion in sales in 2019, the year before the pandemic hit.
In 1996, Cohlan, then 36 and single, was temporarily transferred to Florida for his position as chief financial officer at Triarc, a conglomerate whose interests included fast-food chains like Arby’s.
He met Buffett socially and the musical artist invited him to attend a performance at the New Orleans Jazz Festival.
“I was standing there as a guest watching this from the side of the stage and looking at maybe 100,000 ecstatic fans,” Cohlan said. “I was like, ‘Wow, you know, that could really be a brand.
Universal Studios then approached Buffett to license his name for a restaurant at its theme park in Orlando. Cohlan helped Buffett with the case. The restaurant opened in 1999, followed by other restaurants and brand extensions.
“Margaritaville was synonymous with paradise and laid-back fun, and the brand generates an emotion that makes you feel good,” Cohlan said.
“What’s interesting is that emotions can travel much further than a traditional product in terms of brand extensions because emotion can apply to so many things,” Cohlan said. “Brands like Kleenex or Marriott are defined by products that don’t have many logical extensions, whereas an emotion like Margaritaville is relevant in different ways.”
A decade later, Cohlan visited a hotel in Pensacola Beach. A friend had purchased the hotel independently with the intention of converting it and reporting it as a Hotel Indigo franchise (belonging to IHG or InterContinental Hotels Group).
Cohlan told him it was too bad he didn’t know about it ahead of time because it was a great location for a first-brand Margaritaville property. The next day the owner called him and started talks to do just that. It opened in 2010.
Asset-Light but practical
Margaritaville Holdings intuitively adopted the asset-light model, where it licenses its intellectual property to owners and operators through franchise agreements. The company did this before most major hotel groups, such as Marriott and Hilton, by leaning heavily towards the asset-light model.
Unlike most hotel franchisors, Margaritaville takes care of the hiring, the design company they need, and even details like pillows (“100% goose-down resistant cotton”) that go on the guest beds.
“It’s very clear in my mind that we’re a training company,” Cohlan said.
“Take hiring, for example,” he said. “While we work in partnership with management companies that actually employ the workers, we are present at trade shows to recruit talent ourselves. We also survey employees to make sure they are satisfied and to get feedback.
Cohlan said it’s a blessing and a curse that people come to a hotel in Margaritaville expecting to feel a particular emotion.
“Staff attitude is key if you’re trying to deliver a heavenly experience,” Cohlan said.
A flip design
The first hotel built from the ground up with every detail overseen by Cohlan’s team was the Margaritaville Beach Resort on Hollywood Beach, Florida. Barry Sternlicht’s Starwood Capital Group was the business partner.
“It was intimidating because we were translating an emotion into a lodging facility,” Cohlan said. “Every detail mattered.”
They hired the design firm of Pat McBride, who, among other things, helped come up with the idea of having a statue of a pair of 11-foot-tall flip-flops as one of the hotel’s visual elements. . The developer removed the toggles from the plan for budgetary reasons, claiming it was not functionally necessary.
“No, we have to have it,” we told him. “We will own it ourselves – which we always do.”
The plan was to install the flip flops in a corner. But they liked it when they tested moving it to the center of the hall. Now they put giant flip flops in every lobby.
“I knew we were on to something when I was sitting in the lobby and saw a family posing in front of the flip flops,” Cohlan said. This happened before the Instagram era of hotels creating visually appealing spaces for photography.
Other typical hotel design details include bathroom faucets shaped like whale tails. The halls include a giant replica of the Statue of Liberty modified to hold a margarita glass. Properties also often have a replica of Buffett’s seaplane.
The Cohlan team applied similar scrutiny to all aspects of hotel projects. The team ensures, for example, that the developers have correctly painted the walls with the right bright colors without skimping on the number of layers.
One of the pioneers of the Lifestyle Hotel
It’s become fashionable to say that hospitality companies should deliver experiences because that’s what Millennials and Gen Z travelers crave.
Food and drink are often an essential part of the formula. At the Hollywood, Florida property, food and beverage sales account for about half of revenue. Granted, this resort is a bit of an outlier due to its location on the beach’s “broadwalk.”
“It is a reflection of the strength of our brand offerings that lenders will give full credit to food and beverage cash flows at our properties, unlike they would with most other hotel properties,” Cohlan said.
Contrary to many people’s expectations, the hotel doesn’t play Jimmy Buffett songs all the time everywhere you go. On the contrary, the music is usually left to certain places, such as the bar.
Most of the brand’s hotel guests likely haven’t attended Buffett’s concerts and aren’t parrot chefs, Cohlan said. But it turns out that a large number of people are interested in a particular vision of paradise.
“In this industry, words like experience and lifestyle have been, you know — to put it politely — overused,” Cohlan said. “I think we’re the original experience and lifestyle brand.”