CFI & Westgate Resorts cofounder
The hospitality and tourism industry has spawned entrepreneurs the likes of J. Willard Marriott, who started with a nine-stool root beer stand that he grew into a restaurant chain and then Marriott Hotels, and Conrad Hilton, whose first hotel was in Cisco, Texas, from which he built the brand that now boasts more than 500 hotels worldwide. Among those ranks would include local stars including David Siegel, the colorful founder of Westgate Resorts and CFI. His companies have evolved into the largest privately held corporation in the Central Florida area. Starting with its original 16-unit resort at Westgate Vacation Villas, Westgate Resorts now encompasses more than 14,000 guestrooms at 28 full-service resorts in 11 states, including his recent acquisition of the Las Vegas Hotel & Casino and the historic Cocoa Beach Pier.
EW: Your journey is the stuff of legends, what was one of the pivotal turning points?
DS: I found a crystal ball back in 1955 (smiling). I was in California with the hopes of becoming a film star. While I was out there I went to the opening of Disneyland. It was in the middle of orange groves and cow pastures, but when I went back two years later, a whole city had grown up around it. It was amazing. That was something I never forgot and it became pretty significant to my story about 30 years later.
EW: Were you always drawn towards real estate?
DS: Not really. While I was a student at the University of Miami, I thought about going to Alaska and decided to study communication and equipment repair. I was taking classes and when friends and family heard I could fix just about anything you could plug in, they brought their TVs or radios by and I took it to class to repair. I was doing well until the owner of the school came to me and said I was running a business out of his school. He said I had to be in business or in school, so I quit the repair school and started a little appliance repair business in Coconut Grove in Miami.
The business expanded and I kept moving into larger properties. Then I received a draft notice. I went the same day to apply for the Air Force reserves. Fortunately I was accepted and went through basic training, but the whole time I kept running my business. While other guys were getting care packages with cookies, I got boxes full of bills, receipts and checks to sign.
Then I went back to Miami, got married and President Kennedy called up the reserves to active duty. Fortunately I was stationed at Homestead, but the only way I could get off base was if I was taking classes. The only night classes were in real estate, so I enrolled. In fact, my wife and I had to drive to Orlando to take the state exam at the Angebuilt Hotel. We couldn’t afford to stay there. However, 20 years later I bought it!
EW: But you didn’t pursue that as a career at that time?
DS: Correct. While I was on active duty, the person I had managing the business ran it into the ground. I borrowed money to start another retail and repair store in another part of the city, at 40 percent interest. In six months I was back on top, making more money than ever before. I rehired my old manager; we had become friends. The day my second child was born, while I was at the hospital, a customer came in and shot him. In six months I had lost two businesses and a guy who had become a close friend.
That was one of the lowest points in my life; I shut the business down. I was living in a rented house that I was being evicted from, my utilities were turned off, but somehow I still had a phone and a friend called me and invited me to Thanksgiving dinner. I still think about it; it was a wakeup call. The next day I went back into business and again I built it into what could only be described as a mini-Walmart, before there was Walmart. But it got firebombed in the 1968 race riots during the Republican Convention and I just walked away from it.
EW: What did you do then?
DS: I went to work in a real estate call center. It was the definition of high pressure; we were told to not even say, ‘good bye’, just hang up. That wasn’t me, I always believed in making friends before you make the sale – that people buy from people they like. However, during that time Disney had come to Orlando and I had a crystal ball, so I went to work for another company that had land they were selling in Orlando, near I-4 and SR 27.
For a time I commuted back and forth, but then offered to be their broker representative in Orlando. I sold out two subdivisions and then developed a property of my own and sold it out. I moved to Orlando in 1970 with one wife, one ex-wife and six children. Within five years I was thinking of retiring. I was selling the land to Californians who had seen what I saw.
By 1975 I had $5 million in the bank, I was making $1 million a year off my real estate investments, all of which were managed by other people. I built the Mystery Fun House and I had an orange grove that was revenue generating.
EW: What were the most important things you learned up to that point?
DS: Though failure wasn’t an option, I wasn’t afraid of failure. I knew that if I failed I could come back that much faster.
EW: So how did the Westgate get started?
DS: In 1980 a guy came and asked to buy 10 acres of my orange grove to build a ‘time share.’ I didn’t know what that was, so I asked. He did such a great job of explaining it to me – the time share model – I decided to go into the business myself.
I built 16 condo-like units in the back of my orange grove, just in case it failed, I didn’t want anyone to see. The opening day was a record freeze, our sales people were in ski parkas and I had a hand painted sign that said, “Future pool and club house.” But amazingly, people came, they loved the concept and bought. Today that property has grown to 3,500 units.
EW: You were once asked what motivates you to keep going; what is your answer today?
DS: It may sound corny, but it is the success stories of my employees. (Siegel was one of the first to raise his employee’s minimum wage level to $10 per hour). I can’t count the millionaires I have made and our Westgate Resorts Foundation raises around $3 million a year, which helps some 100 charities.
EW: Did you see the 2008 recession coming and how did you weather it?
DS: No I didn’t see it coming, I was building a dream property in Las Vegas, which I ultimately lost. We were doing great, but were highly leveraged, honestly we were ‘fat, dumb and happy.’
Overnight I had to become lean and mean. It was awful, and we had to lay off about 7,000 people. But the silver lining was we stayed profitable and came back. Today we have far surpassed the 2008 levels and the last three years have been our most profitable.
EW: What goes into an acquisition like the Cocoa
DS: I like changing historic structures into modern useable structures. That pier has a lot of history, much like our Las Vegas property. That hotel will be one of the best in the city. I bought the pier sight unseen and we are rebuilding it from the ground up. We want to again make it a great destination.