Developers and hoteliers that take on building projects are often faced with setbacks and problems along the way, but few have had to go through what Robert Rauch, president of R. A. Rauch & Associates, went through five years ago.
Rauch and his partner, Joe Simone, purchased land in Carmel Valley, San Diego just before the September 11 attacks. The plan was to build and operate a Homewood Suites by Hilton and a Hilton Garden Inn to act as sister properties. But once the planes hit the towers, Rauch and Simone lost their loan and had to start raising capital from scratch.
"Putting the deal together was tough to begin with," says Rauch. "It was difficult to build these hotels."
But despite the post-9/11 lending freeze, Rauch and his team managed to get both properties off the ground. The Homewood Suites opened in 2005 and enjoyed an early amount of success in the area. In the spring of 2007, Rauch was prepping to get the adjacent Hilton Garden Inn open in the fall. The hotel was near completion—it even hosted a topping-off party—when disaster struck.
One June 5, 2007, Rauch was jolted out of bed at 2 a.m. with news that a massive fire was ripping through the Hilton Garden Inn and spreading to the Homewood Suites.
"I vividly remember it, though I was in a state of shock," he says. "Whatever I had thrown on my chair that night before I went to bed was what I wore. I didn't brush my teeth. I did not have any coffee. I didn't even think. I just jumped in my car and drove 95 miles per hour to the hotel."
When Rauch arrived, firefighters were already on the scene, battling the three-alarm blaze. Employees at the Homewood Suites were helping emergency personnel evacuate guests and bring them safely outside. The blaze took crews 90 minutes to get under control.
When all was said and done, the nearly finished Hilton Garden Inn was completely destroyed and there was severe damage to 41 rooms at the neighboring Homewood Suites property. Cars that were parked between the buildings that night were left in charred ruins. Miraculously no one was injured.
Rauch gives credit to the emergency workers and his staff for keeping calm and bringing everyone to safety.
"Nobody lost their cool," he says. "There was a tremendous amount of cooperation that night. And my team is still with me to this day."
In the aftermath of the fire, Rauch and Simone met to discuss what their plans should be moving forward. Without hesitation, the pair decided to rebuild. They contacted insurance companies to get the process started and mapped out ambitious timelines for rebuilding the Hilton Garden Inn and renovating the Homewood Suites.
In less than seven weeks—an almost unheard of time frame—the Homewood Suites property was fully renovated with $3 million and open for business in time for the start of the San Diego horse racing season. The Hilton Garden Inn was built from the foundation up, to the tune of $7 million, and opened its doors after just nine months, on March 24, 2008.
This June marks the fifth anniversary of the fire at the two Del Mar properties, and Rauch, who also acts as the general manager of the Hilton Garden Inn, can't help but reflect on how far both hotels have come. Last month, the staff of the properties got together to celebrate the successes and accolades they've achieved after facing such adversity early on.
Rauch says that both properties are currently running at a yearly occupancy rate of 80 percent, and have received numerous industry recognitions over the years including the 2008 Hilton Developer of the Year Award and the California Hotel & Lodging Association's Manager of the Year Award in both 2009 and 2010.
Although it is not something that he wishes to dwell upon, Rauch believes that the fire was a defining moment for his hotels and his career as a developer and owner. He says that guests who were evacuated during the fire often return to the property as loyal customers.
"There's a theory that when something goes wrong at a business, there is a black mark on that business—but it's just the opposite," says Rauch. "It's how you handle the crisis that counts. The fire was a critical moment in the overall long-term success of our hotels. We had a tough time, but we've had a very good run since then."