Foreign growth ‘off the table’: Conversation with Trump Hotel chief

When Eric Danziger became chief executive of the Trump Organization’s hotel business in 2015, he was focused on international expansion and rolling out a new line of hotels. Now he is contending with a thicket of ethical and legal considerations as his former boss — Donald Trump — serves as president.

But Danziger, previously a top executive at such huge brands as Wyndham and Starwood, is plowing ahead with plans for the company’s new Scion chain of hotels. These hotels will offer a four-star alternative to the company’s five-star luxury properties.

Already, Danizger said, the company has signed some 30 letters of intent with potential developers in places such as Cincinnati; Nashville, Tennessee; and Valley Forge, Pennsylvania. The partners would own the hotels while the Trump company brands and manages them. None of the deals have been completed, and all are subject to the approval of an outside ethics adviser. One of the potential deals — to build a Scion hotel in downtown Dallas — has already led to questions about the international connections of the local partner.

Last week, Danziger spoke to The New York Times about Scion and the issues that the new hotels present for the company. Below are excerpts from the interview.

Q: How closely involved are Donald Trump Jr. and Eric Trump in Scion and in meeting with partners?

A: Very much. And when Ivanka was involved, too. That’s why I joined this company. They really are incredible people.

They are deeply involved in the hotel company’s growth and branding efforts. They will meet with anyone if I ask them to.

Q: Has the presidency affected the interest of potential partners in making a deal?

A: That’s really hard to answer. No one is calling us and saying, ‘Hey, because Donald Trump is president, I want to do a hotel with you,’ or ‘Because Donald Trump is president, I don’t know why you’re calling me.’ That’s not the case. I really do think that we sort of stand on our own. I know that sounds maybe a little Pollyanna. But the company has a good reputation.

To the extent that the presidency has had any effect on us it might be in one or two hotels that would have protests or whatnot. We’re running a business. We’re running brands; we’re adding brands. I can’t do a tie-in between the two.

Q: How are you navigating the ethical concerns that come with the presidency?

A: I believe that the largest growth for all of our brands would have been international. But that’s off the table.

We do have the two in Indonesia underway now, as they’ve been in place for a couple years, I think. But we’re not growing the brands outside the United States.

Q: Are you prohibiting the use of foreign money in U.S.-based deals?

A: There is not a blanket rule and, of course, still would be subject to the approval process.

Q: Does part of the vetting involve the particular county where the money comes from?

A: We’re all working hard at trying to be sure we do the right thing. For example, we might say at an early stage that we want to know who the equity partners are. Let’s check that to the extent we can. Let’s say that the financing or mezzanine financing will be a typical source like a United States bank, or lending institution, something like that, and subject to final approval by us when the deal gets finalized. That’s about all you can do at an early stage because a developer may not have it all done.

We’ll use background firm checks, we’ll use the ethics group process and do everything humanly possibly to validate the people involved in the transaction.

Q: What if a deal does not satisfy the ethics monitors?

A: I’m never going to try to talk an ethics group — whose job it is to be protective of all constituents involved — into it if we can’t satisfactorily answer their questions. Then the deal won’t happen.

Q: Where do you see hotel growth while Trump is in the White House?

A: Obviously, in all brands we are limited to domestic growth now because, whereas eight months ago I might have been talking to you about the 40 hotels I want to do internationally, now I’m just talking to you about what is going to happen from sea to shining sea.

Q: How many letters of intent do you have with possible Scion partners?

A: The number is now, let’s just say, around 30. The example is, guys, there were three this week.

Q: Are you telling partners not to talk to the press?

A: To be honest, I never thought I’d have to do that, but we have to do that.

They want to have their face in the paper and the hotel announced for whatever reasons, but we are telling people now you just can’t talk to the press about a deal until we’ve released that there is a deal.