Timeshare King Doesn't Hold a Grudge
David Siegel, chief executive officer of Westgate Resorts, sure is good at capturing public attention -- whether he wants it or not. This summer, his family and his Orlando-based timeshare company were featured in the indepedent film "Queen of Versailles," which showed Siegel attempting to build the country's largest house in the midst of a real-estate bust. Then, in the weeks before the Presidential election, Siegel became notorious for a letter, sent to employees, suggesting he would lay off workers if Obama got re-elected.
Siegel has since recanted, sending a second letter to employees thanking them for their service and offering them raises.
Siegel recently spoke with Inc. staff writer Jeremy Quittner about risk, growth, and why he has the greatest employees in the world -- even though they voted for Obama.
Did you expect your letter to get the reaction it did?
First of all, I never said that if Obama got reelected that I would lay off anybody. I sent a letter to my employees, and when that got out, people didn't see the letter and they twisted the facts. What I said was that if Obama does get reelected, between Obamacare and tax increases, it might make my company hard to operate and to continue growing. Then I might think about retirement and I might downsize the company. But I don’t have any plans right now to do that, and we are very cautiously optimistic.
Has Westgate been having a hard time?
No. I know it sounds crazy, but the last year has been, from a profitability standpoint, the best year we have had in our 42-year history. But here is the problem: Four years ago we were doing $1 billion dollars in sales, we were very profitable. We were what I call fat, dumb, and happy. We had $2 billion in construction going on and we had been growing 20% a year since our inception, and it all came to a screeching halt. The banks froze up, and financing is the lifeblood of our business. So my company had to downsize, and we laid off 7,000 of our 12,000 employees. We went from $1 billion in sales to $500 million. We stopped growing and stopped hiring.
What lessons have you learned?
Before, our business model was to borrow as much as we could and build as much as we could and grow as fast as we could and hire as many people as we could and make as many sales as we could. Our model today is one the whole country should be learning about, which is to live within our means. We are not going to borrow, we are actually now paying down debt rapidly. I want a good strong balance sheet, but that will not allow me to build new resorts and acquire new resorts and grow the company and hire people.
How has Obama's re-election impacted your business plans?
Two weeks ago, thinking Romney would win, I told all my staff that in 2013 I want to grow 100 percent, I want to double my sales back to where they were in 2008, and that I would do whatever it takes, and borrow whatever it takes. When Romney did not get elected, I said let's maintain what we have, we are not going to grow. I am still going to work hard, but I am not going to take risks and get indebted to banks and borrow a lot of money to grow. We are on the edge of cliff.
You recently gave your employees a 5% raise. Why?
I have the greatest employees in the world. They have stuck with me through thick and thin, and they have suffered and they are going to suffer more with these new taxes.
Why do you think Romney would have been better for the U.S.?
He understands what business people go through and what we need to be successful. Listen, if you put more money in the hands of business people, they are going to use it to expand their businesses and hire more people. If you take money out of their hands they will not expand and they will hire less people.
Are you thinking of selling your company?
No, the company is like my child and my employees are like my children. We are a very close-knit family and they are very loyal, experienced people. But I am an entrepreneur, and when you take away the incentive of an entrepreneur to grow, they get bored. Right now I am very bored.
What about companies that have already begun laying off employees in response to the election?
Everybody who was on the verge [of layoffs] waited until the election. If Romney had been elected, it would have been a shot of adrenaline, and [business owners] would have said, now we can weather the storm and we aren't going to lay off anyone. Because he didn’t get elected, they are saying okay, we know what is coming.
Did you want to sway the way your employees voted?
I did want to persuade people to vote, but I did not tell them who to vote for. I just told them what the outcome of Romney getting elected and the outcome of Obama getting reelected would be, and I said vote for whomever you think will be best for you. Probably three-quarters of my employees voted for Obama. I still gave them raises in spite of that, and I am not holding a grudge.
And going forward?
I am cautiously optimistic. Business is a risk if you are willing to lay it all on the line. You can be very successful or a huge failure, but that is the nature of business. Based on what I know and what I have been through, I am not willing to take the risk to make my company highly successful. I am going to stay with the status quo until I see what direction the country is going in.