ZMC Hotels Inc.`s Evolution From Small Family Store to a

Dynasty
By Tony Bennett
ZMC Hotels Inc.’s Evolution
From Small Family Store to a
Top Hotel Management Company
he idea of the “family business” is one that seems to be slowly disappearing.
The corner stores so prevalent a few decades ago have been largely supplanted
by chains and outlets managed by people in other places – without direct connections to the roots of a business.
But for ZMC Hotels Inc., company roots in Duluth run deep and its family
owners are proud of their history and their legacy. Zenith Management Company
(ZMC) originally began as an outgrowth of a simple local business, and now it owns
and runs hotels all over America from corporate headquarters right here in Duluth.
“The [first] family business was a discount store – Goldfine’s by the Bridge,” said
John Goldfine, ZMC’s vice chairman. “It was one of the first discount stores of the new
generation in America. It started a year or two before Target, about the same time Walmart was starting up. Goldfine’s was a little bit more eccentric in that it sold motorcycles
and snowmobiles and campers and groceries.
“We had a commercial division that sold furniture to small ma-and-pa motels,” Goldfine
said. “Along the way, one of the motels we were financing furniture for asked us if we wanted
to buy the motel. And that’s how we ended up in the hotel business.”
Ken Goldfine – John Goldfine’s cousin – is the chief executive officer and chairman of ZMC. He
says that by the late ’70s, his father (Manley “Monnie” Goldfine) and uncle (Erwin Goldfine), were
ready to move on from the retail industry their parents, Abe and Fannie, had brought them up in.
“Around the year 2000, Monnie and Erwin sold the company to John and myself,” Ken explained, adding that since then, all other partners have been bought out except for Amy Goldfine, Ken’s cousin.
12
Duluthian march.april 2014
Chairman of the Board/Chief Executive Officer
Kenneth Goldfine (standing) and Vice Chairman
John Goldfine.
Page 12 - Portraits of family forebears are
proudly displayed at ZMC Hotels Inc. headquarters. Erwin (left) and Manley Goldfine,
founders of ZMC Hotels Inc. and Duluth community leaders, were significantly influenced by
the Goldfine family matriarch, Fannie Goldfine
Benton (top portrait) – a pioneer among businesswomen in Duluth.
march.april 2014 Duluthian
13
That all sounds like the serious
stuff of a corporate dynasty, but Ken
also has the “from-the-bottom-up”
background that only a family business
veteran can provide. “I got involved
in it working as a desk clerk at the
Bridgeview [Bridgeview Motor Inn in
Superior, Wis.] through high school,”
he said. “I delivered telegrams for a
while, things like that.”
In 1985, Ken got married and
moved to Arizona, where he has lived
ever since. “In 1988, with my dad and
mom’s help, we bought a little motel
out here that was not part of the Zenith company directly,” he said, “and I
Around the turn of the century,
big company changes happened, at
least with regard to the first names of
the Goldfines in charge. “As the ’90s
drew to a close, that’s when Monnie
and Erwin and John and I decided it
was time for a transition. I became the
CEO at that time,” Ken explained.
Erwin passed away in 2002 and
Monnie in 2009, leaving the family
business to the next generation. Since
then, their sons have led the charge at
ZMC. They’ve focused heavily on doing
business in a modern way, but with the
personal touches that are befitting of
their forebears’ legacy.
“Their philosophy at the time was to try to buy hotels in
markets that had stable sources of revenue generation,
like college towns, military institutions.”
–Jon Driscoll, chief operating officer
ran that for three years. That’s where I
really learned the hotel business – running my own hotel out of Scottsdale.
I had a lot of help, with ZMC parallel
to me.
“In 1991 or ’92, I started running
hotels for the company and then we
started building hotels,” said Ken. This
job was his main focus through the
1990s. “I managed building about 11
different hotels, mostly in Arizona and
one in Colorado. Some of those were
big additions and some were big renovations,” he said.
14
Duluthian march.april 2014
“I was there on the day we opened
the store,” said John of the Goldfine’s
discount store days. “My grandma was
holding me with one hand and shaking
people’s hands with the other. I was
there from the age of 10 on – almost
50 years.”
That kind of family approach
helped form the foundation for what
became ZMC Hotels, and it has paved
the way as the years (and hotel acquisitions) piled up. The company has
been – and still is – guided by the principles and philosophies that formed it.
Today, ZMC employs more than 1,200
people and operates 29 hotels in 10
states – Alabama, Arizona, Florida,
Kansas, Michigan, Minnesota, Missouri,
North Carolina, Oklahoma and Wisconsin – with more on the way. So how
have they done it?
“Back in the day, when Ken and
John’s fathers were in the business,
their philosophy at the time was to
try to buy hotels in markets that had
stable sources of revenue generation,
like college towns, military institutions
and that kind of thing. That’s sort of
the foundation of how the company
started,” said Jon Driscoll, ZMC’s chief
operating officer. “So we were in places
like Junction City, Kansas, and Aniston, Alabama.”
Ken Goldfine says that some of the
company founders’ visions anticipated
the future of the business. “Monnie
and Erwin – their unique ability back
in the ’70s and ’80s was figuring out
how to manage hotels from a distance,
before cell phones and fax machines
and all that stuff,” he said. “We got
very good at managing over great
distances.”
Determining how to grow beyond
being a regional management company
was a strategy that developed gradually and organically. “We had bought
a series of local motels,” said John
Goldfine, “including the Edgewater,
the Bridgeview and the Best Western
[Downtown Duluth]. The expansion
was three hotels in Kansas. From there,
we bought several here and there.
Page 14 - Vice President/Sales and Marketing
Leanne Joynes (left) and Director of Human Resources/Risk Management JoAnn Mattson.
Clockwise: Chief Operating Officer Jon Driscoll
(left) and President and Chief Financial Officer
Todd Torvinen; Director of Revenue Management Marie Ronning; Controller Mark Olson;
Office Administrator Valerie Jerome; Treasurer
and Financial Analysis Manager Stacey Lange.
Eventually, we built the first of our hotels in Scottsdale.” And that, he said,
is when ZMC started building hotels.
The diversification is due to the
fact that “we had a little bit of a theory
that recessions were regional,” John
Goldfine said. “We were looking for
financial protection. If a recession hit
hard in northern Minnesota, then it
wasn’t going to have the same effect
in Arizona or Alabama.”
The 2008 recession was something
that no business owner could fully
anticipate, but years of smart choices
made it easier for ZMC to navigate a
very turbulent economy.
“During the recession,” said Todd
Torvinen, ZMC’s president and CFO,
“we ended up having to cut back some
things. We knew revenue was going to
take a hit. We did a good job of forecasting the recession, so we were ready
for it. Our revenues and net income
only went down about one-half of
what the industry experienced. We felt
pretty good about being reactive. We
did have to do wage freezes and 401(k)
cutbacks, as far as matches. We held
the line on health insurance and have
continued this for five years.
“To put it in perspective,” Torvinen
said, “we do about $70 million in revenue every year. We create $22 million
of net operating income. We end up
paying roughly $11 million of debt service payments. We have distributions
to owners. The last couple years, we’ve
made about $8 million of capital expenditures as reinvestments into hotels.”
Like other hotel companies, today ZMC operates in an ever-changing
world of technology, where guests
leave reviews and make bookings on a
wide range of user-driven websites. A
social media presence is a major component of a hotel’s public profile.
Driscoll has been with the company since 1980, so he’s been on
board for a lot of ZMC’s evolution and
adaptation to changing times. “When
I started,” he recalled, “everything
was manual. The biggest thing that’s
changed in the hotel industry is high
technology – computers.
“In the last five years, what’s really changed the business are the user
review sites and TripAdvisor,” Driscoll
said. “Back in the day, we would put
a quality-control card in every guest
room. Now we do that all online. We
have somebody that answers every
TripAdvisor comment, good or bad.”
Social media have become a large
part of Vice President of Marketing
Leanne Joynes’ job with ZMC. “Every
hotel has a Facebook page,” she said,
“and every hotel posts three times a
week. We all send offers and sales to
“We had a little bit of a
theory that recessions
were regional.”
– John Goldfine, vice chairman
a customer base that has elected to
participate. Normally, every property
sends about two of those out a month.
We don’t want to overwhelm people,
but we do want to make sure they
know what we have to offer.”
march.april 2014 Duluthian
15
Top photo: Days Inn & Suites - Scottsdale, Ariz.
Bottom photo: Residence Inn by Marriott
- Sebring, Fla.
Page 17 (clockwise): A room at the Sleep
Inn - Scottsdale, Ariz.; pool view at Days Inn
& Suites - Scottsdale; the Sleep Inn Scottsdale, Ariz.
Photos courtesy of ZMC Hotels Inc.
The social media profiles allow each
hotel to actively address the questions
and concerns of guests or potential
guests. “We get a lot of people who –
on Twitter or Facebook – ask questions
about lifeguards or water quality or real
specific questions,” Joynes explained.
ZMC continues to grow, not just in
its ability to finesse changes in economy and technology, but in the way
it physically expands. A new Hampton
Inn in Hibbing is in the works, with
construction slated to begin in May.
“At the moment, we’re kind of in
the information gathering stage,” said
Joynes. “We’ve been contacted by several customers already who are dying
for it to be built. As soon as we’ve got
design plans, we’ll start booking.”
“They haven’t had a hotel built
there in a long time, so it’s an underserved market,” Torvinen said of the
Hibbing area, noting that the largest,
nicest hotel was constructed in 1962 by
business magnate Jeno Paulucci. “When
you look at Essar Steel, Magnetation, a
Fairview Riverside Hospital and things
like that, it really just needed a good
80-room hotel,” he added.
“Our plan is to be open the last
week of 2014,” said Driscoll. “That’s
our goal.”
A new hotel means new jobs in the
area as well as more business for local
restaurants and stores. So the work of
ZMC benefits communities in which the
company manages properties.
16
Duluthian march.april 2014
In Duluth, ZMC works together with
local businesses to accomplish their goals,
too. Take Stewart-Taylor Printing, for
example. Co-owner Bill Olson says the
work he gets from ZMC and the business
relationship they share is indispensable
to him. And the history of ZMC plays no
small part in that; the seeds of good will
have continued to grow over time.
“It’s something people don’t understand – what the Goldfine family did
for the city and how good they were to
people,” Olson said. “They helped so many
companies like ours. We’ve been printing
“We get a lot of people who – on Twitter or Facebook
– ask questions about lifeguards or water quality or
real specific questions.”
– Leanne Joynes, vice president of sales/marketing
“It’s something people don’t understand – what the Goldfine
family did for the city and how good they were to people.”
– Bill Olson, Stewart-Taylor Printing
march.april 2014 Duluthian
17
BELOW: Room and exterior view of the Inn on Lake Superior – Duluth, Minn.
PAGE 19:
TOP PHOTO: Hampton Inn & Suites – Rogers, Minn.
BOTTOM PHOTO: Room view at the Inn on Lake Superior – Duluth, Minn.
Photos courtesy of ZMC Hotels Inc.
for them for 30 years. Really, it’s become a
friendship. They trust us with everything.
It’s a great organization and we’re glad to
be partners with them.”
“It is important to us to be a good
partner for local businesses,” said President Sue Ryan of Upper Lakes Foods Inc.
“We have over 240 employees that live
in the surrounding communities and we
all take pride in doing business locally.
We don’t do business with all of the ZMC
hotels in our area, but the ones we do
service we appreciate very much – and
18
Duluthian march.april 2014
we continue to try for the rest. The ZMC
hotels provide … an excellent experience
for their clientele, which in turn helps our
business by selling them more groceries.”
Business is going so well for ZMC
that one might wonder why executives
don’t pack up corporate headquarters
and ship it to warmer climes, such as
Scottsdale, for instance.
But Ken Goldfine will hear nothing
of it.
“Duluth has been very good to
the Goldfine family,” he said, “and it’s
important that the Goldfine family be
good to Duluth. We’re committed to the
Northland. It’s a wonderful place to be,
there are wonderful people there and
we’ve made a good life for our family.
And we’re grateful for that.
“The pragmatic business reason is
also important,” he said. “I’ve lived in
“We have a competitive advantage by having
our home office up in Minnesota. The work
ethic is higher than in other places.”
– Ken Goldfine, chairman and ceo
Arizona for 30 years and people ask me
why I don’t move the company out here.
I’m a hundred-thousand-miles-in-the-air
Delta guy. The narrative I carry is that
we have a competitive advantage by
having our home office up in Minnesota.
The work ethic is higher than in other
places. The people are smart. The rent is
cheaper. The dedication is higher.”
And although the family-based history goes way back, those who don’t
share the Goldfine DNA are still part of
the clan. ZMC strives to maintain a corporate culture in which all employees
know that their work is important to
company success.
“It’s a different kind of family – a
culture of camaraderie, of loyalty and
being treated right,” Torvinen said.
“From that standpoint, it’s a family
company even if you’re not blood.”
With that sort of business philosophy, it stands to reason that future
generations of Goldfines (and their employees) will have a happy home under
the roof of ZMC Hotels Inc.
Tony Bennett is a Twin Ports-based freelance writer.
march.april 2014 Duluthian
19