The Dean’s Distinguished Lecture Series (DDLS) brings prominent industry professionals to speak at SHA most Fridays during the fall semester. For 2015, students worked in groups each week to research, meet, and profile featured speakers, and then guest-blog here about the experience.
This week’s student authors are Gabrielle Maurer ’16 and Laly Vandenberghe ’16.
The School of Hotel Administration welcomed Mr. Rick Caruso, founder and CEO of Caruso Affiliated, to the stage as part of the Dean’s Distinguished Lecture Series (DDLS) on October 2, 2015. Caruso entranced the audience through his nontraditional real estate thinking and innovative, experience-based concepts.
Before the presentation, we had the pleasure of attending lunch with Mr. Caruso, his close friend President Elizabeth Garrett, Dean Michael Johnson, the dean’s wife, Jill Kobus Johnson, and other distinguished guests. As we enjoyed our French-inspired meal prepared by student chef Mara Jaffe ’17, we were able to get a closer glimpse of Mr. Caruso’s (“Call me Rick, please”) charismatic demeanor. He genuinely wanted to know each lunch guest’s background and goals, and was fascinated by the different interests each person had. At the same time, we were lucky to hear a preview of what we would be listening to only an hour later during his DDLS presentation.
Mr. Caruso’s captivating presentation touched upon a few different topics related to his life and career: his view of the real estate industry, the history of his company, and his vision for the future. “To me, hospitality is the pleasure one derives from watching other people delight.” This quote from Caruso encapsulates his mindset of creating a memorable, touching experience for each guest.
Mr. Caruso spoke about the core of the Caruso Affiliated business model, an “experience-based” rather than profit-driven one. In an increasing “virtual mall” world, this concept of gaining “heart share” versus market share encourages guests to stay longer at the properties, purchasing more as they linger. To achieve this, he insisted upon real grass within his shopping centers (with complimentary towels for sitting on it); offered tenants up to 80 hours of employee training to incentivize companies to provide superior service; and provided a complimentary Uber ride during the holiday season to his mall guests, with rides back home if they spent more than $250 during their visit. These amenities pay off, though, as Mr. Caruso shared that the average amount spent from these Uber trips was $1100—over four times as much—per shopper, and allows Caruso to implement his “second shift” theorem. With this, Mr. Caruso argues that every person has a second shift, i.e., when he or she has to take care of the common household tasks, such as doing laundry, going grocery shopping, etc. In his residential buildings, Mr. Caruso provides his tenants with all of these services at no extra cost, as he believes giving time back to people is the primary added value they receive from living in a Caruso apartment complex.
Mr. Caruso got his start in the industry a little later than other real estate moguls. He began his career as a lawyer, which he said benefited him because he didn’t know the “rules of the game,” so he was able to break them. He then became president of the Los Angeles Board of Police Commissioners, which taught him how to take the political risk out of a project. Mr. Caruso then mentioned how Caruso Affiliated is privately held, which gives him more leeway to do “crazy projects” and keep his non-traditional, experience-based business model.
Rick Caruso has big plans for the future; over the next few years, he plans to unveil at least five new properties, including two new malls (Carlsbad and the Palisades Village) and a second mixed-use residential building at 333 La Cienega, modeled after the 8500 Burton Way complex. Additionally, he plans to make company history by opening an office building in the old Masonic Temple in Los Angeles, as well as his first-ever hotel property, the Rosewood Miramar in Montecito. This property will be the only hotel in the area with a private beach, available exclusively to its hotel guests. Additionally, it will embrace the rail line running through the property by adding a luxury cart to the end of the train, allowing guests to reach the hotel as they did 140 years ago when the property first opened.
Overall, it was an absolute pleasure and honor to welcome Mr. Caruso to the dean’s stage. His passion and dedication to giving the guest an unmatched experience was apparent through the excitement and fervor of his presentation. We look forward to seeing what innovative concept Caruso Affiliated will come up with next!
Rick Caruso, founder and CEO of Caruso Affiliated, speaks at the 2015 Dean’s Distinguished Lecture Series (DDLS).