Thirteen years ago, Efrem Harkham decided the hotel industry was short on personality and long on broken promises. As the owner of two local hotels, he had tried working with franchises, experimented with management companies and reservation services. Every one came up short in filling his rooms. So, he decided to do it himself, buying three reservation service companies. Today, Luxe Worldwide books 200 hotels, taking a 7 percent commission on bookings and accounting for about 30 percent of occupancy at member hotels, a high rate in the hospitality industry. Harkham owns two Luxe hotels, one on Rodeo Drive and the other on Sunset Boulevard in Bel Air. With these properties, he is building a brand that he plans to license to about 30 hotels worldwide in key cities. Growing up poor in Israel and Australia as one of eight children, Harkham is a self-made man. When he found law school "tedious," Harkham tapped into a talent for design and created a gabardine jumpsuit that sold "hundreds of thousands" when he was just 19. It was his first sign of a Midas touch. He later sold his apparel company, Lulu of Australia, and moved to the U.S. in 1978. Here, he began investing in real estate and built another fashion company, Harkham Industries, with his brother, before exiting that business and getting into hospitality.


Question: Everybody wants to know: When a hotel says it's booked is that true?

Answer: Ninety-nine percent of the time, it's not true. We keep those few rooms for our repeat guests and that's when you make the friends and keep the relationships. When the city is booked and they have nowhere to go, you make sure they get a room. That's one of our loyalty program things. When they need a room, we make it happen.

Q: How did you get interested in hotels?

A: In 1995 when I was pulling out of the garment industry, I realized it wasn't rocket science to succeed in the hospitality industry. It's really a very human business. It's about people and the experience.

Q: Tell us about your first hotel acquisition.

A: We bought (the Bel Air Sands) in 1983. We're investors in real estate, so it was a real estate move with the intention of building some real estate structure on the land. And then I realized, "Oh my God, this is taking care of people and providing an experience" and that really attracted me.

Q: But it wasn't that easy.

A: I would say the biggest challenge of my career was how come this hotel lost $1 million year. It was beginning to be a huge burden and management companies, franchises, reservation services all kept losing the same $1 million each year.

Q: What turned it around?

A: Opening up to the community is what I did. We had these empty meeting rooms. Why are they empty? Let's invite the schools to come in, have the kids come, have some bodies walk through the property, experience the property, have some retailers close by come over and not be so tight. The bottom line with all our hotels is we encourage our hotels to be true to their environment.

Q: How involved were you?

A: I was too embarrassed to welcome them personally, so there's a letter from me saying, "Please come to the bar and have a glass of wine or champagne." And we still do that, a letter from me upon check-in saying, "Please enjoy the local activities, there's a play here, a play there, the Getty's got an exhibit, the LACMA's here," that kind of thing. And, "Please present this letter at the bar for a complimentary champagne or glass of wine."

Q: You have some strong feelings about what's wrong with the hotel industry.

A: Hotels are feeding off each other and there's a cookie-cutter issue. It's about choice and personality. We're in the right place at the right time. We're what the market needs, and that's personality, exclusivity. The market needs that worldwide. People need to be pampered and remembered and we're doing it.

Q: What are your next steps for Luxe?

A: Developing the brand is really powerful in our mind. Our goal is to develop hotels in gateway cities, to have hotels on like Rodeo Drive, Sunset Boulevard, Champs-Elysees in Paris, Bond Street in London, etc. etc.

Q: So how do you get into the booking business?

A: I was at an annual conference of a hotel representation company that we paid a fortune to represent our hotels and they did such a horrible job. I was going to stand up at the end of the conference and say, "Thank you for this wonderful conference. We really appreciate it, but we have a problem. You've represented us for three years and we've done everything you've asked us to do, everything you recommended and I'm still not getting my room nights. My costs are exorbitant. Our room rates are high. I'm not getting the ADR (average daily room rate) you promised I'd get." But they ended the conference before I could speak.

Q: So what did you do?

A: I called my lawyer. I said to take out an ad in Hotels magazine. I'm tired of this bullcrap. I want to do this on my own. This isn't rocket science verbatim. I can do it.

Q: What came of that?

A: We went about getting a group together and purchased existing hotel reservation services. We actually bought three of them. Between them we had 450 hotels and over the years, we have eliminated close to 250 to bring it more in line with our image, our look.

Q: So what you provide them with?

A: We provide a lot of technology. We have a reservation center in Canada, a multi-lingual center in Madrid where they speak French, Portuguese and Spanish. We have one in Japan, because you need someone who speaks Japanese. We have one in Australia, because it's so far away. You need to talk to someone who's Australian down under, or they feel like we don't love 'em.

Q: So what's your strategy?

A: We know the top 20 travel professionals in every city. We take care of them; we know when they have their babies; we know them by name. We keep a fantastic database and we share it with our members. And that's the difference. We give them technology and we don't charge them an arm and a leg. It's arming them to play on a field with the giants, the Marriotts and the Hyatts, but they're not losing their identity.

Q: So what does that do for you?

A: Our occupancy is at 90 percent, our profit is phenomenal, and we're way out of the red. We really are very thankful.

Q: You sound busy. How do you maintain a work-life balance?

A: It's complicated; I prioritize. The first-things-first theory really works for me. I tell that to my employees as well. Daily meditation is very important to me. If I don't do that, I'm not of much use to anyone.

Q: What was your family life like when you were young?

A: My father was an educator (religion at universities). He struggled all this life in Israel. He was tired and he wanted to give us a break, give us a choice rather than just going into the Army, to become what everyone else becomes.

Q: So how did you get into the garment industry when you were so young?

A: My brother David had retail stores in Sydney. So I kind of found out what he was selling and produced products for him, and then for other retailers. And then I got lucky because there's one particular buyer who just loved the (jumpsuit) product.

Q: Tell me more about the jumpsuits.

A: My brother happened to be selling them for $200 at the time, which was really expensive. And I took a sample and just put it in simpler fabric, gabardine, and sold it for $15.50. I sold hundreds of thousands of them.

Q: When you look back, how do you feel about getting out of the apparel business when you sold your stake in Harkham Industries in 1997?

A: I'm glad I'm not in there, to tell you the truth. It's a tough market. And the retailers are having a heyday because there's so much competition with all the markdowns. It makes it difficult for the manufacturer to survive so I see it as becoming a tough industry right now.


Efrem Harkham

Title: President and chief executive
Organization: Luxe Worldwide Hotels
Born: Zichron, Israel; 1956
Education: Sydney University Law School
Career Turning Point: Opening the Luxe in Beverly Hills
Most Influential People: His parents
Hobbies: Meditation, yoga, polo
Personal: Lives in Beverly Hills with wife Kendra, sons Aron, 12; Benjamin, 10; and newborn
daughter Natalie

For reprint and licensing requests for this article, CLICK HERE.