Industry Profile: Steve Gupta of Easton’s Group of Hotels – Part 1
Last week, the team at the Toronto Star’s NewInHomes.com met with Steve Gupta, the President and CEO of Easton’s Group.
We learned about his growth from an immigrant looking for a career to a dominant figure in the hotel industry. We also got a chance to pick his brain on King Blue Condominiums, a new development planned for the corner of King Street West and Blue Jays Way.
NewInHomes.com (NIH): How did you get your start?
Steve Gupta (SG): This is a great country to come to. Canada and America are the only two countries that give opportunities like the ones that I got after coming from overseas. It’s a free society that is equal for all. It was for that reason that I decided to come here and become an entrepreneur. When I came to this country, I came from a business family—my father was a builder back home. I did my education and then I came here. I didn’t want to have to start my education all over again, I wanted to make money.
I was looking for a starter job, and originally had looked to real estate, however, I couldn’t get into that occupation, because you had to be in the country for a year to get a license. So I said to myself, what’s the next best option? After some research, I found that an insurance license was my best bet. It would take me only two to three months to achieve. I passed the tests without a problem and joined North American Life (now Manulife Financial). In my first year, I was the best salesman in the branch, which was a great accomplishment.
After that, I started to venture into real estate. I bought homes and condominiums here and there, then in 1978 I started looking at buying a gas station. I believe that everything has a reason, and there was a reason that I started looking at gas stations. There was a guy I knew who leased a gas station in the McCowan and Danforth area from Sunoco. I was able to buy the business for $15,000, gave him the cheque and everything. A few days later, he reneged—he didn’t want to sell anymore. I was mad at him, but what could I do? That goes back to my notion that everything happens for a reason. I became more and more determined to buy a gas station. I kept looking until I found an ad in the Toronto Star offering a gas station for $15,000. I had exactly $15,000. I called the guy, he was a salesman who told me he had something somewhere in the east, but it would cost a lot more than the $15,000—he said it would be more in the $100,000 range, and that he would get back to me.
Sadly, the other agent lost the listing so it took weeks to get out to the station and visit. The agent that I was working with went down to the station and was able to secure it. I made the deal with the agent and the sellers, it took three or four months to put it all together. Turns out they were not asking for $100,000 but $1,300,000, and they would need $300,000 cash. It was a good business, but to jump from $15,000 to 100,000 to $300,000 was a lot. But I figured, let’s go for it. Finally, I was able to make the deal at $950,000. After visiting the sellers’ homes and looking at the numbers, I found a way to make it work. We signed off on the deal in September of ’78 and closed in February of ’79. I brought in two other partners, each taking 30 per cent to my 40 per cent.
Four months into our partnership, my first partner wanted out. He was a vegetarian with a religious belief that he could not sell meat. He did it for greed, but was told ‘you’re not allowed!’ So I bought him out, and took a 60 per cent interest in the station. He sold me everything from his suits to his car, he wanted out that badly.
One year later, my other partner had enough of the travel and also wanted out. His family was putting pressure on him to leave. I met him at a McDonalds, and despite trying to keep him aboard, he had made up his mind. I typed up the document and the deal was done. I was 100 per cent owner.
We had a mortgage from the Easton Brothers for $508,000, and the first mortgage was with Texaco for five per cent and long term, 30 years I believe. This also speaks to my mathematical skills, because I knew my numbers. A bit later on, one of the Easton Brothers wanted to cash in the mortgage. So Bill Easton came to me and let me know. I worked on the numbers that night until 2 a.m. and I made an offer to buy back the mortgage at $300,000, which made sense from a mathematical point of view. I made the deal for $315,000, and I was back to owing only $750,000—my original offer to the Easton’s when I first tried to buy the station. I was even able to get the Texaco contract open, and renegotiated the gas and concessions profit margins. A year later, we were the largest-volume gas and service station in Canada. The moral of the story is, if you believe in something, and know your numbers, you can make it happen.
NIH: When did you move into the business of managing apartments?
SG: I started looking at investing in apartment buildings in 1983. I bought my first apartment building in 1983, and then in 1986 we did a big deal with Peter Pocklington. I got a call at 11:30 p.m., a broker was working with another group to buy Pocklington’s apartment-building package and they could not come up with the deposit money. Basically, it was a management company with no money. So the broker called me and asked “Do you want to buy 2,500 units, Steve?”
So he came right over. We were under a tight deadline and needed to make sure the math worked. We stayed up until 4 a.m. working the numbers, with a lot of coffee. After we had solid numbers, I decided I was in. My only demand was that I wanted to set the prices, and I would go in at 50 per cent, and the management group would come in at 50 per cent. At 6 a.m., I went to see the properties, located in Brampton, Hamilton and Toronto, and at 11 a.m. we put in an offer. We won, a total of $59.7 million, with the deal closing on June 12. At that point, I just continued to develop my real-estate portfolio.
Basically, if you have the knowledge, a good head for numbers and a heart for people, you can succeed. I worked with both my heart and my brain. I always made sure I would never step on anyone’s toes. We are all human beings, someone may have more dollars than me, but it’s all about respect. It’s very important that I maintain that philosophy. I’ve always told my children, with a good name you can make money, but you can’t make money and buy a good name.
NIH: And then you moved onto hotels? Why the hotel business?
SG: From there, we started to move into the hotel business, and we have built hotels, and have niches in hotels in the upper mid-scale range. I feel, in Canada especially, that the full-service hotels are tired, they are 40 to 50 years old. In the ’80s, when the economy went down, we built some real low-end hotels. Those got tired as well, because the owners never put any money in. Both full-service and low-end hotels became tired, and there is nothing in the middle—that’s where I came in. I took the brands like Marriott and Hilton and raised their standards. Most will try to break those standards, but with me—I think you’ll find most people within Marriott or Hilton will say you don’t have to worry with me. They’ll say, “He won’t under-deliver, you have to worry that he will not take it too far above the standards.” Most of the hotels I have built have become the new brand standard. I call it a top-of-the-class student. There are 20 per cent at the bottom, 50 per cent in the middle, 25 per cent at the upper middle, and the rest at the top. That’s where I want to be, and if you want to be there, you have to work harder than everyone else.
NIH: What have been your favourite hotels?
SG: I think the two in downtown Toronto have been my favourites, and the favourites of everyone in the hotel industry. The first is the Marriott Residence Inn. Bill Marriott, who is the chairman of Marriott International, came in and said it was the ‘finest Residence he had ever seen.’ He sent me a letter that is now framed. That was a big accolade. For the chairman of a major corporation to offer that kind of praise, it was very rewarding.
The other one is the Hilton Garden Inn on Peter Street. I convinced them to build in that area with that design, and it turned out to be fantastic. Every time I open a hotel, I do it with pride. I tell my people, let’s go, this time next year we want an award! Everyone involved in the project feels they have done something special.
We currently have 15 hotels, with three more in development. That equals roughly 2,700 units right now, including in Quebec and all over Ontario. But those are the ones that stand out for me.
NIH: How do you gauge success?
SG: It’s about passion and vision. If you have both of those, you can be successful. I’ve always believed that success is a journey—it never ends, it’s not a destination.
This is the first of our two-part interview with Steve Gupta. In the next part, Gupta focuses on his new project, King Blue Condominiums.