Trumps sons are running the business — and their big hotel expansion is at a standstill The Washin
Shortly after Donald Trump entered the White House, his eldest sons announced ambitious plans to open a line of hotels called Scion that would target young, hip customers mostly in places where their father had proved popular with voters.
The first Scion would open in early 2018. A second line of hotels, called American Idea, would soon follow, with three in Mississippi and more than a dozen elsewhere. In all, the Trump Organization said it had preliminary agreements to open 39 properties.
This was the brothers primary and boldest idea for expanding the family business — a push into markets that it had long overlooked, they said.
A year and a half later, progress has been slow. The first Scion, in Cleveland, Miss., remains nearly a year from completion. The first two American Idea hotels, in the same area, will not open until later this year.
And no projects outside of Mississippi have publicly materialized, giving Donald Trump Jr. and Eric Trump little to celebrate following a two year stretch overseeing their fathers business. During that time, the company became the target of and in some markets after partners complained about the brand.
Mississippi businessman Dinesh Chawla and his brother Suresh, owners of 18 hotels in the Gulf Coast region, announced their deal with the Trumps in a glitzy reception at Trump Tower in June 2017. The Chawlas would develop and own the Scion; the Trumps would brand and manage it.
Eric and I got a great crash course in America over the last two years, Donald Trump Jr. of about 500 at the reception. We saw so many places and so many towns and heard so many stories that were so touching. People that were so excited about the prospect of this country and Americana in general.
The plans for Mississippi remain. But Dinesh Chawla says that, at the direction of Trump Organization executives, he has spent hundreds of thousands of dollars and the better part of a year reworking the Scion so it will be capable of attracting meetings, concerts and festivals to Cleveland.
Eventually the 100 room hotel, half completed on a 17 acre site, will be surrounded by 10 other buildings for restaurants and event space in a complex costing more than dollar 20 million. Chawla estimated he would spend dollar 5 million more than he originally planned.
They looked at all our plans, and they liked the basic layout of the hotel, but they did not find our meeting space functional, Chawla said. They worked with us around how it could be restructured.
Chawla, whose father grew up in a refugee camp in India before emigrating to Canada and then the United States, said he is pleased with the changes because, to succeed, the project needs to become a destination for tourists and business meetings. The starting room rates for Scion hotels are expected to run dollar 200 to dollar 300 a night.
Many locals may not be able to afford to stay there, as 59 percent of households in surrounding Bolivar County make less than dollar 35,000 a year. While the area attracts tourists in search of blues music, three other hotels are in the works in Cleveland, even though the town — surrounded by soybean and cotton fields — is home to just 15,800 people.
We need to grow the pie, Chawla said. If we just capture the current Cleveland visitors market, wed be going into bankruptcy.
Local tourism officials are bullish on the property, located less than a mile from the Grammy Museum that opened in 2016 and Delta State University.
I think itll draw people in, having a nice hotel. Weve seen over the last three or four years a boost to tourism with the Grammy Museum, said Judson Thigpen, executive director of the Cleveland Bolivar County Chamber of Commerce.
When the Trumps announced their deal with the Chawlas, the chief executive of Trump Hotels, Eric Danziger, said he had agreed to 39 letters of intent — informal preliminary agreements — for other hotels across the country.
Outside of Mississippi, those plans have made no discernible progress. The Trump Organization declined to comment on how many hotels are in the works but issued a statement from Danziger saying the Trump Organization has enjoyed the process of working with the Chawlas and have great respect for them.
We are always exploring opportunities for growth and continue to work a robust pipeline of opportunities as we build out our brands expansion, Danziger said.
Since Trump left the business, the Trump Organization has followed through on projects that were underway in Vancouver, Dubai and India — sometimes over the objections of government ethics experts — but it lost branding and management deals for hotels in Toronto, Panama and New York. Owners of apartment and condominium complexes in New York have taken the Trump name down there as well, saying the brand was hurting their property values.
Investigators are also swarming the company, and that is putting it at risk of having to disclose private financial information in court cases and before Congress now that Democrats have taken over the House of Representatives, according to congressional staff.
Two of the Chawlas other hotels, a Comfort Inn in Clarksdale and a Rodeway Inn in Greenville, are on pace to open in the spring or summer as the countrys first American Idea hotels. Chawla said he was not sure whether another property he owns in Cleveland, initially pegged as another American Idea, will convert or not.
Experts say there is some legal risk to the Trumps in the expansion. In two lawsuits wending their way through federal courts, plaintiffs argue Trump — because he still owns his business — is the Constitutions emoluments clause, barring gifts or payments from foreign or state governments.
The Mississippi plans have not become a focus of either case, but Mississippis department of tourism approved up to for the project on top of already approved local subsidies, and the Chawlas have talked about partnering with Delta State University, a public school.
John Mikhail, a Georgetown University law professor, said such support could run afoul of the domestic emoluments clause, which bars states from providing benefits to the president, but that it was difficult to tell because there is no existing case law.
It could go either way, he said. If the domestic emoluments clause is interpreted the way some of these plaintiffs would like it to be, then it could be a problem.
Trump, backed by Justice Department attorneys, has argued in court that any payments his hotels receive are market rate transactions that do not qualify as emoluments and that the cases ought to be dismissed.
Chawla has done his own research on the emoluments clause and said the state programs he is using are available to other developers and are not the result of any political favoritism. Thats for someone else to decide, he said.
Cleveland Mayor Billy Nowell said he was unaware of recent progress at the hotel and declined to comment on the developments use of state and local tax incentives, which are contingent upon the hotels completion.
I really havent heard anything, he said. It seems to be going at such a slow pace. Its been at a standstill for close to a year.
The state auditors office, which investigates improper use of state funds, said it is unaware of any reason the development would be unlawful.
Serving in office does not preclude ones family members from working in business, and while there are some federal restrictions on what federal elected officials and their family may do, those restrictions are enforced by federal authorities, the office said in an email.
Trump remains popular in Mississippi, where in November 57 percent of people approved of the job he was doing and only 39 percent disapproved. The Senate candidate Trump backed there, Cindy Hyde Smith, in November despite charges that she used language.
By reaching customers in areas where Trump is politically popular, the company may avoid the it has had with private owners of Trump hotel units in politically left leaning cities, including Chicago and New York.
Cleveland residents seemed unmoved by the delay in construction of the hotel and had mixed thoughts on its utility in town. Some felt the town needed more hotels. Some wondered who would pay for a nice hotel room this far down in the Delta. Everyone agreed the area needed more jobs.
Winn Loudon, owner of Crave Bistro, a popular coffee shop, bakery and sandwich shop in town, said he is disappointed the construction has taken so long. The more options Cleveland has to bring in tourists, the better, he said. His business, like many others in the hotel and tourism industries, relies on it.
I think its great. We see a ton of tourist activity here, and it seems like thats beginning to really pick up with the museum, so, as a business owner, its a good thing for us, Loudon said.
John Jacobs, a retired Delta State University custodian, said he thinks the hotel will benefit the town.
As long as the customer service is good and the security is fine, theres room for more, he said. Itll bring in more jobs. Thats another thing — we can use all the jobs we can find.
Ricky Fair, a retired bus driver for the Cleveland School District, asked: Whos going to be able to afford it? No one here.
In the Chawlas, the Trumps have partners who are deeply ingrained in the local community, employers of nearly 400 people and supporters of workforce development programs aimed at getting people into hotel and technology jobs.
Chawla said all the foundation work for the Scion complex should be completed this month or next though the still says it will open in fall 2018 . Recent permits filed with the city show progress on the foundation, plumbing and electrical systems.
Chawla said being in business with the Trumps company is a good icebreaker when meeting other business people.
We dont view this delay as a totally negative experience, Chawla said. We think we learned a lot from it.
David A. Fahrenthold contributed to this report.
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