UNC Kenan-Flagler Business School

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UNC Kenan-Flagler Business School

Thriving in Tumultuous Times: Economic slowdowns are nothing new for the historic Biltmore House

6/26/2009

During the Depression of the 1890s, Western North Carolina had modest economic activity. Much of its land had been over cropped and its forests strip-cut.

But George W. Vanderbilt II, of the family that made its fortune in steamboats and railroads, saw beauty - and potential - in the undervalued land and bought 125,000 acres of it. There he built a 250-room mansion, the largest private home in the United States. In the next Depression, in the 1930s, the family opened the house to the public.

“George Vanderbilt saw opportunity in adversity from the beginning,” said Steve Miller (BSBA ’77), executive vice president and vice chair of the executive committee at the Biltmore Co. Now the company’s most senior, non-family member executive, Miller began his Biltmore career with a summer job mucking out stables after his freshman year in college.

He impressed his bosses with his work ethic and was invited back into a management-track position. When the more profitable dairy split off in 1978, Miller filled the opening of marketing director of the house and gardens division of Biltmore, a branch that lost 18 percent of its business his first year in the post.

“That gave us a lot of incentive to think creatively,” Miller said.

With the stagflation and Sunday gas station closings caused by the oil embargoes in 1974 and 1979, and with more women in the workforce, two-week vacations gave way to shorter but more frequent trips. Biltmore changed its advertising strategy from billboards and brochures to reaching people at home through TV, radio, newspapers and magazines.

Biltmore House became a destination rather than a roadside attraction. The company restored the kitchen, laundry and servant’s quarters, creating a second tour option, raised ticket prices 30 percent and made back its investment within six weeks.

Miller and the leadership team at Biltmore continually look for ways to cultivate repeat customers, with new things to see, do and buy, and ways to extend a day visit into the evening or multiple days. In 1985, with the dairy business sold, Biltmore retooled the dairy buildings into a winery. In 2001, when travel to overseas and big-city destinations slowed, Biltmore opened a luxury hotel. In 2010, it will open Antler Hill Village, an $18.5 million project that includes an exhibit telling the story of the family’s contributions to the community, a center for outdoor activities, a new restaurant and a regional arts and crafts store.

Biltmore also is expanding its brand business, Biltmore For Your Home, a licensing program to produce and market upscale home furnishings, gardening items, and food inspired by Biltmore’s collection and history. And with land prices falling, the company is keeping alert to other historic property that could be operated with the Biltmore business model. Privately owned, Biltmore pays taxes and doesn’t get grants from the government.

“Our most significant strategies for growth have been introduced when the economy was tough,” Miller said. “If everyone waits to build their business until the economy improves, what’s going to make the economy get better? Our decision is to be proactive, not reactive.” Miller shares these insights into Biltmore’s success:

  • Look for opportunity in adversity. Buy and build when land prices and construction and lending costs are low. Distinguish between temporary and permanent slowdowns, and create a strong future.
  • Evolve. Find new products and experiences to interest customers in coming back. Change marketing strategies to respond to new realities.
  • Be disciplined about expenses, and keep a strong balance sheet. Invest back in the business, but prudently.
  • Seize the advantage of patient capital. The return on investments made with a long-term perspective is often higher and more sustainable than those made to improve next quarter’s profit.
  • Maintain family commitment and a unified vision. A strong commitment by family members who share the same vision for the business’ success inspires loyalty among customers and employees, a huge competitive advantage.