Since 1994, FelCor Lodging Trust has grown from a small company with just seven hotels into an industry leader with 186 hotels, approximately 50,000 rooms, an equity market capitalization of $1.6 billion and a total market capitalization of $3.6 billion. Guiding the company throughout this success has been the job of Thomas J. Corcoran, president and CEO.

But if you think that serious accomplishments like these are gained at the cost of fun and a sense of levity, you have obviously not met Tom Corcoran.

Portfolio: How do you see things shaping up for the REIT industry and the lodging sector in particular?

Corcoran: I really believe that the industry, and certainly the lodging sector, will be known as a much safer investment than in the past because of a lot of the financial disciplines that have been put in place over the last few years. I think a lot of real estate people had reputations as being cowboys. But I think that that’s really changing because of the financial markets. Most real estate companies today have very conservative balance sheets. So I think it is going to curb the big cycles—real highs and the real lows—that happened in the past. As long as people don’t borrow too much money, and they aren’t.

Portfolio: FelCor was one of the more active companies in getting the REIT Modernization Act passed. What do you have planned for 2001?

Corcoran: Well, the company has reached an agreement to acquire the entity that is the lessee for the Embassy Suites, Doubletree and the Sheratons. That was the original entity that we used when we went public and it was owned 25 percent by myself and a couple of the other people, who were in the original company. That entity is being acquired January 1st so it eliminates the conflict.

From the standpoint of the shareholders though, they now have a fairly clean financial statement on those hotels because you are going to be looking at hotel revenue versus just lease income. I think it doesn’t change the business; it just puts all of the interest in one entity.

Portfolio: There seems to be a high ‘fun quotient’ at FelCor. As far as we know, there aren’t any other REIT web sites where you can find a photo of a smiling employee in a Campbell’s soup can costume. Could you tell us a little bit about the corporate culture at the company and how that has developed?

Corcoran: One of the nice things about starting your company is you get to make the rules. I always hated stuffy companies with lots of stupid rules, so I basically don’t allow people to have rules like that. I had a couple of bad experiences in my early business career, where I worked for some people that made my life miserable. It wasn’t fun working for those particular individuals. I remember it so vividly and I always said if I got to be the guy in charge, I would make it so people would have some fun at work.

I hate walking into places where everyone is quiet and no one says a word. I like to hear noise and see action—people laughing and interacting with each other.

Portfolio: You also seem to have a very open management style. How does that play out at FelCor?

Corcoran: You know, you work for some people that tell you that they have an open-door policy, but the door to their office is always shut. At FelCor we really do have an open-door policy. We don’t allow people to close their doors.

Portfolio: We understand that you put together teams of staff members that cook a ‘CEO Luncheon’ for your whole staff every month. Do you have a personal interest in cooking?

Corcoran: Oh, yes. I used to do it all myself. But it got to the point where I couldn’t cook for 50 and go to the store, buy the food, haul it upstairs. But I didn’t want to stop, so we just put together teams of people to prepare the meals. Having people from different departments working together on a task in an environment like that has proven to be a great team-building exercise. In some cases they’ve never worked directly with each other before. And, every other month, I still do the cooking, but I now will bring in a few people that I ask to be a part of my team to help.

Portfolio: Where did you get your cooking background?

Corcoran: Well, I actually started at a Holiday Inn in Topeka when I was about 14 and worked through the restaurants. Then when I got out of school, I started out and I met a guy who had this new concept—he had just signed the rights to do Chuck E. Cheese. So I became the first employee of that company and then eventually I became president of the company that owned Chuck E. Cheese, which I eventually spun-off to the shareholders back in the ’80s.

Portfolio: Certainly that was a fun company.

Corcoran: That was great. There aren’t too many places you get to run around in costumes at work.

Portfolio: You’ve done a lot of renovation and re-branding of properties at FelCor over the last couple of years. Is that an important part of your corporate strategy?

Corcoran: Well, it certainly has been the foundation that even goes back to the beginnings of the company. The first hotel that Hervey Feldman and I bought from the FDIC was a no-name. We re-branded it as a Holiday Inn and fixed it up and put in a new management team. It’s a great way to create value from an existing asset since you already have a base business that you can build on.

As we evolved, we started buying hotels that we could convert into Embassy Suites. I think the next fifty or so hotels we did we converted to Embassy Suites from some other brand.

Portfolio: FelCor received several awards for an interesting renovation project at the Allerton Crowne Plaza in Chicago. Can you tell us a bit about that?

Corcoran: That property was what some people might use as the definition of a flea bag hotel. But it sits on what is some of the best real estate in America—Michigan Avenue, in the Golden Mile. Brooks Brothers had been there for years on the first floor, but the hotel happened to be owned by two policemen, and they didn’t have the resources to bring it back to its former glory. It was a great physical plant. Unfortunately, there are not a lot of opportunities like that anymore, but when you do find one it can be a lot of fun.

In a case like that it’s not just a hotel renovation. You are bringing back history. Since the completion of the renovation we have had several people come in and tell us that they remember staying in the hotel many years ago. I actually had a retired gentleman that my father knows send me his bill from his wedding night there. He and his wife were just celebrating their 50th wedding anniversary.

Portfolio: What kinds of things do you like to do when you just want to kick back?

Corcoran: Typically, go down to our house at Cedar Creek Lake. I fish, I plant and I mow. I do stuff that I never believed I’d do and I enjoy it. I love to play golf, but I find myself enjoying doing simple things that are just different from my usual work routine. Recently I’ve enjoyed building a paint ball field with my kids. They are 12, 18 and 21. I am digging the ditches and we are putting up the wood and just having a lot of fun doing stuff like that. The kids love it.

I do find that the closer I get to the lake house, the more I start calming down and relaxing. Just sitting out on the dock with a cigar is wonderful. I can see the stars at night. I now know why people do that kind of stuff.