Donald Trump is alternately associated with some of the biggest successes, and some of the biggest failures in the home construction market. His emphasis on high end condo towers rode the wave of excess in the 80s and 90s, but as the market began to die out, so did his success. That didn’t mean that people didn’t see the Trump name and not want to buy in. Several developers took advantage of this, creating one of the most painful home building scandals in Florida’s history, the Trump International Hotel and Tower Scandal.
The value of a name
Collateral marketing is nothing new; it’s why the world thinks that celebrities actually wear the clothes they advertise or that Kathy Lee really designed those jeans. It is when a developer (of anything) licenses the name of somebody (known) to put on their project. By doing so, it implies not only an involvement from the person but that the project or product somehow has more integrity and value. Home developers then exchange the worth of the name for what it brings them in upfront investment fees from customers to help fund the project. Donald Trump went from a real estate developer of homes and condo towers, to one focused more on commercial ventures. His name still holds power in the residential market and he capitalized on this by allowing it to be used in the collateral marketing of several projects including the Trump International Hotel and Tower in Fort Lauderdale. In this instance, the developer was able to get up to 30% of the condo cost up front from buyers in a tower where the least expensive residence cost $2 million dollars.
Then, the world crashed down
When the economy faltered and the housing bubble burst, the first things to go were the tower projects. These luxury condo projects lost their potential buyers and were left without money to complete the buildings. Due to the mortgage scandals, they couldn’t even realistically apply for a loan to finish the construction. Those who had already bought in now had a goodly sum tied up in a home that was never going to be finished. Worse still, given its location and exposure to the ocean, the longer the Trump Hotel and Tower remained unfinished, the more it deteriorated. .
Trying to Fix the Problem
Owner’s first went after the home developers and then they tried to go after Trump to get their money back. No one wanted the tower completed because they knew that over 60% of the units remained unsold. The developer was able to claim bankruptcy and Donald Trump, in true Trump style, gave the owner’s a short and hard lesson in collateral marketing and disavowed all responsibility. What remains to be seen is whether or not it will have any impact on the Trump brand. It also remains to be seen who will bear the brunt of the cost of finishing, or demolishing the Trump International Hotel and Tower in Florida. The only person who won’t be involved is the namesake of the scandal, Donald Trump.
About this post:
Organizations within the USA, as with Dunhill Homes, are profiting from Mr. H-man’s guest blogging. As per his Google Plus user page, he’s the assistant manager in a internet promotion organization. D. Holdeman has planted his stakes in L.A. County where he’s expanding his business education to better provide for his sweetest as well as their three children.