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For them, this was no reality television program. There was only reality itself, as Donald Trump’s stock machinations forced the sale of Holiday Inns in 1988, and Memphis’ once-shining example of American ingenuity became a British company whose U.S. regional office was in Atlanta.
While Holiday Inns is regularly cited as proof of how Memphis innovators like Kemmons Wilson changed American culture, Trump’s role in its demise is largely forgotten. The stock frenzy that he triggered when he bought about 5 percent of Holiday Inn’s stock in 1986 paid off big-time for the Donald. He made $32 million, almost the amount of the annual payroll — $40 million — that evaporated from the Memphis economy as a result.
In classic Trump fashion, he also was motivated by an opportunity to show up someone he didn’t like — in this case, highly respected Holiday Corporation CEO Mike Rose — and to show he was all about the “art of the deal,” the title of his boastful memoir published a year before the Holiday Inn sale.
“Trump had to have his name on everything … his ego simply requires him to be No. 1 or he can’t stand it,” Rose said in 1991 to Susan Adler Thorp, then a business writer for The Commercial Appeal and today a communications consultant and political commentator on WREG’s Informed Sources. The newspaper’s six-part series, the culmination of a seven-month investigation, was nominated for a Pulitzer Prize.
A highlight of her legwork was a 90-minute interview that Thorp and co-writer Ted Evanoff (now the business editor for The CA) had with Trump in early 1991 on the 26th floor of Trump Tower on Fifth Avenue in New York City. A social acquaintance of Thorp’s had set up the interview.
“We were called into the boardroom, and it was the most beautiful view of Central Park anyone could imagine,” Thorp remembers today. “There was a large model of an airplane at the window. My friend came in first, and then Trump came in. He had on a blue sharkskin suit and he had the same strange hairdo that he has today. He was cordial and answered all of our questions. He was very helpful, but I do remember he was full of himself. He sucked all the air out of the room, and he let us know how important he was. He clearly thought there was a bunch of buffoons at Holiday Corporation who didn’t see what the real value of the stock was.”
Trump’s strategy was the result of his earlier business dealings with Holiday Corporation in Atlantic City. The Memphis-based company had built a casino, but it needed land for a parking garage and the only available land was owned by Trump. “They entered into an unholy alliance,” says Thorp. “They couldn’t stand each other.” She wrote that, as a result of the deal, “Trump came away with intimate knowledge of Holiday, and a view that the company’s parts were worth three times the whole.”
Trump had discovered that the true value of Holiday Corporation was in real estate, so he started buying up stock. Holiday officials one day “woke up to learn that he owned 5 percent of their stock,” she recalls. “What struck me was that by buying up the stock and forcing the sale, he had nothing but a careless disregard for all the people who lost their jobs at what was an American icon, not just a Memphis icon. He didn’t care. He was simply a ruthless businessman.”
To avoid a takeover attempt by Trump, Holiday Corporation management had borrowed heavily to make lump-sum payments to shareholders and ultimately engineered the sale of the company in 1988 to the English brewery, Bass PLC. To reduce its debt, Holiday then sold much of the company’s real estate in a move that mirrored Trump’s intentions.
Thorp wrote in 1991: “Holiday could market a brand name; Trump could admire his.” As for Trump, it was characteristically all about a deal. “I don’t think I had any great intentions for the company,” he told Thorp at the time. “I made this deal. It was a very unfriendly deal.” Friendly or not, Trump’s stock manipulations netted him $32 million.
By the time the smoke cleared, this once-proud chapter in Memphis’ legendary entrepreneurial history had come to an end, and Holiday Corporation employees were told the grim news that most of their jobs were gone. The few remaining would move to Atlanta.
In last month’s Tennessee Republican primary, Trump received the most Republican votes in Shelby County. It’s a safe bet there weren’t many former Holiday Inn employees among them.