What’s the latest in the hotel economy with the owner of 90 yr old Handley in Union Square and the importance of professional coaching in the business world.

Episode Transcript

Intro:

Welcome to the Practical Tax podcast, with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz, LLP, a tax law firm.

Disclaimer:

The information contained in this podcast is based upon information available as of date of recording and will not be updated for changes in law regulation. Any information is not to be considered tax advice or legal advice and does not form an attorney/client relationship. Further, this podcast may be construed as attorney advertising. You should see professional consultation for your individual tax and legal situation.

Chip Franklin:

Welcome everybody to Practical Tax with tax attorney Steve Moskowitz. Steve, I want to ask you something before our first guess because it kind of ties in with our guest. As you traveled around the country, did you constantly go back to the same hotel when you were in a city? Was it like one you favored and you just stuck with it?

Steve Moskowitz:

Absolutely.

Chip Franklin:

What were the things that that drew you to that? Because I know that some hotels, they fight for business travel because that's a great thing to have. Others can't really compete in that area and some do both.

Steve Moskowitz:

Well, I hate to admit this, but my number one consideration was a good wifi. It's really important.

Chip Franklin:

I get, yeah. That's funny.

Steve Moskowitz:

I mean, for example, right now we're doing a Zoom and all the business is being done through the internet now. The number one thing is I need a good wifi connection.

Chip Franklin:

You know what mine was, good pillows because I mean I've always had... I've played sports so many years and I'm feeling the pain now. I always wanted a hotel that had good firm pillows as opposed to the ones where they look like a sheep snuck in your room and it was on your bed. There was a lot of things and it's funny, so I traveled forever and I would always pick the same hotels and price didn't matter because I mean that was eight hours that I could just disappear before I had to do any kind of work and everything.

Steve Moskowitz:

Of course, you're only paying for part of the room. The IRS is paying for the other part.

Chip Franklin:

Our first guest is the owner and this is a family-owned business here in San Francisco that has been in this family since 1928 and some incredible stories. Jon Handlery joins us here from the Handlery Hotel in San Francisco. Jon, welcome to Practical Tax with Steve Moskowitz. Hope you're well.

Jon Handlery:

I'm doing well. I hear you Steve on the radio quite often giving tips. Thank you.

Steve Moskowitz:

Thanks very much. Hopefully you heard me doing my broadcasts with Chip.

Jon Handlery:

Yes.

Chip Franklin:

Both of you guys are great on the radio and both of you guys I think are smart to represent your brand, and that's one thing that I've seen all these years in radio is that people want authenticity. They don't need the guy that talks like this. What they want is they want to hear from the people who actually will be delivering the service or product that they have. Both of you guys represent yourselves real well. There's some kissing up, but it's true.

Steve Moskowitz:

Thanks Chip.

Jon Handlery:

Thank you very much.

Chip Franklin:

So Jon, let's talk about, I mean obviously in and since 1928 coming up on a hundred years, not too far down the road-

Steve Moskowitz:

Jon wasn't the one that opened the doors.

Chip Franklin:

No.

Jon Handlery:

No. My grandfather, then my dad, now me, and two of my kids now have followed me into the industry, so fourth generation.

Chip Franklin:

Let me ask you this, Jon, over the years obviously this pandemic had to be a difficult period to get through especially as I mentioned before with business travel down. How did you guys manage it to get through that? I know we're still dealing with the aftereffects and the next few years we will be too, right?

Jon Handlery:

Yeah, we're slowly coming back in San Francisco, which is positive. A lot of domestic visitors, people wanting to get out of the house and things of that nature. Conventions are obviously off because they usually book three, four years out. People that were looking at a convention say for '23 in 2020, they weren't going to book because we didn't know where we were going on this. That's been the challenge. The pandemic was totally different than at least anything I've ever experienced. I came back to work for my father in 1980 and I went through all the ups and downs with the downturn in the economy and things of that nature. You could adjust to that by watching your costs and maybe playing around with the rate to try to entice someone. In April 3rd of 2020, I ended up closing the hotel because we'd already been told two weeks earlier that you couldn't travel. That just changed everything.

Steve Moskowitz:

One of the things that's so tough about the hotel business is you can't save up inventory to sell later. You can't put that in a storeroom someplace. I'll put this guest room in the storeroom and we'll sell it-

Chip Franklin:

It's like a restaurant Steve.

Steve Moskowitz:

Exactly. Once the night is over, the room's gone. There's nothing you do to make up for that.

Jon Handlery:

No, challenging. One of my children who I work with came to me and asked me about three months into it being close, "What would my dad have done?" I said, "I don't know if he would've done anything different because if you're told you cannot travel, there's nothing I could have done." I can cut costs the best I can, but I can't have the hotel open. If you don't have guests then you're going to lose money but you'll lose less.

Chip Franklin:

Well you guys open in the heart of the Great Depression in 1928, right? I mean coming up. It's interesting to see this city and where it is because obviously this is something you share with the other hotel owners and I'm sure you guys talk and everybody's trying to figure out the near future. I agree with you and I think Steve would agree, and probably sees it even more so being a numbers guy, that it is changing. We are growing but people don't realize, as you said, hotels book a couple years out and their convention stuff and convention business is huge. I know that there are people though, and this is one of the things you market to and I love this, is that there's so many people that live in the Bay Area and see if you live in the city that don't come into the city, they say they're from San Francisco but they can't tell you the last time they were in San Francisco. That's a big part of your marketing too, right?

Jon Handlery:

Yeah, it is. We're on the radio to attract that market to try to get people to come to the city and just take a weekend off if nothing else or go see a Giants game or whatever the case may be. I think that's why it's been positive from a domestic standpoint and especially regionally where people who were locked up for whatever it was, a year plus, they do want to get out, they want to get away from their house. By letting them know that there're a lot of things in San Francisco maybe they hadn't seen.

Steve Moskowitz:

What's nice if you stay in your hotel, you can walk to the restaurant, walk back and if somebody should decide to imbibe an adult beverage, they don't have to worry about harming anybody.

Chip Franklin:

Right and from that location, you're an Uber ride from Oracle or AT&T, I forget what they're called now; the Presidio, the Wharf restaurants. When I was there staying at your place in... It's funny, you know who is a huge fan of your place? She's not here today. Liz Frame, who works with Steve, she loves it because she says she goes in there and she feels like she's gone back in time. All the amenities are modern, but it has the feel of a hotel that is part of the city and it's really hard to explain that to people who've never been in there. You both know what I'm talking about. You've been in hotels like that before. I mean, New York has a bunch of them. San Francisco not so much. When I came I stayed at a bunch of different hotels in the city. I've been in your hotel in San Diego. There's a Handlery in what do they call that, Hotel Circle down there. This one was such a great experience because as Steve just mentioned it was so close to stuff.

I want to ask Steve, can I ask you a question about business travel? Every year like many people, I do a long form and I have a lot of travel expenses. Have you ever heard of an audit where they question your business travel and they say, "Well, did you go visit somebody? Did you have fun?"

Steve Moskowitz:

Oh, all the time. That's actually one of the areas where the IRS is suspect. The first thing they do is they take a look. What was the primary purpose of the trip? Was it business? Also, one of the things they pay attention to is where did you go? If you went to a resort area that's going to get... If you had a business trip or two weeks in Honolulu, that's going to be scrutinized in and of itself a lot more than if you had it in Pittsburgh or Detroit.

Chip Franklin:

Interesting.

Steve Moskowitz:

Then it's a whole bunch of things and you have to show the primary purpose is for business. On the other hand, suppose you were there for two weeks and you say you were doing business from Monday through Friday and then you took the weekend off. Can you still deduct the time when you're off Saturday and Sunday? The answer is yes if you show that it wouldn't be practical to fly back to your home, it would make no sense for you to fly from San Francisco to New York on Saturday and then fly back Sunday. So you say, "Well, okay,