Published News

Galveston Daily News - March 25, 2001

Neal Falgoust
Citizen of the Year: View for Change

...continued from Published News

Joe's Crab Shack. Landry's Seafood House. San Luis Resort. Fisherman's Wharf. Cadillac Bar. Hilton Galveston Resort. Phoenix Bakery. The Crab House. Willie G's. International House of Pancakes. Rainforest Café. Fish Tales. Kemah Boardwalk. The seawall convention center.
Mention any of those developments, and you might as well mention Tilman Fertitta by name. In the tourism business, he is one of Galveston's Big Three, pulling ranks beside longtime island bigwigs George Mitchell, and Robert L. Moody.

By all accounts, Fertitta has almost single-handedly turned the tide of development along the island's Gulf beachfront, taking it from a struggling stretch of abandoned lots and slumping hotels to the crown jewel of Galveston's tourism industry.

At the same time, he has turned the tiny town of Kemah into a tourism Mecca and taken his hospitality chain to international markets.

But his latest project - one that brought him name recognition throughout his island hometown - is his fight to develop a convention center along the seawall.

Citing his commitment to the redevelopment of the tourism industry throughout the county and his bid to build a convention center, The Daily News has named Fertitta its 2001 Citizen of the Year.

From his private balcony atop the San Luis Resort, Fertitta looks over his emerging empire along the seawall. He gazes down, smiles and leans against the railing.

Below him sit the establishments that gave him a name on the island: Landry's, Hilton, IHOP. Down the road sit the Cadillac Bar, Fish Tales and Joe's Crab Shack.

"This is the nicest part of the seawall," he says. "Not because I own it, but because it is." The palm trees sway in the salty beach breeze. Neon lights at the Landry's illuminate the mist with green, pink and yellow hues. But up here, high above the beach and away from all the bustle of his restaurants, the air is silent.

All told, Fertitta, who lives in Houston and keeps his corporate headquarters there, controls nearly six blocks of prime waterfront property along this stretch of Galveston. He has no plans for slowing down, either. Those close to him say he has plans to build a Rainforest Café either in Galveston or Kemah. And though he is quiet about any future developments, he hints that there are "entertainment venues" in the works.

He also promises a big vision for the seawall, saying the island needs to capitalize on the waterfront to regain its popularity as a tourist destination.
"I think the seawall is our biggest asset," he says.

If in recent years the seawall has suffered from a lack of investor interest, Fertitta has plans to change the outlook, the island's combination of history and beaches make it a sweet deal for investors and a sure bet for future development, he says.

A young entrepreneur

Even from an early age, Fertitta impressed people with his business acumen. His mother, Joy, tells a story how Tilman, at age 5, would sit alongside his grandfather and help open the mail. Any mail that his grandfather would put to the side Tilman would stuff into a briefcase and carry around like a businessman.

By the third grade, Tilman was reading the newspaper from front to back, including the business section.

"Now that is most unusual," Joy says. "I should've known then something was up." Her maternal sense wasn't far off.

Tilman grew up in a rich business environment. His grandfather dabbled in seafood along the Louisiana coast. His father, Vic, ran the Crystal Palace restaurant, the La Quinta Inn and the Holiday Inn in Galveston.

Tilman's eye for profit caught his mother's attention when he began attending school. He often would buy candy at the corner store and then, unknown to her, resell it at a markup on the playground.

"His mind was just working all the time," she says.

As a teen-ager, Tilman helped hold down the fort at his father's restaurant. It was his first expedition into the hospitality industry, and he immediately began to show his attention to detail. He used his keen eye and business sense to make sure everything, from food presentation to the treatment of guests, was perfect down to the last detail. After Tilman began to make a name for himself at the restaurant, he approached his parents and asked them to stop calling him by his nickname, Tim.

"He wanted us to call him Tilman because it sounded more professional," Vic says.

Tilman's first professional business venture was just as big a surprise to his parents as his sale of candy on the playground.

During his first year in college, at Texas Tech University, Tilman began buying clothes from a cousin who ran a textile operation in Dallas. He was 20 years old.

He used some money he had saved to open a dress shop in Houston. He called it the Simple Shop. He kept it a secret until one afternoon when he was driving his father around the neighborhood. They crossed a set of railroad tracks, and Tilman pointed to the shop and told his father what he had been doing in his spare time.

"I couldn't believe it," Vic says. "I was mortified."

After a year at Texas Tech, Tilman transferred to the University of Houston.
He then used his money form the dress shop and other ventures to expand his portfolio, helping a cousin build the Key Largo Hotel on the seawall. He sold his interests in the hotel back to his cousin and used that money to begin his venture into the Landry's Seafood House chain. Family friends now say they didn't know where Tilman was going with his investments, but they knew he had a vision and was bound for success.
"You could tell at that age that he was a cut above," says Joe Max Taylor, a long time family friend and member of the Landry's board of directors.

"He was always sharp. His mind was sharp. I didn't know where he was going, but I knew he was going somewhere. Tilman just had a keen eye for management."
Good times

The mid 1980's were a good time for Tilman Fertitta. After dabbling in the restaurant business as a partner in the Landry's seafood chain, Fertitta bought out his partners in 1986. He opened a restaurant on Galveston's seawall and began a slow expansion throughout the state. In 1993, he took the company public, first on the NASDAQ and then on the New York Stock Exchange.
Now, Landry's Inc. is one of the largest publicly owned restaurant chains in the nation, with locations in 35 states, Canada, England, Hong Kong, Japan, France and Mexico. No longer a small business venture, the company has 24,000 employees and does $100 million in new development every year. Last year, in a continued expansion of its assets, Landry's bought the Rainforest Café chain, and in January the company opened its first new Rainforest restaurant in Anaheim, Calif.

The boy who once was hawking candy on the playground now finds himself welcoming presidents to his home. He helped former president Bill Clinton's fund-raising campaign and is in the captain's chair of an international development and marketing machine.

Family feud

Perhaps no one is more astutely aware of Fertitta's powerful marketing machine than the Moody family. Although Moody interests refused to comment publicly for this story, the two sides fought a very public battle during the past years that has resulted in a $150 million lawsuit filed by the Moodys against Fertitta and the city of Galveston.

That battle was over proposals to either expand the existing convention center at Moody Gardens or to build a new center behind Fertitta's San Luis Resort.

Fertitta says he threw himself into the fight with no intention of securing the bid for the convention center. He put out a bid only to force the Moodys to make a better proposal, Fertitta's friends say.

"He didn't think he was going to get it," Taylor says. "He did it as a way to level the playing field."

Fertitta says he was surprised when the city chose his proposal. He figured the Moodys had so much entrenched power on the island, there would have been no way for him to overcome the family's solid hold and win the bid.

"That's not what's supposed to happen in Galveston," he says.
Those close to Fertitta say what upset him most about the convention center process was that the Moodys didn't keep their promise to support the winning proposal. Fertitta is the kind of man who keeps his word no matter the cost, they say.

The Moodys, Fertitta and George Mitchell, who also submitted a bid for the center, all vowed their support for whichever proposal won. But when an ad hoc committee, and later the city council, chose the Fertitta proposal, the Moodys said the proposal had changed so much they couldn't support it.

"The Moodys didn't keep their word," Taylor says. "He couldn't believe anybody would do that."
The Moody ad campaign against the Fertitta proposal only caused Fertitta to prepare for a fight. Fertitta quickly gathered his top people around and mounted his own campaign. Then, according to Taylor, someone aligned with the Moodys told the Fertitta campaign that the Moodys don't lose in Galveston.

"That was like pouring gasoline on the fire," Taylor says.

Steve Greenberg, Fertitta's director for governmental affairs, says the resulting campaign from Fertitta's camp was no surprise.

"He doesn't mind getting in a battle," Greenberg says. "He does stand up for what he believes is right."

Hometown boy

It may seem strange that a man who heads an international development company would be so focused on a small island off the coast of Texas.
But it's not at all odd to the people who know Fertitta - or to Fertitta himself. It just makes good business sense.

"There is a sexiness to Galveston," he says.

Family ties and a desire to see his hometown become a hot spot also drive his ambition on the island, according to his friends. And I'm sure a lot of Galveston comes down to family ties." In fact, both sides of Fertitta's family are well established in the hotel-restaurant industry. His father ran the Crystal Palace restaurant and two hotels; his cousin ran the Key Largo, which was later bought by island magnate George Mitchell and then bought back by Fertitta and refurbished into the Hilton resort; and his mother's side of the family was involved in the seafood industry along the coasts of Louisiana and in Galveston. Fertitta says Galveston is often looked down upon by outsiders who fail to realize its opportunity.
"I enjoy doing things in Galveston," he says.

A case in point

Anyone who doubts Fertitta's power to reinvigorate an area with his business needs only to look at the city of Kemah. Sitting at the outlet of the Clear Creek Channel, the Kemah waterfront might as well be a microcosm of Landry's Inc.
Situated on a 40-acre tract, the Kemah Boardwalk, which boasts a slew of polished, themed eateries along with a Ferris wheel and amusement park, proves the power Fertitta has in the development ring.

When he began developing the site in 1997, it consisted of a few scattered restaurants and little else. Four years later, there is hardly enough parking to satisfy the thousands of tourists who inundate the town every weekend. During the summer weekends, the city's population easily triples with the onslaught of tourists. And by next year, the city council could be considering an abolition of property taxes because the Boardwalk takes in so much sales tax revenue.

New police cars, a new city hall - all of them directly related to the development of the Boardwalk, according to Mayor Richard Diehl.

"He's an idea guy," Diehl said. He saw an opportunity in Kemah and went for it. "He saw a way to take it to another level."

Family man

But even more important to Fertitta than his business is his family. Those around him say his wife, Paige, is an angel for putting up with a man who often works until 10 or 11 p.m. "I told her she's going to get a seat in heaven," Taylor says.

Weekends are often set aside for family time, Fertitta's parents say, and he spends a lot of time with his four children, Michael, 8; Patrick, 6; Blayne, 3; and Blake; 1.

"He has his priorities straight," his mother says. "That's what's important to me. He's like a normal family man."

Fertitta still calls home several times a week, and visits the island whenever he gets a chance, his parents say. He also spends time at his ranch in New Ulm.

It is his time with the family that Tilman enjoys most, and he says he will do anything to make time for his children.

"I'm not going to look back in 20 years and say, 'I didn't see my kids grow up,' " he says.

Stickler for details

In the ballroom at the San Luis Resort, Fertitta has gathered top hotel management to prepare for the hotel's Mardi Gras ball. It's 8p.m., and he seems nowhere near winding down for the day. Just a half-hour earlier he was on the phone negotiating a meeting with a reluctant city council member to discuss a pending lawsuit over the convention center. Now he's tweaking lighting cues for the big show.

Over there a curtain needs to be straightened. The sparklers on the desserts aren't bright enough. Now they're too smoky. This table needs to be moved over a few inches. There isn't enough space here for the waiters to pass. The light projections on the wall are out of focus, and the neon lights need to be tested.

What's unique about Fertitta, associates say, is that he not only has a shrewd business sense and the "vision thing," but he also has a sharp eye for detail. He is a micromanager, his employees say.

"Not a lot of people see what he sees," says Greenberg.
"If he walks into his restaurants and all the chairs are not under the tables properly, he'll comment on it and tell the staff," Greenberg says.

Walking through the hotel with Fertitta is like going to the dentist to have a tooth pulled. A light bulb is burned out there. That light bulb is the wrong wattage. This bench isn't stained properly.
"It's just part of his nature of perfection," Greenberg says. "It's hard to satisfy his level of perfection."

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