Meet the CEO
He Knows Development, and He Wants to Play in S.A.
The San Antonio Express Business Section, April 18, 2004 — by L.A. Lorek Express News Business Writer
HOUSTON — A mixture of Walt Disney visionary and Barnum & Bailey circus ringmaster Tilman J. Fertitta, CEO of Landry's Restaurants, creates projects that stir controversy.
Fertitta put a Ferris wheel at his aquarium restaurant complex near Houston's downtown theater district. It also has a train that chugs through a tank filled with sharks. he built a Rainforest Cafe with an erupting volcano in Galveston and dancing water fountains with a carnival boardwalk in Kemah near Houston.
Now he wants to transform San Antonio's downtown near HemisFair Park with a new entertainment complex featuring an aquarium restaurant, a Rainforest Cafe, a boardwalk with train ride and ferris wheel.
"We would love to have the ability to invest $100 million in downtown San Antone," Fertitta said recently at Landry's headquarters.
A Galveston native, Fertitta, who stands about 5 foot 9 with an athletic and trim build, runs Landry's with 266 restaurants, including Joe's Crab Shack and Rainforest Cafe. The chain did $1.1 in sales last year. But the restaurant business is just the tip of his empire.
The 46-year-old self-made multimillionaire also runs also runs Fertitta Hospitality, which owns and operates several hotels, specialty shops and other properties, including the South Texas Rolls Royce-Bentley dealership next to Landry's headquarters.
And in recent years, Landry's and Fertitta have invested millions in new developments in the Houston area, creating entertainment complexes, restaurants and hotels. and he's transformed the cities of Houston and Kemah.
Now Fertitta is focused on San Antonio. last month, Landry's won the rights to operate the Tower of Americas and plans to invest $9 million renovating it over a year, creating a ride on the bottom and a "Eyes Over Texas" restaurant on top.
But if the city is willing to work with Landry's, that's just the beginning, Fertitta said.
Already, Fertitta is one of the biggest movers and shakers in the Houston and Galveston area.
In his book on Galveston, author Gary Cartwright called Fertitta "a natural entrepreneur, (who) inherited the family's gift for high rolling and risk taking."
He drives an $80,000 Cadillac Escalade during the day and a Bentley at night, but he never takes a limousine.
"They're too ostentatious," said Fertitta, who owns the biggest mansion in Houston and has entertained former Presidents Bush and Clinton at his $14 million estate in River Oaks. He also owns a private helicopter, a ski chalet in Beaver Creek, Colo., a ranch south of San Antonio, a beachfront retreat in Galveston, a jet and an $8 million 145-foot yacht named Boardwalk.
As a kid growing up in Galveston, Fertitta displayed a knack for business at an early age, his brother Jay Fertitta said. The middle child in a family of three boys, Tilman worked at his father's restaurant, Pier 23. At 8 years old, Tilman walked around with his grandfather's old briefcase filled with old oil field papers and pretended to be a businessman.
"Tilman was always very goal-oriented," said Jay Fertitta, who lives in San Antonio and runs Landry's South Texas operations.
Growing up, Fertitta said, he wanted to run a company. After attending the University of Houston, he started selling Shaklee vitamins and even won a Cadillac as its best salesman. Then he operated a string of Atari Pac-Man video arcades and sold women's clothing.
In the early '80s, Fertitta launched a construction and development company that built residential housing, restaurants and hotels.
"The world was development-crazy in the '80s," Fertitta said. "If you could put a business plan together, you could borrow money."
At 26, Fertitta built and developed the Key Largo Hotel in Galveston. In the late '80s, when savings and loans and banks collapsed, he suffered major losses. The only thing that saved him is that banks failed before he did, he said.
Developer George Mitchell, also a Galveston native, bought the Key Largo Hotel from Fertitta when Fertitta ran into financial trouble. At the time, Mitchell had just developed the upscale San Luis Resort on 17 acres along Galveston's seawall.
"He's a bright young man, very aggressive," Mitchell said.
In addition to his construction business, Fertitta acquired two Houston-area restaurants, Landry's Seafood and Willie G's, both originally owned by the Landry family. Fertitta bought out the Landry brothers in 1986 and he took the company public as its sole owner in 1993. From there, Landry's has grown, in part, by acquiring mismanaged and undervalued restaurants.
In time, Fertitta bought back the Key Largo Hotel, now the Hilton, and Mitchell's San Luis Resort. He quickly has become one of Galveston's biggest landowners, along with the old money Moody family and Mitchell. And he's the largest private employer in Galveston.
"Before it's all said and done, Tilman is going to be one of the most respected and one of the most fierce business people in the country," Galveston's Mayor Roger "Bo" Quiroga said.
Fertitta's critics in Galveston like to gossip about his great-great uncles Sam and Rose Maceo, who ran a bootlegging and gambling operation on the island for three decades until the late 1950s. Fertitta's cousins now run Stations Casinos, a string of gambling establishments in Las Vegas and other cities.
When asked about gambling, Fertitta said he's not actively lobbying for it in Texas.
"Do I want it? Not necessarily," he said. "if it comes, I want to be part of it."
And Mitchell, who knew the Maceos, doesn't think Fertitta's famous great-great uncles have any bearing on Fertitta's accomplishments today.
"I've known Tilman for a long time," Mitchell said. "He's never promoted gambling at all."
In Galveston, Fertitta's empire continues to grow. Along one track of the seawall, he owns several blocks. Last year the city of Galveston sold the Flagship Hotel and pier to Fertitta, who plans to restore it to a turn-of-the-century hotel with a pleasure pier complete with a wooden roller coaster and Ferris wheel.
Fertitta also owns most of the major restaurants fronting the harbor off Galveston's downtown historic strand. He recently won approval from voters to run the city's brand-new convention center. And he's done it all without tax abatements.
Quiroga doesn't think Galveston can have too much investment from Fertitta or Landry's.
"If it wasn't Tilman, it could be somebody else," Quiroga said. "At least with Tilman, we know the quality of work that he does. Everything he does is first class. Everything he does basically makes money."
Fertitta seems like a man who gets almost everything he wants. If he likes it, he buys it. But he waits until the price is right.
"He can keep the emotions out of the deal," Jay Fertitta said. "No matter how much he wants something, he doesn't get caught up in a deal."
When asked to describe himself, Fertitta said, "I'm very, very detail-oriented. Competitive. I like to win. I always try to do the right thing."
Some of those closest to him call him a workaholic.
Fertitta loves his business. Even during Spring Break when he left for a week to go skiing with his wife, Paige, and their four kids, he missed being at the office.
"I was anxious to get back," Fertitta said.
Most days, Fertitta works until 10 p.m. or later, and when he's not at Landry's headquarters, he takes along a wireless laptop and check daily performance of the company's restaurants. He's also been known to close deals from the deck of his yacht, which he often takes into the Gulf of Mexico.
One of Fertitta's favorite places to visit is Kemah, which he has transformed into a major tourist destination from a sleepy bayside shrimp town south of Houston.
In 1999, he opened the Kemah Boardwalk on 40 acres of bayfront property with an aquarium restaurant featuring a 100,000-gallon tank of tropical fish. It also has a train, a Ferris wheel, dancing fountains and a boardwalk with carnival games and rides.
The Kemah Boardwalk has boosted Kemah's tax revenues and brought many more visitors to the area, said Gary L. Gray, a 20-year Kemah resident who misses the town's old-time charm. It's like the carnival has come to town and never leaves, he said.
"Before, the town was something you would really like to take a picture of," Gray said. "Now it looks like an amusement park."
In Corpus Christi, Fertitta and Landry's also faced critics who thought Landry's might develop the city into another "Landryland."
Mayor Loyd Neal said the city selected Landry's as the developer for its bayfront area.
Landry's was going to put in an aquarium, Rainforest Cafe, a train and boardwalk with Ferris wheel, but the city withdrew its negotiations after Landry's balked at allowing a local developer to handle part of the project.
"Mr. Fertitta said, 'This is it. Take it or leave it.' At that point, we said if that's the case, there are no further negotiations," Neal said.
Landry's pulled out of the Corpus Christi project because the city wanted to "carve out a piece for a local guy," Fertitta said. "We drew a line, he said.
Landry's has a major presence in Corpus Christi with a Joe's Crab Shack and Landry's restaurant on the water, but it has no plans for further development at this time, Fertitta said.
"We like San Antonio," Fertitta said. "I had some thoughts that if we do a lot in Corpus, we can't do a lot in San Antonio."