Winning formula: How Herb Kohler succeeded in hospitality

Herb Kohler | 2021 Ryder Cup
After solidifying The American Club resort hotel's presence, Herb Kohler turned his attention to adding golf courses. The Straits course at Whistling Straits hosts this week's Ryder Cup.

The American Club resort hotel in Kohler, Wis., which this week is hosting guests attending the Ryder Cup, is operating proof that the third-time-is-a-charm mantra can be true

Around the late 1970s and early 1980s, Herb Kohler knew he had a decision to make. The American Club, a 200-room boarding house initially conceived and constructed by Kohler’s uncle, Walter Sr., was in dire need of care.

Initially built in 1918 for “single men of modest means,” the edifice, which showcased a blend of Tudor and Revival-style architecture, was created specifically for European immigrants. It was determined that the house would not only provide those men a place to live but also a place where they could learn English and develop a strong sense of American patriotism — two key attributes that would help them earn their American citizenship.

As the 1980s approached, the structure had grown obsolete. Kohler, who then served as the chief executive of Kohler Co., a manufacturer of kitchen and bath products, as well as engines and generators, sought the advice of three independent consultants, two of whom advocated that the building be torn down and the plot of land converted into parkland. The other proposed that the historic boarding house be transformed into a boutique hotel.

It was the latter option that piqued Kohler’s interest, so he approached his company’s board of directors, of which he was the chairman, and proposed that The American Club be reborn as a boutique hotel. The board turned him down. He revisited the idea not long thereafter, again advocating that the conversion project held great potential. Again he was denied.

“This is a privately held company,” he says. “You’d think I could be persuasive enough, but obviously, I wasn’t.”

Finally, on his third appeal to the board, the company’s directors acquiesced.

As Kohler believes, the board likely assessed the scenario and deemed that its youthful, 40-year-old chairman could only make so many mistakes and that those mistakes wouldn’t carry hefty price tags. “Go let him prove himself wrong,” is what Kohler speculates the board members likely said to one another in private. “We’ll get through this fine and then we’ll get back to what we’re supposed to be doing, which is manufacturing.”

Invigorated by the board’s approval, Kohler dove into the project, and though he lacked any business experience owning or operating a hotel, he did have recent success opening two membership clubs: River Wildlife, a rustic cabin that accommodated members for hunting and fishing trips; and Sports Core, a wellness club structured around racquet sports, swimming, and traditional fitness classes and training. Both of those clubs are a mile or less from The American Club, which sits at the heart of the Village of Kohler, roughly 55 miles north of Milwaukee.

The successes of those two clubs gave him the confidence he needed to take on the hospitality industry, but he also relied on corporate philosophies that served as the central pillar of the Kohler family’s bath and energy companies — philosophies that had been established long before he was born.

“We had a mission to raise the level of gracious living for anyone touched by our products and services,” he says. “We had to improve someone’s way of life. That was our daily mission, whether it be through kitchen and bath products or even engine and generator products.”

The American Club.jpg
The American Club Hotel was built using many of the same principles used at Kohler. Co.

Two key principles born from that mission statement also provided him with sound guidance. The first was a commitment to a singular, high standard of quality across all product types and categories.

“Prices would vary based on differences in materials and functions and design details,” he says of the kitchen and bath products that Kohler Co. manufactured, “but we tried like hell to never let it vary in quality.”

The second principle was to live on the leading edge of design and technology, both for the products themselves and also the processes used to create them. In other words, the company had committed to always being the best in the marketplace and to never waver in its quest to constantly innovate.

“If you’re going to live on the leading edge, you better understand where the leading edge is. And then you need to design something better than that,” he says. “That’s how we’ve managed our power business and our kitchen-and-bath business. We’ve always tried to stay out in front, always maintaining a single level of quality. Those two guiding principles were so important both for plumbing and the hospitality business.”

Kohler didn’t blindly follow these principles. Instead, he looked back to the successes of his ancestors.

“My grandfather founded the company amidst a financial panic,” he says. “Sixty-six railroads went bankrupt the year he started and yet he survived. Why? Because he maintained a high level of quality with consistency. It was that consistency that enabled him to be successful and to slowly grow the business.”

Under Kohler’s direction, The American Club Resort Hotel, which opened in 1981, succeeded almost immediately. However, the now 82-year-old acknowledges that at least a bit of the hotel’s early success was indirectly connected to Burma-Shave, a company that was founded in 1925 and specialized in brushless shaving cream.

For the better part of almost four decades, the shaving cream company posted billboards along many of the thoroughfares in the United States. The advertising campaign was structured as a series of small signs positioned one after the next, each one displaying a verse of a whimsical, oftentimes humorous poem that promoted the benefits of Burma-Shave:

Your shaving brush / Has had its day / So why not / Shave the modern way / With / Burma-Shave

Others were less direct:

Train approaching / Whistle squealing / Stop / Avoid that run-down feeling / Burma-Shave

Inspired by the success of that advertising campaign, Kohler traveled the state of Wisconsin, persuading farmers to let him put up signs on the periphery of their fields that simply stated how many miles it was from that spot to The American Club in Kohler, Wis. 

“That was our marketing campaign,” Kohler says with a chuckle, “but by God it worked. We had almost immediate notoriety.”

In 1899, John Michael Kohler moved his company from the city of Sheboygan, relocating it four miles in the country. He simply felt that the city had grown too congested and would constrain his company from further expansion. Convinced that the company’s relocation would lead to its demise, The Sheboygan Press declared the move “Kohler’s Folly.”

You might think that when Herb Kohler ventured into the hospitality industry 80 years later, similar opinions would be formed. Yet, the Kohler Co.’s expansion into the world of hotels and resorts wasn’t deemed the second coming of Kohler’s Folly. Those opinions were reserved for the moment when the resort declared it would build a golf course.

“They thought that was ridiculous given the golf that we had in the area, both private and public golf courses,” he says. “They saw no reason whatsoever to see this company build more golf.”

RELATED: Pete Dye's Ryder Cup legacy animates Whistling Straits

Adhering to those corporate principles, Kohler ultimately hired Pete Dye, a course architect that the bath-products-turned-hospitality magnate deemed was on the cutting edge. Kohler had read stories of Dye’s infamous layout at TPC Sawgrass — specifically the disparaging comments made by frustrated tour players who deemed the golf course too hard. He also read reviews of The Honors Course, a private club in Chattanooga, Tenn., with a course that Dye had designed two years after TPC Sawgrass and which allowed amateur players of all ability levels to enjoy the game.

“Here is this fellow who can addle the pros a little bit and at the same time design for the amateur,” Kohler remembers thinking. “If we could do that in Wisconsin, I thought we’d really have something.”

Whistling Straits (Straits)
Pete Dye's TPC Sawgrass design impressed Herb Kohler enough to hire Dye to design the Straits course, which has hosted three PGA Championships, a U.S. Senior Open and this week's Ryder Cup.

His instincts proved prophetic. In particular, Kohler learned that Dye’s approach to course design aligned with his own mantra that prioritized quality above all else. “This man built golf courses like no one else,” Kohler says of Dye. “He would initially take with him a topographic map, and he’d walk the land. He wouldn’t ride; he’d walk — at least seven miles in a day. After a couple days of this, he’d put [on the map] a dot for a green, a dot for the landing area, and a dot for a tee. Eventually he’d connect the dots, and that would be the last time he touched a piece of paper.

“Other people would take their computers and lay a pre-imagined design on top of this land and then alter the land in such a way as to conform to the design,” he continues. “Often they’d end up with a good golf course, but it would have nothing to do with the original landscape. Pete was really married to the land. In his mind, there was always strategy and the landscape, and how the course was positioned [on that landscape] was very much a part of the strategy. I thought he was the greatest artist that I’d ever seen.”

Today, the resort that Kohler has built remains one of Wisconsin’s preeminent travel destinations — The American Club remains the state’s only five-star hotel as rated by the Forbes Travel Guide. The resort’s four championship-caliber golf courses are also among the best in the state, as evidenced by the Straits course at Whistling Straits hosting three PGA Championships and, most recently, the Ryder Cup. In all of those cases, Kohler points to his loyalty to the core business principles that have steered his family’s enterprises for almost 150 years.

“You have to establish the core beliefs in the business,” he explains. “If you really believe in it and practice it, the profits will come. You have to have the courage of your convictions.”