How I Made It: The recession forged his path to boutique hotel success
Few were hit harder in the recession than residential builders. Avi Brosh, 53, was one of them. His Palisades Development Group went from 50 employees to four. After losing millions of dollars, he was left with only the Palihouse West Hollywood hotel, part of a diversification effort. Now called Paligroup Management, Brosh’s firm operates three boutique hotels in Los Angeles, Santa Monica and West Hollywood. The company employs 214 people. Under the Palisociety hotel brand, Brosh hopes to open five more by the end of 2019 in Westwood, Culver City, San Francisco, Seattle and Miami Beach.
The recession, Brosh said, “forced me to learn. I spent the better part of 2008 to 2013 learning the hotel business. It was, in a way, a blessing. When you have it all stripped away, you reevaluate what you want to do and how you want to do it.”
Brosh said the retrenching and subsequent rise taught him an important lesson. “I would never want to go through that again,” Brosh said, “but what it did do is prove that I could get through that. If you can navigate through something like that, you can get through anything.”
As a residential developer and with his first two hotels, Brosh said, his company “did all of the heavy lifting.” But then he decided on a new business model, starting with Palihouse Santa Monica in 2013. Brosh began, he said, “to entrust responsibilities to partners and other investors.”
Brosh added, “We still handle the branding, the design and the operations,” but the new model quickly led to deals to expand in Westwood and other parts of California.
Each of Brosh’s small hotels, ranging from 33 to 38 rooms, has its own style. An upcoming project in Westwood, for example, is described as “a mix of Mid-century Modern with Parisian eclecticism.” Brosh said his design choices hark back to his childhood in New Jersey.
Brosh credits his mother, Adele Ariane Brosh, for her influence on his style. “She was always very stylish, flamboyant. She had an eye for quality fashion pieces. She would scour flea markets and garage sales to find these little trinkets.”
Riding horses in equestrian competitions in his youth had Brosh rubbing elbows with families of vast wealth. “Older money has a whole set of rules,” he said. It’s gauche to have a fancy car. Gauche to have designer anything. It’s about hand-me-downs and restraint. Not ostentatious. Not showy. That’s what sticks with you. It’s understated.”
Brosh’s family was “much more budget-constrained but with that comes a sense of ingenuity. You learn how to make 75 cents look like a dollar. … I loved that challenge of figuring out how to fit in but spending half of what others were spending.”
Brosh showed drive and intiative early on when, at age 15, he was allowed to travel on his own to participate in equestrian competitions. “I spent the summers traveling the East Coast,” Brosh said. “It was weeks at a time on my own, staying in hotel rooms, hanging out with people much older than me.”
Brosh credits his father, Ammon, for not pushing him in a specific direction, making suggestions only when it clearly looked as if his son was finding his niche in real estate.
“He said, ‘Hunker down and study it.’ Dad demanded a high level of morality and responsibility, but he never really pushed me into a field. So I took it upon myself to learn,” Brosh said.
During a stint working for Braemar Group, Brosh said, he discovered his design talent.
He built a home for his family and saw that the bank appraised it for $250,000 more than he had invested in it. Soon he was designing and selling homes as a business. “I did four houses on four lots, same vibe, same budget. I sold them right away and made more that year than in the prior 10 years,” he said. He founded Palisades Development Group in 1997. For the first three years, he ran it while still working for the Braemar Group. In 2000, he left Braemar to focus fully on his Palisades Development venture.
Brosh remembers when showing one of his homes and the potential buyer said something that changed his life. “She said, ‘Could you imagine this with a lobby and a little cafe?’ A light switch went off. I can build this, design it, soup to nuts, in my style. Devised the idea. Called in a lot of favors. Four years later, we opened the Palihouse in West Hollywood at the end of 2007, beginning of 2008.”
Brosh has been married for four years to his wife and business partner, Kirsten Leigh Pratt, who works as the company’s principal of hotels and brands. His son, Archer, 22, is now working for the company, part of the pre-opening team for Brosh’s upcoming hotels. “It’s really nice to see him here,” Brosh said.
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