A Grand (Hotel) Lesson in Free Enterprise

Free enterprise promotes selfishness, according to critics. The strong are obsessed with achieving personal wealth and crush the weak to gain it. Government has a duty to capture the plunder of the avaricious rich and give it to the more deserving.

As one antidote to this stereotypical view, let’s examine the history of one of Michigan’s most venerable and endearing landmarks, Mackinac Island’s Grand Hotel. The lesson it teaches is that free enterprise is less about money than critics realize.

This year marks the 80th anniversary of the arrival of a young man named W. Stewart Woodfill at the Grand Hotel to begin work as a desk clerk. Woodfill was a hay fever sufferer from Greensburg, Indiana, whose "heart was greatly warmed" when he secured work in 1919 in the pollen-free air of Mackinac Island. Fifty years later, in 1969, he recounted the hotel’s history at a dinner held in his honor by The Newcomen Society of North America.

From its 1887 opening onward, the summer resort made no money. Three hotel managers in succession battled vainly to achieve profits during the short summer tourist season. The last announced his intention in 1910 to tear down the place and sell the land.

A hastily assembled stockholder group dissuaded him, but "the same sad story of profitless operation continued," Woodfill said. A go-getter took over in 1918 and began turning it around, abetted by post-World War I prosperity, but died in 1923. His estate then chose the 27-year-old Woodfill as manager.

Woodfill had always wanted his own business, and now his eye was on "the serene charms of the Mackinac Island queen." With little capital he formed a partnership to purchase the property. Chicago bankers refused him financing until his unyielding determination connected him with a new bank headed by cheese magnate James Kraft, who apparently dozed off during Woodfill’s pitch for backing. Then Kraft raised his head, recalled that he had spent his honeymoon at Grand Hotel and described it as "the most beautiful place in all America." The deal was made, and in 1925 Woodfill became managing partner.

He began innovating and improving. But two years later he realized the hotel needed so much investment that "ours was a treadmill operation" that paid no dividends. He sold his interest two years before the 1929 crash. In 1931 the Grand Hotel went into receivership.

As Woodfill phrased it in classic understatement, "it was fortunate that my capital had been husbanded after selling out in late 1927." At a March 1933 bankruptcy auction, Woodfill himself was the sole bidder. He became the new owner during the bleakest year of the Great Depression.

He nursed the Grand Hotel through the 1930s, "riding shotgun on every item of expense." Even 1939 was "truly grim," what Woodfill called "the Summer of the Great Quiet." He had a payroll of 411—exactly 400 more than the number of guests one night.

The Grand Hotel survived World War II in spite of a cut in consumer travel, and afterwards Woodfill innovated, refined, reinvested, and was soon aided by his nephew and successor R. Daniel Musser, who purchased the facility in 1979, five years before Woodfill’s death.

Woodfill built the hotel into a world-renowned expression of elegance with a durability that belies its beleaguered past. Yet, as he observed in 1969, in 82 years the business had never paid a dividend.

So why all the effort if not for the money? Woodfill said, "We do not live by bread alone. The muses say our soul must also be fed . . . my success has been most rewarding in the satisfaction of having [kept the Grand Hotel alive], in teaching it how to live, in making it more beautiful. It has become a great landmark that will long serve . . . the tourist public. As such an achievement, one can say it has been eminently worthwhile."

Free enterprise allows people with ideas to seek to realize them. The pursuit of achievement often motivates as strongly as the hope of monetary profit.

In Woodfill’s own words is the moral of the Grand Hotel’s story: "It reveals so well that the free-enterprise system is a most fruitful one because it creates an appetite for success."