The Vanderbilts are one of the oldest and most powerful families in the USA. But it was George, whose love of travel and culture resulted in the architectural gem of Biltmore Estate. Scott McCulloch hears how this rich legacy has spawned growth and diversity
William Amherst Vanderbilt Cecil Jr always knew he would succeed his father, he just didn't know when. What he did know was that he was destined to go one better than the man credited with restoring Biltmore House to its former glory, and doing it profitably.
Cecil took over the job when his father, William AV Cecil Sr, grandson of George Vanderbilt, suddenly announced his retirement in 1995 at a banquet commemorating the 100th anniversary of Biltmore House. The announcement came as a surprise. "When I first started working here in 1982 we didn't really think about where it would go at that point for at least ten years or so. I had been hoping to work into the top job."
After his father's retirement, Cecil continued the family legacy by opening the Inn on Biltmore Estate in 2001, a 213-room hotel that diversified the family firm's revenue from ticket sales to visit Biltmore House and the group's winery. It was big step, he recalls. Big, but measured. "We had to invest about $31-32 million into the hotel, and for the company at that time – by then I guess we were a little over $45 million in sales – that was a big thing to think about." Indeed, it was the biggest capital project Biltmore had done before the company got into the winemaking business in 1985, a separate but lucrative revenue stream that now accounts for 23% of Biltmore's gross sales.
Biltmore House has long been a focal point of the Vanderbilt family history. It first opened to Cecil's great-grandfather George W Vanderbilt's family and friends in 1895, but it wasn't until 75 years ago that the rest of the world got a chance to see inside the world's largest country home. In 1930 John and Cornelia Cecil, Vanderbilt's son-in-law and daughter, opened Biltmore House to the public at the request of the Asheville Area Chamber of Commerce, which was hoping the move would drive tourists to the Depression-hit city. "Mr Cecil and I hope that through opening Biltmore House to the public, Asheville and western North Carolina will derive all the benefit they deserve," Cornelia Cecil said. On that day 297 people walked though the 250-room mansion modelled on several 16th century French châteaux.
The benefit has paid out in spades. Last year Biltmore helped create a $351 million economic impact on Ashville and western North Carolina, according to data released by Tammy Ross Huffman of the department of management and accountancy at University of North Carolina. Estate guests spend an average of $148 at Biltmore, the study shows. The company paid $11.5 million in taxes last year.
It was the hard work and promotions of Cecil's father, who took over the business in 1960, that re-ignited the family enterprise. He had been born in the house, but had spent his childhood in Europe and then made a career in banking at Chase Manhattan in New York. It was Cecil Sr who transformed Biltmore Estate. He restored it, built on it, and added vineyards in the early 1970s. In 1985, the Biltmore Estate Winery opened in a former dairy barn along the French Broad River. Producing 125,000 cases of wine each year, Biltmore has since become the most visited winery in the US. "When we started 20 years ago we were producing about 8,000 cases. This year's forecast for next year's budget is 139,000 cases."
The wine, says Cecil, is now sold in eight states and is beginning to attract the attention of key rivals in the US wine market. "Unfortunately we are no longer under their radar and they are watching us closely with great interest and concern." They would be: winemaking is an expensive and labour-intensive enterprise. It's inherently risky. No matter, says Cecil. "It's a good diversification strategy," he adds with a flourish. Cecil believes the company left nothing to chance in making a go of it. The first vines were planted with domestic grapes in 1971 and the first wines were produced some six years on. Eventually French-American hybrid grapes gave way to vitis vinefera – a European grape commonly used in world-class wines. Keen to crack the market with more than plonk, the company brought in viticulture experts from France to cultivate a clutch of grape varieties, including Cabernet Sauvignon, Merlot, and Cabernet Franc, along with Chardonnay and Riesling. "It's been a tough business but it is definitely a profitable business for us – it diversifies our income," says Cecil, whose near obsessive attention to detail has seen him measure how fast customer queues move at Disney World.
Obsession pays off. Chateau Biltmore Chardonnay, which is produced exclusively from grapes grown on the estate, is one of more than 100 Biltmore wines that have won awards. Cecil marvels at the scope for growth for his family's product, prices of which range from $6 to $29. "I'm not even selling wine in New York state and that's a huge market. We don't sell in Chicago – that's a top five market," he enthuses. "There is huge upside potential."
Potential yes, but with it comes military planning. "It's a tough business," he concedes, explaining pricing dilemmas. Wine's image, he reasons, associates it with fine food and elegant dining – perfect for Biltmore. "It's a good and bad image because it puts a lot of people off and it also drives other people to pay more than they should for a bottle of wine. We find our best success is with a good solid price, consistent product delivery and just a lot of hard work."
Hard work is not without its rewards: Biltmore expects to post earnings of $105 million this year. But is it profitable? "We have a different look about how we view profits," says Dini Pickering who is a vice-chair of the board, Biltmore Companies and Cecil's sister. "We have a saying: we don't preserve Biltmore to make a profit, rather we make a profit in order to preserve Biltmore. So most of what we do is re-invest in the company – I think that has a profound impact. It gives us more incentives to make that profit so that we can continue to do the projects that we know need to be done on the property."
Yet so much has been done. Vast gardens, an award winning winery, elegant restaurants and casual eateries, acres of meadows and hiking trails await exploration. Last year, about one million people visited Biltmore House and its outbuildings, shelling out $39 for a full-fare ticket to get a taste of a bygone lifestyle of almost unimaginable opulence. The quality of preservation is top-notch, says the National Trust for Historic Preservation, a Washington-based non-profit group that administers historical sites. But make no mistake, Biltmore is privately held – Cecil's father still holds the deeds – and doesn't see a penny of public funds. As a tourist destination, Biltmore now employs about 1,500 people.
But it could never have been without the inn. For decades, visitors to the Biltmore Estate had asked whether there was anywhere they could stay on the grounds of George Vanderbilt's magnificent retreat high in the Blue Ridge Mountains. For as many years Cecil's father wondered whether a hotel should be built. In the end, he implemented his father's vision. He had to. Richard Pressley, the CFO, and executive vice-president of Biltmore, said market research showed that 60% of the Biltmore House visitors stayed in local motels, and in mid-priced chains with room rates of about $100 a night. Most visitors were between 34 and 54 years old. So the signs were there. But why didn't his father build the hotel? "I never really got a straight answer on that," says Cecil. "I've tried to ask him why he was opposed to it and he'll answer by saying: 'I think it's a little bit silly' but I'm not sure that he's not serious."
Today the inn, and activity in the wider business group, is a roaring success. But it wasn't always so. When Cecil's father returned to Asheville in 1960, the estate and the house were losing $250,000 a year, just in the massive upkeep. It wasn't until 1968 that Biltmore House posted it's first profit – $16.24. "The best money I ever made," Cecil Sr, now chairman of Biltmore Company, is reported to have said.
Building the hotel – or at least deciding to build it – changed everything, says Cecil. "We had been talking about building this hotel for a long time and my father didn't want to do it. I said to my management team: 'It's time we quit talking about this, let's fully research it.'" Then Cecil's father put the ball squarely in his court, turning over all responsibility for the project and vowing not to become involved. The succession was complete. "He never told me that I couldn't do it. He asked me some good questions and he didn't really get involved in the process," he recalls. "I would not ever say that he meddled. It was amazing because I was worried that he would sort of semi-retire. He said: 'It's yours. I've had it for 35 years. Get started.'"
The project was a family affair with Bill's younger sister Dini firmly in the fray. "We did all of the research together," she recalls. "We took a lot of trips to look at various hotel properties to decide what would work for us at Biltmore, what the right image and feel was." Once convinced it was sound financially, Biltmore spent 18 months interviewing architects and contractors. In designing the hotel the intent was partially to create a building that didn't compete with the house but gave guests a sense of staying at the house, says Scott Sickeler, the lead architect at Thompson, Ventulett & Stainback Associates of Atlanta.
Today Biltmore is a thriving family business. The Vanderbilt heirs, who still own Biltmore House and its 8,000 surrounding acres, think the original owner would approve. "It is a beautiful piece of property in the mountains of western North Carolina," says Cecil proudly.
It's been ten years since Cecil stepped into his father shoes. By 1993 he was angling for the top job, expecting to take over as CEO in 2000. "My father likes these round numbers so I thought that the millennium would be the time he would retire and step down." Not so.
Dear old Dad, it seems, loves a surprise; he duly announced his retirement at the centennial of Biltmore House. One hundred years is as round as numbers get. But for all the spontaneity, it was planned to subatomic detail. "I worked on my retirement for ten years," Cecil Sr told Forbes in 1998. "I wanted the successor generation to be 35 to 45-years-old when he took over, at the beginning of the most productive time of life." In 1995 Bill Jr was 37, just about right.
If bravado counts for anything then Cecil says he was prepared for the transition. But was he? "Yes and no," he admits. "I was a little nervous about the whole idea. If you had asked me the day before my father retired, I would have probably said 'Of course I'm ready. I'm a fully-prepared, better-trained, relatively young male'. I would have probably answered that question the day before with an aggressive yes but now I had to live up to the standards that had been set by past generations. It looks a little different when you're in charge."
Indeed, there's the psychological pressure of upholding the family tradition of entrepreneurship – William Henry Vanderbilt (1821-85) doubled the $100 million in assets left to him by his ruthlessly industrious father Cornelius.
Even by today's standards it's a significant sum of money. "Our family business is also our family heritage and a lot of family businesses don't have that so firmly tied together," says Pickering, who is also vice-chairman of Biltmore's nine-member (three non-family) board. "If you think about the history of our property and that fact that our great-grandfather started it, it's a little more complicated for us to not have a willingness or desire to make a commitment because so much is tied into it for us."
Cecil says he and his sister will encourage their children to join the family business, but only if they want to. The future is an open book and for the sibling team it looks an optimistic story. "The business has grown," he says. "When my father started in 1960 there were 65 people who worked here and it was not making money.
In 1968 he had it turned around it was barely making money. He did a tremendous job and at each level of growth he implemented policies, procedures and monthly meetings. Now we are realising that as we've grown, we have the business and it's running pretty well, but we have to ensure that we deal with the whole family."