One mark of a good salesman is the ability to find a kindred spirit in a position to buy.
In 1999, Michael Lombardi had just taken over a business called Carpet Workroom and was trying to get some contracting work from the Hilton La Jolla Torrey Pines Hotel.
He had to convince hotel executives that, while ostensibly a carpet company, Carpet Workroom could do an entire renovation.
Hilton managers were skeptical.
“But the director of engineering believed in us,” Lombardi recalled. Why? Because Lombardi had recently left the same job , director of engineering , at a nearby hotel, the Hyatt Regency La Jolla at Aventine.
On the strength of that connection, he landed his first major renovation.
“That put us on the map,” Lombardi said.
Carpet Workroom soon changed its name to Lombardi Contracting. And now, Lombardi, sole owner of the 60-employee operation, says he expects to do $30 million worth of business this year, largely on hotel remodeling jobs.
324 Percent Growth
Its growth trajectory from the start of 2005 through 2007 gave Lombardi Contracting the No. 12 spot on the Business Journal’s recent list of the county’s 100 Fastest-Growing Private Companies. Lombardi Contracting turned in 324 percent growth, going from $6.7 million in revenues to $28.4 million during the three-year span.
Lombardi, 42, says he accomplished the growth through the methodical process of working his way up.
“Once you do a $1 million job, people ask you to do a $2 million job,” he said. That led to jobs in the $5 million range, which led to jobs in the $10 million range, and so on.
“We just keep breaking new thresholds,” Lombardi said. “Successfully completing small to midsize projects let us go after and win larger projects.”
These days, Lombardi Contracting is doing $15 million worth of work at the Hyatt Andaz in West Hollywood. Another current project, at the Hilton Anaheim, approaches $30 million. The company has projects in Manhattan Beach and Santa Cruz, along with work at the Hilton San Diego Resort & Spa on Mission Bay and the Loews Coronado Bay Resort.
“We travel well,” Lombardi said.
A few years ago, the business traveled to Harrah’s Rincon Casino San Diego North, the casino-resort on the Rincon Indian Reservation near Valley Center. There, Lombardi gutted and refinished the interior of the steakhouse.
“It wasn’t the easiest project in the world,” said Robert Livingston, the casino’s assistant general manager. Harrah’s wanted to enclose a space that was open to the rest of the casino with a storefront some 30 to 40 feet high. The trick, said Livingston, was to “tie it in as though it had always been there.”
Lombardi finished the $170,000 project on time and on budget. After three years, “The workmanship has proven out to be quality,” Livingston said.
Lombardi built his business on the foundation of a 14-year career with Hyatt. He started out with Hyatt in Columbus, Ohio, when he was just out of high school. He went on to the Atlanta airport, then to St. Louis, then to Scottsdale, Ariz. In 1994, he arrived at the Hyatt Regency La Jolla. There, he met his wife, Cori.
Carpet Workroom was actually an old business, established in 1953, when Lombardi had the chance to buy it for an undisclosed sum.
“I had no idea I would do something like this,” he said. But he saw opportunities , including the chance for his wife to stay home with his son. Sales were $900,000 in his first year. The number grew from there.
Targeting New Markets
There are construction companies that specialize in hotel work alone. However, Lombardi now wants to count the generalists of general contracting , such as Roel Construction, Swinerton Builders and Turner Construction , as his competition.
“Our business plan is to put less eggs in the hotel basket,” Lombardi said.
While hotel work provides 85 percent to 90 percent of the company’s business, Lombardi says he wants to reduce that to 50 percent within three years.
It’s probably a wise move, given the economy. Hotels are slowing down their remodeling work, Lombardi says. Hotels typically go through regular remodeling cycles, doing guest rooms one year, common areas the next, and so on, repeating the process every five or seven years. Now, client companies are stretching that cycle over a greater amount of time.
One of his biggest challenges at the moment is trying to win jobs while still making a profit.
“People say, ‘It’s kind of competitive, Mike. Can you give me a couple points back?’ ” Lombardi says he is charging 2 percent to 5 percent less than he was 18 months ago. Meanwhile, the cost of business goes up.
His bet is the economy will turn around in the fourth quarter of 2009. “We have a year to go,” he said.