WisBusiness: Kohler's Scottish Acquisition a 'Big Deal'
By Brian E. Clark
When the Kohler Co. finished hosting the PGA Championship at its Whistling Straits links complex in August, golf fans wondered what was next.
They didn't have to wait long.
On Oct. 5, a little more than six weeks after the tournament finished, Kohler announced it had bought the Old Course Hotel, Golf Resort & Spa, and the Dukes Golf Course in St. Andrews, Scotland, perhaps golf's most venerable venue.
While Kohler is well known in the Midwest for its American Club Hotel and Resort and golf courses, the $62 million Scottish acquisition makes the multifaceted, Wisconsin-based private company a major player in the international golf hospitality scene.
Remarkably, this comes only 16 years after making a splash with its first course at the inland Blackwolf Run complex in the community of Kohler.
"The PGA Championship at Whistling Straits was a great launching pad, and Herb Kohler got a lot of great ink and air time from it," said Dave Seanor, editor of Golf Week Magazine, referring to the golfing millionaire who's the driving force behind Kohler Co.'s success.
"He's on a mission to establish himself as having great golf destinations, and he accomplished a lot in one fell swoop," said Seanor, who has played golf at St. Andrews seven times.
It would have been difficult for Kohler to have found a spot more dear to the golfing world's heart.
The 136-room luxury hotel is on the 17th hole of the Old Course at St. Andrews, one of the most famous holes on one of the most famous tracks in all of golf. The Old Course, long accepted as the birthplace of golf more than six centuries ago, has been the site of 26 British Opens and will host the 2005 British Open.
St. Andrews is the home of eight golf courses, including the Old Course, as well as the other five golf courses comprising St. Andrews Links.
"When you are talking about golf, the 17th hole on the Old Course is location, location, location," said Seanor. "This is a big deal."
Jim Holperin, Wisconsin's Tourism Department secretary, said the St. Andrews purchase will help put a Wisconsin stamp on European tourism.
"We don't have a strong international travel market," Holperin said. "And we don't do a lot of international marketing. Most of our business is regional, with drive markets coming from Chicago and the Twin Cities."
However, Holperin said direct marketing of golf vacations at the Straits course and other top Wisconsin courses to Europeans and Japanese (who knew about the Kohler courses even before the PGA) is a possibility. Kohler Co. operates four Pete Dye-designed courses.
During a recent trade mission to Japan, Gov. Jim Doyle, an avid golfer himself, said he hoped the worldwide attention given the PGA Championship would lure golfing travelers to the Badger State. Doyle and the Tourism Department this year launched a Golf Wisconsin program designed to recruit new golfers and showcase the golf assets of the state: http://www.travelwisconsin.com/golf/
"We had no idea this Scottish purchase was in the works," Holperin said. "But we wish Kohler well. It's a pleasant surprise. It puts a Wisconsin company on the map and is gratifying to see.
"This says a lot about Herb Kohler. He's obviously a shrewd businessman who runs a very profitable and successful company. I'm sure this is well thought-out and will be a success."
Alice Edland, vice president of Kohler's hospitality division, said the company got a tip during the PGA Championship that the Japanese company that owned the Old Course Hotel -- Kosaido -- wanted to sell it.
"We actually started looking seven or eight years ago for properties to buy," she said. "But you couldn't have found a site more tied to golfing history."
Edland said she and Kohler made several trips to Scotland in September to put together the deal.
"It all started with a visitor who lived in France who told us that people in Scotland were trying to put together a deal," she said.
"Then, three weeks or so ago, it all came together," she said. "I think it surprised some people, but it really was part of the overall plan."
Edland said Kohler was surprised to be recognized in St. Andrews by golfing fans. An avid golfer himself for the past quarter century, Kohler, 65, has an 18 handicap. He doesn't get to play as much as he wants, however, she said.
"People over there knowing who he was just goes to show how much recognition the PGA Championship gave us worldwide," said Edland, who has a 30 handicap.
In a statement, Kohler said he had been looking around the United States and abroad to add to the company's resort business.
"It looks like we found the perfect fit," he said.
Edland said Kohler will upgrade the hotel and spa with some of its high-quality plumbing fixture products and services. In addition, she said the Dukes Course will be improved, and the historic Creighton mansion on the course will be renovated.
"We are still looking at our options," she said. "Over the next few years, we'll refurbish the guest rooms and expand the spa and public spaces.
"A respect for history and authenticity are hallmarks of the Kohler brand," explained Edland, who said her company will have to work with historical boards to make changes to some parts of the hotel.
"There isn't a better location to showcase quietly our mission of providing a higher level of gracious living for those who are touched by our products and services."
She said Kohler owns the MIRA brand, which makes showerheads and sells Kohler products in the United Kingdom.
"Since we have a plant there, this will give us a chance to showcase the products that we make there," she added.
Though the American Club was upgraded from a dormitory for workers into a public inn in the 1940s, the Kohler Co. dates the development of its hospitality arm to 1981, when it restored the American Club Hotel and turned it into a luxury property and conference center.
The company was founded in 1873 and is headquartered in Kohler. Besides being a world leader in manufactured kitchen and bath products, it also sells small engines, generators up to 2.5 megawatts and furniture under the brand names Baker and McGuire. It is one of the oldest and largest privately held companies in the United States.
In addition to the American Club and the Whistling Straits courses, Destination Kohler includes the Blackwolf Run golf courses, a preserve along the Sheboygan River called River Wildlife, and Riverbend, a private club in one of the 40 great mansions of North America.
Eland said Kohler had no grand plan when it remodeled the American Club, which is listed on the National Register of Historic Places. The hotel, which has 237 guestrooms and suites, is considered one of the Midwest's finest resort properties.
"Once we did that, most of the other things were driven by our guests," she said.
"We had a lot of land that wasn't being used," she said. "About the same time, Mr. Kohler began to play golf (again)."
One thing led to another and by 1988, Kohler had a golf course, the River Course at Blackwolf Run.
In 1989, Blackwolf Run added nine more holes and then another nine in 1990. Guest requests led to the creation of a spa, which is especially popular in the winter.
A few years later, the Kohler Co. added the Inn on Woodlake, a mid-priced hotel.
But the biggest, and most public success has been Whistling Straits, a former military base on the shores of Lake Michigan that Kohler bought from the Wisconsin Electric Power Co. The utility once wanted to use the land for a nuclear power plant.
Kohler opened Whistling Straits in 1998 and a second, 18-hole course, the Irish course, joined the Straits course two years later.
Edland said she isn't sure what's next for her division.
"I think we've done all the development we can with Kohler, Wisconsin, because it's about all the market will support," she said.
"But I do know Mr. Kohler is looking for interesting places and venues," she added. "Other than that, I can't say."
Golf fans, by now, know to expect more.
See an earlier WisBusiness story about Kohler golf.
See more from Kohler on its golf courses.