Nearly 35 years ago, the owner of the historic El Rey Inn on Route 66 in Santa Fe, New Mexico, instituted a profit-sharing plan for employees.
According to CNN Money, owner Terrell White has put $7 million into the plan and paid out $5 million over the years. The hotel has 26 employees, with many of them who’ve worked for White for decades.
Employees are 20% vested in the plan after two years and become fully vested after seven. The plan’s investments are overseen by White and are a mix of real estate holdings, rental properties, savings, bonds and stocks. He said the inn’s gain in profitability — which didn’t waver until the recession of 2008-2009 — meant that some employees were making as much in profit as they were in yearly earnings.
“I think this is a much better alternative than a hearty handshake and a gold watch,” he said.
Business dropped 30% during the recession, and while it continues to improve, White hasn’t been able to resume funding the profit-sharing plan. He hopes to start it up again this year, but he noted the plan has continued to earn 10% to 12% annually.
White said the plan is worth it because it fosters employee loyalty. On top of that, he provides all workers medical and dental benefits, up to three weeks of paid vacation, and regular raises.
El Rey Inn, built as the El Rey Court in 1936 just before Route 66 was realigned, has more than doubled in its capacity since White bought it in 1973. More than half of its overnight guests are repeat customers.
El Rey’s developer also built El Vado Motel in 1937 on Route 66 in Albuquerque. El Vado is closed, but the city is seeking to redevelop the property using its existing buildings.