Donald Trump’s business brand is crumbling as his divisive campaign turns off wealthy consumers.JONATHAN ERNST/Reuters
Donald Trump had better win the U.S. presidency, because his polarizing political run is threatening to ruin his luxury business brand.
The financial mess now swirling around the 65-storey Trump International Hotel & Tower in Toronto is the latest sign that Trump the politician and Trump the brand may be on a collision course. Talon International Development Inc., the company building the project, and its lenders are quietly shopping the property around, or could force it into bankruptcy, in the face of sluggish sales.
Adorning everything from condos and golf courses to steak and vodka, the Trump name is synonymous with wealth, bling and business success. And it's everywhere. Half of the 515 companies that Mr. Trump has a hand in operating bear his name, according to filings with the U.S. Federal Elections Commission.
And the name has enormous financial worth, or at least it did. Earlier this year, Mr. Trump pegged the value of his business empire's "deals, brand and branded developments" at $3-billion (U.S.).
The problem, of course, is that Mr. Trump's image has undergone a radical makeover since he launched his improbable run for the Republican nomination last year.
Celebrity was Mr. Trump's ticket to the top of a crowded field of candidates. And indeed, Mr. Trump's political brand is still rising. Recent polls show him in a virtual tie or narrowly trailing Hillary Clinton, his likely Democratic adversary in the November presidential vote.
People may have found Mr. Trump entertaining as the host of NBC's Celebrity Apprentice, famously yelling "You're fired" at candidates. Or perhaps they admired his entrepreneurial drive and outrageous publicity stunts.
But the fame and brashness that have proven to be such valuable assets in the polarized U.S. political climate may be very bad for business over the longer term. Mr. Trump's now-familiar racist and bullying taunts are turning off many of the wealthy consumers who were once drawn to his brand.
Nearly half of U.S. residents earning at least $200,000 a year said they would now make a point of not visiting Trump-branded hotels and golf courses over the next four years, according to a recent survey commissioned by Forbes Magazine. More than three-quarters of those surveyed said they would consciously avoid his properties as a form of protest against his divisive campaign.
The traits that made the Trump brand so successful are under assault, according to a closely watched annual survey of brands by BAV Consulting, a unit of advertising agency Young & Rubicam. Among consumers earning more than $100,000 a year, the perception of the Trump name tanked in 2015 in categories such as "glamourous," "prestigious" and "upper class." BAV Consulting likened the magnitude of the brand's collapse to the aftermath of a major corporate scandal, according to an account in Politico.com.
The business blowback began last year, soon after Mr. Trump accused Mexican immigrants of being rapists and murderers. NBC fired him as host of Celebrity Apprentice, a gig Mr. Trump has acknowledged he took to boost "his brand presence" rather than for the money. Various other companies, including Univision, Macy's and Serta, have since moved to sever their marketing ties to the Trump empire. Wall Street banks have long been reluctant to deal with the billionaire because of his track record of lawsuits and bankruptcies.
The irony is that leveraging his business brand to secure the Republican nomination may come back to haunt Mr. Trump. Around the time he launched his bid last June, a blue and white sign went up outside a Trump hotel project in downtown Washington, "Coming 2016: TRUMP" – a sign that looked a lot like his campaign material.
If Mr. Trump loses the election, these and other branded properties could quickly lose their appeal. This could have a significant effect on Mr. Trump's earnings power and net worth, pegged at anywhere from $3-4 billion. Mr. Trump doesn't actually own many of the products and properties that bear his name. Instead, he leverages his celebrity by often leasing his name through marketing deals and management contracts with other investors.
Talon, the company building the Trump International Hotel & Tower, is finding out that a name means a lot – just not always in the way you think it should. Depending on what happens, the Trump could come off the building.
Mr. Trump is discovering the distinction between brash and crass. Brash is good for business. Crass, not so much. And racism is an off-the-charts brand killer.