|By Stanley Turkel, MHS, ISHC
September 27, 2005
1. If you read the hotel trade press regularly, you would think that hotel franchisors owned and operated all the hotels in their system. Their advertising campaigns stress the improvement in amenities like wireless HSIA and new beds. They talk about “tightening standards” and “strengthening the brand”. But they never mention that the costs for these amenity improvements are borne solely by the franchisees (owners of the hotels) and not by the franchisors (providers of reservation systems without any fiduciary duty).
2. Believe it or not, there are still women-only hotels in New York City even in a ‘Sex and the City’ age? For example, on Gramercy Park, the Parkside Evangeline, operated since 1963 by the Salvation Army. About a half-dozen women’s residences remain in the city including the Brandon on West 85th Street and another Salvation Army-run building, the Markle Evangeline on West 13th Street.
3. Did you see the new HVS International 2005 Hotel Franchise
Fees Analysis Guide? It reviews the franchise documents of 89 major
hotel franchise companies to compare the various fees they charge their
franchisees. These fees include royalty, advertising, reservation,
frequent traveler programs, travel agent commissions, global distribution
systems, computer hardware and software maintenance. The HVS Guide
reveals the following wide disparities in three categories:
Hats off to Steve Rushmore for producing these invaluable guides.
4. Did you read the new report (available at no charge from TheCenterforHospitalResearch.org) on the cost of impact when a franchisor licenses a same-brand hotel near an existing property? Associate Professor Arturs Kalnins of Cornell University calculates the cost of impact to be 2.7 percent of revenue when the franchisor licenses a competing same-brand hotel in a market where it already has franchises. The report characterizes the revenue losses from impact as “not negligible but not a fatally insurmountable burden”. Easy for the Professor to say but hard for the hotel owners to absorb.
Suggestion: The franchisor should reduce the franchise fees by 2.7% (or whatever the cost of the impact) for the affected franchisees as long as the impact lasts.
5. Is it possible that Americas Best Value Inns is the fast growing chain in America in 2005 (more than 500 properties in six years) because of:
• low flat fees
6. Shouldn’t hotel guestrooms provide filtered air and water?
7. Why has the Bush administration allowed the National Parks to fall into despair?
8. In the summer of 1900
Stanley Turkel, MHS, ISHC, is a New York-based hotel consultant specializing in hotel franchising issues, asset management and litigation support services. He is a member of the International Society of Hospitality Consultants and can be reached at firstname.lastname@example.org and 917-628-8549.
Stanley Turkel, MHS, ISHC