Blang, Bathtubs, Best Green, Arbitration, Best Western,
AAHOA, State Franchising Laws, VFR
|by Stanley Turkel, MHS, ISHC
May 23, 2006
1. Here’s a wonderful American immigrant success story! In the past 25 years, members of the Asian American Hotel Owners Association (AAHOA) have acquired more than 20,000 hotels with more than one million rooms or 40% of all U.S. hotel properties. If you bear in mind that Indian Americans constitute less than one percent of America’s population, their achievement is all the more extraordinary. These hotels (many upscale) have a market value of about $40 billion, employ 800,000 people, and pay some $700 million in real estate taxes.
2. Ron Watanabe, ISHC (808-599-5595), a well-known hotel consultant in Hawaii, writes,
“I enjoy reading your articles. I had some comments about your bathtubless hotels.3. Kit Cassingham, ISHC of Sage Blossom Consulting (bestgreenhotels.com) has collected a list of 1628 hotels- bed and breakfasts, resorts, motels, lodges and inns- worldwide that are committed to the environment and greening of the hospitality industry. The property name on the summary page is a hot link to each property’s website where you can get more information about the hotel.
4. Hotel franchisees should beware of mandated arbitration. Many franchise agreements stipulate arbitration over litigation. At first glance, this may appear to be more beneficial to franchisees but nothing could be further from the truth. Compulsory binding arbitration protects franchisor interests while diluting franchisee remedies. Alan L. Sklover’s Newsletter (www.ExecutiveLaw.com) says, “It costs about $200 to start a lawsuit, but as much as $5000 to start an arbitration. You pay a state or federal judge nothing… you must pay arbitrators tens of thousands of dollars for their time. It is in a judges interest to finish a case in a short amount of time; it is in an arbitrator’s interest to make a case last forever. These may be surprising, but in actuality that’s how arbitration works: the costs can be prohibitive and make your efforts to achieve fairness anything but.” Sklover is an attorney-author who represents senior executives worldwide in their personal negotiations and a leading authority on Negotiating At Work.
5. Do you realize just how big Best Western has become? Founded in 1946 by M.K. Guertin, the BW system now contains about 4200 hotels worldwide (316,000 guestrooms) including about 2400 hotels in North America. Different from typical franchises, BW member hotels must renew their affiliation every year and can, therefore, terminate without liquidated damages. Furthermore, the membership fees (approximately 2.3% of room revenues) are far lower than normal franchise fees (approximately 9.5% of room revenues). When will the leadership allow the Best Western Premier designation in the United States (to attract higher average daily rates in certain BW hotels)? The Best Western brand Premier has been permitted in Europe and Asia for years.
6. Franchisees should be wary of the differences in state laws that apply to franchising. The differences in the laws from state to state can have a substantial effect on the outcome of disputes between franchisee and franchisor. For example, in New Jersey, all contracts, including franchise agreements, are subject to implied covenants of “good faith and fair dealing”. This means that a franchisor’s conduct is subject to a higher standard than what is written in the agreement. While in Pennsylvania, no “good faith and fair dealing” requirement exists. This important difference may affect the outcome of disputes concerning such issues as termination, renewal and transfer rights.
7. In my Nobody Asked Me, But… No. 8 article, I quoted from a speech made by H. P. Rama, a former chairman of AAHOA and the AH&LA as follows. “…. Only 65% of our guestrooms are occupied most of the time. What this means is, on an average day, 1.5. million rooms are vacant.” Rama said that capturing just 5% of that potential business would add billions of dollars in revenue to the industry. It has now come to my attention that the research for these remarks was done by D. K. Shifflet & Associates Ltd. (DShifflet@dksa.com).
The project is entitled “VFR Traveler Conversion Project” (Visiting Friends & Relatives). Shifflet concludes the following:
a) The sheer size of the VFR market (almost two thirds the size of the entire hotel market) makes even a small convertible portion significant.I strongly believe that a humorous advertising campaign could produce extraordinary benefits in increased guestroom occupancy. Which hotel company has the creativity and guts to reach for this low-hanging fruit?
8. Did you hear about “Blang” as in web language?
Stanley Turkel, MHS, ISHC, is a New York-based hotel consultant specializing in hotel franchising issues, asset management and litigation support services. I am a member of the International Society of Hospitality Consultants and can be reached at firstname.lastname@example.org and 917-628-8549. Don’t hesitate to call me if you need an asset manager to monitor a management contract or a franchise expert to review an impact or liquidated damages problem.
Stanley Turkel, MHS, ISHC
|Also See:||Nobody Asked Me, But… No. 8; Bathtubs, Smokefree Hotels, Maps, Saving Water, Nevada Revenues, H.P. Rama, Ritz-Carlton, Statler Service Code, Mother’s Day / Stanley Turkel / April 2006|
|Nobody Asked Me, But….No. 7 / Stanley Turkel, MHS, ISHC / March 2006|
|Nobody Asked Me, But…. / Stanley Turkel / February 2006|
|Nobody Asked Me, But…. / Stanley Turkel / January 2006|
|Nobody Asked Me, But…. / Stanley Turkel / December 2005|
|Nobody Asked Me, But…. / Stanley Turkel / November 2005|
|Nobody Asked Me, But…. / Stanley Turkel / October 2005|
|Nobody Asked Me, But…. / Stanley Turkel / September 2005|