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Nobody Asked Me, But… No. 31
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Blackstone’s Acquisition of Hilton, The Art of Groveling, The Origin of Franchising, 
Key Facts about Franchising, Quote of the Month
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By Stanley Turkel, MHS, ISHC
August 2007

1.  Blackstone’s Acquisition of Hilton -    If you want my considered opinion about the Blackstone acquisition of Hilton, just remember that private equity investors buy and sell companies usually with other people’s money.  They put up a tiny slice of their own capital and multiply it with investments from pension funds, wealthy individuals and foreign government investments.  They shake the acquired companies up, cut spending, reduce reserves and then resell them to smaller investors in the public markets.  Some of these equity firms “rip, strip and flip”.  Look at the Hilton family of brands one year from now to see which have been sold and discarded.  Look at the roster of Hilton executives one year from now to see whether a personnel bloodbath has taken place.

Finally, let’s see if Jonathan Gray, a senior managing director at Blackstone, lives up to his statement, “we are committed to investing in the company and working with Hilton’s outstanding owners and franchisees to continue to grow and enhance the business.”  What will happen with the overlap in the middle tier with Hilton Garden Inns, La Quinta and Hampton Inns?  Or in the luxury tier with the overlap of the Waldorf=Astoria Collection, Conrad Hotels & Resorts and the Blackstone LXR portfolio?
 

2.  The Art of Groveling -     Steve Rushmore’s “The Art of Groveling” column in Hotels magazine (August 2007) is a classic description of how to handle a public relations disaster in your hotel.

Rushmore’s solutions are brilliant:

  • Accept full blame
  • Start groveling immediately
  • The apology needs to be sincere and from the heart
  • Repeat your apology several times using different words and phrases
  • The solution/compensation needs to exceed expectations
  • Empower everyone to grovel and provide immediate solutions
  • Immediate compensation is best
  • Don’t forget the quid pro quo
For those not familiar with the term, Rushmore defines “grovel”: to humble oneself or act in an abject manner, as in great fear or utter servility.
 

3.  The Origin of Franchising As a Business Format -    Who was the first to utilize franchising as a method of expansion?  Was it Howard Johnson’s, Holiday Inns, McDonalds, A&W Root Beer or the Singer Sewing Machine Co.?  My research reveals that it was none of the above.  It was, in fact, Martha Matilda Harper (1857-1950) who used the franchising technique to expand her Harper Hairdressing Parlors to other outlets.

After years of domestic service, Harper used her savings to open Rochester’s first public hair salon.  The demand for her products and services grew so quickly that she launched a new business model (“a franchise”) in 1891, and by the 1920s there were 500 franchised Harper Shops worldwide.  Each salon was run by a woman trained in the regimented “Harper Method” of beauty but the franchisees owned their own salons.  Harper inspected the franchises, provided training and group insurance and supported them with worldwide advertising campaigns.  Harper Shops offered countless low and middle-income women economic security.  Harper is credited with other groundbreaking employment practices including paid personal time off, flexible financing and profit sharing.  Harper was also a marketing innovator long before the phrase “customer service” came to be.  Harper Shops offered evening hours and childcare for working women.  She invented the reclining shampoo chair that is used throughout the world today, and produced her own natural hair and skin care products which she tested on her own glorious floor-length tresses.  Harper customers included Susan B. Anthony, First Ladies Coolidge, Kennedy and Johnson and Helen Hayes.  Harper also established beauty training schools (Rochester, NY; Atlanta, Georgia; Madison, Wisconsin; and Calgary, Alberta) and laboratories in Rochester, N.Y. and Niagara Falls, Ontario where “Mascaro” products were manufactured.

In 1920, Harper married Robert Arthur McBain, a man 24 years her junior and they ran the business together for 15 years until Harper retired at age 78 and passed control to him.
 

4.  Key Facts about Franchising -    If you want to know what Martha Matilda Harper started, here are the key facts about the franchising sector in 2003:

  • Franchised businesses generated jobs for more than 18 million Americans
  • More than 760,000 franchised businesses generated a total economic output of more than $1.53 trillion, or nearby 10% of the U.S. private-sector economy.
  • Employed 9,797,000 people directly 
  • Resulted in more than 18 million jobs or nearly 14% of the nation’s private-sector employment
  • Accounted for 622,272 establishments.


5.  Quote of the Month -    “If you really want something in this life, you have to work for it.  Now, quiet!  They’re about to announce the lottery numbers.”
                      Homer Simpson


Stanley Turkel, MHS, ISHC operates his hotel consulting office as a sole practitioner specializing in franchising issues, asset management and litigation support services.  Turkel’s clients are hotel owners and franchisees, investors and lending institutions. Turkel serves on the Board of Advisors at the NYU Tisch Center for Hospitality, Tourism and Sports Management.  If you need help with a hotel franchising problem such as encroachment/impact, termination/liquidated damages or litigation support, don’t hesitate to call 917-628-8549 or email stanturkel@aol.com

If you would like to reserve an autographed copy of Mr. Turkel’s new book “Great American Hoteliers: Pioneers of the Hotel Industry” (to be published at the end of 2007), send an email to stanturkel@aol.com.

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Contact:

Stanley Turkel, MHS, ISHC
917-628-8549
stanturkel@aol.com

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Also See: Nobody Asked Me, But…. No. 30 / Impertinent Questions In Search of Pertinent Answers: Carbon monoxide detectors, exterior-corridor properties / Stanley Turkel / July 2007
How American-Owned Can You Get?, ISHC's CapEx 2007 Report, The Bowery Hotel / Stanley Turkel / June 2007
Hotel Franchising and State Laws, Is Immigration Important? Save the Biltmore, The Good Old Days, Quote of the Month / Stanley Turkel / May 2007
Nobody Asked Me, But - No. 27 / Hotel Franchise Agreements: Mediation, Arbitration or Litigation? / Stanley Turkel / April 2007
Nobody Asked Me, But - No. 26 / Energy Usage and Potential Savings; Great Art in Hotels; Lifestyle Hotels; The Minimum Wage Issue; Quote of the Month / Stanley Turkel / March 2007
Nobody Asked Me, But - No. 25 / Guestroom Design & Amenities, Get a Human, Best Luxury Hotels in the U.S., Turnpike, The Pineapple as Symbol of Hospitality, Fair Franchising / Stanley Turkel / February 2007
Nobody Asked Me, But - No. 24 / Loose Cannon, Fair Franchising, Manhattan Hotel Profits, Hotels of the Future, Interesting Miscellany, Quote of the Month / Stanley Turkel / January 2007
Nobody Asked Me, But - No. 23 / Biting The Hand That Feeds You?, By The Numbers, Shortage of Hotel Rooms, There is No Free Lunch, Iron Laws of Business Travel, Happy New Year / Stanley Turkel / January 2007
Nobody Asked Me, But - No. 22 / Smart Elevators, Tony Marshall’s Memorial, Women in the Hospitality Industry / Stanley Turkel / December 2006
Nobody Asked Me, But… No. 21 / The Drake Hotel in New York, Fair Franchising is Not an Oxymoron, By the Numbers, Another Secret Underground Shelter, Passing of Anthony G. Marshall / Stanley Turkel / December 2006
Nobody Asked Me, But… No. 20 / Turnabout Is Fairplay, Secret Underground Shelter, By the Numbers, Genuine Fair Franchising/ Stanley Turkel / November 2006
Nobody Asked Me, But… No. 19 / International Society of Hospitality Consultants, Great Miami Hotels, Reduce Carbon Monoxide Emissions, Turn Gray Into Gold / Stanley Turkel / November 2006
Nobody Asked Me, But… No. 18 / John Q. Hammons, Save the Belleview Biltmore, Chinese Tourism, CFLs, Ernie Byfield, Guestroom Entertainment in 1905 / Stanley Turkel / October 2006
Nobody Asked Me, But… No. 17 - AAHOA's 12 Points of Fair Franchising, Protected Territories, / Stanley Turkel / September 2006
The Newest Independent (and Oldest Partially Independent) Franchise Association in the Hotel Industry / Stanley Turkel / September 2006
In Hotel Franchising, Reality Trumps Wishful Thinking / Stanley Turkel / August 2006
Nobody Asked Me, But… No. 14; Impact Studies, Stretching Segments, Short-Stay Rentals, Smoke-free Marriotts, Franchising in China, Save the Belleview Biltmore Hotel / August 2006
The U.S. Population Age 65 and Over is Expected to Double in the Next 25 Years; What Does this Mean for the Hotel Industry? / Stanley Turkel / July 2006
Nobody Asked Me, But… No. 12; Portman, Women Homeowners, Minimum Wage, Tipping, Brooklyn Bridge, Chinese Tourism, Impact Studies / Stanley Turkel / July 2006
Do Hotel Franchisees Need Independent Franchise Associations? / Stanley Turkel / June 2006
Nobody Asked Me, But… No. 10 / Chinese Tourists, Gasoline Prices and Alternatives, GLBT Segment, Travel Agents, FAC's, Manhattan's Record Breaking Year, Impertinent Questions / Stanley Turkel / June 2006
Nobody Asked Me, But… No. 9 / Blang, Bathtubs, Best Green, Arbitration, Best Western, AAHOA, State Franchising Laws, VFR / Stanley Turkel / May 2006
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
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