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.. New President of Wyndham Ignores the Real Issues; Restoration of the Historic U.S. Grant Hotel; Hotel Franchises Compared to Auto Dealer Franchises: Quote of the Month |
| By Stanley Turkel, MHS, ISHC
January 2008 1. New President of Wyndham Ignores the Real Issues-
However, nowhere in his remarks does Mr. Danziger make any reference to the subjects that are of the greatest importance to Wyndham franchises such as: guaranteed areas of protection, termination and liquidated damages, encroachment and impact studies, windows of penalty-free exit opportunities, choice of venue, etc. Since the Wyndham Hotel Group franchises 6,544 hotels (more than any other hotel franchise company), wouldn�t you think that a major part of his responsibilities should be to satisfy his customers with a fair franchising environment? Incidentally, my recent rating of Wyndham�s compliance with AAHOAs 12
Points gave Wyndham a failing score:
At 50.3%, Wyndham is failing its franchisees badly. How is it that Mr. Danziger can regard the mutual relationship successful when �our common goals are realized� if he gives no recognition to the most important franchisee goals? 2. Restoration of the Historic U.S. Grant Hotel - Some years ago I consulted for the Sybedon Corporation and served as asset manager when they acquired and restored these historic hotels:
Sycuan�s purchase of the hotel represents an ancestral tribute to its local legacy. It was President Ulysses S. Grant who passed an Executive Order in 1875 that set aside 640 acres of East County land for the Kumeyaay Tribes and granted them sovereignty. The hotel was originally built in 1910 by Ulysses Grant who was the son of the 18th U.S. president. Under the direction of French interior designer Frederic Marq, the new owners commissioned nine noted Native American, European and American artists to create paintings, murals, sculptures and ironworks to decorate the U.S. Grant�s public spaces, guestrooms, suites and corridors. The 11-story, 270 room hotel has 47 suites ranging from 400 to 1300 square feet. Since its opening, 13 sitting U.S. presidents have been guests at the U.S. Grant. 3. Hotel Franchises Compared to Auto Dealer Franchises- The large hotel franchise companies do not grant �areas of protection� (AOP) to their franchisees. At best, some of them utilize third-party impact studies to try to quantify the effect of the proposed new hotel on the existing franchisee. The results of these impact studies are highly subjective. How different from the franchise situation in the automobile business. Early in the last century, General Motors and Ford adopted the franchise dealer system because they thought that it would expedite expansion and save money. They believed that a dealer who owned his business would invest his own capital, work harder than an employee and would not require a lot of outside supervision. But, as it turned out, the franchising of dealerships costs the car companies a lot in terms of flexibility and control. For example, in every state these local franchises are protected by so-called �franchise laws� which restrict G.M.�s freedom to open a new Cadillac dealership a few miles away from an existing one. Just like the hotel franchise companies, G.M. is in a different business than its dealers. G.M. makes its money on new car sales and on the financing of loans. Dealers make most of their profits on servicing cars and selling used ones. So dealers can thrive even when auto manufacturers suffer. On the state level dealers often have more political clout than automakers do. Historically, the automakers have not been good partners. For example, in the 1930�s during Great Depression, G.M. and Ford kept their factories running and forced thousands of dealers to buy new cars that they had little chance of selling. The dealers provided a cushion against hard times by eating the inventory. There are now many cost-saving steps that G.M. can�t take (like discontinuing Buick or Pontiac) because they do not own the dealerships. It is said that the automakers made a devils bargain some eighty years ago and now they�re stuck with it. 4. Quote of the Month- �There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things.� Niccolo Machiavelli
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| Contact:
Stanley Turkel, MHS, ISHC
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