News for the Hospitality Executive
Nobody Asked me, But… No. 74
By Stanley Turkel, CMHS, ISHC
March 16, 2011
1. The Triumph of Public Relations
In February 2011, I reported that 50 new hotel brands had been announced in the past six months, adding to the 100+ already in existence. I wondered if the announcement of these new brands was the triumph of public relations over common sense.Here are eight more new brand announcements:
Meanwhile, Otus Analytics, a division of the investment bank Otus & Co. has recently issued their 2011 edition of Hotel Chains in Europe 2011. The full report runs to almost 500 pages covering nearly 900 brands and 15,300 hotels in Europe, most quite small.A free 20-page summary is available from email@example.com. The European market is dominated by Accor which has more than 250,000 rooms and four of the top brands. But behind Accor are another seven hundred companies, each with at least four hotels and almost nine hundred brands:
Top 10 brands in Europe at end of 2010
Brand Hotels Rooms
Ibis 709 75460
Mercure 474 54032
Holiday Inn 277 45526
Novotel 265 43420
Premier Inn 586 42809
NH Hotels 275 41213
Hilton 152 39594
Radisson Blu 172 38740
Etap 421 35691Travelodge 458 29775
2. Helpful Hotels
Did you know that
a handful of
hotels are designing suites for families with autistic children? While we might face a long wait for this to
become the norm rather than a rare and wonderful opportunity, look for
that offer amenities designed to make it less stressful to travel with
needs children. The Wyndham Garden Hotel
in Austin, Texas has “thoughtful rooms” that include a door alarm,
drawers, cushioned table corners, shorter strings on the window blinds
covered outlets. They also didn’t forget
to include toys, books, restaurant items for special diets (soy
and…staff trained to manage children with autism. The
Clinton Hotel in Tenafly, New Jersey also
has a special suite with safety features such as unbreakable glassware,
corners on furniture, a door alarm, a TV secured to the wall and
that are glued down. (Source: June 15, 2010 USA Today article,
Hotel in Austin Offers Autism-Aware Rooms”).
Here, in full, is an important article from that excellent website: www.bluemaumau.org
January 3, 2011:
Marion, Ark.- Kemmons Wilson must be spinning in his grave. The founder of the Holiday Inn chain was friends with J.O. “Buddy” House.
Back in the 1950’s the two worked on several construction projects together.
In a blistering decision issued February 23, a three-judge panel of the Arkansas Court of Appeal reversed a trial court’s reduction of punitive damages and held:
Holiday Inn, a multinational corporation, failed to disclose valuable information to a businessman who had worked with and trusted the company for over half a century. In doing so, Holiday Inn caused the businessman, over a period of more than a year, to expend significant sums of money on a hotel that he believed would be relicensed but whose relincensure certain Holiday Inn personnel were determined to thwart. Further, the nondisclosure of Holiday Inn’s business plan, which Holiday Inn knew that [the franchisee] was entitled to have, combined with providing the plan to [the franchisee’s] competitor, indicates, at the very least, outright disregard of [the franchisee’s] interest as a franchisee, and, at most, a deliberate attempt by certain Holiday Inn employees to reap their own economic benefits by keeping [the franchisee] in the dark. On these facts, notwithstanding the trial court’s finding that Holiday Inn’s nondisclosure appeared to be “more of an accident” we conclude that Holiday Inn’s degree of reprehensibility supports a significant punitive damages award.
Franchisee Buddy House had been asked by Holiday Inn to consider taking over a decrepit property in Wichita Falls, Texas to convert it into a Holiday Inn hotel. The renovation cost was substantial. House told Holiday Inn that he would need a 15 or 20-year license to recoup the investment. Holiday Inn was unwilling to grant anything except a 10 year license. But VP of franchising Steve Romanelle told House that if the hotel was run well, there was no reason to believe that the franchisor would deny any extension.
The renovation was a great success. House received offers to buy the hotel for $15 million. He turned them down and applied for early relicensure with Holiday Inn. After some analysis and suggestions by the franchisor, House spent $3M on further renovations.
Holiday Inn’s director of franchise development Greg Aden would not get a commission if House’s request was granted, but if Aden persuaded Holiday Inn to deny House and instead approve the conversion of a Radisson property, then Greg Aden would get a $13,000 commission. Aden wrote a report that recommended the Radisson conversion.
After all, he had plans for his commission.
After stringing along Buddy House, the franchisor ultimately went with Aden’s plan and so Buddy House was forced to reflag before ultimately selling the hotel at a loss for $5 million.
After House sued Holiday Inn, a jury found that Holiday Inn had defrauded Buddy. On appeal, the three judge court discussed just how badly Holiday Inn had cheated him and the failure of Holiday Inn to disclose Aden’s plan. The judge reasoned:
Buddy House had a long-term relationship with Holiday Inn characterized by honesty, trust, and the free flow of pertinent information. He testified that [Holiday Inn’s] assurances at the onset of licensure in 1995 led him to believe that he would be relicensed after ten years if the hotel was operated appropriately. Yet, despite Holiday Inn’s having provided such an assurance to House, it failed to appraise House of an internal business plan, developed only four years into his licensing period, that advocated licensure of another facility instead of renewal of his license. A duty of disclosure may exist where information is peculiarly within the knowledge of one party and is of such a nature that the other party is justified in assuming its nonexistence.
The trial court jury found that Holiday Inn had committed fraud, to which the appellate court added, “the jury’s verdict on fraud was supported by substantial evidence.”
Stan Turkel, one of the hotel industry’s top consultants and author of Great American Hoteliers, which reverently devotes a full chapter to Holiday Inn’s founder Kemmons Wilson, observes, “This sequence of events does not surprise me. Holiday Inn’s director of franchise development behaved like most franchisors- in his own self interest. Sentiment and historic memory count for naught when cold hard cash is involved. If the courts would acknowledge the existence of a fiduciary duty owed by franchisors to franchisees, such ‘reprehensible’ behavior could not occur.”
5. Quote of the Month
“Excellence is not a singular act, but a habit. You are what you repeatedly do”Shaquille O’Neal
Stanley Turkel, CMHS, ISHC recently published his new book, Great American Hoteliers: Pioneers of the Hotel Industry. It contains 359 pages, 25 illustrations and 16 chapters. It also has a foreword (by Stephen Rushmore), preface, introduction, bibliography and index.
Ed Watkins, Editor of Lodging Hospitality wrote, “The lodging industry typically doesn’t spend a lot of time considering its past. Some may find that odd since compared to many other businesses (computers, automobiles aircraft), the hotel business is one of oldest if not the oldest, in the history of man. That changed recently with the publication of.... Great American Hoteliers: Pioneers of the Hotel Industry, a fascinating and entertaining series of profiles of 16 men who author Stanley Turkel argues were the builders of the modern American hotel industry. That’s significant because due to the efforts of these titans (and others, of course), the American style of hotelkeeping long surpassed the European tradition that reigned for centuries.
Some of the profiles contain cover names (Hilton, Marriott, Johnson, Wilson) familiar to even casual students of hotel or U.S. history. Sadly, just one of the pioneers covered the book (John Q. Hammons) is still alive and active in the industry. To me, the more interesting tales cover hoteliers about whom I knew little before reading his book but now have a greater appreciation for their contributions.
The most compelling story focuses on Kanjibhai Manchhubhai Patel who Turkel identifies as the first Indian-American hotelier. K.M. Patel arrived in San Francisco in 1923 and soon began operating a small residential hotel in the city. The rest, as they say, is history; Today, Indian-American hoteliers dominate the industry with their trade association, AAHOA, recently surpassing 10,000 members. As Turkel says, this community represents a true American success story.To order the book, go to www.greatamericanhoteliers.com. I heartily recommend it.”
Stanley Turkel, MHS, ISHC
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