News for the Hospitality Executive |
by Rick Welch, CHA,
CHME December 2010 In the past franchisors believed that amenities
and services were needed to stay competitive. Hotel owners and
operators did
not have a say in the matter, it was predetermined for them, by all of
the
major hotel companies. The race was on to see who could give the most
away the
fastest. The idea
was that new amenities and services would make their hotels more
competitive. As a result, pools, hot tubs,
and
well-equipped exercise rooms have become almost commonplace in limited
service
properties. Complimentary full hot breakfasts, rather than just coffee
and a
doughnut as well as an expensive serving bar. Business centers have
appeared,
complete with internet access, fax machines, and copiers. Automatic
open front
doors were installed. Lobbies featuring fine furniture, serving tables
and side
chairs have replaced utilitarian entryways. When economy-hotel guests
enter
their room today, they expect to find internet access, hair dryers,
shampoo,
body lotion, combs, tooth brushes, mouth wash, shower caps and the need
to
package such items in an expensive display. Easy chairs, desks with
large work
surfaces, and remote-control cable TV with free movie channels. And do
not
forget the “out of sight” cost of the frequent stay programs that we
fought so
hard to obtain. The belief
then was this would add significantly to occupancy and ADR. I don’t
know if
sales were even a consideration then or it was to see who could give
away the
most the fastest! The need to make a limited service hotel seem like a
full
service hotel without the service employees. We were fast to react back
then
but not so fast to react now! The airlines did not waste a minute to realize that if you are
going to
compete by cutting rates something has to give. They immediately moved
to
reduce expenses by cutting out free meal service, free luggage, free
snacks and
even seating preference. They did however realize that the monster they
created
thirty years ago, the frequent flyer programs were going to stay, but
they were
adjusted to cost cutting measures. Why not the limited service hotel industry? Why do we continue
to stick our
heads in the sand and ignore the facts that cutting amenities time has
come.
The need to get back to the basics is here if we are to survive the
current
economic conditions. We cannot charge the rates necessary to pay for
all of the
“stuff” that we continue to give away. The local market is dictating
what we
can charge for a room. Franchisers have to take the lead here and begin to work with
their franchisees
to assist them in reducing their operating expenses. Labor has been cut to the bone and utilities continue to go
up. I remember
working for a successful hotelier who believed if you are going to cut
rates
then tell everybody! Franchisers need to develop new advertising that
makes the
consumer aware that the reason rates are so low is that hotels have
returned to
the times that made them successful. A good clean room with friendly
service! Begin reducing all of the controllable amenities. Advertise to
the public
that their hotel chain is meeting the consumer demands for a limited
service
rate for a limited service product, thus reducing room cost. Let the
competition continue to let their controllable expenses run high by not
making
this change. But, I will bet if one brand does it, the others will
follow. I was also told by one of my mentor’s that we do not make a
dollar in this
business we make twenty nickels and to continue in-room coffee and a
full
amenities packages will just hasten the ownership of your hotel to your
lender. Rick Welch CHA, CHME is currently President of the Lakeshore Group Professional Hospitality Consulting and Asset Management Company. He recently has consulted to many major Lending Institutions as a Professional Hospitality Consultant. |
Contact:
Richard
J. Welch, CHA, CHME |
Also See: | Successful
Hotels Hire Successful Employees / Rick Welch / July 2009 |
A Hotel Sales and Marketing Action Plan that Will Yield Immediate Results / Rich Welch / June 2009 |