Seth's Blog : Valuing hygiene factors

Valuing hygiene factors

A hygiene factor is something you miss when it's gone, but barely notice when it's there.

Clean sheets at a hotel, for example. The base salary at a job. Your title.

Every time you add one of these factors to consumer or employee expectation, you've signed up for a lifetime of providing that benefit. You've made it more difficult for the competition to keep up. And you've raised the standards for everyone.

They're important, but their presence doesn't motivate people. It's only when they disappear that we think about them.

       

Why do some hotels have two brands, chain and independent? (Some hotels have names like these : Four Seasons George V, Fairmont The Plaza, Fairmont The Savoy, Four Seasons Beverly Wilshire, etc. Are these type of agreements common? Would these be considered managed properties instead of franchise or other form of agreement?)

These are merely location descriptors, not part of the brand itself (except for the individual property described); and have nothing to do with whether the property is managed directly by the chain that owns the brand or is franchised . . .

They’re necessary in places where there is more than one property operating under that brand in a single city, town or place. The most ‘obvious’ example of the need that I’ve ever seen was the Marriott Crystal City and the Marriott Crystal Gateway, two entirely separate, self-contained, big-box Marriott hotels, but both located in the Crystal City complex in Arlington, Virginia, about 1500 feet and across the U. S. 1 traffic artery from each other. But in order to have the Hampton Inns in your town designated as the Hampton Inn-North and the Hampton Inn-Airport, your town only has to be large enough to have two Hampton Inns, one in each of those parts of it.

They may be desirable where an individual property has a history of its own as an iconic property prior to its affiliation with its current brand. Some examples would be the Radisson Hotel Bethlehem in Bethlehem, Pa., back when the Historic Hotel Bethlehem was a Radisson; and the The Omni Grove Park Inn in Asheville, N. C. (The Grove Park Inn was there for the better part of a century before it signed with the Omni brand). With some iconic, high-profile hotels, it’s almost like allowing them to use the chain affiliation as a soft brand.

Originally appeared on Quora

What is a good way to start a hotel chain?

It's tricky. I'm still working on it.

Any answer I give to this one is a work in progress: for now it is going to appear discreditable on grounds that I've been trying to do just that for the last five years or so and haven't quite scored any hits (insofar as finding a taker - or more specifically, a taker that I'd really want to sell such a venture to - on grounds that you have to start with just one or two 'independent, non-franchised' hotels; but 'independent' hotels are perceived as more risky than franchised hotels). I wish I could give you a better answer on how to do it, but if you're willing to accept an answer that better illustrates how do we intend to go about it, here goes.

First of all, ask yourself, why would anyone pick your brand, why would anyone prefer a hotel from your 'chain', and why would they remain so committed to it that they'll call you every time? And if you don't have not just one but several answers, maybe you shouldn't do it. There are many hotel chains and brands, but very few successful ones out there. If you don't have good answers to that question, your 'chain' will not grow very large or, without doing a lot of franchising, last very long. (But as I'll share with you as we continue, successful hotel franchising isn't a hotel management success or hotel brand success nowadays, it's a franchising success.)

We've developed two homegrown brands. (What makes us think we can do this? Michael Forrest Jones' answer to What is the impact of Online Travel Agencies like Expedia and Travelocity on the hotel business? | Michael Forrest Jones' answer to What is the average percentage of business a hotel owner can expect from brand-specific sources? - and we'll come back to the subject in this answer.)

What is the average percentage of business a hotel owner can expect from brand-specific sources? In other words, what percentage of rooms revenue should an individual branded hotel expect the brand itself to contribute?

In most cases, just enough to get you to sign on the dotted line on the last page of the long, long franchise agreement; keep your hotel in their 'chain' for as long as possible, and keep you paying your fees and royalties every month.

If you're doing any better than that, they'll want to flag another, newer hotel nearby under the same brand and collect the fees and royalties from them, if not the both of you. So I don't really count on 'rez contribution' to be much more than the 8.5 percent of my revenue - my total revenue, not just the business that brand-specific sources send you - that I'd generally pay in franchise fees and royalties, if even that. And I do track it. (As much as I like some Starwood products, I wouldn't pursue a Sheraton, Four Points or aloft because I don't like their 12% royalties: it can't be worth it. And I've negotiated those for other brands down as low as 5.5%.)

If you get more than that out of the relationship, you're blessed. For as long as it lasts.

Hotels: How do I determine which hotel franchise to choose?

I'd have to know the precise location you have in mind before I could go with anything more than a broad-strokes recommendation; but if I were your partner on this venture, or if I were advising you as your prospective management company, I'd say -- between the options you've been given -- give IHG another call. A Holiday Inn Express or Candlewood would be your best bet, if you have to mess with a franchise at all. Their salespeople do play games, but still . . .



(I assume you're dealing with a lender requirement that you have a franchise: otherwise, I'd suggest a more boutique property, if you have any hotel management experience at all. And don't do anything until you give Best Western a call. It could be that there's another one close to your planned location - did you not call Hampton Inn for that reason? -- and the same would go for any other franchise. But Holiday Inn would always be among my own preferences, if it could be had, at least for another twenty or so years anyway until hotel franchising dies completely. If your location is that good, and you don't put one there, eventually someone else will. I never advise first time owners to go independent, but eventually that's going to change: a franchise offers little to no assurance that it'll help you more than it'll cost you, and that's not going to get any better.)

If you must go with one of the others, I'd probably go with LaQuinta. As a fifth choice (fourth among those you provided), go with Choice, but make it a Sleep Inn, not a MainStay, and not a dual-branded Sleep Inn/MainStay. MainStay is a loser, and hooking it up with a winner - Sleep Inn, as of now, the best brand Choice has left - is as likely to drag down the winner as it is to help the loser. (Is Comfort Suites not an option?)

What does "soft brand" mean in the hotel industry?

A soft brand is a 'chain' or franchise organization affiliation that has a hotel relying primarily on its individual identity rather than that of the 'chain' or organization. The hotel gets to tap into the 'chain's' reservation system, but the formal connection is a little more subtle and discreet.

Perhaps the most famous 'soft brand' - through much of its history, anyway, even if many of their member hotels are not doing a very good job of taking advantage of it nowadays - is Best Western. At one time, they encouraged their member hotels to develop their unique brand identity, with Best Western as part of that identity, rather than operate a "Best Western Inn and Suites", or "Best Western of Podunk" and people I've talked to at Best Western now tell me they're about to try and swing back toward that.

Sales: What are some best responses to "Sell me this hotel room"?

"I see you have no idea whatsoever how to successfully market a hotel, or how to find or identify candidates who might, nor would you know how to work with and properly supervise someone who could perhaps help you in that area; so I won't waste any more of your time. Good day."

Hotel sales and marketing people do not sell hotel rooms, they market the hotel. You might point out a unique design or uncommon amenity item in the rooms; but as far as 'selling a hotel room' goes, there is very little differentiation between hotel rooms found within the same class of hotels, even between competing hotels, unless you're selling a recently renovated Class B or economy property.

What specific criteria a hotel has to meet to become a Leading Hotels of the World?

Apply, and pass a punchlist to show that you meet their standards, as your hotel would with any franchise organization. 

That's all The Leading Hotels of the World is, a 'consortium', a membership organization, like Best Western.

As to anything more specific, you'd have to ask them. I can't speak for them and since, I suspect, many of the 'standards' at that luxury tier are subjective and will even vary by property, I wouldn't dare try.



My only qualification to answer this question at all is that I've actually stayed in one: a few years back, the Hotel Bethlehem in Bethlehem, Pennsylvania, was an LHW. I still have a copy of the printed directory in which they appeared.

The Hotel Bethlehem is really nice. I wasn't served tea, so I can't speak to the 'requirements' for how they do it (nor anything else about the service - I'm sure bell service was available, but I only had one bag that I didn't mind schlepping up to the room myself). Indeed, I used to live in Bethlehem and I love that hotel, both for all the usual reasons, and because I used to work for the company that almost bought it (with yours truly putting a flea in their ear, coming up with the idea and egging them on and encouraging them) when its owners went into bankruptcy in 1998 and the opportunity came up for us to buy it, renovate it, and for me to be the project manager (an opportunity to bring a unique set of skills into play, since my degree is in architectural technology, not a hospitality field) and carry on afterward as the g.m. of a high-profile, well-regarded property (not bad for a guy whose first job in a hotel was as a night auditor in a run-down hotel owned by a criminal organization).

The best way to stand for something

The best way to build a brand that matters, a story that spreads, an impact that we remember, is to understand a simple but painful trade-off:

If you want to stand for something,

You can't stand for everything.

"Anyone can be our customer and we will get you what you want..." is almost impossible to pull off. So is, "we are the cheapest and the most convenient and the best."

It didn't work for Sears, or for Chevrolet or for Radio Shack. It definitely doesn't work for the local freelancer, eager to do whatever is asked.

Relentlessly trimming what's on offer, combined with a resolute willingness to say, "no," are two characteristics of great brands. And linchpins, too.

-- Seth Godin

From Seth's Blog