Hotel Revenue Managers Say They Want a Revolution

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What do you think of the following business name: ''Last Room Club'' for a business selling hotel rooms for the same day with significant discount?

It's as good a name as any for something that there's already dozens of out there, and that even hotel operators who deal with them deal with them at all only because they feel like they have to, lack enthusiasm for, and even resent a little. (Actually, I like the name better than many that I've seen for deep discount online travel agencies.)

As names go, worse can be had, I suppose. Most of the ones I can think of for deep discount OTAs aren't suitable for use in polite company.



A few things that drive us nuts:

We don't like dumping our rooms cheap because we can't find a way to rent them for a decent price. If we can afford not to, we won't. I'd rather let a few $140-per-night rooms stand empty than to rent them to people who, if I let them have it for $75 one time, will get spoiled and never again see them as worth more than $75. Letting you sell our $140 a night rooms for fifty bucks, and making it too easy for too many people to get them at that price, doesn't exactly enhance the perceived value of our product — why should anyone want to pay even a hundred bucks a night for something you can get for fifty bucks? And when we have to because we can't afford not to, it makes us sick. If you're just doing it because you need the money, you may be relieved to getthe money, but it still makes you feel like a loser.

Hotel for sale: Days Inn, Lexington N. C. (No longer available)

Property offering

Listing broker: For sale by owner, via Loopnet

TripAdvisor reviews: Bubble score 4.0

Property website:

• Days Inn Lexington -- Wyndham Worldwide child site

The facility:

This is an attractive, mixed corridor (exterior corridor lower floor, interior corridor upstairs) facility built in 1991.

It shouldn't be a Days Inn: Days Inn was a great company its day, but its day was back in the 1980's and today, the Days Inn brand is a disease.

(The Days Inn brand is a minor cold that you can medicate and still make it to work with if you have to, to give Days Inn some credit -- unlike Ramada, Howard Johnsons, Travelodge, Clarion, Econo Lodge, Rodeway Inn, Red Carpet Inn and Scottish Inn; which are repulsive, disabling viruses by comparison -- but still a disease.)

This facility was originally developed as a Comfort Suites -- back when Comfort Suites was a new brand that permitted mixed-corridor properties -- and the suites are 12-by-33 feet, about six to nine feet longer than a conventional hotel room, with a partial dividing wall. You've got nice, big rooms.

When does the prices on hotels go down on the holidays?

Business travel is the bread and butter for most reputable hotels. (An older, cheaper, more run-down property with little business travel survives on the crumbs from the table of reputable hotels in its area.) And during any holiday - especially family holidays like Thanksgiving, Christmas and Easter - business travel falls off. Everyone has family to think about, everyone has time off coming, no one feels like doing any business. 



Resort locations play by a slightly different set of rules, but - while these holidays come with extra free time and increased travel - family events prevail.

Some locations; Bethlehem, Pa., Gatlinburg, Tenn. (near Dollywood) and Niagara-on-the-Lake, Ontario, with major holiday-oriented events, benefit somewhat from the lag - but often not enough to make up the loss in its entirety unless it's a year-round resort location.

But fixed expenses for the hotel continue, the bills still have to be paid, the staff has to be kept doing some work, and the hotel has to be kept open. 

So the law of supply and demand kicks in and does its power and magic - we drop the rates a bit, keep that much money coming in; and if you are traveling during one of those holiday times, you get a bit of a bargain.

Originally appeared on Quora

As a new independent angel investor, how will I find new companies to invest in?

I can set you up with some hotels. 

For example, get onto Loopnet, and look at some Microtels. A Microtel in good condition is a good quality, if modest, mid-market hotel product. But they have historically been marketed and promoted as 'economy' properties - even in areas where they could easily command a higher rate, where the only nearby hotels and motels that charge approximately the same for a room are older and of much inferior quality. Wyndham Hotel Group is now getting away from that, but the franchisees aren't catching up.

So, Microtels tend to be undervalued.

What do hotels do with unused guest rooms?

Get rid of them, if I can't find a way to sell them at a decent price, and if I can find a way to eliminate them that the owners will go along with.

I'm serious.

The same law of supply and demand that means you have to pay $175 to $300 per night for a mediocre room in a mediocre hotel in, say, New York or Boston, where scarcity of hotel rooms occurs naturally, also turns around to bite us in the butt when scarcity is . . . well, scarce. 

So, I'm going to create some scarcity - even if I do it by letting some rooms go empty.

I might have an older 125-room property, for example, that was built in the '70's. 

Why do real estate companies prefer not to rent real estate, instead of renting it for less?

Perceived value, preservation of the desired price point of the rental rate, and actual value of the property when income or cash flow is a factor in calculating its value.



I run a hotel where the rooms go for $100 per night.  I might be able to rent a few more rooms each night if I lowered the rate, but if I rent too many rooms at $75 per night, for example, then I'm now running a $75-per-night hotel instead of a $100-per-night hotel, it becomes very difficult if not impossible to find people willing to pay $100 per night if that many people are paying only $75 - and the value of the hotel itself has instantly declined by 25%. (One  of the most commonly accepted means of valuing a hotel as a real estate  investment is a multiple of its annual room revenue. For many hotels, 25% of their value can be a a million bucks or more.)

Why don't airlines build their own hotels for crews in order to save costs?

Because the deal they get on rooms in hotels that tie up someone else's investment capital is too good, so why invest their own money? Yet, they get all the benefits of ownership. Airlines, when they need rooms for crew turnarounds, are the most aggressive, predatory negotiators of corporate and group rates on the planet.



You're usually talking about five rooms per turnaround -- that is, per flight crew per night. That's twenty rooms, if they send four crews per night. If an airline needs enough rooms each night in a given city to fill a small hotel, it will generally establish a crew base in that city, and -- rather than build a hotel -- eliminate much of its need for rooms right there.

Which hotel management system is the most common in the U.S?

Micros-Opera (OPERA Property Management System ). InterContinental Hotels (which includes Holiday Inns) uses it. Carlson uses it. Wyndham Worldwide has it (and one other, cloud-based system) for you to pick from.

Is it 'the standard'? No, and it never will be. It's too exorbitantly priced, both in terms of initial cost and monthly support costs. I've never known an independent hotel to use it -- it's marketable at all because, in every case I've seen it used, it's some franchise organization's required purchase.

I won't touch it with a ten-foot pole unless I'm running a hotel under a franchise that has it forced on me. I can think of two or three that are just as capable, at much lower cost. The one we're currently looking at for our next hotel (http://openhotel.com/ ), while having some things missing that I'd like them to add, or modify their system to accommodate, actually has unique features that were on my wish list from a few years back (Michael Forrest Jones' answer to Is there a demand for a well-designed hotel website service? ).

What are the best property management systems for small hotels?

Originally appeared on Quora

How can I distribute an app-widget for a hotel website? (I have created an app which allows hoteliers to create promotions. These promotions are auctions for hotel rooms day-by-day. The widget functions in the hotel website as a popup window.)

I'd love to have the need for something like that, but usually we have the opposite problem: empty rooms (meaning, for your system, no bidders at all; and the rooms we do rent go for fixed prices higher than a bidder might want to bid), and margins not all that good on the rooms we do rent, once all of our costs are taken into account.

Some hotels might want something like that for, perhaps, six days a year for special events, where the hotel will be fully booked weeks ahead of time. For example, on the local university's homecoming weekend, we know we're going to be full: the only question being, how much can, and should, we charge? (We want to be as profitable as possible, but if I can't get $220 for the $100 room on the big night, I'm willing to at least think about giving it to the guy willing to pay $190. On the other hand, if someone is willing to pay me $275 for it, that person will get it, no matter how many people are willing to pay $220. And there has to be a reserve of at least what we could get for the room at a fixed, what-we-guess-to-be-the-market-rate rate.) I myself have contemplated auctioning special event reservations on eBay to see how it would work out, but have yet to actually try it.

So -- with a little tweaking of what you apparently have in mind -- you might be on to something. Perhaps if you went about it that way . . .

Hotel channel management software API: what solutions exist out there for a PMS?

One of the reasons that Open Hotel (http://openhotel.com/ ) is my PMS of choice is that I’ve found them to be pretty decent about working with third-party developers about exchanging APIs when there’s a reason to.

I got them talking with one third-party hotel CRM site.

And I even found one franchise organization that will let us use Open Hotel if they will accommodate a two-way API. Terrific - I’m not a big believer in hotel franchising anymore, and I’m developing my own brands, but occasionally I encounter an investor whose financing will restrict him to a national franchise. With that franchise, I can use the same property management system that I’d use in an independent hotel, or one operating under one of my own brands, and have a little more uniformity in the bookkeeping department.

There are a lot -- two or three dozen, anyway -- of new cloud-based PMX out there, competing for a very limited market of hotel business. And most of them drive me a little nuts, because there is so much that so many of them won't do.

And for a tech company that markets a hotel PMS, that's suicidal.

How does a hotel make decision on the number of rooms?

In most places (I deal in select service properties, no food or beverage except a complimentary breakfast, little to no meeting space, similar to a Hampton Inn if your first priority is ‘nice’, or a Red Roof Inn if the most important thing to you is ‘adequate but cheap’), 60 to 80 rooms is optimal.

You may go slightly smaller. (We’re actually planning a few 46-room properties in smaller towns where there is no existing Class A property, and we’re okay that the demand is there. For example, one of those places is one of those mid-state North Carolina furniture manufacturing towns with a population of maybe 3000 and a spunky, aggressive and somewhat muscular local business community; where the nearest Class A hotels are thirty miles away — and where our preferred mattress provider has its headquarters and factory located. The need there, as perceived by that business community, is so great that our mattress guy there faithfully assured me, if you put a new hotel here, we will give you any mattresses you want at our cost. I don’t have the bucks for it, so I’m looking for a partner, but I think taking him up on it might just work.)