Why is it difficult to rid a room from the smell of cigarette smoke?

Any scent or odor is made up of microscopic particles of the substance that is the source of the scent or odor. Tobacco smoke floats in the air, and gets absorbed into everything it touches: your clothes (and even the clothing of people around you), the drapes, the bedding, the carpet, even the wallpaper. Once the smoke hits a wall, or a ceiling, or whatever and can no longer escape from the space it's in, it's got to settle somewhere.



Because it's mixed with moist, exhaled air, tobacco smoke tends to be kind of damp, to be absorbed into things, to stick like glue as it dries, and to accumulate with added exposure. In a hotel where housekeeping is slack enough to let it get to be a problem, I can stand out in the parking lot and point out the smoking rooms: they'll have that brown film on the glass that contrasts against the white backing of the drapes in the rooms - which itself will be coated with the same film - just like the inside of the car windshield in the vehicle of a driver who likes to smoke in the car . . .

Why are hotels often slow to innovate?

Because we don't have to if we don't want, so why the heck should we? 

Investment is risky. Leave things be, and we can still have enough people come in the door at a rate we kvetch and whine isn't high enough, to keep the property running in the black and get a low return that we kvetch and wine isn't high enough. And people have little to no patience with results that aren't immediately apparent. 

That's the way most people do it, anyway. Asking me why they don't innovate is like asking me, why would someone not eat, or why would someone not breathe? I can only speculate. But there are a lot of natural human flaws that get in the way, so some of this stuff even comes up for me more than I should let it.

So here goes with some speculation, based on my observations and experience over the years:

How much do hotel operators pay hotel/property owners?

Under a hotel management agreement?  Your typical mark-one-mod-zero, off-the-shelf, fill-in-the-blanks HMA calls for a base management fee of 2% of the hotel's revenue, before deductions (payroll, utilities, and operating costs are paid from revenue as much as possible, although a property running in the red will require occasional subsidies or capital calls from its owners) - and every year, the base management fee goes up half a point until it levels off at 5%. 

There's also an incentive management fee at the end of the year of ten to fifteen percent of any increase in total revenue from last year's total revenue (there's an accounting term for that, and I'm going to feel stupid when someone mentions it, for being unable for now to remember what it is).  




An HMA also provides for a fee of five percent of the cost of all renovations and upgrades done. To be fair, this is in exchange for planning it, overseeing it, making sure it all goes together properly, and  keeping the hotel up and running through the duration of it. However, an unscrupulous management company can get away with lots of abuse (see What is a typical Opco/Propco revenue split in the hospitality industry? | Michael Forrest Jones' answer to When a hotel has an electronic "Do Not Disturb" system, what happens, and where, when a guest toggles the setting? )  I hate people like that: they give all hotel management companies a bad name, and cause knowledgeable owners to want to negotiate HMA's very aggressively. (I can deal with and even respect that, it's the tough guys who think they're knowledgeable that are impossible to deal with . . . )  But I try not to judge those management companies too harshly. What they consider to be acceptable behavior, and performance standards, and competency levels, for themselves, presents an opportunity for decent, respectable human beings who want to do things right - like me.

What should be the penalty when an employee steals items from the company they work for?

The supreme penalty. Termination. Prosecution, if it doesn't cost you too much more than you caught him stealing (by the time you catch a thief, there's usually more than you know about or can know about with any certainty, anyway). Block the unemployment compensation if you can. Permanent ineligibility for rehire. Be completely candid about what happened on any future reference checks. Sue to recover what he stole. And if you're in an Islamic country that provides such a penalty at law, have his right hand cut off at the wrist. The Mob has a solution that's by golly 100% effective, but it has its drawbacks: in a more civilized society, there has to be limits. (And besides, it's risky. And if you go to them for a favor like that, they'll over time want more in return than it'd be worth.) Stick it to him, sideways; give it a few turns, and make it hurt for a long, long time. And anyone who knew about it and didn't report it is just as guilty as the perpetrator: do it to them, too.



If it becomes known to your other employees that someone got away with stealing - or even if others on your staff feels that the penalty was light enough to raise questions about just how seriously you take such a thing, or to make the risk of getting caught worth taking because the downside seems 'minimal' - you'll sooner or later have more problems. You need to make an example of any individual you catch stealing.

Hotels: How do people choose a hotel?

It's very much an individual decision. There are as many possible answers to this question as there are hotel guests. 

Actually there are more possible answers than there are individuals. Every individual has his priorities, but for each person, one or more secondary factors will be taken into account as well -- many of which will still be significant enough to make a difference in whether or not he wants the room at a particular hotel at all, and any of the others sufficient to prompt him to choose one hotel over another.

If I knew them all, I could retire comfortably in just a few years. (And if I knew, out of fifty-odd numbers, which six will win next week's Powerball jackpot, I could retire even more quickly.)  But I can't. I'm not a mind reader.  Besides, there's seven billion people on the planet, times . . . how many features, and services, and amenities are on your list of 'must have' items when you check into a hotel (as you'll see, they don't have to be big things . . .), times . . . how many possible combinations after you take into account all the other possible things in or about a hotel that you could care less about?  Do the math. It's a big number.

Several factors do turn up over and again, however:

Hotels for sale: Quality Inn, Sneads Ferry NC (No longer available)

Property offering

Listing broker: Jonathan Ruprai, Marcus and Millichap, via Loopnet
TripAdvisor reviews: Bubble score 4.0

Property website:

Quality Inn Sneads Ferry (Choice Hotels child site)

Asking price	$3,800,000	Given
Number of rooms	68	Given
Annual gross	$1,241,000.00	Calculated
Occupancy	58	Calculated
ADR	$85.00	Given
REVPAR	$50.00	Given
Room revenue multiplier	3.06	Calculated

The facility:

This facility was formerly a Holiday Inn Express.

Click for map

The market:

Even this property's negatives work in its favor.  This one is doing well even with a Quality Inn franchise, yet has some potential. It's in a beach resort area that has needed a hotel for a long time, but it's also near some demand generators so that you're not entirely dependent upon the beach resort.

Hotel for sale: Days Inn, Wilson NC (No longer available)

Property offering

Listing broker: Vinit Mody, MTEL Consultants, via Loopnet
TripAdvisor reviews: Bubble score, 3.0

Property website:

Days Inn Wilson (Days Inn child site)

Asking price	$2,500,000	Given
Number of rooms	91	Given
Annual gross	$1,079,487.50	Calculated, possible error
Occupancy	50%	Given, "app."
ADR	$65	Given, "app."
Room revenue multiplier	2.31	Calculated, possible error

Listing page gave critical figures as approximations, so I'd want to confirm actual figures before I'd proceed very far with negotiations.

The facility:

It's a former Hampton Inn, so you have that much going for you: those were built pretty well and should have quite a bit of life left in them if maintained properly.

Click for map

The market:

For the asking price, you may have a pretty good opportunity here.

I spent the better part of a day researching the Wilson market. You don't normally have to divide a market that size into submarkets, but Wilson has two -- the properties out on the I-95 exits, and the properties in the city.




This one's in the city, next to the hospital.

Wilson has pretty good demand generators. This property would occupy a spot where you won't quite catch the $102-112 rates that the Holiday Inn Express and Hampton downtown properties get -- it's an exterior corridor property -- but something in the $75-90 range is sustainable if you work a little on your marketing. (In this location, you have to work on your marketing. You can shag passive business of the Interstate -- at low rates -- if you're out on 95, but in town, with an exterior corridor property, you're going to have to work it a little.)

The physical location (area, surrounding neighborhood):

Being right next to the big hospital helps. Or should, if your marketing is what it should be.

It's somewhat odd to find an exterior-corridor property in a location this built up, but it's in a part of town that should still have quite a bit of life in it for a few years to come. There are two other, newer, more upscale hotels -- a Hampton Inn and a Holiday Inn Express -- nearby. A slightly more modest price point vs. their room rates, and a commitment to not let standards or security slip or to compromise too much in that area, should enable this property to compete successfully against those.

Facility changes recommended:

I brought the location up on Google Street view and spent a half hour pushing the little yellow man around the neighborhood on the screen, and it doesn't look to be in a bad area; but any exterior-corridor property in an urban area should still be fenced. Budget about $30,000 give or take for it, don't use cheap chain link fencing: you don't want it looking like a prison or military camp. Fencing along a street needs to be extruded metal on a brick base, like you see in the photo. Fencing along a rear property line can be vinyl-coated chain link. At night, all three gate openings except for the one nearest the office are chained off, and a speed bump just inside that opening slows traffic down enough so that everyone coming in or going out gets picked up on the security cam.  (Every property, no matter where it is, whether interior or exterior corridors, should have security cameras covering all common areas and hallways. A good system can generally be set up for around $3000.)



Also, if there's a sanitary sewer line running anywhere near that dumpster pen, I want to put a lav dump there, so we can aggressively pursue bus tour business.  We don't want to use that as a commercial RV dump: heavy use will generate a mess and odor problem.  But motorcoach tour operators that I've dealt with in the past are particularly appreciative of an amenity such as this. They don't pursue discounts very aggressively -- they just pass the costs of the rooms to the tour customers, anyway -- but they like being able to have the coach serviced; and with Trailways no longer in business in most parts of the country, there aren't that many places to get it done any more.

We have a maintenance guy there when a coach is scheduled to arrive to help unload the coach, we have the driver park the coach over the lav dump, we dump the lav and hose down the area around the dump spot; we swab out the lav, refill it and dump in some de-germ, we sweep and mop the coach and get the interior looking nice and fresh, and we wash the coach. Total time, one guy, a little over an hour, maybe two hours if you want to give it a really good job. (And we do. As you can guess, I worked for Trailways years ago, when there was a Trailways...). Small price to pay for being able to rent an extra 25-50 rooms in a night, even if we have to give a free room to the driver.

With 91 rooms (more than we really need), on a property 'halfway between New York and Florida', as the motels lining I-95 through the Carolinas bills themselves; it's just too much of an opportunity to pass up, especially if yours is the only hotel that has it. Check it on Google Maps now, and notice how they're using the rear parking lot for truck parking.  We'll decide later what to do with those two apartments.  We might have an employee or manager with a temporary need to live on property; but I don't encourage that as a regular thing, so someone like that, we can put in a room and not encourage them to get too comfortable or think they're going to be there too long.

This hotel is too big. Converting some more of those rooms to apartments, and renting them to good tenants who won't require hotel services, and getting the number of rooms down to 72 or so, is something to consider.

Market information links:

• Wilson, North Carolina - Wikipedia
• Wilson Medical Center

Operational changes recommended:

Both facility design and management, as Beechmont would approach it in this location, will reflect the need to reposition this property as a Class B mid-market property.

It's pretty clear from the TripAdvisor reviews (check the 'average', 'poor' and 'terrible' ones so you just see all the bad ones, and pick up the common threads that run through all of them and see what your biggest problems are) that this property needs to be gutted and renovated. The rooms are shot. "The property is well maintained and continually updated to meet the current franchise brand standards. We anticipate a minimum PIP for the new owner", the listing says -- but we have to remember that Days Inn has very little by way of standards. In its day, Days Inn was an impeccable, economical brand. Nowadays, you can run a pretty shabby property and still have it be a Days Inn as long as you pay your fees and royalties.

Marketing recommendations:

We differ with the listing broker's recommendation to "focus more on occupancies rather than ADR to achieve higher RevPAR". At the current rack rate of $75, and too many ways to get a room there now for between $61 and $64; if you drop the rate to "focus more on occupancies rather than ADR", you're going to have your rates so low that you're not going to get a return, you'll be charging less than what people will be willing to pay at a good property, and you risk security problems.  You can't let your ADR get too far below $60 and be bringing in enough to keep up your property properly.

Stick to your guns on the rates. If you don't rent as many rooms, you don't rent as many rooms; if people walk away because they think the price is too high, they walk away.  Even if it's up to 20% of them -- it sounds like heresy, but I'm serious. You're better off renting 64 rooms at $75 each on a given night, than you would be renting 80 rooms at $60 each on that night: either way, you're getting the same $4800 in revenue, but your variable costs -- the utilities, the housekeeping, the food -- go way down. (And you're also getting the same REVPAR: either way, in a 91-room hotel, your REVPAR for a night on which you take in $4800, no matter how many or how few rooms you rent to get it, is going to be $52.74.)  You don't want to be stupid about it: if too many people are walking away, you need to get it that someone has to rent the rooms at some price, and be willing to compromise accordingly.  But in a hotel of good quality, if there's not a cheaper option out there that's as good (look at the TripAdvisor reviews), you don't have to cave on rates.

Instead, let's reflag it and do something about that borderline 3.0 bubble score on TripAdvisor.


GuestHouse Inn and Suites, Lexington, Kentucky

Rooms would, following renovations (which can be done in stages without closing the hotel), be offered at a rate of $72.00-78.00 per night.

Larger companies having a presence in the Wilson area include Ardagh Group, BB&T (their headquarters was located here prior to its relocation to Winston-Salem, N. C., and they still maintain significant operations here), Duke Life Point Health Care (that's the company that manages the hospital on the next block), Kidde Aerospace, Merck Animal Health, Novantis, Pratt & Whitney, Purdue Pharma, R&L Carriers, S. T. Wooten Corporation, Smithfield Foods, and SPC Mechanical.

With large institutional demand generators like Duke Life Point and BB&T, look for secondary users -- people who come into town and do business with them.

Wilson seems to have quite an economic base in aerospace and pharmaceutical production for a city its size, having its history (okay, vetrinary pharmaceutical production is understandable, but the same technology is involved, which would explain the presence of companies like Novartis and Purdue).

Any intelligent hotel marketing plan is going to include restoring use of the guest registration card (you'll need the data in order to identify your existing customer base and scale it up where appropriate), and automatic discounts for extended stays (particularly in a property such as this one with its overabundance of rooms).

Franchise options:

IF WE EXECUTE A HOTEL MANAGEMENT AGREEMENT WITH AN EVENTUAL BUYER, THAT AGREEMENT WILL PROVIDE THAT WE HAVE ACCESS TO ALL BUSINESS RECORDS OF THE PROPERTY PRIOR TO CLOSING. IF THESE INDICATE THAT THE FRANCHISE NOW IN PLACE IS WORKING AND IS BENEFITING THE PROPERTY, WE WILL GENERALLY ADVISE KEEPING IT, SUBJECT TO FIVE-YEAR TERMINATION OPTIONS.

NONETHELESS, WE DO NOT RECOMMEND KEEPING THE DAYS INN FRANCHISE AT THIS LOCATION. 

As an alternative, we recommend conversion of this property to a GuestHouse Inn and Suites.

Leaving it a Days Inn might be an option, and one to consider if you're hoping to catch traffic off 95, but you're not that close to 95, Days Inn has fewer and fewer loyalists, and the brand is good for a lot of downward rate pressure: you want to keep that $75 rack rate if you can.  (We'll be renting some rooms for $61-64, and a few even lower, but we'll be renting them to people we want to have them at that price . . . if we're benefiting in some way, through volume, or a committed corporate or group customer.)

Whatever brand you have, you're going to benefit more from those red or green coupon books they place in Denny's up and down I-95, than you will from brand referrals. Unless we can rent lots of those 91 rooms on extended-stay packages, we're not going to catch that $112-122 Hampton and Holiday Inn rate with an exterior corridor property that close by, so starting out, I wouldn't splurge on making it a Red Lion: a nice GuestHouse will do. When the five-year termination option rolls around, it'll be time for some fresh renovations, and if our occupancy is high and our rate is good, we can re-visit the question of upgrading to Red Lion at that time.

GuestHouse Inn and Suites, Anchorage, Alaska

Our recommendation:

For the price at 2.3 x GRR (and I'd want to see some actual figures), and the potential involved, it's worth a look.

Food and beverage should be limited to the required continental breakfast, and a catering kitchen capable of supporting the events.

Evaluation:

Value of property based on data given:	High	$2,500,000
(Our estimate)	Low	$2,200,000
Renovation required	Modest
Recommended budget	TBD

If the financials provided on the listing page can be verified, I wouldn't press them too hard on the purchase price.

Who should buy this hotel?

The success of this property will rely upon hands-on management, either by an individual proprietor or by a management company who will hire such a person as the property's general manager. A holistic view of, and sensitivity to, the property's place in its market and surrounding community will be needed, not just a concern for the bottom line.

Who should not buy this hotel?

You'll need to have a bit of a talent for hotel marketing in order to make this hotel work for you. You're not going to have a lot of passive traffic come in off the interstate, because it's too far into town and off the interstate.

Beechmont links

• Beechmont Hotels Corporation
• What Would Mike Do?: The hotel blog

About us

Beechmont Hotels Corporation is a hotel management company based in Winston-Salem, N. C. We frequently have occasion to perform asset identification services for potential clients who are seeking to acquire hotels, and inform them as to how a particular hotel listed for sale can best serve their investment needs -- or not.

After a time, we will republish the information here as a short feasibility study (unless an agreement with the potential client for whom we originally examined the property prohibits it).

Our evaluation is based on our own subjective opinion, using data collected from freely available sources online, unless otherwise noted in the Disclosures above. Our advice as shown here is as we would advise a client. You are free to accept or reject it, and should check behind us and make your own evaluation.

Ultimately, you are responsible for your own decisions, including whether to rely upon our opinion or to confirm our assessment for yourself, and we assume nor accept any liability.

When we choose -- ourselves -- a hotel offering to evaluate here, we choose only hotels that we have something nice to say about, a positive recommendation to make; hotels that we wouldn't mind signing to manage ourselves for twenty years.

When someone submits one to us, we're totally candid and spare no one's interests or feelings. If it's a bum deal, we'll simply tell you, don't touch it with a ten foot pole, and we don't care who gets mad.

If you are contemplating purchase of a hotel and would like for us to complete an evaluation similar to this for you for the hotel that you are considering, send a PayPal for $100 at makeitrain18018@gmail.com .

(It has to be a hotel that is currently listed for sale, that you can look up on Loopnet or a broker website. I will pass the information to you privately, and wait a few weeks before I republish it here, unless we make other arrangements in advance -- at a slight extra charge -- to keep it just between us.)

Click here for a listing of other hotels for sale and available that we've reviewed.