Sales & Marketing

Chapter 10: Sales & Marketing

Roles of Sales & Marketing

Activities related directly to servicing consumer

Sales

demand & booking clients Activities designed to increase consumer awareness

Marketing

& demand by promoting & advertising hotel

Roles of Director of Sales & Marketing

Identify and cultivate clients Manage hotel ’s marketing efforts Set rates to maximize RevPar

Negotiate sales contracts on behalf of hotel Serve as a leader to hotel ’s sales & marketing team

The Front Office

Roles of Sales & Marketing: In the Hotel

Transient rooms Front office

Influence

Group sale

Influence

Sales & Marketing Tasks of Sales & Marketing staff with their group sales focus

Planning hotel ’s sales and marketing strategy Preparing and issuing sales contracts in timely manner Maintaining accurate sales records, forecast and histories Coordinating and communicating special client requests

with affected hotel departments Hosting clients during their stay

Conducting site tours

Roles of Sales & Marketing: In the Community

Two sales opportunities

When DOSM and Sales team are active members

of the business community (e.g., local Chamber of opportunities Commerce), disseminating info about hotel ’s

Promotion

products and services is allowed.

Development of personal relationships for

Networking

business-related purposes will result in increased opportunities numbers of sales calls.

- Convention and Visitors Bureau

Segmentation of the Sales & Marketing Dept.

Segmentation based on:

By product(s) product designations becoming

sold

sales specialty areas

By market type of guests (clients) who buy (market segment)

the product

By distribution “how” the hotel’s sales (products)

network

are made (distributed)

Segmentation of the Sales & Marketing Dept.

Catered event

Group guest Conferences

rooms

By product sold

Meetings Conventions

Weddings and special events

Segmentation of the Sales & Marketing Dept.

Corporate Leisure

Business travelers (who Vacations, weddings, visits pay highest room rates)

by friends and family, or non-work related reasons Heavy reliance on travel agents ’ advice

By market (market

Long-term stay

segmentation)

SMERF & Others

Guaranteed occupancy, ease of cleaning their

Social, military,

rooms, relatively educational, religious, or uncomplicated billing

fraternal organizations Rooms often sold at very low daily rates

Segmentation of the Sales & Marketing Dept.

Meeting planners Travel agents

Representative of corporations, Retailers, wholesalers or both groups and organizations

Using Global Distribution Using comparison-shopping

System

techniques Receiving commission Influence on hotel ’s

(5 – 20 %) from hotel reputation

Consortia Internet

Largest customers of many Fastest growing distribution

hotels

channel

Negotiated rate / blackout Creating homepages and dates / pick-up

linking them to other sites

Drop-ins

Potential guest who arrives at hotel without an appointment

Sales & Marketing Activities: Sales Efforts

Sales & marketing

Trace

committee systems

Harmonizes efforts across Maintain record (e.g., department lines

demographic data) of hotel ’s past, current and

Engages in long-term prospective clients

planning Help department maintain

Ensures cooperation of all its sales records, meet in sales and marketing deadlines, and plan future process

activities

Sales & Marketing Activities: Sales Efforts

The sales cycle

Invite client to a site tour

Pre-sale phase

Submit a bid Complete “Request for Proposal” and submit on time

Establish room rates Prepare group contract (attrition and cancellation policy)

Sales phase Forward Direct Bill application to Group

Establish group block Detail client ’s contracted requirements

Monitor client ’s block Attend pre-event sales meeting of hotel staff

Write thank you note to each group Review the final bill

Post sale phase

Include that group in the hotel ’s preferred client database File all written reports

Sales & Marketing Activities: Sales Efforts

Sales lead – effective DOSM should discuss the followings:

New leads uncovered since last meeting Realistic sales potential of these leads Who in the department is following up on leads How leads will be pursued What, if anything, G.M. can do to help cultivate prospect Any sales resulting from leads discussed previously

Reserve adequate time for cold calling!

Make a sales visit / presentation to potential client without having previously set an appointment to do so

Visit / call quality prospective clients for hotel ’s rooms / services

Sales & Marketing Activities: Sales Efforts

Client appreciation activities

Goals

Examples

Solidify business relationship Gala client appreciation with current clients (allow

event

hotel to express gratitude to Golfing, sporting events,

clients for current business) concerts, theater tickets

Communicate to potential

Gift giving

clients the seriousness with which the hotel views the hotel / client relationship

Sales & Marketing Activities: Sales Efforts

Marketing plan development: format of marketing plan

A review of market competition

Occupancy trends /ADR trends / performance of own hotel

Competitive analysis of your competitor

Strengths / weaknesses / price structure

Competitive analysis of your own hotel

Strengths / weaknesses / price structure

Forecast of future market conditions

Estimated market growth or contraction / performance goals and objectives for own hotel / timeline for achieving these goals and objectives

Determination of specific marketing strategies & activities

Advertising / public relations / promotions

Preparation of a marketing budget Development of measurement & evaluation tools

Sales & Marketing Activities: Sales Efforts

Advertising Types of advertising

Effective advertising

Exterior signage

Eye or ear catching

In-hotel and in-room signage and

Memorable

materials Sell the hotel ’s features Radio or television commercials

Cost effective

Direct mailing Does not become quickly outdated Internet banners

Reflect positively on hotel ’s image E-mail message

Can be easily directed to the hotel ’s Yellow pages

core client groups

Franchiser-supplied advertising vehicles (directories, co-ops, etc.)

Billboards Personal contact

Sales & Marketing Activities: Sales Efforts

“Special” packaging of products or services

Promotion

Promoted and disseminated by advertising and publicity

Information about hotel, media-distributed free of charge

Publicity

Costs the hotel nothing May be either good or bad

Activities ensuring hotel has a positive public image

Public

(good citizen of the community)

Relations

Hosting charity events, contributing cash or in-kind

(PR)

services, donation of hotel staff time for worthy cause

Internet Sales & Marketing

Online reservation system

Teaming of GDS with Internet

Impact

Travel agents: check availability, compare prices and book hotel on-line

Online booking sites are fastest growing source of reservations in hotel industry

Sales & Marketing Activities: Websites

Effective hotel websites should:

be easy to navigate. have some level of interactivity.

be linked to appropriate companion sites (demand generator). allow for online booking. balance guest privacy needs with hotel ’s desire to build a customer base. update and revise room rates easily on the website. include a virtual tour of the property. complement other marketing efforts.

be in language(s) of potential clients. have website address easy to remember.

Internet Sales & Marketing : E-mail Systems

Traditional

Direct mailing, telephone, fax

communication methods Emerging

E-mail system

communication methods Advantages of e-mail systems

Inexpensive to send to many current and potential clients. Has attachment feature function to move documents quickly. Automatically updates user database Can disseminate special rate, promotion, new hotel feature to

its client list

The Front Office

Evaluating Sales & Marketing Department: Pace Report

Pace report

Is a document summarizing confirmed (group) sales made by Sales and Marketing dept.

Can be prepared based on number of rooms sold, value (in dollars) of sales made, or both

Can also include any period of time in the future Tells hotel ’s owner and management the potential sales volume generated by Sales and Marketing department However, does not indicate what actual sales volume should be

(STAR report does!)

Evaluating Sales & Marketing Department: Sample Pace Report

Waldo Hotel Group Rooms Pace Report for January, 200x

Sold same month Total sold last Sold this month Total sold YTD

last year

YTD

Jan

550 Mar

Feb

1,250 Apr

1,350 May

1,050 June

1,700 July

2,150 Aug

1,900 Sept

1,750 Oct

1,050 Nov

600 Dec

225 Total

Evaluating Sales & Marketing Department: The Smith Travel Accommodations Report (STAR)

STAR working process and preparation

Hotel voluntarily submits financial data to Smith Smith maintains confidentiality of all individual hotel data Combine operating data submitted by selected competitors An individual hotel ’s operating performance is compared to that of its competitive set (understanding the competitive set is key

component of understanding STAR!)

Who are the STAR interest groups?

Hotel owners, management companies, property management, franchisers, appraisers, financial community

Evaluating Sales & Marketing Department: The Smith Travel Accommodations Report (STAR)

Occupancy, ADR, RevPar, market share,

Operating

historical trends, to-date performance, state

comparison criteria

or region Assess performance of Sales &

Marketing department as well as the

Goals

entire property Know the strength of hotel and Sales and

Marketing staff ’s sales results, in comparison with selected competitors.

Chapter 11

Facility Engineering & Maintenance

Role of E&M Department

Goals of E&M department

Protecting and enhancing financial value of building and grounds for hotel ’s owners

Supporting efforts of all other hotel departments through timely attention to their E&M needs

Controlling maintenance and repair costs Controlling energy usage Increasing pride & morale of hotel staff Ensuring safety of those working and visiting the hotel

Role of E&M Department: Engineering

Engineering: Designing and operating the building to ensure

safe and comfortable atmosphere

Goals of E&M department

Underpowered (or overpowered) equipment Increased building deterioration Excessive energy usage Higher-than-necessary operating costs

Role of E&M Department: Maintenance

Maintenance: activities required to keep a building (physical property) & its contents in good repair.

Effective hotel maintenance must be:

Planned

Implemented

Recorded

Role of E&M Department: Design & Renovation

Building ’s

Finishes and original design,

Quality of

equipment specified size and facilities

construction used

in building

for installation

Affect

Property Operation & Maintenance (POM) related costs

Role of E&M Department: Design & Renovation (continued ….)

Building age Building characteristics and requirements

1-3 years

Low maintenance costs incurred

3-6 years

Maintenance costs increase

6-8 years Refurbishment required; average maintenance costs incurred 8-15 years

Minor renovation and refurbishment required

15-22 years Major renovation as well as refurbishment required 22+ years

Restoration required; high-maintenance costs incurred

Renovation and refurbishment normally one via establishment of an FF&E reserve Facility Engineering & Maintenance

Role of E&M Department: Design & Renovation (continued ….)

Restoration: returning a hotel to its original (or better than original) condition

Facts:

Refurbishment and minor renovation is ongoing process in most hotels

Major renovation should occur every six to ten years Restoration every 25 to 50 years, typically If restoration is not undertaken when needed, the hotel ’s

revenue-producing potential will likely decline

Staffing the Department

Chief engineer

Head of E&M In smaller hotels, hands-on role in the maintenance effort In larger hotels, more administrative role

Maintenance Assistants

Individuals with varying degrees of skills in: engineering / mechanics / plumbing / electricity / carpentry

/ water treatment / landscaping / grounds maintenance

Managing Maintenance: Routine Maintenance

Day-to-day upkeep of both exterior and interior of buildings

Lawn care, landscaping, leaf and snow removal, window cleaning, and painting

Exterior

Maintaining hotel ’s exterior impacts curb appeal, operating costs, & ultimately the building ’s value

Indoor plants, interior window washing, floor

Interior

and carpet cleaning Guestroom and public space related items

Managing Maintenance:

Routine Maintenance (continued ….)

Two ways for implementation

Replacement plan that delays until the original part

“Replace as

fails or is near failure

needed ”

e.g., maintenance of refrigeration compressors

Replacement is based on a predetermined

e.g., maintenance of light bulbs in high-rise

replacement

exterior highway signs

Managing Maintenance: Preventative Maintenance

Effective preventative maintenance can reduce:

Long-term repair costs by prolonging equipment life Replacement parts costs because purchases of these can be

planned Labor costs by allowing PM to be performed in otherwise slow

periods Dollar amount of refunds and charge-backs due to guest

dissatisfaction Costs of emergency repairs by minimizing their occurrence

PM is not a repair program!

Managing Maintenance: Preventative Maintenance (continued ….)

Sample PM task list for laundry area dryer

Clean lint trap

Daily

Wipe down inside chamber with mild detergent Clean and wipe dry the outside dryer shell

Vacuum the inside of dryer (upper and lower chambers) Tighten, if needed, the bolts holding dryer to floor Check all electrical connections

Monthly

Check fan belt for wear, replace if needed Lubricate moving parts

Check pulley alignment

Daily

Adjust rotating basket if needed Lubricate motor bearings Lubricate drum bearings if needed

Managing Maintenance: Preventative Maintenance (continued ….)

Public space

Windows, HVAC units, furniture, lights, elevators, carpets Carpet care is one of the most challenging PM areas

Guest room

Most important and most extensive areas for PM Critical to sales effort, to retain guests, and to maintain the

asset ’s monetary value

Managing Maintenance: Preventative Maintenance (continued ….)

Food Service

Back-of-house equipment - ovens, ranges, griddles, fryers, other production equipment Dining space used by guests - chairs and booths, self-serve salad or buffet areas, lighting fixtures,

guest check processing equipment Meeting and conference rooms and equipment

Landry

Washers, dryers, folding equipment, water supply lines, drains, lighting fixtures, temperature control units

Chemical dispenser maintenance should be an important part of the laundry PM program.

Other equipment

Pools and spas, front desk equipment, electronic locks, exterior door locks, motor vehicles, and in-hotel transportation equipment

Managing Maintenance: Emergency Maintenance

Emergency maintenance

is unexpected threaten to negatively impact hotel revenue require immediate attention to minimize damage require labor and parts that may need to be

purchased at a premium

The stronger the routine and PM programs, the fewer dollars spent on emergency repairs!

Managing Utilities

80% of total utility costs for hotel are actually fixed Energy costs present 3 - 10% of total operational costs,

depending on hotel ’s location E&M department should be concerned with conserving

energy and controlling utility costs

Energy management: specific policies and engineering, maintenance, and facility design activities intended to control and reduce energy usage.

Managing Utilities: Electricity

Electricity is most common and usually most expensive form of energy used in hotels.

Lighting

Light levels measured in foot-candle -The more foot-candles, the greater the illumination

In candescent lights -Inefficient, short-life, but easy to replace

Electric discharge lights -Longer lives, higher efficiency and low operating costs

Lighting maintenance (lamp repair, bulb change, and fixture cleansing) must be an integral part in PM program.

Managing Utilities: Electricity (continued ….)

Heating, ventilation, & air conditioning (HVAC)

Heating components -Electricity is not cost-effective in cold climates -Use natural gas, LPG, steam, or fuel oil

Cooling components

• Effectiveness of cooling system dependent on • Original air temperature & humidity of room to be

cooled • Temperature & humidity of chilled air entering room from

HVAC • Quantity of chilled air entering room

• Operational efficiency of air-conditioning equipment

Managing Utilities:Natural Gas

Usages of natural gas

Heating water for guest rooms Powering laundry area clothes dryers Powering plants to provide heat to guest rooms and public

space Cooking (rapid heat production and great degree of

temperature control) Managed properly, natural gas is an extremely safe source of

energy!

Managing Utilities: Water / Waste

Conserving water:

Reduces the number of gallon of water purchased Reduces the amount the hotel will pay for sewage In the case of hot water, reduces water-heating costs

because less hot water must be produced

Waste

Hotels encourage manufacturers to practice source reduction & to implement creative programs to reduce solid waste

Reduce waste disposal costs by: recycling minimizing waste generation & wise purchasing

Chapter 12

Franchise Agreements and

Management Contracts

The Hotel Franchise Relationship

What is franchising?

A business strategy allowing one party (the brand) to use the logo, trademarks and operating systems of another business entity in exchange for a fee

A network of interdependent business relationships allowing a number of people 1) to share brand identification, 2) to develop a successful method of doing business, and 3) to establish a strong marketing and distribution system.

Franchise benefits

For the franchisee, franchising helps reduce risk -Proven operational methods are used Franchisees and their financial capital expand the brand

faster than franchiser could do solo

Hotel Franchising: Origin & Structure

History of hotel franchising is relatively short

- First significant hotel franchising arrangement began in 1950s with Kemmons Wilson and his Holiday Inn chain

Today hotel owners increasingly affiliate their hotels with other hotels under a common brand name.

Company administering and directing the brand itself is not an owner of hotels, but rather a franchise company.

Majority of franchise companies do not actually own the hotels operating under their brand names. -Those companies have right to sell brand name & determine brand

standards

Conflict can arise between hotel owners and brand managers

- G.M. should balance legitimate interests of hotel and brand

Hotel Franchising:

Origin & Structure (continued ….)

Figure 12.1: Ten Largest Brands

1. Best Western International

304,664 2. Holiday Inn

295,252 3. Days Inn Worldwide

164,023 4. Marriott Hotels, Resorts & Suites

160,540 5. Comfort Inns and Comfort Suites

159,619 6. Sheraton Hotels & Resorts

133,200 7. Super 8 Motels

127,533 8. Ramada Franchise Systems

118,114 9. Hampton Inn / Hampton Inn and Suites

120,589 10.Holiday Inn Express

Hotel Franchising:

Governmental Regulations Related to Franchises

Federal Trade Commission (1979): Franchise Rule requires that franchisers:

Supply potential franchisees with disclosure document at either the first face-to-face meeting or ten business days before any money is paid by franchisee to franchiser

Provide evidence, in writing, of any earning claims or profit forecasts made by franchiser

Disclose number and % of franchisees achieving earnings rates advertised in any promotional ads that include earnings claims

Provide potential franchisees with copies of basic franchise agreement used by franchiser

Refund promptly any deposit monies legally due to potential franchisees who elected not to sign a franchise agreement with franchiser

Do not make claims orally or in writing that conflict with written disclosure documents provided to franchisee

Hotel Franchising:

Governmental Regulations Related to Franchises

Franchise Offering Circular (FOC) include

Name of franchiser and type of franchise it offers for sale Business experience of franchise company ’s officers Fees & royalties that must be paid Initial investment requirements Rights & obligations of franchiser & franchisee Territorial protection offered by franchiser Required operating policies Renewal, transfer, and termination procedures Earnings claims

A sample franchise agreement Specific info required by each state in which FOC is to be filed Name and address of legal representative of franchiser

The Franchise Agreement

A hotel franchise relationship exists with a franchise agreement.

Franchise agreement: legal contract between hotel owners (franchisee) and brand managers (franchiser), which describes duties & responsibilities of each in the franchise relationship

The Franchise Agreement: Major Elements

Franchise agreement includes:

Names of parties signing agreement

-Name of legal entity representing the brand as well as corporation, partnership, or sole proprietor owning hotel

Detailed definitions

- Any definitions subject to misinterpretation by parties to the agreement are defined.

License grant

- Description of how the owner is allowed to use the brand ’s logo,

signage, and name in operating the hotel.

Term (length of agreement)

- The most common franchise agreements are written for 20 years. - Also include windows at fifth, tenth, & fifteenth years with early outs.

The Franchise Agreement: Major Elements

Franchise agreement includes: (continued ….)

Fees

- Affiliation fees / royalty fees / marketing fees / reservation fees

Reports - Room revenue generated, occupancy levels, & occupancy taxes & ADR Responsibilities of franchiser - Inspection schedules, marketing efforts, & brand standards enforcement

Responsibilities of the franchisee

- Signage requirements, operational standards & payment schedules

Assignment of agreement

- Ownership transfer & its affect upon the agreement

The Franchise Agreement: Major Elements

Franchise agreement includes: (continued ….)

Termination or default

- Events that permit a termination, or define a default, by either party

Insurance requirements

- Owner should provide types & amounts of required insurance - Proof of general indemnification policies, automobile insurance, &

mandatory workers ’ compensation insurance

Requirements for alteration

- Rights of the franchiser to change the agreement

Arbitration and legal fees

- Responsibilities of each party related to legal disputes

Signature pages

- Authorized representative of the brand & owners of the hotel will

sign the franchise agreement

The Franchise Agreement: Advantages to the Franchisee / Franchiser

Allowing hotel owners to acquire a brand name with regional or national recognition

Connecting the hotel to the GDS

Advantages Increasing hotel ’s sales, thus its profitability to franchisee

Affecting ability of hotel ’s owner to secure financing Assistance with on-site training, advice on

purchasing furnishings & fixtures, reduced operating costs, & free interior design assistance

Increasing fee payments to the brand

Advantages

Growing the business (brand spread)

to franchiser Helping pay for fixed overhead of operating that

brand

The Franchise Agreement: Selecting a franchiser

Basic considerations for a selecting a franchise brand:

Quality and experience of the brand managers

- Hotel owners, not brand managers, bear financial risk of poor brand management

Perceived quality / service level of the brand

-Travelers associate some brands with higher quality, service levels, and costs, than other brands.

-Franchisers offer brands at a range of quality and guest services

The amount of fees paid to franchiser -F ees paid to a franchiser are a negotiable part of franchise agreement

Direction of the brand

The Franchise Agreement: Selecting a franchiser (continued ….)

Clues to future success of the brand

Number of hotels currently operating under the brand name Percent of hotels, on an annual basis, that elected to leave the brand

in the past five years Number of new properties currently being built under the brand ’s name The number of existing hotels converting to the brand (if

conversions are allowed) ADR trend for the last five years in comparison to ADR trend for the

industry segment in which the brand competes Occupancy rate trend for the last five years in comparison to the

occupancy rate trend for the industry segment in which the brand competes

Percent of total hotel room revenue contributed by the brand ’s reservation system and percent of hotels within the brand that achieve that average rate of contribution

Selecting a Franchiser: Franchiser Questionnaire

Figure 12.2: Franchiser Survey

Contents in franchiser questionnaire

1. Application fees

2. Area of protection

3. Recurring fees

4. Standards

5. Mandatory service programs

6. Operating performance

7. FOC

8. Fair franchising

9. Financing assistance

10. Termination

Selecting a Franchiser:

The Product Improvement Plan (PIP)

A brand conversion = reflagging

Process of changing a hotel ’s flag from one franchiser to another

Conversion will always require some facility modification. When a potential franchiser inspects a hotel property whose

owners are interested in a conversion, a PIP (product improvement plan) will be prepared. Estimating expenses to implement PIP is the hotel owners ’ job.

PIP: document detailing property upgrades and replacements required if a hotel is to be accepted as one of a specific brand ’s franchised properties.

Selecting a Franchiser:

Negotiating the Franchise Agreement

Franchise agreement is negotiable. Franchise agreement tends to be written in franchiser's favor. Owners should evaluate all components of proposed franchise

agreements. Hotel owners have demanded that impact studies, prepared by

an independent party, be undertaken and paid for, when appropriate, by franchiser.

G.M.s must become adept at operating hotels in best interests of their owners, as well as in compliance with their owners ’ franchise agreement.

Hotel Management Company Relationship: Management Companies

Management contract: agreement between hotel owners and hotel management company under which, for a fee, the management company operates the hotel.

Management companies will:

Secure, and if it has closed, reopen the hotel Implement sales and marketing plans to maximize hotel ’s short- & long-term profitability Generate reliable financial statements Establish suitable staffing to maximize customer and

employee satisfaction Show hotel to prospective buyers Report regularly to owners about hotel ’s condition

Hotel Management Company Relationship:

Management Companies (continued ….)

Figure 12.3: Ten largest management companies

Get annual revenues (in

Brand

Properties

millions of $)

1. Interstate Hotels and Resorts

2,800.0 (with 2002 MeriStar merger)

2. Destination Hotels & Resorts 29 545.0 3. Tishman Hotel Corp.

17 521.8 4. Prime Hospitality Corp.

485.0 5. Lodgian

448.0 6. John Q. Hammonds

56 436.7 7. Kimpton Hotels & Restaurant Group

34 400.0 8. Outrigger Enterprise

39 400.0 9. Ocean Hospitalities

93 339.0 10.Sunstone Hotel Investors

Management Companies: Origin & Purpose

Management companies will :

Reflag hotel from lower quality brand to higher one Reflag hotel from higher quality brand to lower one Manage / directing major renovation of hotel Operate hotel in a severely depressed market Handle bankruptcy / repossession of hotel Manage hotel that is slated for permanent closing Manage hotel when G.M. unexpectedly resigns Manage hotel extendedly time for owners who elect not to

become directly involved in day-to-day operations

Management Companies:

Hotel Management Company Structures

How to examine the management company

Are they first tier or second tier By number of hotels they operate

Participation in actual risk and ownership of the hotels they manage - The management company is neither a partner in nor owner of hotels

it manages -The management company is a partner (with others) in the ownership of hotels it manages -The management company only manages hotels it owns -The management company owns, by itself, some of hotels it manages,

and owns a part, or none, of others it manages

Management Operating Agreement

Major elements of management agreement include: Length of the agreement

Procedures for early termination by either party Procedures for extending contract Contract terms in the event of hotel ’s sale Base fee to be charged Incentives fees earned or penalties assessed related to operating

performance Management company investment required or ownership

attained Exclusivity (Is the management contract company allowed to

operate competing hotels?) Reporting relationships and requirements Insurance requirements of the management company Status of employees

Management Operating Agreement: Advantages / Disadvantages to Hotel Owners

Management quality can be improved Targeted expertise can be obtained

Advantages Documented managerial effectiveness is available Payment for services can be tied to performance Partnership opportunities are enhanced

The owner cannot control selection of the on-site

G.M. & other high-level managers Talented managers leave frequently The interests of hotel owners and the management

Disadvantages companies they employee sometimes conflict The costs of management company errors are borne

by the owner Transfer of ownership may be complicated

- High cost of buyout limits the number of potential buyers

Issues Affecting G.M.s: Managing the Franchise Relationship

Franchise agreement will affect G.M. ’s relationship with:

Hotel owner Hotel ’s franchise service director (FSD)

- Responsible for day-to-day relationship between franchiser & franchisee - Assisting hotel ’s sales effort - Monitoring and advising about hotel ’s use of reservation system - Advising franchise on availability and use of franchiser resources

Brand (managers) Staff

- Brand standards will affect every department in hotel.

Guests

Issues Affecting G.M.s:

Managing for a Management Company

G.M.s ’ challenges

Career management challenges

- Long-term career advancement with management company conflicts with desires of the hotel owners

Dual loyalty issues (owners vs. management company) - Hotel owner ’s best course of action works against the best interests of own

company.

Strained EOC relationships Affected and concerned employees

- A new management company implements its benefit, pay, seniority,

and related employment policies in place of those of a previous

management company

Conflicts with brand managers