News for the Hospitality Executive |
By Stanley Turkel, CMHS, ISHC
March 16, 2011 1. The Triumph of
Public Relations In
February 2011, I reported that 50 new hotel brands had been
announced in the past six months, adding to the 100+ already in
existence. I wondered if the announcement
of these new
brands was the triumph of public relations over common sense.
Meanwhile, Otus
Analytics, a
division of the investment bank Otus & Co. has recently issued
their 2011
edition of Hotel Chains in Europe 2011. The full report runs to almost
500
pages covering nearly 900 brands and 15,300 hotels in Europe, most
quite small.
Top
10 brands in Europe at end of 2010
Brand
Hotels
Rooms
Ibis
709
75460
Mercure
474
54032
Holiday
Inn
277
45526
Novotel
265
43420
Premier
Inn
586
42809
NH
Hotels
275
41213
Hilton
152
39594
Radisson
Blu
172
38740
Etap
421
35691 2.
Helpful Hotels Did you know that
a handful of
hotels are designing suites for families with autistic children? While we might face a long wait for this to
become the norm rather than a rare and wonderful opportunity, look for
hotels
that offer amenities designed to make it less stressful to travel with
special
needs children. The Wyndham Garden Hotel
in Austin, Texas has “thoughtful rooms” that include a door alarm,
childproofed
drawers, cushioned table corners, shorter strings on the window blinds
and
covered outlets. They also didn’t forget
to include toys, books, restaurant items for special diets (soy
protein, GFCF)
and…staff trained to manage children with autism. The
Clinton Hotel in Tenafly, New Jersey also
has a special suite with safety features such as unbreakable glassware,
rounded
corners on furniture, a door alarm, a TV secured to the wall and
decorations
that are glued down. (Source: June 15, 2010 USA Today article,
“Wyndham
Hotel in Austin Offers Autism-Aware Rooms”). Here, in full, is
an important
article from that excellent website: www.bluemaumau.org January 3, 2011: Marion, Ark.-
Kemmons
Wilson must be spinning in his grave. The
founder of the Holiday Inn chain was friends with J.O.
“Buddy”
House. Back in the
1950’s the
two worked on several construction projects together. Times change. In a blistering
decision issued February 23, a three-judge panel of the Arkansas Court
of
Appeal reversed a trial court’s reduction of punitive damages and held: Holiday Inn, a
multinational corporation, failed to disclose valuable information to a
businessman who had worked with and trusted the company for over half a
century. In doing so, Holiday Inn caused
the businessman, over a period of more than a year, to expend
significant sums
of money on a hotel that he believed would be relicensed but whose
relincensure
certain Holiday Inn personnel were determined to thwart.
Further, the nondisclosure of Holiday Inn’s
business plan, which Holiday Inn knew that [the franchisee] was
entitled to
have, combined with providing the plan to [the franchisee’s]
competitor,
indicates, at the very least, outright disregard of [the franchisee’s]
interest
as a franchisee, and, at most, a deliberate attempt by certain Holiday
Inn
employees to reap their own economic benefits by keeping [the
franchisee] in
the dark. On these facts,
notwithstanding the trial court’s finding that Holiday Inn’s
nondisclosure
appeared to be “more of an accident” we conclude that Holiday Inn’s
degree of
reprehensibility supports a significant punitive damages award. Franchisee
Buddy House
had been asked by Holiday Inn to consider taking over a decrepit
property in
Wichita Falls, Texas to convert it into a Holiday Inn hotel. The renovation cost was substantial. House told Holiday Inn that he would need a
15 or 20-year license to recoup the investment. Holiday
Inn was unwilling to grant anything except a 10
year
license. But VP of franchising Steve
Romanelle told House that if the hotel was run well, there was no
reason to
believe that the franchisor would deny any extension. The renovation
was a
great success. House received offers to buy the hotel for $15 million.
He
turned them down and applied for early relicensure with Holiday Inn. After some analysis and suggestions by the
franchisor, House spent $3M on further renovations. Holiday Inn’s
director
of franchise development Greg Aden would not get a commission if
House’s
request was granted, but if Aden persuaded Holiday Inn to deny House
and
instead approve the conversion of a Radisson property, then Greg Aden
would get
a $13,000 commission. Aden wrote a
report that recommended the Radisson conversion. After all, he
had
plans for his commission. After stringing
along
Buddy House, the franchisor ultimately went with Aden’s plan and so
Buddy House
was forced to reflag before ultimately selling the hotel at a loss for
$5
million. After House
sued
Holiday Inn, a jury found that Holiday Inn had defrauded Buddy. On appeal, the three judge court discussed
just how badly Holiday Inn had cheated him and the failure of Holiday
Inn to
disclose Aden’s plan. The judge
reasoned: Buddy House had
a long-term
relationship with Holiday Inn characterized by honesty, trust, and the
free
flow of pertinent information. He
testified that [Holiday Inn’s] assurances at the onset of licensure in
1995 led
him to believe that he would be relicensed after ten years if the hotel
was
operated appropriately. Yet, despite
Holiday Inn’s having provided such an assurance to House, it failed to
appraise
House of an internal business plan, developed only four years into his
licensing period, that advocated licensure of another facility instead
of
renewal of his license. A duty of
disclosure may exist where information is peculiarly within the
knowledge of
one party and is of such a nature that the other party is justified in
assuming
its nonexistence. The trial court
jury
found that Holiday Inn had committed fraud, to which the appellate
court added,
“the jury’s verdict on fraud was supported by substantial evidence.” Stan Turkel,
one of
the hotel industry’s top consultants and author of Great
American Hoteliers, which reverently devotes a full chapter
to Holiday Inn’s founder Kemmons Wilson, observes, “This sequence of
events
does not surprise me. Holiday Inn’s
director of franchise development behaved like most franchisors- in his
own
self interest. Sentiment and historic
memory count for naught when cold hard cash is involved.
If the courts would acknowledge the existence
of a fiduciary duty owed by franchisors to franchisees, such
‘reprehensible’
behavior could not occur.” 5.
Quote of the Month “Excellence is
not a singular act,
but a habit. You are what you repeatedly
do” Stanley Turkel,
CMHS, ISHC recently
published his new book, Great American
Hoteliers: Pioneers of the Hotel Industry. It
contains 359 pages, 25 illustrations and 16 chapters.
It also has a foreword (by Stephen Rushmore),
preface, introduction, bibliography and index. Ed Watkins,
Editor of Lodging
Hospitality wrote, “The lodging industry typically doesn’t spend a
lot of
time considering its past. Some may find
that odd since compared to many other businesses (computers,
automobiles
aircraft), the hotel business is one of oldest if not the oldest, in
the
history of man. That changed recently
with the publication of.... Great
American Hoteliers: Pioneers of the Hotel Industry, a fascinating
and
entertaining series of profiles of 16 men who author Stanley Turkel
argues were
the builders of the modern American hotel industry.
That’s significant because due to the efforts
of these titans (and others, of course), the American style of
hotelkeeping
long surpassed the European tradition that reigned for centuries. Some of the
profiles contain cover
names (Hilton, Marriott, Johnson, Wilson) familiar to even casual
students of
hotel or U.S. history. Sadly, just one
of the pioneers covered the book (John Q. Hammons) is still alive and
active in
the industry. To me, the more
interesting tales cover hoteliers about whom I knew little before
reading his
book but now have a greater appreciation for their contributions. The most
compelling story focuses
on Kanjibhai Manchhubhai Patel who Turkel identifies as the first
Indian-American hotelier. K.M. Patel
arrived in San Francisco in 1923 and soon began operating a small
residential
hotel in the city. The rest, as they say,
is history; Today, Indian-American hoteliers dominate the industry with
their
trade association, AAHOA, recently surpassing 10,000 members. As Turkel says, this community represents a
true American success story.
|
Contact:
Stanley Turkel, MHS, ISHC |