Tuesday, March 20, 2007

Helping Owners Strike a Fair Deal: 5 Milestones Marking The Road To Success For Hotel Management Agreements

by Jim Butler and Robert Braun

In order to consummate any substantial business transaction, there are inevitably some “challenges” to overcome. Hotel management agreements are no exception: in part because of their complexity, and in part because hotel management agreements typically transfer effective control over valuable assets for several decades, and their terms can easily enhance — or diminish — the value of hotel by a staggering amount. We have often seen hotel values depressed by 50% or more from what the hotel would have been worth without the encumbrance of an onerous, long-term management agreement. In representing owners negotiating hundreds (or possibly thousands) of hotel management agreements over the past 15 years, the Global Hospitality Group® at Jeffer, Mangels, Butler & Marmaro LLP has compiled a comprehensive list of many milestones that mark the road to successful negotiation of a hotel management agreements. As in all journeys with high stakes, advance preparation including mapping out the most advantageous route and hiring guides that know the terrain, is critical to success. In this instance, before you ever get to the negotiating table.

This is especially true for those new to the hospitality industry. Recently, many sophisticated developers and investors have identified the rich potential that hotels offer — particularly in hotel mixed-use projects — and they are bringing new vitality to the marketplace. While not new to real estate development, these players are new to the norms, customs, practices and business considerations of hotels. The intertwining of single purpose real estate with an operating business presents unique issues and opportunities — opportunities that we have seen the uninitiated leave on the table, simply because they were none the wiser. Developers and owners new to the hotel arena can avoid an expensive and painful learning curve by retaining experienced advisors that know the value of each component in the management agreement from both sides.

Here are our top five pre-negotiation milestones for helping owners achieve success and strike a fair deal on a hotel management agreement:

1. Get the “right brand” for your project

Every project is unique, and all appropriate brands, identities and market positionings should be considered — along with the appropriate operators who will enhance project value. The right operator to optimize value may not the branded management company that puts it name on your hotel. And it is important to note that in the past few years, we have seen the emergence of new “lifestyle brands” that can add great value to a project — “brands” that are not owned by traditional hotel companies and which many pundits fail to recognize for the value they can bring. Some of the new lifestyle brands are sponsored by the traditional hotel companies such as Aloft by Starwood, and Indigo by InterContinental, but there are some very exciting new entrants such as the Valencia Group with their Santana Row and San Antonio Riverwalk projects or Miraval with their Miraval Living and Miraval Resorts. And they provide some interesting alternatives to other great lifestyle or boutique hotels such as the Kimpton Group, Joie de Vivre or Morgans.

Selecting the best brand and operator requires a careful business and legal analysis of the owner’s needs, goals and resources — particularly for a hotel mixed-use project where the hotel is often the spark plug for the synergies of mixing uses. That’s why we like to bring our knowledge and resources to the owner’s team before the brand and operator candidates are even identified. We can help identify the right players, scope out areas of strength and weakness, and help our owner or developer client articulate and prioritize goals to be accomplished in a Request For Proposal (RFP) or a carefully-orchestrated interview process. This kind of preparation can enable an owner to better gauge the strengths and weaknesses of each potential brand, find the optimal terms that the brands and operators are willing to extend, and facilitate an informed decision and a smooth negotiation with reasonable expectations on all sides.

2. Look for common perspectives

Sometimes, we are brought in late on the hotel management agreement process — after the initial candidate consideration and selection and perhaps into the Letter of Intent or LOI stage. When this happens, we too often find that “the table has not been properly set.” As deal terms and drafts begin to exchange, it can appear that owners and operators are contemplating two different projects … because they are! The owner comes to the negotiating table with one set of financial projections and program elements, while the operator has its own. Set side by side, they would seem to describe different projects — different concepts for the hotel’s target market segment and customers, its sources of revenues, costs of construction and maintenance, integration of the hotel with other project elements, and even the project’s financial viability. If the owner believes the project is highly profitable and the operator does not, the natural (and reasonable) result will be for the operator to try to protect itself by demanding higher fees and incentives, which will create a chasm between the owner and the operator. If the operator believes that the project requires substantial amenities and the owner does not — or if they cannot agree on how hotel mixed-use project elements will be integrated — it is more likely that the owner and the operator will be unable to agree on key issues, such as the total cost of the project and owner's required investment. (Remember that selecting the "right” operator, based on objective data, makes a “meeting of the minds” more probable.) The operator and owner must agree as to what the project will look like and what will drive its success.

3. Address the “challenges” early

During negotiations, it may often make sense to defer certain tough issues for later resolution so that all the areas where agreement can be reached are understood, and the importance of the areas that require compromise are clear. However, there comes a time when the parties have to discuss “the elephant in the room that they have been ignoring.” Talking about the elephant sooner, and more directly, may allow both sides to create global resolutions. And of course there may be situations where owners and operators will not fully resolve certain issues, either intentionally or unintentionally. While it's true that parties cannot be expected to resolve each and every issue that might come up during the term of a management agreement — that would require the ability to predict the future — failing to address known issues can be an “expensive” way to reach “agreement” because it leaves potentially messy disputes for the future.

4. Know what’s “market” and how it fits your goals

While both owners and operators usually seek to negotiate agreements with "market" terms, every hotel property is unique. And, there is really is no simple metric or checklist of market terms. There are ranges of what are considered “market” terms for particular types of properties or projects and specific brands or operators. For example, the terms for branding or operating a 2,000-room convention hotel are quite different than a 200-room full service urban hotel or a 120-room extended stay. And “market” is also defined by the competition for a particular set of brands or operators, which will vary depending on how desirable a specific hotel project is, and how important that location or property may be for the strategic and business needs of a brand or operator (e.g. to fill in a critical “hole” in its distribution system, maintain a presence in a key market, etc.)

These factors make it very valuable for an owner to have an experienced team who may know better what market is than the brand or operator — and will at least know what the operator has done in 6 recent deals and what their 3 closest competitors are likely to offer on a sticky economic or business point. There are also a lot of trade offs that make up a “market” package. In other words, it is a little like going to a smorgasbord buffet with $100 worth of tickets, and you have to know the price of each item if you are going to get the meal you want. If you spend all your money on the caviar and dessert, you won't have any left for the main dish or the beverage. All items on the buffet are not of equal cost or value.

So, while there are some commonly accepted ranges for business and legal parameters for hotel management agreements, an owner needs to recognize that they can be broad and owners may need to be flexible to accomplish their goals in a particular situation.

5. Bring the right team to the table

Negotiations don't occur between companies; they transpire between the people representing those companies — and it is essential to have a team with the comprehensive set of experience and skills to negotiate and document a successful hotel management agreement. Hotel management companies usually have a strong bench of experienced lawyers, dealmakers, financial experts and others who understand fully their goals and needs, because they are actually in the business of sourcing and negotiating management contracts and franchise agreements. Owners typically have not experienced the frequency or volume of hotel management agreement negotiations that operators have, and should retain experienced lawyers and advisors in order to level the playing field. But more than just arming oneself in negotiations, retaining experienced professionals will make the negotiations more productive for both sides.

Owners will want to draw on professionals who have had direct experience with the operator, as well as broad-based experience in the industry. A hotel lawyer and consultant who knows what a particular operator has done in other deals as well as what that operator's competition has done (and is likely to do again) is able to bring great value to the owner’s side of the discussions.

Finally, it is essential that owners understand the critical importance of their own active participation in the hotel management agreement negotiations. While it may be expedient to leave the discussions to the professionals (and there are certainly portions of the discussions which can and should be handled by attorneys or consultants), there are always a lot of issues that will ultimately be won or lost by the passion and conviction of the owner. “I am just not going to do that,” goes a long way toward convincing the operator that an specific issue is too important to be compromised.

That is one of the reasons that we spend so much time with owners — particularly first time hotel owners and developers — to help them understand the real practical significance of management agreement provisions. It isn’t rocket science, but it is understanding the business implications of hotel management agreement terms on the owner’s goals and plans, and seeing what should be accomplishable that makes a difference.

Preparation to successfully negotiate a hotel management agreement starts early. It starts before you ever identify potential candidates and way before you ever start talking terms. The roadmap you establish — along with the practical experience of the professional team members you line up to structure and guide the process — can make a substantial difference in the outcome and long-term success of your entire project.


Golden Tulip Hospitality Celebrates the Official Opening of its First Newly-built Hotel in Hamburg

The Official Opening reception took place on Thursday March 1st at the Golden Tulip Hamburg Aviation. With over 300 business partners, colleagues and special guests, Mr. Hans Kennedie, President & C.E.O. of Golden Tulip welcomed all the attendees and thanked all the business partners and staff involved in the hotel development.

Further speeches were delivered by: Mr. Bonz, Staatsrat for Economic Affairs of the City of Hamburg, Mr. Frank H. Albrecht, Chairman of Supervisory Board of AVW and Mr. Ulrich Krehan, Vice President Site Management Hamburg of Airbus Industries, all addressing the importance of the arrival of this hotel for the trade and business of Hamburg.

A symbolic key handover ceremony took place in which Mr. Albrecht handed over the keys of the hotel to Mr. Kees van Maaswaal, C.O.O. of Golden Tulip and Mr. Jan Patrick Kreuger, Hotel Manager of Golden Tulip Hamburg Aviation.
Through this celebration Golden Tulip celebrated the opening of three unique brands that together form the Golden Tulip Hotel formula:

· Golden Tulip Hamburg Aviation
· BRANCHE Restaurant, Bar & Lounge
· Let's Meet Again

Hans Kennedie, President & C.E.O. of Golden Tulip Hospitality, states: “it is with great excitement that we celebrated the official opening of this newly built hotel. Golden Tulip Hamburg Aviation is symbolic for our company, to launch and operate all new concepts we developed over the past 24 months. The hotel is equipped with 170 ultra-modern facilities, a state of the art conference centre, called: “Let’s meet again” and a full BRANCHE Restaurant, Bar & Lounge."

Golden Tulip currently franchises and operates over 17 hotels with over 2000 rooms in Germany in prime locations among others Berlin, Düsseldorf, Munich and Hamburg.

About Golden Tulip Hamburg Aviation
The Golden Tulip Hamburg Aviation is located directly at the river Elbe in Hamburgs district Finkenwerder. The hotel is easily to reach via the motorway A7 or via public transport. The hotel has a most famous neighbor: Airbus Work Hamburg with its brand new Airbus A380 and highly interesting plant-tours.

The hotel is best equipped and offers 170 comfortable guestrooms. The hotel rooms are furnished in modern style and offer at least 24 square meters in area and offer an unforgettable view of the river Elbe. The hotel also provides 5 apartments with kitchenette as well as rooms with connecting doors for our long-staying guests. Five conference rooms are available - most of them are connectable in different sizes. All conference rooms have daylight and are equipped with state-of-the-art conference technology. Recreational area is at the guest disposal on the highest floor with the latest fitness-equipment, sauna and solarium. The surrounding area "Altes Land" Europs biggest fruit-growing area needs to be experienced by bike. Cities like Stade, Buxtehude of Jork are worth to visit and doubtless an unforgettable experience.

About the Golden Tulip Hospitality Group
Golden Tulip Hospitality Group, with its head offices in Amersfoort, The Netherlands and Lausanne, Switzerland, is a worldwide hospitality company with more than 630 hotels, 58.000 rooms in more than 49 countries. The Golden Tulip Hospitality Group franchises and manages hotels in Europe, the Middle East & Africa, the Asian Pacific Region and the Americas. In 2006, Hotels Magazine has ranked this company the 18th largest hotel chain.

As a multi-brand hospitality firm, the Golden Tulip Hospitality Group offers services in the two, three, four and five star categories. On the two-star side Golden Tulip has an alliance with the French B&B hotel chain. The three-star concept is the Tulip Inn for the limited-service first-class category, the four-star category falls under the Golden Tulip brand for the Superior First-Class business and Resort hotels and the recently introduced five-star concept Royal Tulip. In addition Golden Tulip offers its services through its commercial alliance with TOP International, a German based hotel consortium.


Price of gasoline related to future of the industry

What's the price of gasoline have to do with the future of the lodging industry? Some pretty interesting research tells us more than you might think!

In a recent posting on HotelLawBlog, I talked about the intimate relationship between the U.S. economy and the lodging industry. You may recall that cited studies of the past 30 years show that for more than 24 years there was a remarkable statistical correlation of 1.2 between U.S. Real GDP and the demand for hotel room nights at hotel in the United States.

That means that if the U.S. economy grew by 1%, then lodging demand (i.e. demand for hotel room nights) grew by 1.2%. And although the correlation is a little lower now (around .7), there is still a very strong correlation between the Real GDP and the lodging industry.. (For more details see, As goes the economy, so goes the hospitality industry — the ineluctable elasticity of demand!)

I was quite surprised by the number of HotelLawBlog.com readers who sent me emails commenting on that recent blog. It is always nice to know that so many of you actually read these postings. But several of you wondered out loud — or commented — that you thought the cost of petroleum or perhaps some other items might also have a strong correlation with the lodging industry.

As to the impact of petroleum prices, there is a strong correlation. As to other factors, there appears to be little or no correlation. So the price of gasoline actually does have a lot to do with the future of the lodging industry. How much impact? Let's take a look.

Correlations of economic factors with the hospitality industry

My expert for all these matters is Bjorn Hanson, Ph.D., principal and practice leader with PricewaterhouseCoopers. I regard Bjorn as an industry friend and colleague, and he was kind enough to share his graphics with me.

If you missed it, you really should see the prior posting on the "elasticity" of demand between the U.S. Real GDP and the lodging industry. (As goes the economy, so goes the hospitality industry — the ineluctable elasticity of demand!)
But today we want to go a bit further.

PwC notes that when gas prices were at $.98 per gallon, and other consumer price segments stayed stable, lodging demand decreased. So gas prices did not affect lodging.

However, in recent times, PwC has calculated that when real gasoline prices increase by 10 percent, lodging demand declines by 0.41 percent.

Translating this into real terms . . . If real gasoline prices had stayed at December 2005 levels through September 2006, U.S. lodging demand would have been higher by 12,000 occupied rooms, or 0.3 occupancy points

The following charts illustrate the significance of gasoline prices on lodging demand and the fact that virtually no other consumer segment had any seeming correlation with the lodging segment. In other words, other than changes in the supply of hotel rooms, or changes in the real GDP, gasoline prices may be the next most significant indicator of changes in the lodging industry’s fortunes.


So, it would seem that the practical answer to the original question poed, is that — at least today — gasoline prices have a significant impact on lodging industy demand, and have to be seriously considered in evaluating the future of the industry.

In the next few days, I will be reporting on the developments at the industry's leading hotel development conference — The Hotel Developers Conference™, in Rancho Mirage, California on March 7-8, 2007, where all of the industry leaders will be.

Walk in registration is available if you haven’t signed up yet. Stay tuned for the reports!

Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $40 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.

Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.

Jim devotes 100% of his practice to hospitality, representing hotel owners, developers andSo, it would seem that the practical answer to the original question poed, is that — at least today — gasoline prices have a significant impact on lodging industy demand, and have to be seriously considered in evaluating the future of the industry.

In the next few days, I will be reporting on the developments at the industry's leading hotel development conference — The Hotel Developers Conference™, in Rancho Mirage, California on March 7-8, 2007, where all of the industry leaders will be.

Walk in registration is available if you haven’t signed up yet. Stay tuned for the reports!

Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $40 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.

Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.

Jim devotes 100% of his practice to hospitality, representing hotel owners, developers andlenders. Jim leads JMBM’s Global Hospitality Group® — a team of 50 seasoned professionals with more than $40 billion of hotel transactional experience, involving more than 1,000 properties located around the globe.

Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.

Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim’s books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.

Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at jbutler@jmbm.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.


Hospitality eBusiness Strategies to Present at Economy & Budget Hotels World 2007

Hospitality eBusiness Strategies (HeBS), a leading Internet marketing consulting firm for the hospitality industry, today announced the firm will present an Internet Marketing Workshop: “Economy Hotel Branding Strategies Online” at the Economy & Budget Hotels World 2007 Conference, May 22-24 at the Millennium Mayfair Hotel in London.

Max Starkov, HeBS’ Chief eBusiness Strategist and Jason Price, HeBS’ Executive Vice President will present a two-part workshop, focusing on building brand equity online in the economy hotel sector and the importance of brand awareness on the Web for increased direct bookings and increased competitiveness.

Some of the topics in the workshop include:

- The effect of the Internet on economy hotel brands and their customers
- Building brand awareness online
- Building emotional connections with customers
- Building positive customer perceptions of the economy hotel brand ethics
- Best practices in growing the brand online
- Defining a corporate and franchisee friendly branding strategy

- Building local brand value at the franchisee/property level:
o Local Brand Ambassadors program
o Build local customer relationships
- De-commoditization of the economy hotel product
- Value vs. Price Equation and brand building
- Methods to structure the budget and maintain control
- Tactics on putting the marketing budget to work
- Case studies

According to Starkov, “In 2006, all hotel brands including economy and budget brands far exceeded their own expectations in hotel bookings via the brand website. These brand website bookings are at the lowest cost point and highest ADRs, and branding online is essential and well within reach by large and smaller hotel brands and independents. This is especially important for the economy and budget hotel market because it is a particularly competitive, dynamic and a robust segment of the hospitality industry. Our goal at Economy & Budget Hotels World 2007 is to describe brand building best practices with a hands-on approach. We will describe the strategies and principles of online distribution and marketing methodologies and explore resources for building a strong connection with customers."

Building a robust online presence and brand equity within the framework of direct-to-consumer online distribution and creating interactive relationships with clients presents substantial opportunities to hoteliers. Developing brand equity can forestall price erosion, strengthen the brand for long term economic health, increase ROIs, and enable direct communication with a loyal customer base to promote the property and its services. As a result, hoteliers are increasingly committing resources to creating pro-active strategies that combine best Internet marketing practices with a comprehensive online brand building strategy and an aggressive direct web presence.

Commented Jennifer Pettinger, Economy and Budget Hotel World Project Manager, “The continued growth and success of this conference demonstrates the strength of the sector and the importance of maintaining a flow of current marketing, financial and business information. The conference brings together senior level managers from the major hotel brands, franchises and financial institutions across Europe, North America and Asia. Our ongoing strategy for this program is to ensure the conference provides an exchange of practical strategies and ideas that directly impact fundamental business concerns. Internet marketing is a critical component of that mix.”

About HeBS
Headquartered in New York City, Hospitality eBusiness Strategies (HeBS) is the industry’s leading Internet marketing strategy consulting firm for the hospitality vertical. HeBS has pioneered many of the "best practices" in hotel Internet marketing and direct online distribution. The firm specializes in helping hoteliers build their direct Internet marketing and distribution strategy, boost the hotel Internet marketing presence, establish interactive relationships with their customers, and significantly increase direct online bookings and ADRs. A diverse client portfolio of over 350 top tier major hotel brands, multinational hospitality corporations, hotel management and representation companies, franchisees and independents, resorts, casinos and CVBs worldwide has sought and successfully taken advantage of the firm hospitality Internet marketing expertise.

About Economy & Budget Hotels World
Organized by Terrapinn Ltd, a leading global business-to-business media company, delegates will have the chance to hear from over 35 top-level speakers representing operators, brands, franchises, financial and other related businesses from diverse geographies countries. A pre-conference half-day interactive workshop hosted by Hospitality eBusiness Strategies is designed to help organizations understand the importance of building their brand and build strategies for optimizing their online distribution and internet marketing in ways that contribute to building brand equity.


A Hot Career in Honolulu: Hospitality Management

It's no surprise that tourism is Hawaii's biggest industry. Over 650,000 people visited the island in December 2006, according to Hawaii's Department of Business, Economic Development and Tourism. As the capital of Hawaii, Honolulu receives thousands of tourists every day who want comfortable hotels and delicious restaurants with friendly and reliable staff. If the thought of living in this sun-filled, Polynesian paradise tempts you, consider studying hospitality management at one of Honolulu's accredited schools.

AAS in Hospitality Management
To succeed in hospitality management, you need great people skills and a knack for problem solving. An AAS in hospitality management will provide you with professional preparation for a hospitality career and develop your customer service and leadership skills. Coursework typically includes subjects such as:

* Customer service
* Computer technology and software
* Management

By studying hospitality management in Honolulu, you'll have exposure to Hawaii's robust travel industry. You'll gain a competitive advantage as you develop the necessary skills for many jobs in the tourism and travel industry. You might qualify for jobs such as:

* Dining room supervisor
* Banquet manager
* Management trainee
* Food service director

Honolulu has much to offer visitors and tourists alike. On weekends, you'll be able to relax as you study on the beach or take advantage of the many recreational activities available in the city, including opera, theater, nightclubs, or shopping. You can also visit the natural wonders of the island--its rain forests, mountains, and beaches.

With so many things to do in this thriving tourist town, you'll never be bored and likely never exhaust all of your career opportunities, especially with the credibility you'll gain with an AAS in hospitality management.

About the Author
Eneida P. Alcalde works in Washington, DC and has written several grants, educational manuals, and promotional material for development organizations. Eneida holds a B.A. in international politics and Spanish from The Pennsylvania State University.


Hospitality Training Schools

Hospitality Management Schools provide fulfillment for those who have dreamed of owning their own hotel or managing a restaurant in a hotel or other food service establishment.

Hospitality management schools give training and prepare students for careers in services link catering management, food and beverage management, hospitality management (communication and organization) and restaurant management.

Hotel and motel management schools generally cover the basics of degree programs in the hospitality industry, which includes restaurant management, beverage management, and commercial cooking, as well as accounting, finance, and business law regarding food service businesses.

Although hospitality management and restaurant management are both different terms but are both equally important for customer service and hence can go hand in hand for better customer service and customer satisfaction.

Some bachelor degree programs in hospitality management are also designed for students who looking for opportunities to advance their careers in hospitality fields.

Master level hospitality management may include areas of entrepreneurship, marketing management, information systems, operations management, and investment. Hospitality management positions may be found in large and small hotels, motels, and restaurants.

Now days an online certification or degree courses for Hospitality Management are also available. So now students can also study hospitality management without loosing current job. Best of all, online Hospitality Management courses require no educational prerequisites or experience to enroll. After completing the Associate degree in Hotel Management (AHM) course successfully, graduates can work with any large or small company around the world in an entry-level management post with hotels, motels, and restaurants.

A Bachelor of Hotel Management degree (BHM) can be ideal for those seeking advancement in their already established careers in hotel management. And a Master of Hotel and Motel Management degree (MHM), offers specialization in marketing, entrepreneurship, operations management, information systems management, and real estate and investment.


There Is No Such Thing As A “free Lunch” how To Optomize Your Advertising Dollars | By J. Ragsdale Hendrie

An Advertising Executive with a significant Destination area Newspaper declared recently, “Business is soft, and I do not think our advertisers would be interested in any new products to enhance their business”. Well, this is of course bunk, because this is exactly when you need to differentiate your business and apply marketing clout. She forgot that business is all about competition and the means to share with the Consumer our distinction and attract their business. Tight times, flush times – it does not matter. We need to get the message out to our potential Guests and Visitors and get them in our doors.

Some smart saloon keeper figured this out years ago. Come on in and have some bread, sausage, and pickled eggs on the house. Want a beer (or two) with that pal? That has translated into the “Happy Hour” and marginal hors d’oeuvres. Gaming emporiums love to pour drinks, gratis, for now you are relaxed, tend to lose track of time, and everyone is festive. Lodgings started with Enjoy our Pool, moved to Free HBO, Kids Free, complimentary breakfast, water beds and blue movies. Other Retail operations jumped on the wagon, from the Barker promoting the Bearded Lady, to the sleaze, trumpeting Naked Coeds, to the Billboard announcing the Sale of the Day. Take a peak, take a swim, take a chance, but by all means enter our establishment! It still works, but we can do better!

The essential expectations from the Customer perspective are straight forward. They want to know that the Product is good, that the Service is reasonable, that they will be safe in a clean establishment, where what they pay represents value. The Hospitality operator wants to engage that customer, respond positively to their expectations, gain their loyalty and market that success, thereby increasing traffic, and, of course, revenue.

The above formula is just like a see-saw. Hospitality operators aim for that equilibrium, but frequently the balance board is askew, based either upon poor delivery or expectations not met. The variables affecting delivery are numerous: condition of the Guest Room, food quality and presentation, standards of service, ambiance - the realities of operating our businesses run to head and heart ache. Every day has an imperfection, regarding product, service or facility. Our customers understand this; there is no perfection in any industry. But, it is the Experience we wish to tell people about, the distinction we usually represent, and specifically the performance expectation they should anticipate. The Consumer is eager to know.

Sadly, there are limited means to successfully project this message to our Customers - the Distinction of our establishment. They are bombarded by data, pummeled by sensory images, and numbed by incessant messages.

It is easier to retain existing customers rather than recruit new ones. Those loyal "fans" must be courted, made to feel special, and recognized for their "good taste" and support all the time - they are our "bread and butter", the very foundation for any success we enjoy. Yet, the business must grow! What avenues do we have to promote what our current "fans" already know? Hospitality operators are, how can I say this nicely, penurious. Even with such a sensory product and environment we represent, we will settle for the quickest most inexpensive marketing turn. The psychology of our attention is wrapped around the idea of “build and they will come” not even at the level of that Saloon keeper. But, although the Advertising Budget may be meager, there are a number of ways to create the “Buzz”, broadcast your distinction, and deliver the Experience.

Testimonials are a prime means to "pass the word" and gain prominence. This works by "word of mouth", referrals, and, more and more through the Internet. The power of a statement by a satisfied Customer is extraordinary, but even these Patron Reviews can be uneven, sometimes even "stacked". For the potential customer, though, they do provide a means to gather information and appreciate the "flavor" of a lodging or restaurant, through the senses and descriptive words of someone who has "lived" the Guest Experience. Visitors new to the area rely upon these sources, whether portals such as Expedia, Hotel.com, We8There, guidebooks like Zagat, or unofficial Bulletin Boards on the Internet. Otherwise, they may depend upon hotel concierges, business associates, or friends. Hmm, I like what they say.

Your local Newspaper is an extraordinary resource. They are all moving towards electronic rendering of the news, products and services, and in many markets their Web Site gets huge traffic, more “hits” than any localized Hospitality site, such as a CVB or even Chamber. They actively pursue unique programs and events through special inserts and Weekend Guides in print, in addition to having vast potential with Hospitality portals on their web sites, driving business to your door. But, you still need to be distinct to gain my business.

Marketing Associations also can be effective. They establish some bona fides, but typically, only informational: a brief description of the Business, type, amenities, menu, price and the like. They do not describe the Experience, and sadly, promote the “cream” as well as the “whey”. There are other means as well, such as a "Phantom Gourmet" local program, write-ups/local reviews in the newspaper and underground news, State and City Lodging and Restaurant Associations and service guides, and area Attraction magazines. In many cases you pay for that coverage - advertising dollars perhaps spent well. Your potential customer may review these sources, but they are hardly definitive. But, my interest has been piqued.

Then, there are Rating/Assessment companies, either serving as consumer advocates and setting the "taste and style" landscape, such as Michelin or sometimes Mobil, and, others, similar to AAA, which may review your establishment, but they are more interested in you signing up for their many services and programs. There are other companies you can retain for an Assessment; they benchmark your performance as to Hospitality Standards and provide recommendations for Continuous Improvement. All of these can be invaluable, depending upon the level of expertise and professionalism of their review team; however you have no control over the outcome of their evaluation. But, the Consumer does pay attention to ratings and Seals of Approval. I am feeling more secure, though.

Lastly, a Hospitality Business should present their own story, describe the uniqueness of their establishment and passionately relate to the potential customer why they should visit, stay, dine, recreate and enjoy the Experience through their own Web Site. This is the opportunity to market directly your Distinction! The site must relate to all the senses, where the “flavors” and Experience Mosaic speak through the eyes. Wow, fish jumping at dusk, a signature chef, WiFi in the bathroom!

The ideal means for successful promotion of a Hospitality Business should embrace four facets: testimonials from satisfied patrons; the advantages of a media company, which provides vast exposure; an operations review by a professional, objective third party, certifying a certain level of performance; and a spectacular Web Site presence. You can influence the outcomes with Management and a Team, who believe in their product and the highest level of service. Harnessing the promotional power of Customer Reviews, and Quality Assurance Certification and proper media usage provides confidence and reliability for your Customer, which makes that “Booking” Decision easy. You establish Distinction, traffic increases, and revenues flow!