By Jennifer Esposito
Over the past several years, you would have to have been living on a deserted island not to know about the Harry Potter book series. And, of course, one of the central figures of this book/movie series was the evil wizard who was characterized throughout as “The One Who Shall (Must) Not Be Named”. If you talk to tour operators and leisure wholesalers that work in the hotel industry, there is one hotel company that stands out above (or I should say below) all the others in a very negative way. Rather than to state the obvious name, we shall simply call it “The Hotel Company That Shall Not Be Named.”
“The Day the Earth Stood Still” – Earlier this year, “The Hotel Company That Shall Not Be Named” totally eliminated what was left of their Leisure sales team dumbfounding the leisure client base, its franchisees and its hotels. TOTAL dependence on making sure bookings go through “the system” via direct connections (so they can generate additional fees) has eliminated many Leisure clients who are not connected, alienating these same leisure clients. Where this company’s hotels used to be the 1st choice, now it is no choice.
Geez! Why would they do this? There now is no one to push leisure business to “need” hotels; there is no one to educate leisure clients or leisure hotels on each other; there is no one to go to for problem resolution; there is zero customer service; smaller/medium sized hotels with no sales staff are shit out of luck; with no exposure at IPW (Pow Wow) this year, should franchisees really have to pay S&M fees for this business (if they can get it) if the parent company has shut it down?; the competition has stepped in ably and captured hundreds of millions if not a few billion $$$ away from “The Hotel Company That Shall Not Be Named”. Incredibly, no one at the company seems to care as no one is telling the hotels/franchisees about the business they are not getting.
“You Can’t Ride Two Horses with One Ass” – “The Hotel Company That Shall Not Be Named” has put its eggs in the OTA basket which was even mentioned recently by stock analysts as an underlying stock weakness (yes, your stock may be high but everyones stock is high thanks to the much discussed tax cuts coming). The lower online price for frequency guests “strategy” has been a dismal failure as most of us predicted it would be. You can’t preach direct booking and then cave in to the OTA’s of the world as “The Hotel Company That Shall Not Be Named” has done consistently over the past several years (read “The Buggy Whip of the 21st Century” (insert).
And, with the new OTA RFP system for MICE accounts that was recently announced to go along with their Corporate tool and other tools and programs, is the next step to eliminate the Global Sales team?; to eliminate the Brand teams?; to eliminate the Brands? Will there really be any reason for “branding hotels”? Will Expedia and Priceline (and Airbnb) become the Amazons of the lodging world? Well, its heading in that direction at a rapid pace! It seems that “The Hotel Company That Shall Not Be Named” WANTS this to happen?
“If You Don’t Know Where You Are Going, Any Road Will Get You There!” – Clearly, “The Hotel Company That Shall Not Be Named” thinks it knows where it’s going but unfortunately its hotels and franchisees are going in a different direction. What kind of mentality would lead you to prefer a system with 20% incrementally over one with 100% incrementally? In the past two years, this company has made unprecedented layoffs of key personnel a matter of policy. As business guru Edward Deming said, “a bad system will beat a good person every time.”
And, there have been a lot of good, smart, knowledgeable people terminated over the past two years as the company saves its way to prosperity. Well, that helped temporarily with profits but ladies and gentlemen, “It’s Saturday Night but Sundays Coming!” Makes you think that the primary strategy is to sell the company so the execs can cash out! Mindless! Yes, as I said before, “The Hotel Company That Shall Not Be Named” used to make its franchisees rich, now they make their executives rich,….really rich! (see “The Screw Job that is the Best Rate Guarantee”.) (insert)
“The Horse with No Name” – Sticking with our theme of horses (maybe mule would be more appropriate), “The Hotel Company That Shall Not Be Named” has recently announced “A Hotel Brand That Has No Name”. A midscale product (they don’t have enough of those) 10-20% below their current mid-price offerings. A perfect product for…dada!…LEISURE travelers, the very segment they are closing out. HAHAHAHAHAHA! You actually have to wonder what is in the water they are drinking at “The Hotel Company That Shall Not Be Named”. Crazy.
This to go along with the brand they announced several years ago at a now cost of millions of dollars and guess what? Still only a handful open. Do you think maybe there is a demand problem for the company, given that other hotel companies are kicking butt in Leisure, Forward Thinking Strategy and the Shared Economy?
Status quo and “organic growth” isn’t going to cut it anymore and it will lead you to obsolescence. Giving $$$millions back to shareholders instead of investing in the future (you’re still planning on a future aren’t you?) isn’t going to cut it anymore either. Growth by harvesting fees from your hotels and franchisees isn’t going to cut it anymore. The well is running dry!
“It’s Not “The Open”, It’s the “British Open!” – It’s not “The Championship”, it’s the “Wimbledon Championship”. It’s not “The Empire”, it’s the “British Empire”. Oh, scratch that. It WAS the British Empire. Last time I checked, India, Australia, Ireland, Canada, New Zealand, Hong Kong, etc. no longer fly the U.K. flag. But don’t despair, they still occupy and hold sway over the Falkland Islands which they were prepared to spill blood and treasure for a few years ago (for some unknown reason).
I told you that to tell you this. When the Brits bought “The Hotel Company That Shall Not Be Named”, the company held the leadership position in the lodging industry by far. But, with it being split up and with some pretty suspect leadership, it quickly lost that position in the 1990’s and has been getting farther and farther behind every year. You see, Brits have this thing about planting a seed and then digging it up every week to see if it’s growing. Paralysis by analysis!
It’s not that they can’t make a decision, they just need to study it for a few years before doing so. Currently, “The Hotel Company That Shall Not Be Named”, which has held the 3rd position for the last decade is being passed by multiple hotel companies with the aforementioned Forward Thinking Strategies, strong Leisure demand bases and investments in the Shared economy. Sad, sad, sad.
“It Ain’t Over Till It’s Over” – In conclusion, Yogi Berra once said “if you don’t go to somebody’s funeral, they won’t come to yours”. It seems to be unmistakable that the Leisure strategy of “The Hotel Company that Shall Not Be Named” was something concocted by someone with a mission not to help hotels but to help the corporate bottom line and… the company funeral is on the way. Truth be told, “The Hotel Company That Shall Not Be Named” has not recovered from the untimely passing of one of its great leaders a few years ago and it is looking like they never will.
To at least put a positive spin on this, “The Hotel Company That Shall Not Be Named” still has time to fix itself by: 1) re-instituting the Leisure segment within its outside sales team to open up these revenue channels that are desperately needed by its hotels; 2) give a stiff-arm to the OTA’s and use them only as a weapon of last resort, not as a first responder; and, 3) embrace that rate parity is an illusion and let the free market prevail (it’s about revenue, not ADR).
Given that this is not likely to happen I have no doubt that at the end of the day, when “The Hotel Company That Shall Not Be Named” finally rolls up its carpet, the OTA’s will have their hand out with congratulations saying “Mission Accomplished…Thank You!”. Meanwhile, the rest of the hospitality industry sadly or maybe gladly has to watch the slow spiral downward that may be irreversible and terminal for what was once a great company. Too bad, so sad. Rest in Peace “The Hotel Company That Shall Not Be Named”, Rest in Peace!
This article is one of three in a series on issues confronting the hotel industry. Links to the previous two articles are below
- March 7, 2017
Part 1 of 3, by Wallace E. Johnson
- May 18, 2017
Thoughts, Ideas, Opinions on the above…and They are all Mine!
by Wallace E. Johnson