All they ask is to allow them to flourish with as little government interference as possible . It ’ s also a sentiment echoed by the many lodging franchisors that members of AAHOA and others use to brand their hotels — from Days Inns and Red Roofs to Motel 6s and Best Westerns .
Queried during a panel session at the 2024 AAHOA Convention over what is the biggest challenge facing hoteliers today , the answer wasn ’ t inflation , it wasn ’ t interest rates , it was the government .
“ Government should not be as involved in our business ,” said Geoff Ballotti , president and CEO of Wyndham Hotels & Resorts , which recently staved off an acquisition attempt by Choice Hotels International , due , in part , to a government agency , the Federal Trade Commission , voicing serious concerns over a merger .
He continued : “ Our Department of Labor should lower your labor costs , not see them go up .” Consider California , where on April 1 , it was no April Fools ’ Day joke for franchisees , as a new $ 20 minimum wage requirement took effect for fast-food workers . It ’ s $ 16 statewide . Higher labor costs hurt owner margins and customers : higher wages often mean passing the buck on to consumers . It also can contribute to further automation : checking into a hotel through a tablet or kiosk rather than a human .
“ Why does AAHOA exist ? Why are we here ?” Ballotti asked . He implored the audience to step up and make their voices known : “ Your voice is more impactful than any of ours in D . C .,” he said . “ Get the interference out .”
Raj Trivedi , the former president of La Quinta and current managing principal of Tri Star Trivedi , was even more blunt : “ They have no business in our business . Keep them away .”
Government can only shoulder so much of the blame . Market dynamics play a major role determining owner profit margins , under pressure from expenses stemming from a host of variables , including insurance costs , as Larry Cuculic , president and CEO of BWH Hotels , emphatically pointed out . “ We are all feeling the pain of it ,” said Julie Arrowsmith , president and CEO of G6 Hospitality , which franchises the Motel 6 and Studio 6 brands . She advised hoteliers to partner with insurance brokers to help bring costs more in line and to leverage the brand for additional assistance .
“ It ’ s a huge challenge ,” Cuculic said of it , but far from the only one that is impacting margins , argued Trivedi , ticking off culprits like general supply costs , along with labor and the higher cost to finance new projects or renovations . “ At the end of day , the brand response is to improve owner margins ,” he implored .
Accepting the challenge , Ballotti was earnest in telling the audience to hold brands accountable . A brand ’ s value proposition , he noted , is to give hoteliers the necessary tools and guidance to succeed financially and improve the guest experience . “ What you are paying us for is an owner-first proposition to get you the most money ,” he said .
Value for the fees franchisees pay the brands is key , said Cuculic . “ It ’ s about driving revenue and support for hoteliers ,” he said .
Another hurdle hoteliers are contending with is the high cost of debt that has made it more difficult to both build new properties and buy and sell them . As the industry awaits the next Federal Reserve decision on interest rates — with many believing a rate cut imminent this summer — lending remains a pricey proposition . “ It ’ s a big issue that impacts refinances , renovations , buying or selling ,” said Greg Juceam , president and CEO of Extended Stay America . Higher rates and higher loan-tovalue ratios have stymied deal volume . “ It is down because of that ,” he said . “ There is evidence the big banks will lend again and spreads will tighten , but regional banks still are not .”
Another expense that owners need to be cognizant of is technology , which continues to evolve at a brisk pace . Artificial intelligence is now ubiquitous discussion with John Murray , president and CEO of Sonesta Hotels , calling it an opportunity with a learning curve . “ We are still learning about it and it can make employees more efficient ,” he said .
Most hoteliers up to now have noted the awesome power of AI , harnessing it , and how it can be used not to replace human employees , but free them up to focus more on guest engagement . “ AI is becoming more prevalent ,” Trivedi said , adding that it can also be used to better get to know the guests in a more personal manner . “ Let ’ s make it a priority to minimize guests to write a critical review .”
Beyond technology , getting back to the basics of hostelry and hosting are still the fundamentals that , in the end , leads to profitability . BWH ’ s Cuculic said that the word “ appreciation ” had been resonating with him of late , as it related to guests . “ Hoteliers , if you show guests you appreciate them , you will gain loyalty ,” he said .
“ Go back to the fundamentals and create a value proposition ,” Trivedi said . For example , what does an economy guest expect when he or she travels ? Trivedi said it ’ s a clean and comfortable room . “ It starts with quality and consistency .”
Arrowsmith , whose brands operate explicitly in the economy segment , noted the huge demand for travel that necessitates a premium to be put on quality — no matter if it ’ s an economy or luxury product . “ We cater to the economy traveler that wants quality , but not luxury ,” she said . “ They like that we are consistent and safe and we will message that .”
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