It's Time To Trade 'Set-ups' For Marketing Brochures
by Jeff Wilder
Reprinted from Advanstar's Hotel & Motel Management Magazine
Most hotel brokers traditionally have offered property in the old-fashioned way. After spending time hunting for a listing, be it open or exclusive, they'd find a motivated seller, get some property information and do a relatively simple write-up on the hotel property they were offering for sale.
These write-ups, which are called "set-ups" in the brokerage business, give basic data that any customer needs to know in order to decide if he'd like to pursue the buy.
What is included in a set-up?
Plot size, location, property description, existing financing, a summarized profit-and-loss statement for the past year or two, and the price/cash/terms that the seller will accept. Usually, a property brochure is clipped to these three to four page set-ups, together with a cover letter that goes into a bit more depth about the deal.
Old system hangs on
Most hotel brokers still use this marketing piece, although I believe it is an anachronism in the hotel brokerage industry. The broker's normal instinct is to put basic property information together quickly and start the long process of marketing the hotel as soon as possible.
After all, the broker has to make lots of offering calls. He needs to send out many set-ups, discuss the deal in follow-up conversations with interested buyers, arrange property inspections and get into price negotiations.
It seems natural for the broker to quickly do a short offering piece and get the ball rolling as quickly as possible, but it actually causes a lot more work and delay on the back end.
It is clear to me that those brokers still using the old-fashioned set-up as their basic offering piece are doing a real disservice to their clients and themselves. Forward-looking professional hotel brokers have come to understand the need to replace the old-fashioned set-up with a far-more-elaborate property marketing brochure.
Property marketing brochures usually are 15 to 20 pages in length, at the minimum. They provide:
Detailed financial information, which includes both annualized profit-and-loss statements as well as monthly departmental grosses and occupancy rate statistics for the past two to three years.
In-depth market information about the area that the specific property serves. This data includes. but is not limited to, its current guest profile, area commercial and tourist draws, feeder markets, competition, regional commercial stability and/or growth prospects, road patterns and accessibility/visibility.
Property information that includes: status with the franchisor; complete physical description, from the type of structure to its HVAC systems to its roof specs to its age; and its compliance with various governmental regulations, such as environmental and ADA laws.
Maps and pictures.
Pricing.
As a person who has spent many late nights working with my own staff in putting these far-more-elaborate and expensive packages together, I can assure you that there is immeasurably more work that goes into the creation of a property marketing brochure than into a simple set-up. But our company believes that it is worth every moment of our time, and the results have confirmed that our instincts are correct.
I encourage the continued healthy trend toward exclusive marketing agreements between sellers and hotel brokers, as long as the broker is knowledgeable about the lodging product and truly professional and responsible in his property marketing presentations.