Chain's Service Program Brings Bottom-Line Benefits

Chain's Service Program Brings Bottom-Line Benefits

Reprinted from Advanstar
Hotel & Motel Management Magazine
November 7, 1994
By Jeff Wilder
Wilder Group, L.L.C.

Our firm manages a number of franchised and independent hotels for investors to whom we have sold properties. We do our best to learn all the benefits and programs that each franchisor offers and maximize their use to the best of our ability. This is an important area of emphasis for us, as most franchisors will affirm that two-thirds of its franchisees don't avail themselves of anything except the chain's reservation system. Inexplicable, but true.

We are affiliated with one chain that I believe has the finest franchise-support system in the industry. Without naming the chain, I'm going to discuss what sets this organization apart from the rest, in hopes that they will strive to emulate its services.

This chain has made a strong financial and personnel commitment to proactively help the entire system via a program specifically set up to deliver franchise services. It may be the most powerful service-delivery effort in the industry. The purpose of the program is simple:

To assist all franchisees INDIVIDUALLY to improve revenue.
To assist all franchisees INDIVIDUALLY to improve customer service.

In order to maximize the values of this permanent program, this chain has created the position of area service delivery consultant, or ASDC. These field-based, corporate employees each are responsible for the well-being of approximately 50 hotels. These ASDC's average more than 10 years of "real world" operational experience and have backgrounds in training. They are the heart of the chain's service-delivery arm.

Essentially ASDC's view themselves as revenue-and-service consultants to the hotel operation. Four times a year, the ASDC visits his or her assigned properties in order to discuss the chain's thinking on how to improve business.

CASE IN POINT

Having made it my business to attend these on-site get-togethers, I can assure you that they are packed with relevant, specific ideas that, if implemented, are almost guaranteed to have a positive impact on your hotel's cash flow.

I recently attended ASDC meetings at one of our hotels. In a short column, it is hard to adequately describe the variety of discussions that can result in improved financial performance resulting from ASDC advice. Here is an example: At one meeting, an ASDC identified more than $80,000 in potential revenue that was being left on the table. Evidently, the res system's denials were not being monitored correctly, and the g.m. was closing out the hotel's discounts on weekdays, but not on weekends. In essence, correcting that one yield-management error amounted to paying a year's worth of franchise fees.

Of course, looked at from another perspective, an $80,000 cash-flow windfall like this could bring a property an extra $40,000 in mortgage-loan proceeds, or increase a property's value by $600,000 to $700,000.

EFFECTIVE FOLLOWUP

In addition to discussing revenue-enhancement opportunities, these quarterly ASDC sessions culminate in focused revenue action plans, which are aimed at ensuring the desired objectives and include target dates. Subsequent to the meetings, the ASDC sends copies of the agreed-upon action plans together with an outline of the visit, to management and ownership for their review. It's been my experience that the ASDC keeps in touch between visits to check on the hotels progress.

This chain is to be commended for committing their effort and funds to such an outstanding service program - and other chains would be wise to make a similar commitment.