A Hotel Business Plan for Today's Difficult Environment
As a hotel industry historian, I was happy to come across a Wall Street Journal front page article dated December 12, 1972. “Economy Motels Lure Travelers With Prices as Low as $6 a Room.” What caught my attention was the opening sentence, “Remember when motels were Spartan $7-a-night places that beckoned you with a “Kleen Kabins” sign and offered you little more than a bed and a shower?” The WSJ article goes on to criticize the subsequent upgrading:
“Then they got fancy, with bellhops, room service and plush cocktail lounges- and the price shot up to $20 a night. Now here’s the latest thing in the motel business: Spartan, $7-a-night places (without “Kleen Kabins” signs) that offer you little more than a bed and a shower… Bargain-hungry travelers are flocking to so-called budget or economy motel chains, and in the process they are igniting a boom in a brash little industry that’s taking on the established motel chains on their own turf. Budget motels are sprouting up all over the country- most heavily in the Southeast and in the West. In many places, they claim occupancy rates of better than 90%, while more expensive competitors struggle to keep their rooms 70% full…. The four or five most active budget companies are run by people with background in construction rather than hotel management. There won’t be any meeting or convention facilities, the lobby will be so small as to be nonexistent, and there may not be a restaurant on the premises. One company- Econo-Travel Corp. of Norfolk, Va. even does away with swimming pools. They’re an added expense most people don’t use, the company reasons.
The question that pops into my mind, “Is it time for another resurgence in inexpensive guestrooms in budget-oriented hotel properties?” As I was quoted in the 1972 WSJ article, “The conventional hotel-motel industry has priced itself into the stratosphere. Why should a guy pay $18 a night for a hot shower, an hour of Johnny Carson and a night’s sleep when he can pay $10 or less at Shoestring Motor Lodge next door?”At that time, the leading budget motel companies: Motel 6, Scottish Inns of America, Chalet Susse International, Days Inns and Econo-Travel, were doubling their occupancy each year. The established operators were caught in a dilemma: they were pincered between the prospect of losing customers to the budget operators if they didn’t emulate them and the danger of undercutting their own conventional units if they did.
Are we entering a phase of new economy hotels (geared to cost-conscious travelers) which employ advanced construction techniques and operating methods aimed at holding down the cost of a night’s lodging? If you wonder how a group of small companies with no experience in the motel business can penetrate an industry dominated by corporate giants like Marriott, IHG, Hilton and Starwood, just recall what William W. Becker (founder of Motel 6) said in 1962: “When we entered the business, we had the advantage of not knowing anything about it, so we weren’t burdened by pre-conceived notions.” At the time, Motel 6 and others built their rooms more cheaply than the conventional companies and kept dreaming up new ways to shave costs and increase revenues. Remember when Motel 6 charged 25 cents to watch a few hours of television. Guestrooms were designed to reduce the time it took a housekeeper to clean them, beds were built flush to the floor so the area underneath them didn’t have to be cleaned, bathtubs were rounded to save scrubbing in corners and glasses were replaced with disposable plastic cups. In those days, Motel 6 didn’t put dresser drawers in its rooms because most travelers didn’t use them and they took time to dust.So, here’s a great business development plan offered without cost to any entrepreneurs smart enough to exploit the current economic malaise:
- Create a new budget limited-service hotel brand (consider the name Shoestring Motor Lodges)
- Attract franchisees who own or can acquire exterior corridor properties
- Provide a franchise system that is 100% compliant with AAHOAs 12 Points
- Provide renovation and redesign for the guest rooms so that they are unusually attractive and colorful
- Review the amenities which are usually offered and eliminate all those that are not necessary. Promote and advertise these cost-saving actions.
- Advertise Shoestring Motor Lodges as the safest and most accessible of all roadside properties:
- Park outside your guestroom
- No long, dark and unsafe corridors
- No elevators
- Great access for road warriors, ADA guests and senior citizens
*Next month: A Marketing Plan for Today’s Difficult Environment
About the author: Stanley Turkel, MHS, ISHC operates his hotel consulting office as a sole practitioner specializing in franchising issues, asset management and litigation support services. Turkel’s clients are hotel owners and franchisees, investors and lending institutions. Turkel serves on the Board of Advisors and lectures at the NYU Tisch Center for Hospitality, Tourism and Sports Management. He is a member of the prestigious International Society of Hospitality Consultants. His provocative articles on various hotel subjects have been published in Blue MauMau, the Cornell Quarterly, Lodging Hospitality, Hotel Interactive, Hotel-Online, AAHOA Lodging Business, etc. Don’t hesitate to call 917-628-8549 or email [email protected]
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Stanley Turkel is available as featured speaker on the following subjects:
- From Ragas to Riches: The Origin and Growth of the Asian American Hotel Owners Association
- Great American Hoteliers: Pioneers of the Hotel Industry
- Franchise Advisory Councils: Powder Puffs or Powerhouses?
- Henry Morrison Flagler: The Robber Baron Who Invented Florida
- Fred Harvey: Great Food. Unique Hotels and the Harvey Girls