Is it Time to Abandon the Big Hotel Groups?
William Harriss
Entrepeneur, Inventor and Innovationist, Journalist, Writer, Author, Professional Company Director, Small Resort Owner, Hotel Hygiene and Sterilization Specialist.
By William H Harriss. 6/6/2024. [email protected]
Perhaps it's time to reduce the Hotel Groups' massive power over the industry. We should consider whether they are taking far too much from the franchisees, which increases room rates and affects the bank balance of the property and business owner.
It is not just licensing and standard operational fees that are obvious and transparent. It is all the group purchasing kickback deals that the Hotel Groups negotiate with suppliers and then give the supplier exclusivity to supply the brand and all the Franchisees. These commissions are not one-off. They are paid to the hotel groups every time the owner buys or restocks with food and beverages, every time you refurbish, paint, decorate or buy new equipment. it is a continuous revolving open candy jar. It is billions of dollars a year; I am sure you will agree that it is not peanuts.
The groups say they appoint exclusive suppliers for uniformity of equipment and products. But the problem is that giving one supplier an exclusive supplier deal means that they can virtually charge what they like. You can be sure the manufacturers and suppliers are not paying the Groups from their profits; they will build what the Hotel Group demands into or onto the original price and then add a little. Reducing supplier prices does not benefit the Hotel Group or the supplier; it reduces profits for both of them. However, the hotel owner would benefit greatly from lower supply prices.
Most Groups charge $300,000 to $500,000 for a 200-room hotel just to use their brand name to opt into their franchise system. After that, they want you to pay fees for every room you let and fees for all sorts of other reasons. They milk you to the nth degree.
If your hotel loses money, that is your problem; the group wants no part of that. You have to pay royalties and other fees even if you are losing money. And you have to continue paying for often overpriced supplies and services. They are often overpriced because the supplier has exclusivity and has to pay the groups. Of course, the more they charge, the more the group gets, which can create an evil circle of nasty overpricing.
One group openly states in their online franchise form details “You may have to buy or lease items from the franchisor or a limited group of suppliers who the franchisor designates. "These items may be more expensive than similar items you could buy on your own.”
‘May’ is obviously the incorrect verb; it surely should be the modal verb ‘will’.
“You must use only such Furniture Fixtures & Equipment (“FF&E”), Operating Supplies & Equipment (“OS&E”), and other goods and services at the hotel that conform to our applicable standards and specifications. “We may specify a particular model or brand of FF&E, or that may be available from only one manufacturer or supplier. “Additionally, we may specify that certain food products, FF&E, OS&E, communication systems (including internet access), and other goods and services be purchased only from us or sources designated or approved by us.”
Again, the use of ‘may’ seems to be more than a mistake in verb usage; it is rather misleading.
The groups take the kickback from everyone and every item you need to stock and operate your hotel. Even Booking.com, Expedia.com, Hertz car rental, Rent-A-Car, bedding mattress and pillow companies, cleaning and chemical companies, computer companies, telephone companies, Pepsi-branded drinks, Operating Supplies and equipment, every single item, even a tack or paper clip, all pay the required kickback.
Now, do not think for one moment that all the commissions or, as I like to describe them, “kickbacks” do not affect the hotel owner and hotel operator. They most certainly do, because when payments are made to third parties like the hotel groups, you, the hotel owner, are really paying that; it is taken from you by the supplier and paid to the group. Overall, we are talking about hundreds of millions of dollars, it really is obscene. In fact, if you put all the groups together, it is billions of dollars annually. At least 50% of that belongs in the pocket of the hotel owner. This may be the way to do just that.
It may be time to start a ‘New Hotel Group System’ that acts as a franchisor of a new, wonderful, catchy, alluring, and elegant brand name. I am talking about a New Group that is a kind of partnership whereby all the owners share in the success and profitability. All the franchisees will be part owners of the New Group. The hotel owners will be owners of the New Group but will still fully own their hotels.
The New Group will still negotiate kickback deals with suppliers, but instead of one supplier, there will be four suppliers for every item, all capable of supplying an identical or very similar product. This will create competition in product and equipment pricing and should lower the franchisee's price.
Because each of those suppliers is also paying the New Group a kickback payment for partial exclusivity, that kickback will fund the New Group's operation, and the residue will be shared annually on a fair basis with the franchisees. It will create a win-win situation for the hotelier and his business. https://lnkd.in/eVf8q94R
But the New Group must want to become the number one, The World's Leading Brand, and so must place itself squarely into the position of becoming just that. A powerful name and rapid growth are the keys. Attracting not just the single-site independents and the small independent groups but also encouraging hotel owners from the established groups to come on board is crucial. The Traditional Groups have had it too good for too long.
The New Group hotels need to do everything that will put them in front, which is what the established groups fail to do.
Mass publicity campaigns will enhance the New Group and its new brand hotels while destroying the established groups in the same advertising. It really is time to tell the world the truth through the media.
So, what would we expect from a new ultra-progressive hotel group that will impress the public and, almost certainly, the world?
Well, let's start by being as green as possible without becoming woke about it.
1/ Let's dump all the present chemical companies from the hotel supply chain. Conventional cleaning products contaminate the air with a mix of carcinogens, hormone disrupters, neurotoxic solvents, mood-altering chemicals, and reproductive toxins. Toxic Chemicals The ingredients in conventional cleaning products mean that your hotels may look clean but unhealthy.
2/Let's ban all products and equipment hotel-wide that have ‘forever-chemicals’ attached to them. Forever chemicals, also known as perfluoroalkyl and polyfluoroalkyl substances (PFAS), are a group of compounds that pose potentially serious health risks. They’re found in various products used in hotels and catering equipment. Here are some key items:
a/ Teflon (PTFE): Teflon, commonly used in non-stick frying pans and medical catheters, is a well-known forever chemical. While using non-stick cookware is generally safe, avoiding high heat for extended periods is essential.
b/ Firefighting Foam (AFFF): AFFF contains PFAS and is used by firefighters. However, these chemicals have been linked to cancer, making proper handling and disposal crucial.
c/ Other Applications: Forever chemicals are present in various materials, including waterproof jackets, popcorn bags, and carpets. As we learn more about their health effects, efforts are underway to reduce exposure and find safer alternatives.
3/ Let's get rid of plastics. Microplastic contamination poses massive risks in hotels and catering establishments. These tiny plastic particles, often less than the width of a human hair, can be found in various sources, including food, air, and water.
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Here’s what you need to know:
Health Risks:
a/ Reduced Fertility: Ingested microplastics may impact fertility. They can mimic human hormones, affecting reproductive processes.
b/ Cancer Risk: Evidence suggests that microplastics could increase cancer risk, especially in the digestive tract.
Chemical Exposure:
Microplastics can contain harmful chemicals like BPA, phthalates, and PFAS, adversely affecting health.
Avoidance Strategies:
c/ Avoid Microwaving in Plastic: Heat can cause plastic to release harmful chemicals, so use ceramic or glass containers for microwaving instead.
Choose Eco-Friendly Cleaning Products:
Opt for eco-friendly chemicals in hotels and restaurants to reduce microplastic pollution and protect indoor air quality.
Minimize Single-Use Plastics:
Reduce plastic waste by using alternatives like compostable materials and reusable containers.
4/ Let's ban the use of polyurethane foams in hotels everywhere. Bedding, mattresses, pillows, seating, under carpets, everywhere—totally banned. Polyurethane Foam is becoming the new asbestos crisis and will catch thousands of commercial users up in future litigation.
According to the United States Environmental Protection Agency (USEPA), exposure to some of the main ingredients of polyurethane foam – isocyanates – can cause a range of negative health effects, including asthma, lung damage, respiratory problems and damage and skin and eye irritation.
Other research shows that polyurethane foams can cause irreparable brain damage. It is a danger to those who make it, those who sell it and those who use it. It is also dangerous to your hotel guests and to your team of housekeepers. https://lnkd.in/ehgmb2i3
5/ Let's stop using dangerous chemicals and go green with cleaning products. Sustainable hotel housekeeping practices are both environmentally responsible and financially beneficial. Hotels that adopt eco-friendly cleaning products, implement water and energy conservation measures, reduce waste, and engage both staff and guests in sustainability efforts can achieve significant cost savings while minimizing their impact on the environment. Instead of bleach, look for cleaners that use hydrogen peroxid. Swap out chemical-filled all-purpose cleaners for those with plant-based ingredients. Housekeeping can even make their own effective cleaning solutions with vinegar and baking soda! To ensure the products we choose are truly green, always look for certifications like Green Seal or EcoLogo.
6/ Lets sterilize bedding, pillows and mattresses between every new client. https://www.dhirubhai.net/pulse/safety-housekeeping-laundry-staff-william-harriss-qwbre/?trackingId=cgu03McYTp%2Bg2UuR5haSJQ%3D%3D
7/ Let's run an amazing new awards scheme. https://www.dhirubhai.net/pulse/become-confirmed-leading-hotel-cruise-ship-brands-harriss-fbii/
There are a lot of other things that will make the New Group outstandingly different. I will not list them all here now because it will give the traditional groups too much information.
The traditional groups are now so top-heavy, financially strained, and reliant on kickbacks that they would collapse if they tried to adopt the New Groups' tactics and policies.
Tell the traveler's, the holidaymakers, the business traveler's, the tourists, and the whole lodging world of users what the New Group hotels are doing. Tell the world what the competition is not doing and how that affects the health and well-being of Hotel Clients and Hotel Staff worldwide.
Tell them about the dangers and make them aware of what we do to eliminate those dangers. Meanwhile, the competition is pulling in the opposite direction on the backs of the chemical companies.
It may be that there is a small independent hotel group out there that likes the idea, or a small independent hotel chain that would like to be the springboard, or even perhaps a start-up organization big enough and powerful enough to front-fund such a project.
Please do not ask me to do all this; I just cannot; I am 82 years old, and I do not have the energy or stamina to be able to do even the preliminaries. I used to be the big businessman able to do everything and anything I asked anyone else to do. But I still have a brilliant mind, and today I am an ideas man, a guru. So, if anyone brave enough wants to talk about the realities of making this a feasible project, I will be happy to assist you in any way possible, but the deal is yours to run with.
Read the following articles, and you will understand why I wrote this article. https://www.dhirubhai.net/in/william-harriss-0b406919/recent-activity/articles/