Difficulties of Management Contracts

Looks like Jim Murphy of the Prem Group agrees with some of the difficulties with management contracts in Ireland. An old posting but relevant!

D4 Hotels
I was saddened to read the reports in the media over the weekend of the falling out between Developer Sean Dunne and Hotelier John Brennan. Business is tough enough without having to deal with problems under the gaze of the national media. Mr Dunne had recruited John Brennan to reopen and manage the three former Jurys Doyle Hotels in Ballsbridge. Some newspapers claimed that the split was “extremely acrimonious”.

PREM Group operate a number of Hotels under management contract and are all too aware of the challenges that such contracts can bring. It is essential that both parties fully understand the concept of a management contract from the outset. Certainly if the relationship is not managed from the outset difficulties can arise very quickly. Good communication is essential especially in the early months while both sides are getting to know each other. Once the business settles down (usually after over a year), relationships between the owners and managers become more relaxed. These relationships take a lot of time and effort from both parties, good communication is critical in developing the trust between both parties.

Whatever happened in Ballsbridge it would be great if the detail could be kept out of the media and whatever differences the parties have could be sorted behind closed doors. The problem the rest of us Hoteliers in Dublin have is that these Hotels are dumping hotel stock onto the market at very low rates. The Burlington Hotel is about to reopen in the near future and already they have stolen some Tour Group business from one of our Hotels. The problem in Dublin is that room rates have hardly grown since 2000 while costs have risen substantially over the same period. These hotels are not in the business for the long haul and they could potentially inflict serious damage on hotels in the Dublin market who are trying to meet their commitments in a market that is sluggish to say the least.


ORIGINAL http://www.premgroup.com/blog/2008/02/25/d4-hotels/

Who Manages Expectations?

Ireland has been a strange place for luxury hotels in the last year. With a very poor summer in '07 and a weak dollar and a credit crunch in '08 rates have been nowhere near forecast.

However, the question should be asked ... Where did the forecasts come from?

Once developers got their hands on the capital grants for hotels that the Irish Government were giving out in the early 2000s it seemed the only thing they were interest in was luxury hotels - even in locations that did not justify them.

They brought in international management companies to run them or indeed often created their own and somewhere along the line they got the idea their average rates would be €400 plus ... and nobody told them otherwise.

Did the consultants get it wrong? Did they use the right consultants? Did the hotel management companies not carry out due diligence? Was everybody blinded by the money available in Ireland at the turn of the century and felt they could get their share? Did the management companies not talk to local consultants?

Who knows, but we are seeing the fall out now.

The Shelbourne and Marriott are going at it hammer and tongs displaying their dirty linen in public as it is all widely reported.

"Marriott claims the owners have demonstrated "a lack of understanding" of the realities of returns on investment in the luxury hotel industry. On the basis of the investment, the Shelbourne would have to have an average room rate of more than EUR 300 when the average room rate for luxury hotels in Ireland is some EUR 170, Marriott claims."

Surely the room rate was discussed as part of the negotiations for the management contract? Is Marriott not responsible for their clients lack of understanding?

Meanwhile the Capella Castlemartyr opened with great fanfare as Horst Schulze's Westpaces new brand has also closed with much less fanfare and thankfully less animosity. The new management company there should be ready to give a lot of bad news.

For more problems see this article in the Irish Times - "Chill winds of recession close some hotel doors"

The scary thing for me is that I was recently approached by another developer in the UK this time who was looking for a management company to run his proposed 5 star hotel. The 'consultancy firm' they had used suggested that an average rate of £150 with a 50% occupancy was achievable in year one. I won't tell you what the profit margin they suggested was! Even in the bast of recent times that would have been a struggle, especially given the location of this project. The problem was that the 'consultancy firm' was a estate agent/realtor/property agent/commercial property consultant they were not a hotel consultancy. Their main interest is in selling property!

So the answer?

Developers should employ a hotel consultant/specialist to sit between themselves and the management company and translate each others speak make sure that the project is viable and that misunderstandings do not happen.

Management Companies without experience in a country should employ consultants who do to make sure that what the developer is telling them is realistic.

Developers can make good hotel owners but they need expert eyes and ears to review what they are being told as indeed do management companies.

Keynesian Economic Theory Applied to Hotels.

As Sir Winston Churchill once said: “If you put two economists in a room, you get two opinions, unless one of them is Lord (John Maynard) Keynes, in which case you get three opinions.” It seems Sir Winston was not a great admirer of the economist who championed increased government expenditure to stimulate an economy faced with falling demand, rising unemployment and a drop in national income. But his approach is once again being talked of as crucial to recovery.

But what’s it all mean for hoteliers? Apart from the obvious to anyone looking to pick up government business (time to dust off those GOV GDS rates!), it does pose the question that, credit lines permitting, should firms feeling the pinch follow Keynes and spend their way out of the mire?

If we learn our lessons from the downturn post 9/11 it would seem the answer is yes. Hotels that kept up their spend on marketing and training benefited more when business started to return. This was especially true of Terry Holmes at the Stafford (now with Red Carnation). Who spent a great deal of time travelling in and around America and who benefited greatly when the started travelling again.

Certainly don’t think about laying off staff – especially the skilled ones. The story still goes round about the New York Hotel that got rid of its concierge team post 9/11 and is still struggling to repair its damaged reputation. The smart firms will still foot the wage bill as you’ll need those skills to be competitive once the markets pick up again.

The key is to make sure your spend is effective whether it is in marketing or staff. This is where outside specialists can help maximise the 'bang for your buck'. With experience from many sectors and up-to-the-minute knowledge of the most effective online tools a marketing consultancy can help you increase your Share of Voice (SOV) and thus you share of market. They will also help you identify and target the most profitable market segments. A training consultant will help your team to be more efficient thus saving money and also better salespeople thus generating more revenue.

It is advisable to spend your way out of troubled times ... just make sure the spend is effective!

US & Canada PR Opportunity

Came across the following on LinkedIn recently.

In need of travel articles and photos

I am looking for well-written travel articles, with photos, to be distributed to travel writers and editors in Canada and the US. Troy Media supplies free editorial content to our media subscribers and we've been asked if we will be supplying travel content. There is no charge for distributing articles we select, which must include hi-res photos. We are testing the market to see how deep the need is. If you are interested, please contact me. To view our market penetration, please visit our web site. Hopefully you will see this as an opportunity to raise your destination's profile. Gary Slywchuk

http://www.troymedia.com/

Marketing 101

Came across the following on Freelance UK.

Given that the recent Hotel eMarketing Conference empahasised that we have to get Web 1.0 sorted out before we move on to Web 2.0, the article below looks like we have to get Marketing 1.0 sorted out before we even consider eMarketing!

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Marketing? Beats us, say small firms

We’re not sure how to use it, or where it fits into our business - so don’t expect us to implement it online. Such is the message coming from two surveys that quizzed new start-up companies about their feelings on marketing.

Marketing experts selling themselves to these small firms will no doubt be upbeat, as the first survey found almost one in three firms don’t know what marketing is. Forty-per cent had no marketing plan, and almost half launched without any budget for advertising or marketing, says the survey of 3,000 firms by Project Word.

Obtained by FreelanceUK, the headline findings show one-third of new firms are clueless as to what role marketing should play in a start-up business. Of the nearly 50% of start-ups who had no form of marketing at their launch, 36% said they would make a success of their firm solely through word of mouth.

“These statistics establish the downfall of many new companies that just assume consumers will have heard of their website,” said Jamie Delo, Project Word’s founder.

His comments tally with the second survey, which found company owners are missing out on sales by failing to market their business effectively on the internet.

The poll of 225 companies, reported by the Financial Times, by SuccessTrack found that only 11 per cent of owners felt their marketing skills were good or very good. Not being able to get their message across was the biggest barrier to firms getting more sales online, though the pollster admitted “there was no magic formula.”

“You just have to pay attention to the basics,” the firm advised, “and do everything 1 per cent better than your competition.”

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Given the theory discussed below I do not think "1 per cent better than your competition" cuts it any more!

Singapore Grand Prix > Game Theory > Hotel Marketing

What I Learnt from Watching the Grand Prix in Singapore Yesterday.

"Be daring, be different, be impractical, be anything that will assert integrity of purpose

and imaginative vision against the play-it-safers, the creatures of the commonplace,

the slaves of the ordinary."

Cecil Beaton

Pat Symonds of the Renault F1 Team subscribes to something called Game Theory.

Definition: A mathematical method of decision-making in which a competitive situation is analyzed to determine the optimal course of action for an interested party, often used in political, economic, and military planning. Also called theory of games. Answers.com

This in a very simple form was explained as follows.

In Grand Prix terms the theory says that if you are in the pack on the grid and you want to get to the front do something completely different and completely unexpected.

Because ...

If you only do the same as the others around, but with a bit more quality or a bit more efficiency then all that can happen is that you will only be a bit better - and still in the mid pack at the end of the race.

Do the different thing and you could end up first by a country mile as Alonso did!

Having looked up Game Theory on the Web (Google 10,500,00o results in 0.26 seconds!) I cannot find anywhere that says the above, however, it does propose a lot of interesting counter intuitive approaches to situations.

The main thing for me is that it encourages the different after all as Einstein said

"Insanity is defined as doing the same thing over and over again and expecting different results."

Whether it is in creating the brand, Search Engine Optimisation Strategies, Web 2.0 Strategies, Rate Distribution or Yield Management, we all need to look to alternative ways of doing things.

Hotel eMarketing 2008

As promised during my recent talk at Hotel eMarketing 2008 in London below are a few places you can find tools to help you optimise (or optimize for our American friends) your website.

You will probably see a few of the themes from my talk developed here over the next few weeks as well as the latest ideas in website optmisation. So add this blog to your news feed by clicking one of the links at the bottom of the page.

Remember the search bot/spider needs to be able to technically find your site and then work its way round.

Set up a google alert for your hotels name: http://www.google.com/alerts. This will e-mail you whenever Goggle see new content featuring your name.

The first priority in tools is the Google Webmaster suite. Thats you s webmastern not the designer! Google Webmaster Tools - www.google.com/webmasters/tools. If you haven't already set up an account. You'll find it of great value.

1) Check your source code. From Internet Explorer click on "view" and then "source"

Use find to check your key tags. Title, Description, Keyword, H1 and alt.

Copy it into word and run spell check!

2) Check who owns & controls your domain name in the "who is" section of http://www.selfseo.com/

3) Check your Google Cache type - cache:yourdomainname.com - into a Google search box

4) How many of your websites pages are cached at http://www.checkmypr.com/

5) What is your hotels Alexa rank? What is the trend? http://www.alexa.com/

6) How many links do you have? www.searchengineoptimising.com/link-popularity-check

Another tool is http://tools.seobook.com/backlink-analyzer

7) Where is your server located? http://www.81solutions.com/server-location.html

8) Do you have the correct re-directs? http://www.ragepank.com/redirect-check

9) What speed is your site loading at? http://www.selfseo.com/website_speed_test.php

10) Keyword research https://adwords.google.com/select/KeywordToolExternal

For geographic information see www.google.com/insights/search

HOW NOT TO DO SEO

THE IMPORTANCE OF CONTENT

YU9A1757 - hmm appetising

YU9A1757, originally uploaded by ciollileach.

Google Alerts did their job and told me there was something new on the web about an old client of mine, Stapleford Park, near Melton Mowbray, Leicestershire. Photographs posted on Flickr!

Obviously created by the photographer and with no real marketing info attached (what does that title code mean!), it did get me thinking, however!

If the album had been created in the name of, or indeed by, the Chef - not the company ;-) If the title was appropriate, there was a description of the wonderful fresh ingredients used and the tags were carefully thought through, then this would have been a perfect bit of low cost Web 2.0 SEO activity.

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There are a couple of other pictures below.

I really want to know what the descriptions of these dishes are!

Asian Domain Name Spam

A client of mine recently received the e-mail below.

*******************************************************
Dear Principal / CEO,

Hello!Sorry to trouble you!
We are a domain name registration service company in HongKong, which mainly deal with international company's domain name registration and disputing
in Asia.On the Sep 10,2008, Our auditing dept received an application formally from "Daredi international ltd",they claimed as your agent in Asia and consigned
by you to register following internet trademark :
domainname (clients domain name)

and the domain names:
domainname.asia
domainname.cn
domainname.com.cn
domainname.hk
domainname.in
domainname.net
domainname.tw etc...

Through our company.
According to our procedures and in order to protect your intellectual property rights, we need to send this email to the original company for confirming the
actual relationship with this company.If you do not know this company, we doubt that they have other motivation to register these domain names and probably
want to do some cybersquatting. Now we have postponed this issue and have not proceeded their registration,In order not to confuse registering these domain
names,Please contact us Asap.

PS:If you are not in charge of this matter,please transfer this email to appropriate dept.

Best Regards
Sophia
Auditing Director

West Technology Limited
Tel: 00852 9566 0205
Fax: 00852 8226 1055
E-mail: sophia@westtechnology.org
Website: http://www.west-technology.net/

********************************************************
This appears to be at the very least a spam e-mail praying on fears of cyber squatting.

For the website that clued me in to it see http://www.kenkai.com/seo-blog-article-142.htm

If you want an Asian domain name seek the advice of your website deigner or SEO specialist and get them to look at a variety of the domain name providers to find the cheapest price and most flexible service.