ATLANTA—Backed up by steady growth of its four brands, an increasing share of reservations delivered through online travel partners and a new proactive approach to social media, America’s Best Franchising, Inc. delivered an upbeat message to the roughly 200 attendees gathered here this month for its 2012 Owners & General Managers Conference.
Reservations delivered to its 272 hotels through online partners so far this year jumped 39%, compared to the same period in 2011. “Such a significant increase underscores our commitment to increasing profits for our franchisees from Internet bookings going forward,” chairman & CEO Doug Collins told conference attendees.
America’a Best Franchising’s four brands include the upscale 3 Palms Hotels & Resorts and three upper economy brands: America’s Best Inns & Suites, Budgetel Inns & Suites and Country
Hearth Inns & Suites. All are on track to mark healthy unit growth this year, Collins told Hotel Business in an interview during a break in the program.
“We want to grow the brands, but grow them responsibly. We’ll add approximately 40-50 hotels this year across the four brands, which is an increase over 2011 of approximately five to 10 hotels. By the end of the year, however, we’ll probably have ended up losing 10 to 15 hotels,” he explained.
These hotels’ franchise agreements either will have come up for renewal or the hotels will have been sold and the new owner opts to go with another flag. “We get hotels when they’re sold, but we also lose hotels when a change in ownership occurs. So we’ll grow by a net amount of about 30 hotels this year,” Collins continued.
That number is fairly evenly distributed among the four brands. “Certain years, one brand outsells another brand, but over the long term the numbers average out,” he added.
With new construction still constrained because of trouble obtaining financing, most of the company’s growth has come from conversions from either an independent property or another brand. “This is likely to continue and I suspect my brethren at other hotel chains are seeing the same thing. Lenders now are starting to say, what are we going to do with all these bad loans? So the hotels are being placed into foreclosure and then disposed,” he explained.
With America’s Best Franchising’s emphasis on Internet bookings has come an interest in social media, particularly the online reviews guests post on both social media sites and the sites maintained by online travel agencies. To develop and implement an effective social media policy to deal with online guest reviews, the company introduced what it calls a reputation management department in January.
In the months since, America’s Best Franchising has received upwards of 5,000 reviews of its hotels on a range of social media sites such as Trip Advisor, Google and Yelp as well as online travel agency sites.
“Research shows that 85% of customers go online to research their choice of hotel before booking and this includes reading reviews that have been posted on the sites by prior guests,” reported director of brand marketing Renee Walsh.
Collins and Walsh urged owners and managers at the conference to read these reviews and to respond to them, whether positive, negative or neutral. “Tech savvy consumers especially are more likely to choose a hotel that actively engages with its customers online,” Walsh noted.
Marketing muscle
Given the size of America’s Best Franchising’s brands, relative to its competitors, responding effectively to online guest reviews—indeed, anything related to Internet marketing—has become critical, Collins added. “This is the ground game today,” he said.
In their session, industry veterans Nitin Shah and John Russell commented on the current state of the business. “RevPAR is up in most markets, but new supply growth is at historic lows. Not only is financing difficult, but why would you want to spend $100,000 a key to build when you can buy a hotel for half that price, especially with so much distressed properties coming on the market?” asked Shah, a hotel owner, former chairman of the Asian American Hotel Owners Association and current chairman & CEO of Embassy National Bank.
Russell agreed that industry fundamentals were strong. “Growth opportunities outside the U.S. are particularly strong. Of course, there are the rapidly expanding economies of China, India and Brazil, but there are opportunities closer to home as well. Take Canada, for example,” said Russell, CEO of Campus Brands and former chairman & CEO of the hotel division of Cendant Corp (now Wyndham Worldwide).
Another highlight of the conference, meanwhile, was the presentation by American Hotel & Lodging Association EVP for public policy Marlene Colucci, outlining the various issues the Association is currently lobbying about on behalf of the industry. The list ranges from swimming pool lift requirements being sought by the Department of Justice to the high number of hotel audits presently being conducted by the Department of Labor.
“We urge hotel owners to make their feelings known on these issues to their representatives in Washington as well as on the state and local levels,” Colucci said.
“Remind them our industry is an economic driver and that we create jobs. Then we need to make sure everyone votes in the upcoming election,” she added.