HB On The Scene: Franchise-Firm Executives Face The Music At AAHOA Conference

LONG BEACH, CA— Recognizing virtually every franchisee has “issues,” the Asian American Hotel Owners Association (AAHOA) Friday brought together a quartet of hotel-franchising leaders to address— and assess— several concerns identified by the association’s membership as among the most pressing they currently face. With AH&LA Educational Institute President Anthony Marshall leading the question-and-answer session, those on hand to respond to input from the overflow audience included: Hilton Hotels Corp. Executive VP and Brand Performance/Franchise Development Group President Tom Keltner; Choice Hotels International President/CEO “Chuck” Ledsinger Jr.; US Franchise Systems Chairman/CEO Mike Leven; and Cendant Corp. Hotel Group Chairman/CEO Steve Rudnitsky. The first order of business needing to be addressed was that of finding better ways to put heads in beds. Given the fact nearly half (48%) in the audience reported their occupancies are hovering at— or below— the national lodging sector average, pressure was understandably put on the four industry leaders on stage to lay out their road map for generating more business for their franchisees. The next query, asking for a measurement of franchisee satisfaction with their contracts, shaped up as a reasonable reflection of today’s tougher economic times, what with 39% maintaining they are moderately satisfied with their franchise pacts while 49% checked in as being unsatisfied. The logical extension to this line of questioning sought to test the waters vis-à-vis those who would dump their present franchisor, provided they could do so without being penalized. Given this scenario, nearly two-thirds (64%) said they would like to switch their allegiances, while 30% contended they are still willing to stay the course. In light of this mind-set, the sanctity of the contract— and the feasibility of early-out provisions— commanded the focus of the franchise-company executives on hand. Accordingly, while Ledsinger termed franchise contracts “a two-way street,” he similarly emphasized his company always tries to be “understanding and realistic” when faced with what may shape up as something of an untenable situation. The last word on this subject, however, was delivered by Leven, who stated: “We understand how business works and, because of that, we can adjust our fee structures for those hotels posting occupancies below 50%. In short, we do everything we can to work with, and on behalf of, our franchisees.”