I wrote an article at the end of 2018 about the “Soul of Hospitality”, hoping that our hotel brands would see fit to support franchisees by managing supply growth and reducing the expensive – for ourselves and our clients – brand specificity of their new brand approach. Hotel brands are rewarded by shareholders for lean, often exploitative, growth to sell franchises and saturate markets. Hotel owners are a tool of the game. I never envisioned, however, that our brands would ever achieve that particular self-awareness.
I thought COVID-19 and the protests around George Floyd’s criminally wrong death had changed that drastically. Our brands are grasping desperately for liquidity to satisfy shareholders waiting to jump off the boat. Hilton (here) and Marriott (here) pre-sold billions of dollars worth of loyalty points to Amex (and will undoubtedly tank the value of those points further) in order to stay alive. Do what you have to do and all, I don’t blame them, but surely its purpose should be to support, throughout all their associated hotels, those that the hospitality business employs. Maybe this was the time.
Franchise responses have lacked focus, sympathy for their hundreds and thousands of employees
Sadly, their message to hospitality students – per Adweek’s summary of the virtual NYU CEO roundtable for students and Hotel Management’s discussion summary, at least – were a little hollow.
“All of us, as leaders, have a lot of people looking to us… what they need to have is hope, … a light at the end of the tunnel and it’s our job to give them that”– Christopher Nassetta, President and CEO, Hilton
“We need [governments] to step in to help our hotel owners, most of whom are small business, navigate from where we are until… we can be going forward”– Arne Sorenson, President and CEO, Marriott
Both of these individuals have accomplished a significant amount to be in the position they’re in. Both have added plenty of new brands to create more brand supply in major markets. Shareholders are happy, undoubtedly, and I don’t deny the importance of that. In June 2020, however, hotels are gasping for air and their largest variable expenses are directly associated with these brands. I do commend the leadership that Hilton, Nassetta’s company, and Best Western have taken in response to COVID-19. It’s something. After all, others have been downright negligent.
What they have not done, neither before or now, is address the value destruction that their aggressive franchise sales tactics have encouraged or the crippling effect that liquidated damages, excessive franchise fees, and restriction that ‘approved’ suppliers (those suppliers that can pay the brands the commissions and access fees that they desire) can have. Hotel franchises don’t quite see it the same way:
“Not every brand is going to make it to the other side… not to be harsh, but there are going to be winners and losers, and some in the middle”– Christopher Nassetta, Hilton
No more ‘picking horses’
Our hotel brands need to take the ownership they profess themselves to desire. They dictate who the ‘winners, losers, and some in the middle’ will be this year (and every year, really). Hotels support the livelihoods of millions around the world, many of whom are visible minorities. The success or failure of our brands is critical to this goal, absolutely, but hotels themselves need to survive to support them. Organizations like NABHOOD and AAHOA exist because hotels provide growth meritocratic opportunities for so many to grow and thrive.
If we are serious about supporting hotel owners we need to focus on the survival of our hotels. We need to refocus on fair franchising and supporting aspiring minority hotel owners to get their ‘foot in the door’. We need our hotel brands to help ensure that jobs can be supported sooner rather than later. Like so many of us in quarantine, I hope our hotel brands follow the same self-reflection path that so many of us have taken. Our industry depends on it.