The ROI Crisis: Why Brand Partnership Must Be a Two-Way Street
Summary:
ROI is the Only Metric That Matters: Every brand mandate must pass a simple test: Does this expense actually put heads in beds or affect the guest experience? If the answer is no, it shouldn't be mandatory.
Standards vs. Sales Pitches: There is a difference between investing in the guest experience (cleanliness, safety) and being forced to buy overpriced items from specific vendors. We must reject the "hidden taxes" of vendor exclusivity.
Collaboration Over Confrontation: Shouting at the brands doesn't work, but neither does silence. We need to use data, open the books, and prove that owner profitability is in the brand's best interest.
Financial Respect is Non-Negotiable: A true partnership requires shared risk. Brands cannot take a guaranteed percentage off the top while owners shoulder 100% of the market risk and renovation costs.
Transparency is Key: Owners deserve full visibility into vendor rebates and marketing funds. We are the customers, and we have a right to know how our money is being spent.
Every hotel owner knows the frustration of staring at a Property Improvement Plan (PIP) that costs more than the property made in profit last year.
We sign the checks because the contract requires it. We make the upgrades because we want to keep our flag. However, we rarely get a clear answer when we ask the most important question of all.
“Is this expense actually bringing me any new guests?”
I am a proud franchisee. I believe a strong brand on the building promises quality and safety to the traveler. Yet the current dynamic is broken. The cost of compliance is outpacing the value of the brand. We are facing an ROI crisis that requires a leadership approach rooted in honest conversation and hard data.
1. Distinguishing Standards from Sales Pitches
I learned early in my career that brand mandates fall into two categories.
The first category improves the guest experience. Crisp linens, reliable Wi-Fi, and good lighting are investments. I will sign those checks every time because I know they bring the guest back.
The second category feels like a hidden tax. We are often forced to buy a specific chair from a specific vendor at a 40% markup simply because a contract dictates it. That does not serve the guest. It serves the vendor.
We need to get back to basics. If a mandate does not put heads in beds, it should not be required. We must have the courage to push back on requirements that drain our bank accounts without adding value to the asset.
2. Lessons from the Negotiating Table
Shouting at corporate executives never solves the problem. Silence does not work either.
I learned this lesson during my time as President of the EconoLodge Franchise Association. We faced corporate mandates that our members could not afford. We did not declare war on the brand. We opened the books instead. We gathered the data and showed the leadership exactly how thin the margins were for our owners.
We found a middle ground because we shifted the dynamic. We moved from compliance to collaboration. That is the teamwork we need at AAHOA. We are the brands’ biggest customers. It is time we operated like partners with a seat at the table.
3. Financial Respect is Non-Negotiable
I use the phrase “Financial Respect” often. This is a requirement for our industry’s survival.
Financial respect means transparency. If a brand receives a rebate from a vendor I am forced to use, I deserve to know about it. If I am asked to invest $500,000 in a renovation, the brand should share in that risk through fee incentives or marketing support.
A partnership requires both sides to carry the weight. Right now, the owner takes 100% of the risk while the brand takes a guaranteed percentage off the top. That bridge will eventually collapse if we do not reinforce it.
Let’s Fix the Equation
We are in this business to build legacies for our families and serve our communities. We cannot do that if our profits are eaten away by mandates that fail to convert to revenue.
I am ready to meet with the brands to have the necessary conversations to restore our ROI. We will use facts to support our case. We will use the collective strength of 20,000 owners to ensure we are heard.
Let us work together to ensure the road to profitability is open for everyone.
