We all know about Trip Advisor and what it can do to the travel industry. The ability for guests to post their honest opinions about a property can be valuable. We also have to keep in mind that it is very difficult to please 100% of the people, 100% of the time. However, it seems that Trip Advisor is all too often being manipulated by the owners of the properties to try to bury bad reviews. It is always painful to receive a bad review, but owners have to sit back and “listen” to what your guests are saying.
We went strolling amidst Trip Advisor and started reading reviews. A true telltale sign of an owner trying to bury a bad review is when you see five glowing remarks about the property followed by an unhappy guest rating their experience a “1” or a “2”. This trend continued as we read reviews, five glowing, one bad. All of this being done to push the bad comments below the fold with the hopes that the next potential guest coming to the inn wouldn’t see it. One inn in New England had a review which was written in November. It raved about the wrap around porch with flower baskets and spoke of having breakfast outside. I don’t know about you, but I live in New England and my flowering annuals are long gone and there is no eating breakfast on the porch until next Spring! This was obviously written by the owner of the property who happened to forget what month it was. Another example that I really loved was when the property was referred to by its initials. Guest don’t refer to an inn by its initials, they call it by name.
My only word of advice is to listen to your guests and try to adjust accordingly. By writing contradicting reviews to bury a bad review only reflects badly on you, the owner, as it is easily identified. The service industry is one of the hardest jobs to perform, so do it to the best of your abilities.
Tuesday, February 05, 2008
Monday, January 28, 2008
ARE YOU READY TO MAXIMIZE YOUR PROFITABILITY?
Arden Dale writes in a compelling article published in the Wall Street Journal on January 8, 2008 that “Want to Sell a Business? You May Not Be Ready.” Ms. Dale goes on to state quite cogently that many small business owners are relying on the ultimate sale of their business for their own personal retirement funds. The author’s thesis is that many small business owners do not have proper financial records, detailed operational documentation, and may not have a very realistic idea about the price for their businesses. She goes on to point out that buyers are much more sophisticated than in the past and are insisting on receiving extensive due diligence materials before agreeing to any purchase. The author’s solution is to start getting the business ready to sell several years in advance, to keep proper books and records, and to improve the operating profitability as much as possible.
Sound familiar? This is what we have been talking about this for years now with our program to Achieve Maximum Profitability at your Inn well before it goes to the market. Looking at the financial condition of an Inn as compared to Inns across the Country is achieved by looking at results compared to other similar Inns. In this regard, one source of information for the smaller Inns would be the PAII Industry Study (2007-2008 utilizing 2006 financial results is the most recent version). Other sources includes our own Quantum Hospitality/Oates & Bredfeldt, LLC Standard Cost Analysis Study. In either case, the concept is to conform your own Inn’s financial performance to the Chart of Accounts set forth in the appropriate study, and to determine on an account-by-account basis whether or not your income and expenses are in line with the average Inns in each such study. I can state, without any doubt, that each time we do such analysis for an Inn, we are able to come up with potential cost savings well in excess of our charges for doing this work. We do in depth reviews of the operations of 30-50 Inns across the Country each year, and there are very few that stand up to this type of rigorous, detailed study. The result is that we are then in a position to suggest operational and expense cost savings which will improve the financial results prior to selling the Inn, irrespective of the process used to market the Inn. This is especially true about the “personal” costs and expenses that seem to always be present in the Profit and Loss Statement of the Inn. A good couple of years before any contemplated sale is a really good time to eliminate these additional costs and show some real profitability and net cash flow in the Inn.
Dale’s point about researching the price for the Inn is also well taken. Most Innkeepers look at what they think another Inn has sold for without first hand knowledge of the financial condition of that Inn. They think that if that Inn down the street sold for $X then their Inn has got to be worth more since it is “better” or “more popular,” etc. Another practice is simply to utilize the various rules of thumb like Gross Revenue Multiplier (see previous Article dated May 17, 2007 called “Best Methods for Finding the Ideal Inn”). Often Innkeepers are told to price their Bed and Breakfast Inns at 5-6 times gross sales, even though the business results do not justify such lofty pricing. The solution is to obtain professional advice as to what your Inn Business is really worth compared to other similar Inns before going to the market.
The point about written operational policies and procedures is another really important one. Two or three weeks training from the prior keepers of the Inn can not teach new Innkeepers what they really need to know in order to maintain the value of their new Inn Business in the first year. Those Inns which have written checklists and policies, training manuals, job descriptions, recipes, and stated practices for all of their operational tasks are simply worth more than Inns that do not have this documentation. Buyers will quickly figure this out in the due diligence process, and may walk or run away from a poorly managed Inn notwithstanding the price.
Finally, a word about where we seem to be on the National economic front, as it may impact the ability of Innkeepers to achieve their goals of selling the Inn. Some commentators have downplayed the impact of the Sub-Prime Mortgage Crisis on business. This, of course, is pure foolishness, and a disservice to those whose dreams can be destroyed by buying Inns at the wrong time or at the wrong price. It is now clear from the daily economic news, the plummeting real estate markets, and the rapidly falling stock market that the Country is at grave risk of a real recession, if we are not already there. This will clearly be felt in the tourism market, and all forms of accommodations across the Nation will be feeling this pinch. The Inn business survived the fall off after 911 by not falling prey to the discounting that the hotel business jumped on. We hope that the greater hospitality business has learned its lesson, but for Innkeepers, this year will clearly be a real challenge.
For Sellers, this is not good news. It will clearly have an impact on the prices that will be achievable for their Inns, especially if results take a down turn for them. It already has impacted time on the market for Inns, especially full service Inns with restaurants. Most Inns are staying on the market for 1-2 years before they are sold, even if they are at the right price. For buyers, this does created somewhat of an opportunity, with the Federal Reserve pushing interest rates back to the really low levels of the past several years, however the real key is to make certain that there is sufficient cushion in the net cash flow of the Inn to weather the likely fall off in the hospitality business caused by an economic recession. So buyers need to be very careful that they look at the reality of the financial performance of an Inn opportunity, that they make absolutely certain that there is sufficient cash flow to get by if things go bad, and that they have good working capital at the outset. Making an emotional “lifestyle” decision is not a very good idea in the immediate future (or perhaps ever!). The best performing and operating Inns will likely still be very attractive at the right price with such low interest rates, but marginal operations simply will not sell at any price. In any event, we will be there to offer help when and where needed.
Sound familiar? This is what we have been talking about this for years now with our program to Achieve Maximum Profitability at your Inn well before it goes to the market. Looking at the financial condition of an Inn as compared to Inns across the Country is achieved by looking at results compared to other similar Inns. In this regard, one source of information for the smaller Inns would be the PAII Industry Study (2007-2008 utilizing 2006 financial results is the most recent version). Other sources includes our own Quantum Hospitality/Oates & Bredfeldt, LLC Standard Cost Analysis Study. In either case, the concept is to conform your own Inn’s financial performance to the Chart of Accounts set forth in the appropriate study, and to determine on an account-by-account basis whether or not your income and expenses are in line with the average Inns in each such study. I can state, without any doubt, that each time we do such analysis for an Inn, we are able to come up with potential cost savings well in excess of our charges for doing this work. We do in depth reviews of the operations of 30-50 Inns across the Country each year, and there are very few that stand up to this type of rigorous, detailed study. The result is that we are then in a position to suggest operational and expense cost savings which will improve the financial results prior to selling the Inn, irrespective of the process used to market the Inn. This is especially true about the “personal” costs and expenses that seem to always be present in the Profit and Loss Statement of the Inn. A good couple of years before any contemplated sale is a really good time to eliminate these additional costs and show some real profitability and net cash flow in the Inn.
Dale’s point about researching the price for the Inn is also well taken. Most Innkeepers look at what they think another Inn has sold for without first hand knowledge of the financial condition of that Inn. They think that if that Inn down the street sold for $X then their Inn has got to be worth more since it is “better” or “more popular,” etc. Another practice is simply to utilize the various rules of thumb like Gross Revenue Multiplier (see previous Article dated May 17, 2007 called “Best Methods for Finding the Ideal Inn”). Often Innkeepers are told to price their Bed and Breakfast Inns at 5-6 times gross sales, even though the business results do not justify such lofty pricing. The solution is to obtain professional advice as to what your Inn Business is really worth compared to other similar Inns before going to the market.
The point about written operational policies and procedures is another really important one. Two or three weeks training from the prior keepers of the Inn can not teach new Innkeepers what they really need to know in order to maintain the value of their new Inn Business in the first year. Those Inns which have written checklists and policies, training manuals, job descriptions, recipes, and stated practices for all of their operational tasks are simply worth more than Inns that do not have this documentation. Buyers will quickly figure this out in the due diligence process, and may walk or run away from a poorly managed Inn notwithstanding the price.
Finally, a word about where we seem to be on the National economic front, as it may impact the ability of Innkeepers to achieve their goals of selling the Inn. Some commentators have downplayed the impact of the Sub-Prime Mortgage Crisis on business. This, of course, is pure foolishness, and a disservice to those whose dreams can be destroyed by buying Inns at the wrong time or at the wrong price. It is now clear from the daily economic news, the plummeting real estate markets, and the rapidly falling stock market that the Country is at grave risk of a real recession, if we are not already there. This will clearly be felt in the tourism market, and all forms of accommodations across the Nation will be feeling this pinch. The Inn business survived the fall off after 911 by not falling prey to the discounting that the hotel business jumped on. We hope that the greater hospitality business has learned its lesson, but for Innkeepers, this year will clearly be a real challenge.
For Sellers, this is not good news. It will clearly have an impact on the prices that will be achievable for their Inns, especially if results take a down turn for them. It already has impacted time on the market for Inns, especially full service Inns with restaurants. Most Inns are staying on the market for 1-2 years before they are sold, even if they are at the right price. For buyers, this does created somewhat of an opportunity, with the Federal Reserve pushing interest rates back to the really low levels of the past several years, however the real key is to make certain that there is sufficient cushion in the net cash flow of the Inn to weather the likely fall off in the hospitality business caused by an economic recession. So buyers need to be very careful that they look at the reality of the financial performance of an Inn opportunity, that they make absolutely certain that there is sufficient cash flow to get by if things go bad, and that they have good working capital at the outset. Making an emotional “lifestyle” decision is not a very good idea in the immediate future (or perhaps ever!). The best performing and operating Inns will likely still be very attractive at the right price with such low interest rates, but marginal operations simply will not sell at any price. In any event, we will be there to offer help when and where needed.
Wednesday, January 23, 2008
Time to Refinance?
I think that everyone is aware of what is happening in the mortgage industry. The reporters are delivering the news everyday of how home sales are falling and that lenders are tightening their belts on providing loans. Interest rates are falling and their looms the possibility of a recession. What should we do with this news and what is next?
We take this news and it gets everyone a little nervous. However, this is still the time for Innkeepers which are running a good, clean business to step up to the plate and take advantage of interest rates. Let me give you an example. We are in the process of assisting a buyer purchase a property in Maine. When we started this process back in November, we were hoping that we could find an interest rate around 7 ½%. So, we developed the business plan and in December we submitted it to four banks, two being national lenders. The results were interesting. The two national banks didn’t want to get involved, even though there was about 1.5 debt ratio. However, the two local banks reacted very differently. They are competing strongly against each other for the opportunity to finance this purchase. We now have an offer for a loan for twenty-five years, fixed for five years, at 3.28% above the treasury rate. As of January 22nd, this will provide us with a rate of 5.82%! This is astonishing!
So, if you have your financial house in order, it may be time to shop for a new interest rate. If you don’t have your finances in good shape, take steps to get them in line and use this time of interest rates being lowered to the best of your advantage!
We take this news and it gets everyone a little nervous. However, this is still the time for Innkeepers which are running a good, clean business to step up to the plate and take advantage of interest rates. Let me give you an example. We are in the process of assisting a buyer purchase a property in Maine. When we started this process back in November, we were hoping that we could find an interest rate around 7 ½%. So, we developed the business plan and in December we submitted it to four banks, two being national lenders. The results were interesting. The two national banks didn’t want to get involved, even though there was about 1.5 debt ratio. However, the two local banks reacted very differently. They are competing strongly against each other for the opportunity to finance this purchase. We now have an offer for a loan for twenty-five years, fixed for five years, at 3.28% above the treasury rate. As of January 22nd, this will provide us with a rate of 5.82%! This is astonishing!
So, if you have your financial house in order, it may be time to shop for a new interest rate. If you don’t have your finances in good shape, take steps to get them in line and use this time of interest rates being lowered to the best of your advantage!
Wednesday, November 07, 2007
Bed & Breakfast Seminar
We wanted to thank everyone for joining us at the Manor on Golden Pond this past weekend for our Seminar on becoming an Innkeeper! The group was very lively and the interaction made it educational and fun for everyone. We had the opportunity to work with specific properties that attendees were considering purchasing and it really brought the seminar to another level! It quickly pointed out to participants which inns were viable and which were not!
Now in keeping with the Manor's standards, they even provided us with a special surprise celebrity. We don't really just want to give away their name, but they happened to be one of the lead stars of the Sopranos...yes, James Gandolfini himself! I think that he really came for the Seminar, but got so wound up with the comforts of the Inn that he decided to relax and be pampered instead. Maybe next time he'll attend!
Some of our comments included:
"Absolutely necessary if even remotely serious - amazingly insightful and enlightening" - K. O'Connor
"If you are thinking about becoming innkeepers, you HAVE to know if it is possible financially, emotionally, etc." - M. Winter
"You get so much more out of a Seminar than you would an "how to be an innkeeper" book" - R. Slavinski
"A good dose of realism" - K.M. O'Connor
Now in keeping with the Manor's standards, they even provided us with a special surprise celebrity. We don't really just want to give away their name, but they happened to be one of the lead stars of the Sopranos...yes, James Gandolfini himself! I think that he really came for the Seminar, but got so wound up with the comforts of the Inn that he decided to relax and be pampered instead. Maybe next time he'll attend!
Some of our comments included:
"Absolutely necessary if even remotely serious - amazingly insightful and enlightening" - K. O'Connor
"If you are thinking about becoming innkeepers, you HAVE to know if it is possible financially, emotionally, etc." - M. Winter
"You get so much more out of a Seminar than you would an "how to be an innkeeper" book" - R. Slavinski
"A good dose of realism" - K.M. O'Connor
Monday, November 05, 2007
The Inn Goes Green
We are seeing it everywhere, and know it’s time to take it to the inn. Going green…is it for you and your inn? The first thing that we think of is asking the guests not to have us change their towels. In reality it goes much further than this. We are talking about organic food, specialty products for the inn, marketing to guests that want to be green, enjoying nature, recycling, light bulbs, and much more. We started our investigation and were surprised by the facts.
The hospitality industry spends around $3.7 billion each year on energy, much of it going to waste, as stated by the American Hotel and Lodging Association (AHLA). According to data from GreenTreks Network, Inc., a distributor of environmental education, compact fluorescent bulbs use 75 percent less energy and last 10 times longer then incandescent bulbs. Not replacing towels and linens each day saves 13.5 gallons of water daily. These facts in themselves are amazing!
We welcome your comments to share with other innkeepers!
The hospitality industry spends around $3.7 billion each year on energy, much of it going to waste, as stated by the American Hotel and Lodging Association (AHLA). According to data from GreenTreks Network, Inc., a distributor of environmental education, compact fluorescent bulbs use 75 percent less energy and last 10 times longer then incandescent bulbs. Not replacing towels and linens each day saves 13.5 gallons of water daily. These facts in themselves are amazing!
We welcome your comments to share with other innkeepers!
Tuesday, September 04, 2007
Changes From Within
Our new look has arrived! We invite you to take a look at our new website format and see the changes as they begin to occur. You can utilize either http://www.quantumhospitality.com/ or you can always use http://www.oatesbredfeldt.com/ to see the new look and feel for our website!
As many of you know, as of April, 2007 Oates & Bredfeldt, LLC is now owned by Quantum Hospitality Group, Inc. This was part of a five year transition that was finalized as of April of this year. Quantum Hospitality Group is owned and operated by Howard and Rebecca Levitan, and is located in Damariscotta, Maine. As we move forward, many changes will happen, but the quality of the work will always remain consistent. As we expand the role of the Company to provide business consulting services to the broader hospitality Industry, including larger size hotels and restaurants, we will have all consulting and educational programs become a part of Quantum Hospitality Group, Inc. At this time, you will begin to see the transition between utilization of Quantum Hospitality Group and Oates & Bredfeldt names. Oates & Bredfeldt will continue to be utilized, but will be focused and limited to the transfer of Inn properties.
For many years, our Mission Statement has been to provide premier consulting, education, and management services to Innkeepers and future Innkeepers. With that in mind, our product lines have been expanded for both future and current Innkeepers and invite you to visit our website and check them out. We value your comments and would be happy to hear from you.
Regards,
Rebecca & Howard
As many of you know, as of April, 2007 Oates & Bredfeldt, LLC is now owned by Quantum Hospitality Group, Inc. This was part of a five year transition that was finalized as of April of this year. Quantum Hospitality Group is owned and operated by Howard and Rebecca Levitan, and is located in Damariscotta, Maine. As we move forward, many changes will happen, but the quality of the work will always remain consistent. As we expand the role of the Company to provide business consulting services to the broader hospitality Industry, including larger size hotels and restaurants, we will have all consulting and educational programs become a part of Quantum Hospitality Group, Inc. At this time, you will begin to see the transition between utilization of Quantum Hospitality Group and Oates & Bredfeldt names. Oates & Bredfeldt will continue to be utilized, but will be focused and limited to the transfer of Inn properties.
For many years, our Mission Statement has been to provide premier consulting, education, and management services to Innkeepers and future Innkeepers. With that in mind, our product lines have been expanded for both future and current Innkeepers and invite you to visit our website and check them out. We value your comments and would be happy to hear from you.
Regards,
Rebecca & Howard
Friday, July 20, 2007
Is It a Front Desk or Sales Position?
When a call reaches the front desk of an Inn, many times it is just thought of as a telephone call and a potential guest for the Inn. In reality, the front desk is a full powered sales position. This is nothing to shy away from. The sooner that this is acknowledged and embraced, the results will show in the bottom line.
Prior to owning and operating our own Inn on the coast of Maine, my background was mainly sales and marketing. There is a basic formula for sales, and here is the secret recipe:
1. Qualify the caller – This is basically asking open questions such as who, what, why, when, and how. What is bringing you to the area? Who will be traveling in your party? Do you have any special needs? When are you planning to join us? Is this a special occasion? Why are you coming to the area? How did you hear about us? Are you familiar with our Inn/area? You don’t need to ask the questions as they are briefly stated above, but you need to get to know your potential customer before you can start presenting accommodations to them.
2. Present based upon their needs - Once you have learned about your potential customers’ needs, you can them present to them a room to them that meets their needs. Are they coming for a funeral and they would like a quiet room? Are they on their honeymoon and want the best room you have? Are they visiting colleges with their son/daughter and need twin beds? Do they have trouble with stairs and potentially need a first floor room?
3. Pre-Close – After presenting the room to them, do a pre-close: Would you like us to reserve the room for you? If they say yes, proceed forward. If they said no, then proceed to the next step.
4. Handle the Objection – If they say no, you have to identify the objection. You discover that the rate you quoted is too high. You discovered that they can’t climb the stairs. You discovered that they don’t like Jacuzzis. What ever the objection is identify it and move to the next step.
5. Close – We do have another room at different rate (state rate), would that work for you? We have a lovely first floor room with a deck, should we do that room instead? I completely understand the noise from the jets. We have a suite with a soaking tub, would that be best for you? If you receive another objection, return to step four and keep backing up until you can get a close.
It’s been many years since I’ve been out of the corporate world, but the “steps to successful sales” has been implanted into my brain, and I just have never forgotten them. I hope that this helpful in making your Front Desk into a successful Sales Department!
Prior to owning and operating our own Inn on the coast of Maine, my background was mainly sales and marketing. There is a basic formula for sales, and here is the secret recipe:
1. Qualify the caller – This is basically asking open questions such as who, what, why, when, and how. What is bringing you to the area? Who will be traveling in your party? Do you have any special needs? When are you planning to join us? Is this a special occasion? Why are you coming to the area? How did you hear about us? Are you familiar with our Inn/area? You don’t need to ask the questions as they are briefly stated above, but you need to get to know your potential customer before you can start presenting accommodations to them.
2. Present based upon their needs - Once you have learned about your potential customers’ needs, you can them present to them a room to them that meets their needs. Are they coming for a funeral and they would like a quiet room? Are they on their honeymoon and want the best room you have? Are they visiting colleges with their son/daughter and need twin beds? Do they have trouble with stairs and potentially need a first floor room?
3. Pre-Close – After presenting the room to them, do a pre-close: Would you like us to reserve the room for you? If they say yes, proceed forward. If they said no, then proceed to the next step.
4. Handle the Objection – If they say no, you have to identify the objection. You discover that the rate you quoted is too high. You discovered that they can’t climb the stairs. You discovered that they don’t like Jacuzzis. What ever the objection is identify it and move to the next step.
5. Close – We do have another room at different rate (state rate), would that work for you? We have a lovely first floor room with a deck, should we do that room instead? I completely understand the noise from the jets. We have a suite with a soaking tub, would that be best for you? If you receive another objection, return to step four and keep backing up until you can get a close.
It’s been many years since I’ve been out of the corporate world, but the “steps to successful sales” has been implanted into my brain, and I just have never forgotten them. I hope that this helpful in making your Front Desk into a successful Sales Department!
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