Fair Franchising Remains Number-One Issue for Asian-American Hoteliers

While the Asian American Hotel Owners Association seeks to stay relevant by tackling a broad range of industry issues, the group’s agenda remains squarely focused on one supreme topic: fair franchising. That was evident last week in Las Vegas as the 11,000-member association met to talk about a number of key issues—OTAs, purchasing power, education and, of course, the politics of the group—with the chief among them how to get a better shake from franchising companies, particularly the large legacy brand organizations.

In his opening session address to a crowd approaching 2,000, AAHOA Chairman C.K. Patel outlined the group’s cooperation with a coalition of franchisees in other industries to forge a universal franchisee bill of rights. The draft proposal covers many of the items AAHOA has long lobbied for in its 12 Points of Fair Franchising: good faith and fair dealing, termination and transfer rights, transparency in fees, territorial protection and more. The Coalition of Franchisee Associations, of which AAHOA is a leader, will release the full bill of rights at a forum tomorrow near Washington, DC.

In a more definitive step toward defining the franchisor-franchisee relationship, Patel also announced the launch of a groundbreaking research study to pinpoint the returns on investment franchisees can expect from specific franchise flags. AAHOA contracted with HVS to conduct the study, which Patel said will “give members another tool to help them in negotiations with franchisors.”

AAHOA Chairman C.K. Patel chides brand companies that don’t practice fair franchising.

Years ago, when AAHOA first took up the fair franchising battle, its main weapon was a yearly report card of franchise companies and their attitudes and policies toward their licensees in light of the 12 Points. Those studies devolved into a divisive wedge between AAHOA and its members and some franchise companies. In fact, the forerunner company to Wyndham Hotels refused to participate in an AAHOA annual convention one year because of the rough treatment it received in the report.

This year, and for the past four, the process has been much tamer. Almost as an afterthought, AAHOA leadership last week released its 2011 Progress Report on Fair Franchising. Each franchise company was asked to complete a questionnaire outlining their policies toward guest reward programs, GDS and Internet booking fees and fair franchising. Ten companies submitted reports (notably, Hilton, Marriott and Starwood did not), but AAHOA leadership didn’t comment on the results or give any of the company’s a letter grade as was done in the past.

Still, the vitriol remained, as witnessed by Patel’s comments during a press conference at the convention. He described the progress report as the association’s way of “making sure franchisors aren’t sucking the blood out of their franchisees.”

Another surreal moment came on the first day of the conference. A parade of companies, including several legacy hotel brand companies, was invited on stage to present oversized checks of $50,000 and more to AAHOA and its educational fund. Following the check presentations, former AAHOA chairman Bugsy Patel moderated a panel of CEOs from three so-called franchise alternatives: Best Western, AdVantis Hospitality Alliance and Vantage Hospitality. Patel lobbed softball questions to these chain leaders to showcase why they are a superior alternative to the legacy brands. Patel even ended the session by exhorting the crowd to sign up with one of the alternative brand companies.

The next day, the legacy brand leaders had their moment in the spotlight, but it wasn’t always smooth. On an industry issues panel, executives from Marriott, Wyndham, Hilton, Carlson and Choice opined on a number of key industry issues, including what one panelist called “the 800-pound gorilla in the room:” the need for many owners to make investments in their properties following several years of inactivity due to the industry downturn. The answers, for the most part, led to a series of boos from the audience.

Choice Hotels CEO Steve Joyce told the group, “It’s getting to a point where if we don’t make investments in properties it will be harder and harder to bring them back.” The comment wasn’t well received, even though Joyce followed the comment with news that Choice is working to create a financing vehicle to help franchisees fund needed CapEx.

Next year’s AAHOA convention will be a month earlier, May 2-5, in Atlanta.


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