Good article today regarding the “Emerald Inn’ and a dispute over Rugby World Cup accommodation bookings. It is good to see the court rule that the contract binds both parties and uphold the commitment made to the motel by the customer.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10813107
June 15 2012 | Articles for current moteliers and Changes in Motel Trends | No Comments »
The latest accommodation survey shows a rise in the level of short term stays to levels not seen since 1996. Five out of seven North Island regions showed an increase with this being mainly due to domestic tourism.
Overall motels and holiday parks were the winners with a 46000 and 45000 guest night increase respectively while the hotels and backpackers sustained falls of 33000 and 14000 respectively.
May the increasing guest night trend continue.
September 16 2011 | Articles for current moteliers and Changes in Motel Trends and Entering the Motel Industry and Uncategorized | 1 Comment »
You may think I hope not to the above question but in fact it is a positive for a business to have an SOP. This is an acronym for Standard Operating Procedure and is really a necessity for a business to ensure things are consistent and your customers always receive the experience you want them to have.
For instance one of your cleaners may leave 4 coffee sachets in a room and another may leave 6. If you have a client who is a heavy coffee drinker and drinks five coffees during their stay, they will sometimes have enough to last the night but when the 4 coffee cleaner prepares their room they will get frustrated and annoyed at missing out on a cup of coffee. You may say well they can always come and ask for another one, but that is a nuisance that the customer may not want to have and it may be the catalyst for them looking for alternative accommodation.
The SOP will ensure that all tasks are completed to a consistent standard in a safe and economic manner. This means happier customers, less accidents and more efficiency within the business making it stronger and flowing down to a healthier profit.
So how do you prepare an SOP. First you must analyze the task you are writing the SOP for.
1) Choose the task
2) Perform the task and document each step
3) Identify the critical elements which must be done a specific way. Eg: 6 coffee sachets.
4) Identify any hazards
5) Isolate or eliminate the hazards by documenting the correct procedure and materials (eg: chemicals and dilution rates) for the task and any safety equipment or clothing which must be worn.
6) Set out the steps within the SOP and the order in which things must be done.
Next it is important that everyone is aware of and follows the SOP for these tasks. When you employ new staff they should be given a job description and the SOP for the tasks you are expecting them to perform. This clarifies things for both parties. It is not just the staff however who should adhere to the SOP, the business owner must also perform the tasks in the same way. If you do things differently why is this? Does the SOP need to be changed?
When you look at your business it is often too big a task to work on things like an SOP. Where do you start? There are just so many things that happen. When things are very big and daunting however you just have to remember this saying. “How do you eat an elephant? One bite at a time” It would be too hard to sit down and write SOPs for your whole business but one winter afternoon when it is quiet (looks like we are heading for some of these soon) just sit in front of your computer and pick one thing and document an SOP for it. It can be anything from checking a guest in to cleaning the pool to cleaning a bathroom to taking a booking.
Keep this process up and eventually you will have enough SOPs that you will have created an operating manual for your motel. This will add to the value of your business, make it clearer for staff, managers and minders and will help when it is time to sell your motel. It is completing a number of small tasks that eventuate in completing a major one. Just like eating an elephant one bite at a time.
May 11 2011 | Articles for current moteliers and Changes in Motel Trends and Entering the Motel Industry | No Comments »
One of the newer additions to social media is Foursquare. This basic concept is that people check in when they are visiting places such as cafes shops etc and the person who visits the one place the most becomes the mayor of that place. To learn more look at this website http://foursquare.com/businesses/
Some businesses are using this concept to their advantage by creating added value for people who use the foursquare concept. This builds your current customers in to more loyal customers and can also attract new customers.
One icecream shop gave the mayor for each day a free icecream and increased their business substantially. If there is a choice between shops and you may get something extra from one place then it is most likely you will choose that place.
Another example is a hotel who offer a bar discount to their patrons who check in on four square http://www.hotelworldnetwork.com/customer-loyalty-programs/aloft-introduces-social-networking-rewards-9746
All these things create loyalty with customers and increase your exposure on the web. What can you do with this type of advertising media to improve your business?
December 13 2010 | Uncategorized | 2 Comments »
There are three main types of business structures in New Zealand to choose from when purchasing a business and the type of structure you use will be determined by the needs you have and which structure will best suit your individual circumstances.
1) Sole Trader
A sole trader operates the business on his or her own. This is easy to set up in that there are no legal requirements for registration or formal processes to follow. The owner in this business structure does everything themselves controlling, owning and managing the business. They are entitled to employ staff to help run the business but are entitled to all profits and are personally liable for all taxes and debts.
There are some disadvantage to this structure including that you have unlimited liability for your debts which may put your personal assets at risk. It can also be harder to secure loans or investors in the business and the sole trade structure can only last for the lifetime of the person.
2) Partnership
Partnerships are where two or more people run the business together. Each partner shares responsibility for running the business shares the profits and shares the liabilities. Partnerships are usually formed with a formal partnership agreement. The profits from a partnership are not taxed in the partnership but are distributed to the partners as per the partnership agreement and taxed as individual income for that person.
The partnership structure is not as common as in the past as more people are now able to use a company structure. One of the disadvantages of a partnership is that each partner is liable for all debts within the partnership even those incurred by another partner and thus may put personal assets at risk. Also if there is a conflict within the partnership, a partner wishes to leave or a partner dies it can cause problems in the running of the business.
3) Limited Liability Company
A company is a formal and legal entity in its own right and is separate from its shareholders (group of people who own the company. Because of the formal structure the company governs the relationship between shareholders, directors and creditors and so usually fosters more confidence in a business than the previous two structures.
The liability of the shareholders is limited to their stake within the company, unless they have given personal guarantees, the company has traded while insolvent or has been trading recklessly, and so provides more protection for investors. This can make it easier to attract investors or loans. It is important for directors to clearly understand their responsibilities under the company structure though as the limited liability can be eroded by personal guarantees.
These are the three main company structures but there are other structures which may be relevant to your personal situation. It is very important when purchasing a business that you consult with your professional such as accountant or lawyer to determine which is the best option for you.
Information Sources: http://www.business.govt.nz/companies
November 29 2010 | Changes in Motel Trends and Entering the Motel Industry | 3 Comments »
For those of us who have been in the Motel Industry for a long time the answer to the above question seems obvious but we forget the day when we first entered the industry and asked the very same question.
There are three ways of entering the industry. Buying a Freehold Going Concern motel ( land Buildings and business), buying an Investment Motel (land & Buildings only) or buying a lease motel (business only). The lease business is the most common way of entering the industry with approx 90 to 95% of motels run under a lease situation.
In the lease situation a purchaser buys the right to operate the motel business from the premises for the number of years determined by the lease, the goodwill of the business and the chattels.
The lease is the document which dictates the terms and conditions within which the purchaser must operate the business. There is no standard motel lease and they can be quite varied so it is essential when purchasing a motel that the purchaser has a solicitor familiar with the motel industry review the lease and advise them on the various terms. The lease will specify the obligations of both the lessor (landlord) and lessee(purchaser). Once the lease is set up the terms are valid and can only be changed by mutual consent of both parties. The terms of a lease are usually relevant to the use of the land & Buildings and not specific to the way in which the business is operated. For example the lease may stipulate the building must be painted every 10 years but would not stipulate where the business was to advertise.
If the lease is purchased from an incumbent lessee then the purchaser is assigned the lease with the current terms and conditions and therefore becomes bound by those terms. The length of the lease is an important factor as this provides for you to operate the motel in the premises for that length of time. It is usual for a purchaser to want a lease with at least 20 years still to run. If the lease is shorter than 20 years the lessor may extend the term and it is usual for this to attract a cost.
The goodwill of a motel lease business includes the client base and business procedures which the current owner has developed. If a purchaser was buying a new motel with no previous history they would need to develop a customer base and would only gradually build the occupancy and turnover. By purchasing an established business this has already been developed and means the incoming lessee can expect a general level of income right from day one. This goodwill may also include branding, logos, websites etc. and the database of customers for the motel.
The chattels are a tangible asset; they usually consist of all the furniture within the motel, the carpets, curtains, appliances, fridges, stoves etc. If anything is hired this should be disclosed within the information provided to purchasers enquiring about the motel. A chattels list will be provided with the motel information or as part of the due diligence process at the latest and these items become the property of the purchaser.
Thus when buying a motel lease a purchaser is bound by the terms of the lease but has the ability to operate the actual business in a manner which they wish to. The financial decisions, the choice of chattels & soft furnishings, the marketing decisions and the operational decisions such as staffing are all undertaken by the lessee without needing the input of the landlord.
If you have any specific questions relating to motels or leases please feel free to comment or contact me directly and I will endeavour to answer them for you.
October 18 2010 | Uncategorized | 10 Comments »
At all times but especially in these tough economic times it is common for moteliers to be reviewing their business and looking at ways they can increase their profit. This is an integral part of operating your own business be it a motel or any other type of business. The ideas and solutions which you arrive at must however be analysed properly to ensure they are in fact a benefit and not a detriment to your business.
What is your core product? This is the backbone of your business and will be the bread and butter profit for you. Many will say well all motels have the same core product. They all have rooms with a bed and bathroom. It is true that all motels have rooms with a bed and bathroom but all of these rooms are not the same. Some are luxury rooms with expensive fittings and unique bathroom accessories, some are rooms of a modern design with standard fittings and some are older rooms with older style fittings and chattels. These are all motel rooms but each offers a different core product to their customer.
Find your identity from your core product and build on this. What are you good at and what are you not good at? If you have a luxury style complex you will not be good at servicing the needs of the budget conscious client. An older style mid range complex will not be good at servicing the needs of a client looking for luxury. What is it that you are best at? Establish your core product find your identity and build on this.
When you are looking at expanding your business you must look at the ideas in relation to your core product. You cannot be all things to all people! When analyzing a new idea put yourself in your clients shoes; is it something they would want. Would a luxury client want a frozen meal to zap in the microwave or would an anti-pasta platter be more appropriate? What can you add to your product that your current customers would want to pay extra for? It is a far more economical way of making profit by taking more revenue from your current clients than by spending marketing dollars to try and attract new clients.
When you implement a new idea it is like any other aspect of your business you must be able to monitor and measure the effect of it. If you have a new product on offer then you must set a time frame (say monthly) to measure how many customers have taken up this product and how much profit was made from it after all costs were taken out. Ask your clients for feedback. Was the product beneficial, would they use it again, how could it be improved? Then it is vital to act on the information and measurements you have gathered. If you have given a product sufficient time to develop and it is not making profit or being used then you must put it in the tried but didn’t work basket and move to the next idea. Business is a perpetual cycle of evaluation and ideas.
Most importantly be good at what you are, “Stick to your knitting” and grow your business from this to be the best of its own particular kind.
August 30 2010 | Articles for current moteliers and Entering the Motel Industry and Uncategorized | No Comments »
This workshop was conducted at the recent Motel Association of New Zealand Annual Conference, by a panel of the MANZ Consultant Motel Brokers: John Griffin, Malcolm McCrae, Kelvyn Coffey and John Harrison, answering questions and giving advice as to how you should prepare your motel for sale.
It was a very informative workshop with many points raised and many questions answered by the professional brokers. The key points being; Profit & Loss accounts, Chattels, Presentation and Leases.
Profit & Loss Accounts. It is from these accounts that the purchaser will calculate the return they will get on their investment and therefore the accounts need to be accurate and presenting as much profit as possible. A purchaser or their accountant will expect 3 years accounts not just last years, so you need to ensure your accounts are showing the best profit for the three years not just the year you decide to sell. If you take cash from your business and people are looking for a 20% to 25% return then every $1 you take out costs $4 or $5 on your sale price. $20 dollars in your pocket is $100 off your selling price.
Chattels: When selling it is important to have a complete and up to date chattels list available. The purchaser will want to see this in order to assess the business and a delay in receiving it sometimes looses your buyer.
Presentation: This is paramount when purchasers are looking at a motel. Any deferred maintenance should be completed. Fix that leaky tap so the purchaser doesn’t wonder what else needs doing that they can’t see. Clean and tidy, so it all looks pristine and orderly. A disorganized and dirty complex may make the purchaser think the reason is that the motel is too much work and put them off buying it.
Leases: Leases were the major topic in regards to the length of the lease and terms in them. Currently The Motel Assoc of NZ is working on a draught motel lease to try and replace the old ADLS leases and others which are not motel specific . This new lease will be availabe to new properties as those with existing leases in place cannot be changed unless by mutual agreement. It is becoming common for new leases to be 30 or 35 years in length and most buyers are looking for at least 20 years. Extensions can be granted by lessors but this is usually at a cost per year. There is no set figure per year as it is an individual agreement between lessor and lessee and each motel is a unique business so age & condition must be taken into account. Buyers are insisting on leases over 20 years so it is important to ensure you can extend your lease. This does not have to be done at sale time and can often be negotiated as a part of a rent review. A trade off for a rent increase could be the lessor extending the lease.
For more information on any of the above you can contact one of your professional accredited motel Brokers John or Kathie at John Griffin Realty ltd. Hamilton. E-mail kathie@shepard.co.nz
August 13 2010 | Uncategorized | No Comments »
The annual Motel Association of New Zealand conference was held in Hamilton from July 29th to August 1st. One of the highlights from the conference was the award of Life Membership to a motelier who has been heavily involved in the Motel industry over a number of years. Congratulations to Colin Hunt from Taranaki in gaining this prestigious honour.
Following is the accolade about him from his local Taranaki Branch when recommending him for the award.
Colin started in the motel industry in 1995 when he opened Brougham Heights Motel with his wife Beryl. Leading up to this he had sourced the land for the motel and found the investors for the building project.
Colin & Beryl operated Brougham Heights until Jan 2001 at which time their daughter Deborah and husband Mo Tawa took over.
Colin continued developing motels and was involved in the building of BK’S Egmont Motel in New Plymouth. He owned the lease with business partner Peter Kirk until about 12 months after operating the motel the lease was sold.
A year or so later along with several other partners he built Landmark Manor Motel. Managers were once again put in this motel and when the business had grown the lease was later sold.
Colin has been involved in the local Taranaki MANZ branch from the time they opened Brougham Heights in 1995. Firstly he was on the committee and then became President a role in which he remained until 2005. He has always been a strong advocate for the motel industry in Taranaki and has written submissions to council on several industry related issues. He was involved in the Hospitality/Tourism cluster group in conjunction with Venture Taranaki. He has also been involved in the local Chamber of Commerce.
In 2005 he, along with Deborah, Mo & Beryl purchased Amber Court Motel here in New Plymouth. He is still actively involved in the day to day operations of this property.
Colin is regularly approached by people seeking advice about how to get into the motel industry, he has also been consulted regarding different properties in New Plymouth offering the owners advice on everything from the design of the building to the actual operation of the motel.
The Taranaki Branch highly recommends Colin Hunt be considered for Life Membership by the Motel Association of New Zealand inc.
August 05 2010 | Uncategorized | No Comments »
Out visiting motels recently I came across a couple who made me reflect on how your attitude determines the type of life you have. This couple is in their late 60s early 70s and is running a motel. They purchased the motel as an investment but then needed to go back to the motel which had been seriously run down and basically build the business up from scratch. This included not only building the business but also refurbishing the motel.
Two years on they have a lovely 4 star complex with a business in the growth stage. Their comments were that they didn’t particularly want to be working at their age but that they are enjoying the challenge and are warm with a roof over their head and food on the table so have lots to be grateful for. There welcoming smiles on our arrival certainly didn’t show any signs of not particularly wanting to be there.
Conversely another motel had a couple whose motel was very well kept and immaculately presented. The conversation at this motel however was not punctuated by laughter and consisted mainly of the problems they perceived they were having in life. The welcoming smiles were not broad and open as in the first case and the couple didn’t appear to be at all happy with their lot in life.
In my opinion both couples were in a similar situation but the first ones looked at life differently and so were happier within themselves. We all find ourselves at various stages in our life with things which we are not particularly content with but it is our attitude which makes the difference. Thinking positive makes us live positive. In order to try and achieve this a good task to do is have a GFT list. This is a Grateful For Today list. Each day write down what you can be grateful for today and take the positive things from life. I am certain it is better to live life with a positive attitude than get bogged down with the things which don’t go quite as well as you would like.
June 24 2010 | Uncategorized | No Comments »