Current Realities Impacting Hotel and Motel Transactions in Fall 2019

Negative Financial Impacts on your guests that you will want to Avoid as Hotel and Motel owners.

Hotel and Motel owners – here’s something to watch out for with your clientele. There are two instances to which I am referring but if space and time permitted, I could add a few more, less egregious ones. 

Recently I was in Washington DC and stayed at a stately, well known, top flag hotel for a conference. Beautiful hotel – wonderful stay and fascinating city. Upon check out I asked to see the paper receipt. I don’t know about you, but I rarely inspect my emailed receipts, so I always like to check the receipts “on the spot” to check for any errors. We were there for a full week and used taxi’s and “shanks pony” (that’s a euphemism for walking on foot) to get around. We never rented a car.

Check your bill!

When I checked the bill there were two valet charges for a total of $124 plus tax in US funds. Huh – this was an 11% overcharge and I never had a rental car and never used a valet. The very professional front desk lady apologised and immediately corrected the error.  However, if I had not checked and simply let the charge to go thru, I might never have discovered it. And if I did discover it how much more trouble would that have been to correct the error from Calgary in communicating to Washington DC.

At this same hotel chain at a Caribbean resort one of my best friends attended a wedding and experienced a full 2-day extra charge. He had to prove the overcharge be securing his Credit Card statement on his return to Canada. He claims he will never use that hotel chain again.

Further, if these bills were simply going to a corporation, would the accounting department paying the bill even have an inkling that there was a mistaken overcharge.

3    Currency Issue!

2.     Secondarily there was a currency issue. The hotel billed the wrong, higher amount and then immediately refunded that full wrong higher amount all in US dollars. They then charged the lower correct amount. HOWEVER, the Sell/Buy of US to CAD funds left me with a further charge of $94 CAD for a $1700 CAD  charge. 

Visa blamed it on the hotel, but that was ridiculous because the hotel refunded the exact same amount of US funds as they incorrectly charged in the first place. This problem arises because all of these calculations are done by machine algorithms. My bank at their own discretion ultimately refunded this amount.

Send an apology!

3      Finally, make sure that you send out an apology after the error is corrected unless it’s very minor. The travelling public relies on trust and confidence in the supplier of the service along with a follow-up of confirmation of the correction of the mistake and a genuine apology.

So, dear reader, if you are in the hospitality industry, make sure that your staff are very aware of checking for mistakes that could hamper trust and future business.

                                Until the next periodic Blog – Tim Anderson – Hotel Broker

                                                                     January 2020 ----403-862-4179

Click on the title below for a quick look at the hotel/motel market as it is now appearing.

Current Realities Impacting Hotel and Motel Transactions in Fall 2019

Current Realities Impacting Hotel and Motel Transactions in Fall 2019

Canmore, Banff, Jasper and other holiday destinations have done as well as ever this year. Read about The Malcolm, the brand new luxury hotel in Canmore after this quick update on the Other Side of This Challenging Hotel Market.

I have just brokered a transaction in Saskatchewan for a $12 million property that sold for $4.175 million.

Why? The relatively new property located in a decent sized smaller town was hit by the oil and gas downturn with the subsequent reduced occupancy and rack rate all of which of course dramatically reduced the ADR and RevPAR. In short, the capitalized value was savaged.

Recent Hotel Sales
My associate and I transacted a total of 5 hotels and motels in 2019 which is a marked increase over 2018.

One was sold for a planned change of use but will still operate as a smaller town motel until the new owner is able to get his project in place. One was an operating property under receivership but it still captured a value close to what the owner wanted. Most encouraging, one was purchased on the basis as noted below. It made sense to the buyer and the seller was prepared to meet the market as it now exists.

This speaks to what seems to be the new attitude of purchasers and owners which recognizes economic realities.

Purchasers – “If this is the new normal, I am going to seek out opportunities that make sense in this economy and I am going to run a successful hotel or motel.”
Owners – “If this is the new normal, I am prepared to set my price at today’s value to secure a successful sale of my property.”

On the other side of the market, here’s an encouraging report from spending an evening with the Rockies SKAL club and then overnighting at the New Malcolm Hotel in Canmore, Alberta.