O8A.ORG
Owners 8Â Association
DISCLAIMER: The opinions and comments of individual franchisees expressed herein are solely the opinions of those individual franchisees and do not necessarily state or reflect the opinions of the Owners 8 Association or its attorneys. The information in this website is the sole property of the Owners 8 Association and any duplication or reprint cannot be made without the consent of Owners 8 Association.
An independent association of North American Wyndham Hotel Group franchisees
CURRENT UPDATES
November 19 2011
Should Franchisors Make Revenue Share at the Hotel Operators Expense?
Over the last few weeks we have been researching this issue for the members. According to the information we have received, we have been told that this is nothing new and not any type of new initiative by franchisors to line their pockets. However, what is of concern is the fact that most of us never knew the specifics on how franchisors such as WHG have found ways to create extra revenue streams. Although, we have and rightly so, always suspected that franchisors continue to obtain "KICKBACKS" from vendors and other exclusive partnerships that they create, we never thought that they would be revenue sharing on commissions on room rate bookings to their own brands.
One of our members was in discussion with their DOS regarding the SVC rate code and the AARP 20% discount that is mandated. For those who have been following our emails, you should be aware of the email that stated that the SVC rate code gave a deep discount while still allowed 10% commission and 5% Wyndham rewards points plus GDS fees. So, what is interesting to us is the fact that the 10% commission to AARP (one of many other discount groups) is a "Member Benefit Discount" program which allows WHG to share 5% of the 10% commission. WHG states that the 5% profit that they make from the commission is spent on marketing for the franchisees. Unfortunately, with their lack of transparent disclosure the franchisees cannot confirm how the Marketing Funds are spent. We believe marketing funds have often been used for items that are not necessarily for Marketing the Brands. Due to the lack of transparency from franchisors such as WHG, we will continue to raise and ask questions regarding funds spent for Marketing.
THE MAJOR CONCERN
Our concern is as follows, according to the email that a WHG official sent to one of our members, it clearly states that all of the Member Benefit organizations (meaning extra 5% profit for WHG) are listed under the SVC rate code probably in the form of a Travel Agent Number. As we continue to see the SVC rate code on more and more reservations, we have to ask the questions:
Are these legitimate SVC rate code customers?
Is this truly benefiting the franchisees?
Is the franchisor, pushing this rate code as it creates an "extra" member benefit for WHG in terms of an additional 5% in fees at the expense of the franchisees?
The Bottom line, franchisees give 20% discount off rack, 10% commission (of which WHG makes 5%), 5% fees to Wyndham Rewards, plus GDS fees may apply and we as the operators suffer. The SVC code appears to create an extra 10% revenue stream for WHG.
So Should Franchisors Make Revenue Share at the Hotel Operators Expense? Are they really benefiting the brands and the franchisees or are they "Helping themselves"? You DECIDE!
August 9 2011
SVC Rate Code Concerns
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It has been brought to our attention that there are extreme concerns among many franchisees regarding the SVC discount rate code. The SVC rate code is a discount code which is being utilized by many companies and individuals in order to obtain rock bottom room rates that are commissionable and are eligible for Wyndham Rewards Points.
According to our knowledge, the code allows a 20% discount off rack rate. WHG have also ignored the typical channels of AARP, AAA, etc, in favor of this rate code which can cost us up to 35% before royalties. Although, many have raised issue regarding this rate code, it appears that WHG has ignored concerns from the franchisees and have not been willing to make modifications to the rate code as they argue that it sells empty rooms. Many of the individuals or companies utilizing this rate code are the same one's who had been obtaining 10% off rack through the other available booking codes. Under the guise of room bookings, WHG franchisees are being forced to participate in this code that discounts unlimited "businesses" and they keep adding companies to this svc participants list while consumers spam the internet of this code to obtain discounted room rates. The most significant concern is that their is no way to verify that the individuals using the rate code are truly eligible to use the discount. We believe that the franchisees should be given the option to decide to participate or not participate with this rate code and there should be some method of policing or verifying usage of this rate code.
Example 49.99 Rack Rate
-9.80 20% discount for SVC code
40.19 Room Rate after discount
-4.02 10% Commision
36.71
-2.01 Wyndham Rewards Point Charge
$34.70 Actual Room Revenue however you will pay royalties on $40.19
Owners 8 Association
Owners Working Together |
Over the past 15 years in the lodging industry, a number of drastic changes have taken place in regards to operations of hotels. A majority of these changes have had a direct impact on our hotel’s bottom line. Today, Amenity Creep is a significant concern for hotel operators. On the Owners 8 website, Amenity Creep is defined as follows: The increasing amounts of amenities required by hotel franchisors that creates extensive new expenses on the franchisees without creating any measureable return on investment. Increased breakfast requirements and its associated costs fall into this category of Amenity Creep. Over the past few years, many of the franchisors have continued to develop newer costly and more demanding breakfast standards. Most franchisors rely on hotel room revenues for their franchise fees and are not impacted in any way by increased brand standard implementation costs. New standards are implemented on franchisees on the basis of competing with our competitors however, many of us wonder if there is significant merit to this argument. Many brands have in fact mandated that limited service hotels without food and beverage must hire breakfast attendants during their breakfast offering. Further, these increasing requirements have resulted in extensive costs to meet both state and federal food service regulations.
Essentially in today’s limited service hotel industry, we have continued to help take away a large amount of breakfast business from restaurants. As our brands increase breakfast requirements, our guests continue to demand more while rates continue to remain stagnant. One suggestion that many hotel operators have had would be to take the restaurant out of the limited service hotel industry. Every hotel offers similar breakfast items which has taken away the novelty or competitive edge from offering such breakfast. We are hoteliers and not restaurateurs, therefore wouldn’t it be much more beneficial to the hotel operators as well as the US economy to allow restaurants to focus on their business while we focus on our business which is selling rooms? If restaurants were given back their share of the breakfast business then they would be given the opportunity to increase their revenues as well as national employment. In today’s economy increased employment and revenues would be a major boost for the US economy.
Don’t you think that it is time for us to work with our state and federal government officials to help increase US employment while we improve limited service hotel and restaurant profitability?
You Decide!
Working Together We Can Make a Difference
Jay (Jimmy) Patel
Interim President O8A
Hotel Frequent Stay Programs – Are they beneficial to economy brand franchisees?
Over the last 2 decades, hotel frequent stay programs have been implemented by all hotel companies. Many of the programs such as that of Marriott, Hilton, and IHG (Holiday Inns) have been very successful. These programs have been in place for several years and some programs have a loyal following of primarily corporate guests. Other programs such as Wyndham Rewards, Choice Privileges, and La Quinta Returns which cater to the middle and economy market segments have also been created by the franchisors. These guests are a mixture of some corporate, commercial, and transient segments of the lodging industry. The question that we as franchisees continue to ask our hotel franchisors is: How effective have these programs been and how beneficial are they to our hotel operations and bottom line?
These frequent stay programs have continually racked up new members on an astronomical basis and the franchisors have often discussed the number of members of their frequent stay program. However, as franchisees we continue to ask the hotel franchisors what the redemption rates of the points are with the specific frequent stay programs and how have these programs benefited the individual hotels. Unfortunately, these figures are never disclosed to franchisees and therefore we are unaware of the effectiveness of these frequent stay programs. Further, these same frequent stay programs involve franchisees paying an extra 5% in revenues as a program fee to the franchisor. Ex. On a guest rate of $50, if the guest is a frequent stay member of one of the programs, the franchisee will typically pay an extra $2.50 in fees which is in addition to any royalties or marketing fees that the franchisor will collect from the hotel operator.
More recently, franchisors such as Choice and Wyndham had been automatically enrolling frequent stay members online. They enrolled members when they did not uncheck a box during the reservation processes online. On many occasions, guests are becoming members of the frequent stay programs without their knowledge and therefore the guest is unaware of the program and its benefits. As hotel operators, we essentially are paying an extra 5% in fees for a guest that may be completely unaware of their membership and points. Even more concerning is the fact that many of these accumulated points will expire after 3-4 years and when these points expire the dollar value of these points is never accounted for. The hotel operator may have contributed $2.50 towards a specific guest’s points and these monies that were spent would basically end up in the hands of the franchisor. The franchisors have been tight lipped about discussing the number of expired points on an annual basis and their actual dollar values. Therefore, as revenues continue to decline in many markets, the additional 5% frequent stay program fees continue to climb.
Many of the franchisors continue to list in their SEC filings that their frequent stay programs are a source of profit and have actually increased their bottom line. These are marketing programs, however; it appears that frequent stay programs have become an avenue to increase franchisees fees in the name of a marketing program. These frequent stay marketing program budgets and performance must become more transparent and available to the hotel operators. Until, the dollar values of these programs are discussed with the franchisees, a cloud will continue to be present over frequent stay programs. We as franchisees continue to ask the question: Are frequent stay programs beneficial to franchisees?
January 29 2011
SOFTHOTELS OUTAGE
The email below was sent out to all WHG franchisees and managers today over 12 hours after the incident occurred.
Softhotels went down last night due to some issues that they have discussed in the email below. However, it is quite disturbing that if they had a backup plan it must have failed thus creating havoc at all WHG Softhotel locations. The entire system was rendered unable to operate their softhotels terminals as they could not log in and thus they had no functionality at the hotels.
Once again, we continue to ask for continued extensive improvement with this software that has been full of extensive glitches from its initial ill advised roll out. We hope that WHG thoroughly evaluates this failure in order to prevent this type of detrimental situation in the future. As always, we continue to be extremely disappointed with Softhotels and its sub par performance.
If you are having trouble viewing this e-mail, click here to view the Web version.
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To: Owners and General Managers Due to a planned power outage to our Data Center last evening, we were running our data center on ourbackup power generator. That generator caught fire and was rendered inoperable and the data center went offline at approximately 3:00am EST. The power came back on at 4:10am EST, and our IT team has been working to bring our systems back online. ? SoftHotel is now operational for most properties. If you are re-connected and have problems with an incorrect business date, please reboot all workstations and log in again. If this does not resolve your issue, please contact a technical support agent for further assistance:
? We are now working on the recovery of our key applications: Central Reservation Systems, Brand websites, Call Center Applications, MyPortal, Global Distribution Systems, Online Travel Agencydistribution. We anticipate having CRS and brand websites updated by 1:00pm EST. We will continue to provide you with updates and will send out another e-mail when the system is back up. We apologize for the inconvenience and please rest assured we are working diligently to resolve the issues. |
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22 Sylvan Way, Parsippany, NJ 07054
January 10 2011
LEGAL CHALLENGE UPDATE - Initial Press Release
Hotel Franchisees File Two Class Action Lawsuits against Wyndham Worldwide and Choice Hotels International for Breach of Contract and Unfair and Deceptive Practices
Fort Lauderdale , Fla. – January XX, 2011 – Franchisees of Wyndham Worldwide, Inc. and Choice Hotels International have filed separate class action lawsuits against their respective global hotel chains for violating franchise agreements and using unfair and deceptive practices to charge its franchisees an additional fee, which was imposed after the execution of many of their franchise agreements. The lawsuits, filed in the United States District Court, Middle District of Florida, are seeking in excess of $260,000,000 in damages in one case and $240,000,000 in the other.
Wyndham Worldwide, one of the largest lodging companies in the world, currently franchises more than 7,090 hotels, representing more than 593,000 rooms, in the United States and more than 66 countries and territories. The company owns 13 brands featured worldwide (many of which are included as defendants in the case), including well-known hotels such as Days Inn, Super 8, and Ramada. Choice Hotels franchises more than 6,000 hotels in the United States and more than 35 countries worldwide, including well-known hotels such as Clarion Inn, Comfort Inn, and Quality Inn.
According to the lawsuits filed by Florida-based Ruden McClosky, by contract, franchisees must pay two separate fees – a royalty fee and system fee. The system fee, ranging from 3.0 to 3.85 percent, is specifically designated for advertising, reservations, and other related activities. However, on top of these fees, the hotel chains have charged and required plaintiffs, and all other similarly situated franchisees, to pay an additional fee of up to 5% of gross room sales generated from hotel stays by members of Wyndham Rewards and Choice Privileges, the hotel chains’ respective frequent stay programs.
According to the Complaints, not only is this being done without franchisee approval, but in many instances, guests have been automatically enrolled in these reward programs without their knowledge or consent. Plaintiffs allege that in order to “opt out” of the rewards program, guests, when making an online reservation, were required to be aware of a discrete box in the lower portion of the screen that automatically had already been checked off by the hotel chain making the guest a rewards member.
As a result of this and other practices, guests who are unaware of their enrollment do not benefit from the membership – yet franchisees still pay the price in the new fees excised without their consent. The practice of automatically enrolling guests in both the Wyndham Rewards program and Choice Privileges program may recently have stopped by the chains; presumably due to complaints from franchisees.
“Essentially, Wyndham and Choice created what appears to be a phantom group of rewards members who are being used as conduits through which the hotels can extract an extra fee from franchisees,” said David Wood, shareholder of Ruden McClosky and attorney for the Wyndham and Choice franchisees.
“Most loyalty programs are designed so that customers are encouraged to take advantage of the reward points they receive,” said Beth-Ann Krimsky, shareholder of Ruden McClosky and attorney for the Wyndham and Choice franchisees. “Many guests did not even know they were enrolled in the program and thus could not take advantage of the points accrued before they expired. Yet franchisees were still expected and required to foot the costs of the program, above and beyond what they were already paying in royalties and marketing fees.”
About Ruden McClosky
Ruden McClosky, one of Florida ’s most established full-service law firms, represents regional, national, and international clients with business interests throughout the state. With offices across Florida , Ruden McClosky is fueled by strong client relationships, a roster of experienced attorneys, and a commitment to delivering superior client service with a focus on results. Among the most respected law firms in the state for more than 50 years, Ruden McClosky’s culture is grounded in excellence, professionalism, diversity, and civic involvement. For more information please visit www.ruden.com.
For further info contact - Andrew Gordon - ph: (954) 527-6251 or email andrew.gordon@ruden.com
or David Wood - ph: (407) 244-8022 or email david.wood@ruden.com
Owners 8 Association
Owners Working Together
Owners Working Together
Nov 10 2010
Enhanced Alternative Sell on Brand.com - A DESTRUCTION OF BRAND LOYALTY
Last week WHG Hotel Group President, Mr. Eric Danziger sent out the attached update to all WHG licensess. It involves alternative selling of different branded hotels on every brand website such as Super8.com or Daysinn.com. This process is also known as Cross Selling and it allows additional exposure to other WHG brands while the guest is searching a specific brand. For example, if a guest searches for a Days Inn inMemphis, TN then the guest will get listings of the Days Inns located in Memphis in order of distance from city center or attraction. However, the guest will also get listings of other WHG brands such as Super 8, Hojo, Travelodge, etc. within a specific distance that WHG has set after theDays Inn listings. According to WHG this is good for everyone and in the email to every licensee all they did was substitute the brand name depending on the franchise you own.
So, How can we all get the same benefits in this case? Obviously, you are thinking that this cannot effect everyone in the same manner.
The Truth to the Matter, is that this is a devastingly negative step that has been taken by WHG which will result in little positive effect for most franchisees. While we understand that this type of cross selling is effective for Marriott, Hilton, and IHG, the fact is that it is not effective or beneficial to franchisors such as WHG who predominately are playing in the economy segment and have little brand differentiation or segmentation. There is very little brand differentiation between Days Inn, Super 8, Travelodge, Howard Johnsons, Knights Inn, Baymont, Ramada, and Microtel. All of these brands are economy brands and compete with each other for the same business. Also, the fact that the same amount of Wyndham Rewards Points are available at all of the WHG brands compounds the negative impact on the individual licensees and franchises. This is yet another negative step that WHG has taken which has destroyed BRAND LOYALTY for the specific brands while it continues to improve WHG's bottom line just Wyndham Rewards. WHG will benefit from the fact that more locations are displayed on the website as it allows them the opportunity to gain market share as a franchisor. However, this is destroying brand specific market share as rate is what drives our economy brand revenue and the guests are typically looking for the best price. For the individual owners it is our hotel against everyone else, regardless of the franchisor and this increases your chance of losing business to the competitior next door who just may be another WHG licensee.
We are extremely dissapointed that WHG continues to try to follow the industry on issues that benefit them and continues to turn a blind eye to addressing issues where they are one of the only franchisors following questionable practices.
Owners 8 Association
Owners Working Together
Owners Working Together
This communication contains information from O8A that may be confidential. Except for personal use by the intended recipient, or as expressly authorized by the sender, any person who receives this information is prohibited from disclosing, copying, distributing, and/or disseminating this information. If you have received this communication in error, please immediately delete it and all copies, and promptly notify the sender. Nothing in this communication is intended to operate as an electronic signature under applicable law. The contents of this email should not be construed and misinterpreted as being representative of the affiliations of sender. The opinions and comments of individual franchisees expressed herein are solely the opinions of those individual franchisees and do not necessarily state or reflect the opinions of the Owners 8 Association or its attorneys.
-------- Original Message --------
Subject: Fw: Enhanced Alternative Sell
Date: Sun, November 21, 2010 10:19 am
To: info@owners8association.org
--- On Wed, 11/17/10, Eric A. Danziger <francomm@wyn.com> wrote:
From: Eric A. Danziger <francomm@wyn.com>
Subject: Enhanced Alternative Sell
To: jpatel0730@yahoo.com
Date: Wednesday, November 17, 2010, 4:37 PM
From: Eric A. Danziger, President and Chief Executive Officer
Wyndham Hotel Group
Date: November 17, 2010
Re: Enhanced Alternative Sell on Brand.com
Those of you who attended our first Global Conference in September heard the exciting announcement that we are taking yet another step toward maximizing the power of Wyndham Hotel Group. On November 18, 2010 we will be launching a new “Enhanced Alternative Sell” distribution model on our brand websites.Current State
Today, seven of our sister brands can be offered to the consumer on brand websites if the host brand has no location within a 25 mile radius or if there are no properties with availability. While this has certainly generated additional revenue for all of our brands, including the Super 8 brand, the model is not competitive with other hotel companies. We believe we are still missing out on significant potential revenue.Future State
“Enhanced Alternative Sell” will differ from the current model in several key ways.• 11 Wyndham Hotel Group brands* will participate, including the addition of Wyndham Hotels and Resorts, Wingate by Wyndham and Hawthorn Suites by Wyndham.
• Other Wyndham Hotel Group brands will be offered regardless of host brand availability.
o The “host brand”, or the brand that the consumer originally came to the website to see, will always be displayed first.
o These host brand hotels will then be followed in distance order by other Wyndham Hotel Group brands. (See example attached on page two.)Consumer Acceptance
This past summer we conducted user testing on this new functionality and it was extremely well received. Not surprisingly, the consumers we asked said they like having a wider variety of choices and found it provides an easier and more effective online shopping experience.Additionally, as this model is similar to what most other hotel companies use, consumers easily understood how the hotels were displayed and were comfortable navigating the site. One tester summed it up by saying “I like that this is a one-stop shopping experience. It saves me time to see more hotels right here - - I wouldn’t be as likely to leave this site and start another search”.Anticipated Benefit
We are confident this new selling model should create significant benefit for the Super 8 brand. Super 8 properties will now have the opportunity to be sold on other Wyndham Hotel Group brand websites, even when the host brand is available. Plus, whether our hotels are booked or not, our presence on these other ten Wyndham Hotel Group websites will enable Super 8 properties to be seen by millions of new visitors every year, increasing visibility.This is an exciting time for us as we come together as the world’s leading hotel company to offer consumers a better experience, provide our franchisees a better e-commerce model and more effectively compete with other on-line providers. We appreciate your continued partnership as we strive to improve our business, together.Best Regards,
If you have any questions, please contact your director of operations and support or the operations support desk at (800) 888-4636.
*Participating brands include Howard Johnson®, Wyndham Hotels and Resorts®, Wingate by Wyndham®, Hawthorn Suites® by Wyndham, Days Inn®, Ramada®, Baymont Inn & Suites®, Microtel Inns & Suites®, Super 8®, Travelodge® and Knights Inn®. TRYP by Wyndham and Planet Hollywood Hotels® are not participating in Enhanced Alternative Sell at this time.
22 Sylvan Way, Parsippany, NJ 07054
July 24 2010
As you are all aware, the last year has continued to be very difficult for many us. While we continue to hear that the economy is improving, many of us have not seen any major improvements in our revenues. In fact, in many areas the revenues have continued to decline throughout many of the first 7 months of 2010. In the midst of this disastrous economy, WHG went through with its threat of restricting sites from receiving reservations from central reservations channels which often included reservations from Third Party Travel Agents. Last month, we became aware that almost 900 WHG franchisees would end up being restricted if they did not sign up for Softhotels however, WHG continues to tell us that there are only 200+ franchisees threatened with legal action. We continue to maintain the fact that our systems on site were typically safe from being breached as all the prior breaches at WHG were in their main servers, it is important that we keep our onsite systems secure.
We were forced to upgrade under the umbrella of PCI compliance concerns as our franchisor lacked foresight into properly addressing the problem. There were other options available to them but unfortunately these avenues which included upgrading the existing software were not carefully evaluated by WHG. In fact these options were discounted as being not beneficial as WHG appeared to be more concerned with the financial impact on WHG rather than their franchisees. Now, essentially it appears that only a small percentage of the franchisees have yet to upgrade and those licenses have been warned that they will receive default letters and will be removed from their respective brands if they do not comply by July 31, 2010.
PCIC was and continues to be an issue of concern for many franchisees as despite upgrading to newer systems they may still be out of compliance for not following all the necessary guidelines. We received a copy of a useful document from AAHOA; please refer to the attachment PCI Compliance for Dummies in order to make sure you are following the correct steps to be PCI compliant in all your credit card transactions. Recently, we evaluated the legal ramifications of all the steps that WHG has recently taken and our attorneys that reveiwed the information found that depending on the specific franchisee's agreement there is a possiblity that WHG did improperly restrict locations and may have violated some license agreements depending on the age of the agreement. Typcially, we have found that the newer agreements have protected the franchisor and allowed them to take any necessary steps without repercusions. Therefore, it would be up to the individual franchisee to have their attorney determine if they have grounds to take any action and there is no blanket violation by WHG as it pertains to all franchisees.
While many of you wait for your new software to be installed, we need to share with you some of the concerns sent in by our members. Those licensees that have not received and installed their new software have been going through significant issues with the current PRM process. This only involves franchisees who have not installed the software and they are obtaining their reservations manually through a process that involves logging into Wyndham's MY Portal system. Some of the issues they have been facing are a lack of inventory control and improper rates being charged. If you are on the current PRM system then it is important that you understand the implications of having reservation related issues with a guest. If you happen to not be able to meet the guest's reservations request then you may be subject to the new $160 penalty from customer service cases. This could end up costing you more than the actual room revenues that you may have obtained. A few of our members have simply just closed inventory during busy periods as it is more fiscally sound to take that route. We have also received complaints that rates were randomly changed and were incorrectly loaded resulting in a loss of revenues to the sites. If anyone is utilizing this system and would like to share any further concerns with us then please send that information in to us.
Also, as many of us continued to receive and install the new software this month we have also found that there have been a significant amounts of data entry errors on the rates. As our existing reservations have been transferred from the older HSS and MSI platforms to the new SoftHotels platform there have been errors in room rates as well as reservation dates. It is very important that after you convert over to the new system that you take the time to verify all your upcoming reservations and make sure that no errors were made by the corporate staff. Although, this is time consuming it is a necessary evil to ensure that you receive the correct rates and that the reservations were made for the correct dates. Fortunately, since we do not have a significant amount of reservations on a daily basis at most WHG brands this process will not be too lengthy.
Despite our concerns over the last 2 and half years regarding Direcway, WHG essentially made all the licensees sign a new upgrade contract with Hughesnet which has resulted in us continuing to pay excessively for this service for the next 36 months. The only other option that we had involved using our high speed internet however you still had to contract with Hughesnet to provide a type of gateway which would still cost over $100 month on top of your internet service costs. So it appears that despite getting some verbal assurances that WHG would reevaluate this relationship that they continued with the status quo which means we will pay more to continue the 2-way interface. They forced all licensees that upgraded into a new contract with the communications provider and the result is that we will continue to overpay for services from Directway/Hughesnet.
This information ties in with our most recent discussion on the issues that continue to plague WHG franchisees.
O8A's Top Four Issues with WHG
- WHG Technology Standards
- Wyndham Rewards Guest Loyalty Program
- Fees
- Approved and Exclusive Vendors
- WHG's Technology Standards
The high cost and poor performance of WHG's technology standards outweigh the benefits Owners receive from this technology. Owners need reliable and cost-effective property management systems ("PMS") that book reservations, perform check-in and check-out functions, manage rates and inventory, collect certain information about each guest, automate the record keeping of the hotel, and interface with other electronic systems at the hotel. Despite WHG's assertion that the PMS should also relay our guests' information directly to WHG, we do not believe this to be the case. Each guest is the guest of the individual Owner and the individual Owner's property. Therefore, the guest's information should be held in confidence by the Owner and should not be accessible by WHG.
The PMS solutions that WHG requires its Owners to use do not always suit the Owners' needs. Additionally, WHG frequently changes the PMS solution it requires the Owners to use, which results in a significant expense to the Owners. Most recently, WHG is requiring Owners to drop the HSS, MSI, and Brilliant systems in use and replace them with the newer, more expensive, SoftHotel system. In addition to paying the high costs associated with the PMS, Owners are also required to pay costly monthly maintenance fees and service fees for the satellite-based Internet access service Direcway, when less expensive alternatives exist.
Issues with WHG's Technology Standards
- HSS, MSI, and Brilliant
Most of the Owners are currently using HSS, MSI, and Brilliant, which are the systems that WHG had initially determined to be the best PMS solutions. While these systems may be slow and have some flaws, cost-effective options do exist to improve the systems. In fact, many Owners spent $6,000 to $8,000 during the last year to refresh their hardware and software. Under the March 30, 2007 UFOC WHG cannot require Owners to replace the PMS in their hotels for four years after such hardware and software has been installed. Similarly, in order to ensure that Owners are able to recoup their investment on the hardware refresh, WHG should not be allowed to require Owners to replace hardware or software until four years after a refresh. When a system refresh occurs, it should be done in a reasonable manner with acceptable costs.
- SoftHotel
WHG had announced that it intends to rollout the SoftHotel system by the summer of 2008, and that, at that time, Owners would be required to purchase both the hardware and software for the SoftHotel system from WHG. SoftHotel is an expensive system that ranges in price from $14,000 to $22,000 for installation, and costs $50 per month, plus $2.50 per room per month, in maintenance and support fees. Despite these high costs, WHG has reserved the right to increase SoftHotel fees up to 5% per year. SoftHotel has essentially now been forced on the owners under the umbrella of PCI Compliance. Any future upgrades to the PMS system must be reasonable and not involve a total replacement of systems. This continual upgrade and change process works negatively towards the operational aspects of the owners. Additional educational and training expenses that WHG has implemented and may implement in the future are a major concern of the franchisee organization.
- Direcway/Hughesnet
Owners are also required to obtain from WHG, its affiliate, or its approved supplier, Hughesnet satellite-based Internet access service, which includes equipment and software for interfacing with the Central Reservation System, the enterprise data warehouse, and the brand information source. Under the terms of the Satellite Connectivity Services Addendum, which Owners are required to sign, Owners are charged $160 per month for a 36-month term (for a total of $9000 over five years) for the Direcway service. The monthly service fee covers communication charges, installation, and maintenance and support services. Despite the monthly service charge that Owners are required to pay for the 36-month term, WHG has no obligation to modify or upgrade any Hughesnet equipment during the service term. The new technology agreement that is currently being required for Softhotels upgrade does offer a broadband alternative or a satellite upgrade however the costs continue to be a major concern of the owners. More economical secure avenues to obtain the same end use continue to be available and the franchisees would expect those to be evaluated. If you want to exit of the contract for any reason then it will cost you the remainder of the contract for 160 a month. For example you used for 1 year and you leave it's going to be 24 months X 160.00 = 3,840.00.
- The Wyndham Rewards Guest Loyalty Program
It is important for us to have loyal guests, and we want to reward our guests who repeatedly stay with us and other fellow WHG franchisees. Guests may be loyal to a particular hotel location, but, more than likely, guests will be loyal to a brand.
Issues with Wyndham Rewards
Guests are often not Aware That They are Members of Wyndham Rewards and are not Held Accountable for Their Wyndham Rewards Memberships. Points are Pro Actively Matched for guest's with Wyndham Rewards Membership Numbers.
Wyndham Rewards was introduced in 2003, as a replacement to the V.I.P. Club and other Frequency Programs. It was introduced to all Wyndham Hotel Group brands, allegedly in response to "increasing consumer demand for a points-based loyalty program." A guest can join Wyndham Rewards at no cost by visiting the website of a participating hotel brand, enrolling upon check-in at any Wyndham brand hotel, or calling a toll-free 1-800 telephone number. Additionally, if a guest makes an online reservation, he or she had automatically been enrolled in Wyndham Rewards for several years, unless the guest opted out of membership by un-checking an enrollment box during the reservation confirmation process. A large number of guests were not even aware that they have a membership in Wyndham Rewards, since, typically, they made their reservations online and do not see the checked-box, or do not even think to un-check the box, which automatically enrolled them in the Wyndham Rewards program.
After enrollment, the guest receives a membership card that entitles the guest to receive "points" that can be redeemed online for "rewards," including motel stays, airline tickets, and gift cards, if the guest stays at any Wyndham brand. Under Wyndham's current Wyndham Rewards policy, a guest is not held accountable for his or her Wyndham Rewards membership and does not need to present his or her WyndhamRewards membership card upon check-in, in order to receive points under the program. However, the fine print in the Wyndham Rewards brochures specifies that the guest must present his or her membership information upon check-in in order to receive points. Since Wyndham Rewards members do not have to present their membership cards or membership numbers upon check-in, in order to receive points, they may not even realize they are receiving points, thus defeating the purpose of the guest loyalty program.
If a guest notices that he or she has not been awarded points for a qualifying stay, the guest has the ability to contact the Wyndham Rewards Customer Service Center and request that points be assessed to the guest's Wyndham Rewards account. The Wyndham Rewards Customer Service Center issues points immediately when such a request is made, without contacting the motel property to verify that the guest actually paid a qualifying rate. Additionally, if a guest becomes a Wyndham Rewards member after staying at a WHG branded hotel, the guest may request that he or she receives points for his or her stays prior to the time the guest became a Wyndham Rewards member. Even though a guest's stay may not qualify the guest to receive points, and even though the guest was not a Wyndham Rewards member at the time of the guest's stay, the Wyndham Rewards Customer Service Center backdates Wyndham Rewards points, and the Owner is charged a 5% Mandatory Marketing Program Charge, as explained below, for the guest's stay.
Pro active matching has made the process simpler for points to be improperly awarded to guests that may not be loyal to Wyndham Rewards or may not be aware of membership in the program. Further, the Wyndham Rewards point assessment on hotels does not always follow the guidelines set forth in the Wyndham Rewards rules. Often times guest's are receiving points for rooms that exceed the maximum point accumulation limits. Guests are automatically assigned points while the rules of the program are being violated.
Wyndham Rewards Creates a Huge Expense for the Owners and Provides Little Benefit in its current format.
Owners are required to display Wyndham Rewards promotional materials at their hotels and are charged a "Mandatory Marketing Program Charge" for their participation in the Wyndham Rewards program. The Owner is assessed the 5% Mandatory Marketing Program Charge, which is billed on a monthly basis. In reality, Owners are being charged the Mandatory Marketing Program Charge for almost every Wyndham Rewards member that stays at the Owners' motel. WHG claims that this 5% charge is "extremely competitive and consistent with most other industry programs," and is used for the "administration, promotion, marketing, award fulfillment, and any other ongoing expenses" required to maintain the program. In fact, this 5% Mandatory Marketing Program Charge creates a huge expense for Owners and provides little, if any, benefit due to the current nature of the enrollment process and pro active matching, except to the extent that such charges benefit Wyndham by putting money in WHG's Marketing Budget.
As stated above, many guests do not even realize they are Wyndham Rewards members, and, accordingly, accumulate a large number of points that will never be redeemed. Many of these points will expire after several months of inactivity. Despite the fact that these points will never be redeemed, the Owners still have to pay the 5% Mandatory Marketing Program Charge for each Wyndham Rewards member's stay. This defeats the entire purpose of Wyndham Rewards, as a guest loyalty program, because loyalty will not be bred in guests that do not even know the program exists or that they are actually being rewarded for their stays at WHG branded hotels. Wyndham Rewards has not increased Owners' revenues, but has only increased the amount of fees and charges that Owners are required to pay to WHG.
Proposed Solutions to Issues with Wyndham Rewards
The main purpose of the Wyndham Rewards program is to create guest loyalty, but how can guests be loyal if they do not even know they are being rewarded for their stays at our hotels? We, as Owners, are confident that the majority of our guests are not aware of their membership in the Wyndham Rewards program. To prove this, we are ready and willing to poll each of our guests, as they check-in to our properties, to determine if the guest indeed knows that he or she is a Wyndham Rewards member and to find out if the Wyndham Rewards program actually influenced the guest's decision to stay at the respective hotel. If, in fact, guests prove to be unaware of their membership in Wyndham Rewards, steps must be taken to increase awareness among guests of the Wyndham Rewards program.
Make Guests Aware of the Wyndham Rewards Program
In order to fulfill the purpose of Wyndham Rewards and increase guest loyalty to WHG brands, guests must be made aware of the program. Accordingly, guests should be required to take affirmative steps to sign up for the Wyndham Rewards program. Rather than WHG "checking the box" for guests who make online reservations or WHG sending out mass flyers with automatic membership, the guests should be required to check the box themselves or take the initiative to apply for membership. Additionally, guests should be required to present their Wyndham Rewards membership cards or membership numbers upon check-in, if they are going to receive points for their hotel stays. That way, guests will know they are being rewarded for staying at our hotels, which will further increase guest loyalty to the brands. Without this requirement, points may be awarded to guests, but never redeemed, all at the Owners' expense. To make it fair for the Owners, WHG should be required to review all inactive Wyndham Rewards accounts-i.e., accounts with points that have not been awarded or redeemed in the last 12 months-and issue credits to Owners who have been assessed Mandatory Marketing Program Charges for these accounts.
Hold the Wyndham Rewards Customer Service Center Accountable to the Owners
When a guest contacts the Wyndham Rewards Customer Service Center regarding missing points, the Customer Service Center should be required to contact the hotel property directly with details and contact information on the guest to verify that the guest actually stayed at the motel and paid a qualifying rate. Without this check on the Wyndham Rewards system, guests may be receiving points when they are not entitled to receive those points and WHG may be requiring Owners to pay Mandatory Marketing Program Charges when those charges are not justified. Additionally, a guest with missing points should only have 30 days after his or her stay to contact the Wyndham Rewards Customer Service Center, report the stay, and receive points. A guest should also be required to be a Wyndham Rewards member at the time of the stay before being allowed to receive points. This will eliminate any back-dating of points for non-member stays.
The Customer Service Center needs to have quality assurances in place that will catch duplicate entries of Wyndham Rewards membership numbers on a single day. As some Owners have experienced, they will be assessed multiple Mandatory Marketing Program Charges under the same Wyndham Rewards membership name and number on a single day. This should not be happening, unless the Wyndham Rewards member has booked multiple motel rooms, which is often not the case when such multiple assessments are made. In other situations, Owners will be charged a Mandatory Marketing Program Charge when the Wyndham Rewards membership number does not match up with the guest's name. The Customer Service Center needs to have the ability to cross-check this information so that Mandatory Marketing Program Charges are not being wrongly assessed.
Ending Pro Active Matching
Pro active matching is a process that WHG has been utilizing to automatically assign points to guests that are members of the Wyndham Rewards program. These points are assigned to the guest whether or not they have knowledge of membership in the program or not. This further destroys the program as it is counter-productive to the success of the program. Wyndham Rewards points should never be automatically assigned and then charged to the hotels as this will never increase brand stay frequency. It further creates a situation where fees are generated from point accumulation and then as points are expired the fees are kept by Wydham and allegedly allocated to the Marketing Budget. The Marketing Budget and the actual values of these points have never been disclosed to the owners. Also Wyndham Rewards should consider not expiring any points as these points had been paid by franchisees through their program fees.
Decrease the Cost of Wyndham Rewards for the Owners
One of the major problems with Wyndham Rewards is the cost of the program for Owner. In order for the Wyndham Rewards program to be beneficial for Owners, the qualifying rate needs to only be applied to rates that are discounted less that 15% of rack-i.e., less than a 15% discount on night stays. With a higher qualifying rate, Owners can pay the Mandatory Marketing Program Charge and still earn profit from the Wyndham Rewards members' stays.
Owners should also be entitled to the accounting records of the Wyndham Rewards program, which include the total number of room nights that are redeemed, total balance of unused points, total costs of the program, and total revenue generated by the program. We should have the ability to evaluate the effectiveness of the Wyndham Rewards program since we fund the program through payment of the Mandatory Marketing Program Charges and since it is a marketing initiative. Wyndham Rewards should not simply be a revenue generator for Wyndham.
Overall, these changes to the Wyndham Rewards program will result in a heightened guest awareness of the Wyndham Rewards program, a decreased number of unredeemed guest points, an increased number of guest rewards, and increased profitability for the Owners. This will create the desired guest loyalty to the WHG brands and fulfill the purposes of the Wyndham Rewards program.
- Fees
- Guest Services Assessments and Processing Fees
We acknowledge that top-notch guest services are necessary for the success of the individual Owners and the WHG franchise system. We, as Owners, strive to satisfy our guests and pride ourselves on ensuring that each of our guests has a positive experience while staying with us. When guests have complaints, we do our best to address and resolve them, since we know that happy guests will likely return to our motels and stay with us again in the future. Our responsiveness to guest complaints not only strengthens brand loyalty, but also increases our (and WHG's) bottom-line revenues.
Issues with Guest Services Assessments and Processing Fees
Guest Services Assessments and Processing Fees are Extremely Costly for Owners
WHG has recently implemented the "Guest Services Assessment," which is a fee imposed on franchisees that experience guest complaints. This is how the Guest Services Assessment works: Whenever WHG receives a guest complaint about an Owner or the Owner's motel, WHG notifies the Owner of the guest complaint. The Owner is then responsible for resolving the complaint to the guest's satisfaction. If the Owner does not respond to the complaint within three (3) business days after receiving notice of the complaint from WHG, WHG charges the Owner a "Guest Services Assessment" of $160.00 plus the costs WHG incurs to settle the matter with the guest. Even if the Owner responds to the guest complaint within specified period, WHG may still charge the Guest Services Assessment, plus its costs, if the guest is not satisfied with the Owner's response.
Guest Complaints are Frequently Unreasonable or Invalid
While WHG contends that the Guest Services Assessment and the Processing Fee "are not intended as penalties or liquidated damages," this is exactly what they are. Owners should be held responsible for guest complaints, but only if the complaints are reasonable and valid. In order for such a penalty to be imposed on a franchisee, the guest complaint should fairly be deemed the franchisee's fault. Currently, franchisees are held responsible for complaints, regardless of their source and regardless of their validity.
Proposed Solutions to Issues with Guest Services Assessments and Processing Fees
Guest Services Assessments and Processing Fees Should be Eliminated Entirely, or at Least Reduced, so That Owners can Remain Profitable
Ideally, the Owners would like to see the Guest Services Assessments and Processing Fees eliminated entirely. If an Owner has an abnormally high number of guest complaints, WHG should work with, and not against, the Owner to pinpoint the source of the complaints and resolve the underlying issues, so that guest complaints do not repeatedly occur. WHG needs to do a better job of supporting its Owners and assisting them in becoming successful operators, rather than issuing monetary penalties against them for every problematic situation that arises.
Guest Complaints Must be Screened for Validity and Reasonableness Before Guest Services Assessments and Processing Fees are Issued
There also needs to be a better system in place for determining which guest complaints are valid and which guest complaints are not. Currently, there is no screening process in place and guest complaints are simply issued to Owners without WHG first reviewing the reasonableness of the complaints. As previously stated, the Owners are willing to take responsibility for reasonable guest complaints that are actually the Owners' faults. However, the Owners are not willing to take responsibility for guest complaints that are wholly unreasonable. Unfortunately, while Owners try to be apologetic and reasonable in dealing with guest complaints, there are times when the complaints are the products of individual guests and not of the Owners or their motels. As all of us in the hospitality industry know, some guests will never be satisfied. As a result, it is unfair for WHG to charge a Guest Services Assessment if the complaint is not resolved to the guest's satisfaction. (In the past, this is how Guest Services Assessments were issued. Owners were only penalized if they failed to respond to the guest's complaint, and were not penalized simply because the guest was not satisfied with the attempted resolution of his or her complaint.) Guest Services Assessments should not be issued in WHG's sole discretion, but rather, the Owners should have some say in determining whether guest complaints are valid.
There also needs to be a better system in place for determining which guest complaints are valid and which guest complaints are not. Currently, there is no screening process in place and guest complaints are simply issued to Owners without WHG first reviewing the reasonableness of the complaints. As previously stated, the Owners are willing to take responsibility for reasonable guest complaints that are actually the Owners' faults. However, the Owners are not willing to take responsibility for guest complaints that are wholly unreasonable. Unfortunately, while Owners try to be apologetic and reasonable in dealing with guest complaints, there are times when the complaints are the products of individual guests and not of the Owners or their motels. As all of us in the hospitality industry know, some guests will never be satisfied. As a result, it is unfair for WHG to charge a Guest Services Assessment if the complaint is not resolved to the guest's satisfaction. (In the past, this is how Guest Services Assessments were issued. Owners were only penalized if they failed to respond to the guest's complaint, and were not penalized simply because the guest was not satisfied with the attempted resolution of his or her complaint.) Guest Services Assessments should not be issued in WHG's sole discretion, but rather, the Owners should have some say in determining whether guest complaints are valid.
Owners Should Know how WHG is Using the Guest Services Assessments and Processing Fees That Owners Pay
Finally, if Owners are going to be charged Guest Services Assessments and Processing Fees, Owners should have a right to know how WHG is using these fees. Owners have been told by WHG that such fees are being used to fund the Customer Service Center. If this is actually the case, how are these funds specifically allocated? If, in fact, these fees are not being used to benefit WHG franchise system, but rather, are being used to increase WHG's own bottom-line profitability, the fees must be done away with entirely.
- Quality Assurance Reporting and Fees
The Quality Assurance ("QA") process was originally created to maintain quality standards throughout the WHG franchise system. Under the QA process, QA inspectors randomly inspect every WHG property twice per year, in an attempt to ensure that WHG quality standards are being met. Inspections may occur at any time during normal business hours, without advance notice to the Owner. QA inspectors do not specifically inspect specific brands, but rather, inspect all Wyndham hotel properties. After a QA inspection, Owners are given QA reports, which contain results from the inspection, as well as the Medalia guest surveys.
If an Owner's hotel fails a QA inspection, the Owner refuses to cooperate with the QA inspector, or the Owner refuses to comply with WHG's published inspection System Standards, the Owner is liable to WHG for any Re-inspection Fee specified in the System Standards Manuals plus the reasonable travel, lodging, and meal costs the QA inspector incurs for a re-inspection. WHG also conducts paper and electronic customer satisfaction surveys of the franchisee's guests and includes the results in the franchisee's final QA survey. WHG also reserves the right to require Owners to make minor renovations to their properties, upon notice to the Owners.
Proposed Solutions to the Quality Assurance Reporting and Fees Issue
QA Inspectors Need to Have Identifiable Standards for The QA Inspections
QA inspectors lack adequate training and uniformity in their inspections, which is evident in the fact that different QA inspectors often demonstrate different standards and levels of tolerance. For example, Owners have been told by some QA inspectors that they do not understand why a particular default has been noted by a previous inspector. WHG needs to have QA inspectors specific to each brand, whose sole functions are to inspect those branded properties. Additionally, objective quality standards need to be in place for the WHG franchise system so hotel properties know what to expect during an inspection and can strive to meet those known and defined standards. It is not reasonable or fair for Owners and their hotel properties to simply be subject to the whims of the QA inspectors. While most of the QA inspectors have demonstrated honesty and integrity in their inspections, unfortunately, some QA inspectors have demonstrated poor attitudes and have failed motels without significant reasons for doing so.
Medalia Surveys Should not be Used in Scoring the Owners' QA Reports
QA reports should not use the Medalia survey results as part of the overall QA scoring system, since Medalia has several flaws. Medalia is the least-used point of contact with guests, yet it is still used to assess points on the QA report. Many of the guests that respond to Medalia surveys are guests that are either extremely disappointed or extremely satisfied with their stays. This skews the QA scoring system because it does not accurately quantify our motels' performance. Additionally, Medalia is an ineffective scoring system because guests are grading their experiences subjectively, unlike the QA report that has a set of specific, objective parameters. In other words, Medalia gauges the perceived value of the guest's stay and not the actual quality of the facility itself. In our experience, Owners feel that our scores suffer due to the perception of the motel's price and/or value. As rates vary during peak seasons, guests taking the survey may place higher emphasis on the price paid, which, accordingly, results in lower scores. Guests' perceptions may also be based on previous lodging experiences at higher-tier motels. This comparison may make guests perceive our properties as a poor value when, in fact, the rates were based on supply and demand in the market at a particular point in time. Essentially, Medalia is a survey and should be evaluated by the Owners. The results from Medalia surveys should not be integrated into the Owners' QA reports.
WHG Must Relieve the Financial Strain on Owners that Results from QA Inspections
WHG should not cut off an Owner's right to reservations through the WHG websites or other third-party reservation websites pending resolution of QA issues, as it is counter-productive and creates financial strain for Owners. With decreased finances, it becomes more difficult for Owners to address QA issues. Similarly, the issuance of Re-inspection Fees has the same result and makes it more difficult for Owners to make the required improvements that will bring them up to QA standards. Re-inspection fees should not be charged. Additionally, as fees are already assessed for customer services issues, those issues should not be considered in the QA inspections. Owners should not be penalized twice for customer service issues.
Finally, there needs to be a cap set on the minor improvements that WHG requires its franchisees to make. Currently, the Owners feel that standards are being changed with total disregard of the costs of the improvements to the Owners. Owners should have a say in which improvements should be required of the franchise system at large, rather than being subject to the whims of Wyndham Hotel Group.
- Liquidated Damages
Liquidated damages are the fees that the franchisor accesses a location for breach of contractual agreement. All franchise agreements indicate the period of time that the franchise agreement represents. Further, they stipulate the amount of damages that will be incurred for exiting the system early either voluntarily or due to default. These charges are often quite excessive and are in reality in place to supplement a loss of revenue for the franchisor. In most cases it involves a calculation of revenue loss for a 36 month period or a fixed payment of loss per room. What is concerning is that WHG has often fined owners the liquidated damage fees while actively pursuing and granting a license to a competing facility. Essentially, this defeats the purpose of the damages which were meant to reimburse loss of revenues for the franchisor. There have been several incidences that prove that termination and then replacement with another facility has proven to be more financially lucrative for WHG rather than to continue with existing franchisees. The owners are very concerned regarding this process.
- Approved Vendors and Exclusive Vendors
Approved Vendors and Exclusive vendors involve a process by which the franchisor creates excessive pricing while having the ability to control the number of vendors. Usually this involves the franchisor receiving some sort of royalty (commisions) to the franchisor for allowing such vendor exclusivity. Recently, WHG has implemented WynSource which is their internal purchasing system for the owners. We are very concerned that WHG will be mandating specific items from specific vendors rather than allowing the owners to purchase items that meet a set of specific specifications that the franchisor may implement. The approved and exclusive vendor process creates a situation where franchisees will no longer have the ability to obtain cost effective pricing as certain vendors will improperly control pricing. Further, we will not have the ability to obtain competitive bids for specific items and will result in additional expenses for the owners. WHG should not have the ability to create these fees and profits at the expense of the franchisees.
May 27, 2010
It is with great disappointment that we have to announce that in April 2010 WHG started a test program which consisted of sending out 900,000 post cards to our prior hotel guests. They also sent out 100,000 emails to our hotel guests. These guests were selected to receive a 30 day complimentary membership for Wyndham Rewards (see attached). After 30days, the guests had the ability to send a notification back to WHG that they no longer wanted to be part of the rewards program. Essentially, this means that the guest would have to take the initiative to OPT OUT rather than OPT IN. In laymans terms, these 1 Million people were signed up AUTOMATICALLY without their consent and now they are Wyndham Rewards Members. What is the most disturbing is the fact that these members will be automatically assigned points through PRO ACTIVE MATCHING by WHG and we will pay 5% in Wyndham Rewards fees for these guest's stays.
This test is very distrubing because WHG have gone back on their word of online OPT OUT that they had discountinued in November 2009. Another reason for concern is that, other employees and management within WHG were not even aware of this "TEST". Overall, this new initative is far worse then the first one. This actually is raising our royalty fees by 5% because of the shear volume of guests that are being solicited and forced to be become members.
You may hear many at WHG rationalise this new program, but do not be fooled, ulitmately we the owners are paying for this in extra unjustified fees. This WHG rewards program is not as attractive as many other programs offered by our competitors due to many specific reasons which we continue to share with WHG officials. WHG needs to look into these reasons and remedy those concerns and bring an end to the dillution of the program with this type of mass program signup.
In Marketing 101 they teach you that you must never give away what you are selling as this dilutes its value. The value in the program should sell itself and the more valuable the program is to the guests the more likely it is to be successful.
Maybe someday, WHG will realize that we have a frequency program in place that they continue to expand improperly and continue to show us that we are reaping a tremendous return on investment. Unfortunately, when we review our revenue figures, we continue to fail to see this tremendous return. In fact, we have seen our fees paid back to our franchisor increase at a much faster pace than our returns on our investment. While there have been many new improvements at our franchisor due to Mr. Danziger, we continue to take 2 steps back due to disappointing techniques such as AUTO MAIL SIGNUP into Wyndham Rewards undertaken by someone at WHG.
WE COMPLETELY DISAGREE WITH THIS IMPROPER SIGNUP METHOD HOWEVER, WITH THE REMOVAL OF PROACTIVE MATCHING THIS COULD BE JUSTIFIED. THE GUEST SHOULD HAVE TO SHOW THEIR CARD OR REQUEST A LOOK UP IN ORDER TO OBTAIN POINTS IN THE FREQUENCY PROGRAM.
THE FOLLOWING EMAIL OBTAINED FROM A FRANCHISEE WAS A RESPONSE FROM A WHG OFFICIAL TO QUESTIONS ASKED ABOUT THE AUTOMATIC SIGNUP BY MAIL.
In April 2010 the Wyndham Rewards team launched a test campaign designed to increase our share of wallet from existing customers. Research and our own internal performance confirms that members of loyalty programs stay more often, pay a higher ADR and are more likely to choose hotels within the same family of brands than non-members. Knowing this, we offered a complimentary membership in Wyndham Rewards to ˜1% of our total non-member database (approximately 1 million customers) as a test. We targeted customers who have the same behavior as our best Wyndham Rewards members. Specifically, we sent this offer to non-members with 3+ stays in the last 18 months. Approximately 900,000 customers received a direct mail piece with a member card and 100,000 received an email with their member number, all at our cost.
Marketing initiatives must be measured to be effective, therefore we held out a control group of 75,000 customers who did not receive this complimentary membership so we can benchmark incremental performance. We will monitor the stay behavior of the new members relative to the control group over the next 6 months. We believe this will demonstrate that membership in Wyndham Rewards does improve the contribution to you, to Wyndham Hotel Group and to the Wyndham Rewards program.
These types of marketing campaigns are considered best practices in the travel industry. Other hotel companies, airlines and car rental companies regularly enroll customers who have the same characteristics as their best members but have not joined their programs. This was only a test to prove the concept. If successful, we will consider deeper testing. If we cannot create incremental stay behavior, we will not pursue this campaign further.
Please remember the primary objective of all loyalty programs is to retain the customers we already have, and having a robust member database is an asset that benefits us all. It increases engagement with our hotel brands. It allows us to create a dialogue centrally that cannot be done at the individual hotel level. It allows us to attract and retain high-value partnerships with the airlines and car rental companies.
April 3 2010
This update has information on the software upgrade, new customer service fees and Wyndham Rewards Pro active matching.
SOFTHOTELS UPGRADE
As you all know, the software upgrade signing deadline has passed on March 31, 2010. We continued to work throughout previous
months to get WHG to address our concerns regarding the software training costs and the overall pricing and issues with the software.
We decided to send out a letter to WHG officials asking for a larger multi site discount in order for the remaining 20-25% of the franchisees
to upgrade to the software and become compliant. In an effort to tackle this from another angle, officials from some of the
WHG brands were contacted in order to obtain a multi site discount. After several weeks of follow up and communication, we were able to obtain a group discount of $3000 plus a $1500 self training credit for each group of 6 or more sites. Further, depending on the age of your hardware, you have the ability to sign up for just the software and related expenses or can opt to obtain new hardware. Many of those that signed up with our initial group essentially just bought 1 workstation with the warranty and were left with the option to purchase or
upgrade their own monitors. Also, most of those sites are continuing to use the printers that they upgrades a few years ago during the
last upgrade.
Although the deadline has passed, WHG will continue to accept sites that sign up soon.
The best thing is for any organized group of properties to provide the site numbers (min. of 6 sites) directly via a email to Brian.Lombra@wyndhamworldwide.com. He can then assign a group to a designated member of his team to manage the quote generation
and distribution to the sites. Please keep in mind that the pricing WHG presented is based on the assumption that the properties can
(and will) agree to install all around the same time; this is how they can save most on the travel fees and work to combine training efforts where/when possible. To pull this off, the groups need to be on the same page and truly ready to move forward together. This also means they need to receive payment promptly so they can coordinate the installs. If you need any further assistance with this after
contacting Brian Lombra at WHG then you can email us at info@owners8association.org
NEW CUSTOMER SERVICE FEES
Recently, on my portal and also by mail, franchisees were notified of the new customer service fees. The fees have jumped dramatically and pay upto $160 in fines for non responsive complaints. We are very concerned with these fees and are sending communication to officials
at WHG regarding the timing of this and the fact that we at O8A have been discussing this issue for several years now and rather than
reduce these fees and the rationale for fines, WHG has decided to increase these charges.
WYNDHAM REWARDS CHARGES
While we are glad to see that WHG at the direction of Mr. Danziger had stopped the auto enrollment process into Wyndham Rewards in November 2009. As a follow up to this issue, we hope that Mr. Danziger will also consider putting an end to proactive matching. Pro active matching involves the automatic assignment of wyndham rewards points to guests by way of the property management systems. The
process that concerns us most is the fact that a guest could check into your hotel and not provide you a wyndham rewards number at check in. Then through the propery management system, through some type of address and name verification and matching, the guest will be assigned wyndham rewards points and your property will be charged the 5% in fees. It is in our best interests for the program to work to its fullest extent and for guests to utilize their points and redeem points through extensive knowledge of the program. This can only be done
with well informed guests who demand their points. Proactive matching works somewhat counter productively as the guests often lack knowledge of their point values and therefore are less likely to redeem and earn benefits. We continue to urge WHG and Mr. Danziger to
also consider actively evaluating this process and bring it to an end.
Owners 8 Association
Owners Working Together
Date: Mrch 20, 2010
To: Mr. Eric Danziger - WHG President
From: Owners 8 Association Officers
Re: Recent Issues
It has been our goal to create a franchisee group that can independently voice member concerns and bring forward our issues to our franchisor. We have always hoped of developing a relationship that would bring the franchisees and franchisor together to help improve the profitability for both of us while advancing and protecting our brands and investment.
Initially, we had been treated in a questionable manner by the hierarchy at WHG as they had sent out letters and communications to franchisees that portrayed us in a negative manner. This continued for several months and had set the grounds for a turbulent relationship between our group and our franchisor. In February 2009, we were fortunate that you were given the opportunity to lead WHG and its brands. One of the most significant decisions that you made was to notify the franchisees that you were changing the website reservation process from Opt Out to Opt In. This was one of the issues that we had been tackling for over a year and a half before you took the helm of WHG. We all felt that this was a significant positive step forward for WHG. In subsequent months and at your direction, WHG made additional changes such as many positive modifications of the current inspection process, changes to the Best Rate Guarantee, changes to the approved vendor process and positive changes to the customer service case process. We commend you for spearheading these positive changes for the brands and do understand that you "Get it" and have made many positive changes that affect the franchisees of WHG brands.
Another significant step was the meeting that was set up with the Super 8 FAB in August 2009. Officers from our group attended the meeting and discussed several issues. Despite good positive dialogue during this meeting, we found that information such as improvements that had been completed on Softhotels were never forwarded to us. In fact, during our meeting with Super 8 officials and the FAB, we discussed the Softhotels rollout and it appeared that due to the severe financial condition of the economy and the financial concerns of hotel operators that WHG was working to delay rollout. Initially, we were told that we would be required to upgrade at the four year anniversary for each site installation. From all our discussions, we repeatedly requested updates that were promised to us by the officials from Super 8 but there was no further follow through from these individuals. This was quite disheartening and we felt that you had spearheaded a positive step towards working together to address the franchisees issues but now there was no continuity and these officials were not willing to share information with our members.
A few months later in the fall of 2009, we were taken by surprise when the mandatory upgrade and dates of compliance were sent out to franchisees. There were many members of our group that have technical backgrounds and felt that there were other options available to reduce the capital outlay for franchisees during these tough times. This information was sent out by our group in an effort to obtain some assistance from WHG and this data is what created the latest strain on our communications with our franchisor. Also, we had sent out subsequent follow up communications based on information provided to us from other technicians, HSS, MSI, and internal software techs that work for WHG.
Recently, board members from AAHOA and the officers had met with you in order to help create a scenario where those that still needed to upgrade could work to come into compliance. The current upgrade involved extensive training periods and AAHOA had attempted to work to request a review of this process. Also, during the discussion with you, one of the board members of AAHOA requested information as to how many franchisees had not signed up for the upgrade. You had asked your Chief Technology Officer for these data items and it appears that he inadvertently told you that 346 locations had not signed up for the upgrade. After further review and discussion from different sources, we wanted to let you know our findings. Our sources indicated that 346 locations Days Inn have not signed up and almost 400 Super 8 locations have not signed up for the upgrade. Therefore, from these two brands alone there are almost 750 locations that still have not signed up for the upgrade that WHG requires. The reason that this is significant is that this information will help you better understand why we are concerned with the current upgrade and this represents almost 25% or more of these two brands.
Now, that we have a more clearer picture as to the PCI compliance issue and the reasoning behind the current upgrade we would request that you consider multi site discounts (greater than 3) that could be given to groups of franchisees that have considered working together to come into compliance. This would allow WHG to maintain the integrity of its pricing strategy that had been in place and further allow you to comply with your current agreement with the software installation company. It has further been indicated to us that the training/installation cost is just a pass through and that at this stage it is very difficult for WHG to modify this process.
The group discounts that could be given to groups of franchisees will give the many that have not signed up for the upgrade an opportunity to comply with WHG standards during these difficult economic times. In the state of NC, we have collected data that shows that 29 of 79 Days Inn locations are still not upgraded and 24 of 39 Super 8 locations in NC are still not upgraded. While this just represents one state, we think you will find this information quite significant. We have also conducted similar surveys for a number of other states and have found that compliance varies significantly however it appears that 20-30% of the locations have not signed up to upgrade.
We are quite confident that you will agree with us that it is in everyone's best interest to have increased compliance with the current upgrade and further hope that you consider this request as a way forward.
If you are willing to discuss this further, we will work towards improving compliance among franchisees and members. Recently, some of the critical information that had been distributed has resulted in no positive developments. Essentially this has created a situation which is not beneficial to any of us and for this we would like to apologize to you. Regardless of what some may say our goal has always been to create a group of franchisees that can help represent our concerns in order to positively grow the brands and create a better relationship between the franchisees and franchisor while protecting our investments in the brands.
We hope that you will consider this information and create further positive steps forward.
Thank You
Owners 8 Association
Owners Working Together
FEBRUARY 25, 2010 :
It is with great disappointment that we have to announce that in April 2010 WHG started a test program which consisted of sending out 900,000 post cards to our prior hotel guests. They also sent out 100,000 emails to our hotel guests. These guests were selected to receive a 30 day complimentary membership for Wyndham Rewards (see attached). After 30days, the guests had the ability to send a notification back to WHG that they no longer wanted to be part of the rewards program. Essentially, this means that the guest would have to take the initiative to OPT OUT rather than OPT IN. In laymans terms, these 1 Million people were signed up AUTOMATICALLY without their consent and now they are Wyndham Rewards Members. What is the most disturbing is the fact that these members will be automatically assigned points through PRO ACTIVE MATCHING by WHG and we will pay 5% in Wyndham Rewards fees for these guest's stays.
April 3 2010
This update has information on the software upgrade, new customer service fees and Wyndham Rewards Pro active matching.
Owners 8 Association
Owners Working Together
This test is very distrubing because WHG have gone back on their word of online OPT OUT that they had discountinued in November 2009. Another reason for concern is that, other employees and management within WHG were not even aware of this "TEST". Overall, this new initative is far worse then the first one. This actually is raising our royalty fees by 5% because of the shear volume of guests that are being solicited and forced to be become members.
You may hear many at WHG rationalise this new program, but do not be fooled, ulitmately we the owners are paying for this in extra unjustified fees. This WHG rewards program is not as attractive as many other programs offered by our competitors due to many specific reasons which we continue to share with WHG officials. WHG needs to look into these reasons and remedy those concerns and bring an end to the dillution of the program with this type of mass program signup.
In Marketing 101 they teach you that you must never give away what you are selling as this dilutes its value. The value in the program should sell itself and the more valuable the program is to the guests the more likely it is to be successful.
Maybe someday, WHG will realize that we have a frequency program in place that they continue to expand improperly and continue to show us that we are reaping a tremendous return on investment. Unfortunately, when we review our revenue figures, we continue to fail to see this tremendous return. In fact, we have seen our fees paid back to our franchisor increase at a much faster pace than our returns on our investment. While there have been many new improvements at our franchisor due to Mr. Danziger, we continue to take 2 steps back due to disappointing techniques such as AUTO MAIL SIGNUP into Wyndham Rewards undertaken by someone at WHG.
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WE COMPLETELY DISAGREE WITH THIS IMPROPER SIGNUP METHOD HOWEVER, WITH THE REMOVAL OF PROACTIVE MATCHING THIS COULD BE JUSTIFIED. THE GUEST SHOULD HAVE TO SHOW THEIR CARD OR REQUEST A LOOK UP IN ORDER TO OBTAIN POINTS IN THE FREQUENCY PROGRAM.
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April 3 2010
This update has information on the software upgrade, new customer service fees and Wyndham Rewards Pro active matching.
SOFTHOTELS UPGRADE
As you all know, the software upgrade signing deadline has passed on March 31, 2010. We continued to work throughout previous
months to get WHG to address our concerns regarding the software training costs and the overall pricing and issues with the software.
We decided to send out a letter to WHG officials asking for a larger multi site discount in order for the remaining 20-25% of the franchisees
to upgrade to the software and become compliant. In an effort to tackle this from another angle, officials from some of the
WHG brands were contacted in order to obtain a multi site discount. After several weeks of follow up and communication, we were able to obtain a group discount of $3000 plus a $1500 self training credit for each group of 6 or more sites. Further, depending on the age of your hardware, you have the ability to sign up for just the software and related expenses or can opt to obtain new hardware. Many of those that signed up with our initial group essentially just bought 1 workstation with the warranty and were left with the option to purchase or
upgrade their own monitors. Also, most of those sites are continuing to use the printers that they upgrades a few years ago during the
last upgrade.
months to get WHG to address our concerns regarding the software training costs and the overall pricing and issues with the software.
We decided to send out a letter to WHG officials asking for a larger multi site discount in order for the remaining 20-25% of the franchisees
to upgrade to the software and become compliant. In an effort to tackle this from another angle, officials from some of the
WHG brands were contacted in order to obtain a multi site discount. After several weeks of follow up and communication, we were able to obtain a group discount of $3000 plus a $1500 self training credit for each group of 6 or more sites. Further, depending on the age of your hardware, you have the ability to sign up for just the software and related expenses or can opt to obtain new hardware. Many of those that signed up with our initial group essentially just bought 1 workstation with the warranty and were left with the option to purchase or
upgrade their own monitors. Also, most of those sites are continuing to use the printers that they upgrades a few years ago during the
last upgrade.
Although the deadline has passed, WHG will continue to accept sites that sign up soon.
The best thing is for any organized group of properties to provide the site numbers (min. of 6 sites) directly via a email to Brian.Lombra@wyndhamworldwide.com. He can then assign a group to a designated member of his team to manage the quote generation
and distribution to the sites. Please keep in mind that the pricing WHG presented is based on the assumption that the properties can
(and will) agree to install all around the same time; this is how they can save most on the travel fees and work to combine training efforts where/when possible. To pull this off, the groups need to be on the same page and truly ready to move forward together. This also means they need to receive payment promptly so they can coordinate the installs. If you need any further assistance with this after
contacting Brian Lombra at WHG then you can email us at info@owners8association.org
and distribution to the sites. Please keep in mind that the pricing WHG presented is based on the assumption that the properties can
(and will) agree to install all around the same time; this is how they can save most on the travel fees and work to combine training efforts where/when possible. To pull this off, the groups need to be on the same page and truly ready to move forward together. This also means they need to receive payment promptly so they can coordinate the installs. If you need any further assistance with this after
contacting Brian Lombra at WHG then you can email us at info@owners8association.org
NEW CUSTOMER SERVICE FEES
Recently, on my portal and also by mail, franchisees were notified of the new customer service fees. The fees have jumped dramatically and pay upto $160 in fines for non responsive complaints. We are very concerned with these fees and are sending communication to officials
at WHG regarding the timing of this and the fact that we at O8A have been discussing this issue for several years now and rather than
reduce these fees and the rationale for fines, WHG has decided to increase these charges.
at WHG regarding the timing of this and the fact that we at O8A have been discussing this issue for several years now and rather than
reduce these fees and the rationale for fines, WHG has decided to increase these charges.
WYNDHAM REWARDS CHARGES
While we are glad to see that WHG at the direction of Mr. Danziger had stopped the auto enrollment process into Wyndham Rewards in November 2009. As a follow up to this issue, we hope that Mr. Danziger will also consider putting an end to proactive matching. Pro active matching involves the automatic assignment of wyndham rewards points to guests by way of the property management systems. The
process that concerns us most is the fact that a guest could check into your hotel and not provide you a wyndham rewards number at check in. Then through the propery management system, through some type of address and name verification and matching, the guest will be assigned wyndham rewards points and your property will be charged the 5% in fees. It is in our best interests for the program to work to its fullest extent and for guests to utilize their points and redeem points through extensive knowledge of the program. This can only be done
with well informed guests who demand their points. Proactive matching works somewhat counter productively as the guests often lack knowledge of their point values and therefore are less likely to redeem and earn benefits. We continue to urge WHG and Mr. Danziger to
also consider actively evaluating this process and bring it to an end.
process that concerns us most is the fact that a guest could check into your hotel and not provide you a wyndham rewards number at check in. Then through the propery management system, through some type of address and name verification and matching, the guest will be assigned wyndham rewards points and your property will be charged the 5% in fees. It is in our best interests for the program to work to its fullest extent and for guests to utilize their points and redeem points through extensive knowledge of the program. This can only be done
with well informed guests who demand their points. Proactive matching works somewhat counter productively as the guests often lack knowledge of their point values and therefore are less likely to redeem and earn benefits. We continue to urge WHG and Mr. Danziger to
also consider actively evaluating this process and bring it to an end.
Owners 8 Association
Owners Working Together
To: Mr. Eric Danziger - WHG President
From: Owners 8 Association Officers
Re: Recent Issues
It has been our goal to create a franchisee group that can independently voice member concerns and bring forward our issues to our franchisor. We have always hoped of developing a relationship that would bring the franchisees and franchisor together to help improve the profitability for both of us while advancing and protecting our brands and investment.
Initially, we had been treated in a questionable manner by the hierarchy at WHG as they had sent out letters and communications to franchisees that portrayed us in a negative manner. This continued for several months and had set the grounds for a turbulent relationship between our group and our franchisor. In February 2009, we were fortunate that you were given the opportunity to lead WHG and its brands. One of the most significant decisions that you made was to notify the franchisees that you were changing the website reservation process from Opt Out to Opt In. This was one of the issues that we had been tackling for over a year and a half before you took the helm of WHG. We all felt that this was a significant positive step forward for WHG. In subsequent months and at your direction, WHG made additional changes such as many positive modifications of the current inspection process, changes to the Best Rate Guarantee, changes to the approved vendor process and positive changes to the customer service case process. We commend you for spearheading these positive changes for the brands and do understand that you "Get it" and have made many positive changes that affect the franchisees of WHG brands.
Another significant step was the meeting that was set up with the Super 8 FAB in August 2009. Officers from our group attended the meeting and discussed several issues. Despite good positive dialogue during this meeting, we found that information such as improvements that had been completed on Softhotels were never forwarded to us. In fact, during our meeting with Super 8 officials and the FAB, we discussed the Softhotels rollout and it appeared that due to the severe financial condition of the economy and the financial concerns of hotel operators that WHG was working to delay rollout. Initially, we were told that we would be required to upgrade at the four year anniversary for each site installation. From all our discussions, we repeatedly requested updates that were promised to us by the officials from Super 8 but there was no further follow through from these individuals. This was quite disheartening and we felt that you had spearheaded a positive step towards working together to address the franchisees issues but now there was no continuity and these officials were not willing to share information with our members.
A few months later in the fall of 2009, we were taken by surprise when the mandatory upgrade and dates of compliance were sent out to franchisees. There were many members of our group that have technical backgrounds and felt that there were other options available to reduce the capital outlay for franchisees during these tough times. This information was sent out by our group in an effort to obtain some assistance from WHG and this data is what created the latest strain on our communications with our franchisor. Also, we had sent out subsequent follow up communications based on information provided to us from other technicians, HSS, MSI, and internal software techs that work for WHG.
Recently, board members from AAHOA and the officers had met with you in order to help create a scenario where those that still needed to upgrade could work to come into compliance. The current upgrade involved extensive training periods and AAHOA had attempted to work to request a review of this process. Also, during the discussion with you, one of the board members of AAHOA requested information as to how many franchisees had not signed up for the upgrade. You had asked your Chief Technology Officer for these data items and it appears that he inadvertently told you that 346 locations had not signed up for the upgrade. After further review and discussion from different sources, we wanted to let you know our findings. Our sources indicated that 346 locations Days Inn have not signed up and almost 400 Super 8 locations have not signed up for the upgrade. Therefore, from these two brands alone there are almost 750 locations that still have not signed up for the upgrade that WHG requires. The reason that this is significant is that this information will help you better understand why we are concerned with the current upgrade and this represents almost 25% or more of these two brands.
Now, that we have a more clearer picture as to the PCI compliance issue and the reasoning behind the current upgrade we would request that you consider multi site discounts (greater than 3) that could be given to groups of franchisees that have considered working together to come into compliance. This would allow WHG to maintain the integrity of its pricing strategy that had been in place and further allow you to comply with your current agreement with the software installation company. It has further been indicated to us that the training/installation cost is just a pass through and that at this stage it is very difficult for WHG to modify this process.
The group discounts that could be given to groups of franchisees will give the many that have not signed up for the upgrade an opportunity to comply with WHG standards during these difficult economic times. In the state of NC, we have collected data that shows that 29 of 79 Days Inn locations are still not upgraded and 24 of 39 Super 8 locations in NC are still not upgraded. While this just represents one state, we think you will find this information quite significant. We have also conducted similar surveys for a number of other states and have found that compliance varies significantly however it appears that 20-30% of the locations have not signed up to upgrade.
We are quite confident that you will agree with us that it is in everyone's best interest to have increased compliance with the current upgrade and further hope that you consider this request as a way forward.
If you are willing to discuss this further, we will work towards improving compliance among franchisees and members. Recently, some of the critical information that had been distributed has resulted in no positive developments. Essentially this has created a situation which is not beneficial to any of us and for this we would like to apologize to you. Regardless of what some may say our goal has always been to create a group of franchisees that can help represent our concerns in order to positively grow the brands and create a better relationship between the franchisees and franchisor while protecting our investments in the brands.
We hope that you will consider this information and create further positive steps forward.
Thank You
Owners 8 Association
Owners Working Together
To: Wyndham Hotel Group President
From: Owners 8 Association
Re: Systems upgrade
We bring to your attention once again that franchisees are currently experiencing extreme financial difficulty due to the economic slowdown. Most recent data from the experts suggests that a major shift in the current pattern will not take place until sometime next year. In 2009 things started going bad, any savings in 2008 were used to keep afloat in the winter of 2009. While we still had debt coming into spring 2009, summer 2009 did not cover debt from winter 2008 let alone provide savings for winter 2009. Now in 2010, people are being foreclosed on, lending has dried up, most families do not have extra cash to help stay afloat and many are going month to month with no salary and are taking on many of the responsibilities themselves.
As owners we have all been cutting back, terminating employees and taking those jobs ourselves, making our operations far more streamlined then ever before. It is unfortunate that this upgrade is being completed now and it is regrettable that WHG is demanding such a considerable capital expenditure during a time when no increases in revenue are being foreseen. Based on this, many of us have requested postponement of this upgrade until such time in the future that a mutually and financially agreed upon solution is available. WHG has offered to make this transition smoother by offering loans, postponing payments and suggesting that the software is cheaper than other franchisors. Further, the PCI compliance deadline has become a major driving force behind requiring this upgrade completion right now. In terms of addressing the cost, there have been numerous communications already sent by O8A which addressed the costs as well as the impact of increased payments on the franchisees. Also, PCI compliance is a significant issue, however; there are avenues that can be taken to overcome this hurdle during this current economy. Again, we have pointed out some information on this in prior letters. The major component that affects us is the fact that the franchisor will abandon support of the software thus creating the compliance issue. Again, there are ways to rectify this process through extensions and modifications to the software.
We hope you plan of giving serious consideration to the information presented in this letter and our prior communications. Our attorney has been in communication with your attorney Mr. Spalty however; there has not been any new dialogue with WHG. We continue to hope that you are willing to address these issues in an amicable manner as our success leads to your success and working together towards these results has always been our goal. Should you wish to discuss these issues further please contact our attorney Mahesh Patel or speak with us directly.
Thanking You
Owners 8 Association
“Owners Working Together”
FEBRUARY 16, 2010 :
Update on Bird vs Wyndham CA Class Action
http://www.bluemaumau.org/8484/judge_rules_super_8_breached_contract
SOUIX FALLS, SD – Last Wednesday District Judge Lawrence L. Piersol ruled that Wyndham Worldwide, parent to Super 8 Motels, Inc., breached its contract with 160 franchisees when it set an unauthorized mandatory fee of five percent on gross room sales in 2003.The lawsuit was certified as a class action in October 2007 after Bird Hotel Corp., a Super 8 operator out of Winnipeg, Manitoba, challenged the chain’s TripRewards program, claiming the new fee was not part of their contracts. Although Wyndham had filed an appeal of the 2007 decision in the 8th US Circuit Court of Appeals, its was denied.
Regarding last weeks ruling, Scott Abdallah of Johnson, Heidepriem & Abdallah, one of the attorneys representing the franchisee plaintiffs said, “Our clients are obviously very pleased with the judge’s recent decision. We had argued that this was a straightforward breach of contract and the court agreed.” His partner Ronald Parsons, Jr. presented the arguments at the hearing in favor of their motion for summary judgment and against Super 8’s argument. The judge ruled that the amount of damages that Wyndham must pay to the franchise owners will be decided by a 12-person jury. Franchise owners are seeking the money they paid into the customer-incentive program which amounts to approximately $3.5 million plus pre-judgment interest. Although a trial date has been set for April 13, 2010, Judge Piersol has ordered the parties to mediation on March 15.
Wyndham touts its TripRewards lodging loyalty program as the world’s largest with 5.2 million active members which drives 26 percent of room sales. Today Wyndham has more than 7,000 hotels in 66 countries. Super 8, one of the largest chains of budget motels in the world, was started in Aberdeen, South Dakota in 1974, and has over 2,000 motels in North America. Super 8 does not have a CEO or board of directors nor does it have any assets. Its president reports directly to the CEO of Wyndham. Will this decision have any implication on other Wyndham franchisees or other hotel chains franchise owners?
Abdallah explained, “Our class action involves a relatively small class of Super 8 franchisees still governed by an original South Dakota standard franchise agreement that does not allow for some of the changes that are made within the industry today. As a result, it is hard to say what type of wide-ranging impact this decision will have on other franchisees.” According to the franchisees’ brief in support of summary judgment filed last October, Bird Hotel Corp. and other plaintiff franchisees had franchise agreements that were executed between 1984 to 1991 and were for a 20-year term. All were required to pay a four percent royalty fee and two percent advertising fee on gross room sales on a monthly basis. The brief states, “The franchise agreements authorize the imposition of no other recurring fees during their term of twenty years.”
A Souix Falls Business Journal article stated that Judge Piersol told the attorneys at the hearing, “You should be able, I’d think, to mediate it out. If not, I’ll see you the 13th of April.” Wyndham attorneys argued that the company didn’t breach its contract when it instituted the mandatory fee for the customer-rewards program. They stated that franchisees are required to do a number of things, such as provide breakfast, replace carpeting and make improvements. They insist that part of being a franchisee is to pay a fee for a rewards program. They also argued that there should be no award for damages because they have benefited by the TripRewards program through increased numbers of customers. Lead attorney for Wyndham defendants Edward Spalty of Armstrong Teasdale declined to make comment. Wyndham Worldwide’s media relations did not return telephone calls or emails prior to publishing.
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