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 The Brancatelli File

joe THE INS AND OUTS
OF INNKEEPING


BY JOE BRANCATELLI

September 30, 1994 -- And now, as a public service for all you sales people who are convinced that your job is impossible, a not-particularly-exaggerated synopsis of what Tom Conran does for a living.

Conran sells a service that must be invisible to the ultimate consumer. He sells to an industry where prime assets have changed hands for as little as 30 cents on the dollar, where inventory has a one-night shelf life, and where four of every ten units spoil. Many of Conran's biggest clients are in the business against their wills and their better judgment. Most know nothing--and care even less--about the service he tries to sell. Conran gets no advertising support, has no brand name to promote, and doesn't have a price list to consult.

Feeling better now? Good. 'Cause truth to tell, Tom Conran isn't complaining about his lot in life. In fact, he's a star. Nobody sells hotel-management contracts like Thomas W. Conran, the director of business development for Richfield Hotel Management.

Of course, it may be hard for you to accept that statement because you probably don't even know what a hotel-management contract is. Let Conran explain.

"A lot of travelers feel that every time they walk into a hotel that has the Hilton name on the side of the building that it means that [Hilton Hotels Corporation chairman] Barron Hilton owns it and manages it. That," says Conran, "isn't true."

What is true is that most hotel names you'd recognize--Hilton, Sheraton, Holiday Inn, Ramada Inn, Radisson, Embassy Suites, and even Howard Johnson--are merely franchisers or licensers. Those famous brand names rarely own the bricks and mortar and almost never manage the hotels that fly their flags. The buildings that house the hotels with the famous brand names are usually owned by traditional real-estate interests: investment groups or asset managers, banks or savings and loans, and insurance companies. Management of the hotels themselves--guest services, food and beverage operations, hiring and managing employees, setting rates, and sales and marketing operations--are usually contracted out to companies like Richfield.

Based in Denver, Richfield is probably the nation's largest independent manager of hotels. At present, it services about 160 hotels owned by more than 100 clients. Richfield manages the properties under about two dozen brand names, including at least one of each of the famous hotel names listed above. From his spartan, two-person office in the Hartford suburb of East Granby, Connecticut, Conran is Richfield's point man in search of new hotels to manage.

"Richfield manages real estate," Conran explains. "The real-estate just happens to be hotels. Our job is to look out for the owners, to maximize their return on investment. The better the management of the hotel, the better the return."

Since 1991, Conran has sold 28 hotel-management contracts to clients as diverse as Chrysler Capital (it owns the 490-room Days Inn in Lake Buena Vista, Florida), a syndicate of investors from Bombay, India (they own the 270-room Sheraton Greensboro Hotel and Conference Center in North Carolina), and a division of Nation's Bank (it found itself with a portfolio of six economy hotels after a series of mortgage foreclosures).

"That's why this business is so interesting," say Conran. "One day I'm trying to sell Richfield to an asset manager with an MBA. The next day I'm trying to sell to a group of doctors who are investing in real-estate as a growth asset. The day after that I'm pitching a banker who probably doesn't even want to own a hotel, but got the property on a [foreclosure]. Then I could be dealing with an individual who owns one hotel and wants professional management for his property. And one of my clients was a guy whose girlfriend inherited a 200-room hotel and didn't know what to do with it."

It takes a particularly flexible personality to sell such a specialized service to such a diverse client base. Not surprisingly, Conran's background and career path is unique even for the off-center world of innkeeping.

Now 42, Conran went to college on a soccer scholarship, then became a physical education teacher. For two years, he also coached soccer and painted houses to make ends meet. He stumbled into sales and the hospitality industry in 1976 because his next door neighbor was the director of sales and marketing at a Hartford hotel.

"We were talking over a couple of beers one night and I thought her job was interesting," Conran remembers. "So she set up an interview at a competing hotel that was looking for sales help. What the industry was looking for then were affable characters who could develop relationships. I knew nothing about sales, but I was affable."

Conran got the job. Eighteen months later, his next door neighbor hired him away to work for her as a sales manager. "My training was pretty limited," Conran says, "but, what the hell, I was still her next door neighbor."

Four years later, Conran moved to a Hartford travel agency as a vice president of meeting planning. Two years after that, one of Richfield's predecessor companies was hired to manage Conran's old hotel. They promptly recruited him back "to the same job in the same office." A year later, his next door neighbor, mentor, and boss was terminated, and Conran got her job.

Then Conran switched out of sales and became the hotel's resident manager. It was a revelation. "For the first time, I'm overseeing the cost of servicing the guests whose business I'd sold," he recalls. "Now I was finally feeling in the game because I was forced to balance both the sales and the cost of servicing those sales."

In 1991, Richfield filled in the blanks in Conran's training by making him a "transition general manager." In other words, whenever Richfield captured a contract to manage a hotel, Conran was one of the top guns shipped out to make the property work the Richfield way. By the end of the year, however, Richfield had created the job of director of business development. It convinced Conran to switch back into sales by offering to let him work from Connecticut rather than corporate offices in Denver.

Conran quickly learned there was a world of difference between selling hotel rooms at a local hotel and selling contracts to manage entire properties. "I was naive," he admits. "I just went out and banged on doors looking for contracts. But my clients were sharp real-estate people. I was in awe of them and, frankly, overmatched."

Conran eventually got on track by stressing Richfield's stellar performance on the bottom line. In an industry that has suffered through a decade-long deflation of real-estate values, slumping guest-room occupancy, and flat room rates, Richfield has been a notable exception. Asset values of the hotels it manages has soared, occupancy levels are about five points higher than the industry-standard 60 percent, and cash flow from hotel operations is far above average.

"That's the one common thread that ties together all my diverse clients," explains Conran. "No matter who they are or what their corporate focus, they are all essentially real-estate investors or owners who want to make money. And that's what Richfield does: enhance the value of their real-estate assets and increase the profitability of the hotel operations located in the real estate."

The triangular relationship between the real-estate owner, the brand-name franchiser, and Richfield as hotel manager is a complex one, and Conran uses that to his advantage when pitching clients.

The franchiser's primary interests, Conran claims, are to increase the awareness of its own brand name and to collect fees from the hotel owner. Richfield, however, works directly for the property owner. "What you're buying in a franchise is making the phones ring [for reservations]. Everything else is bullshit," says Conran. "All franchise fees are based on gross, so what does that say about the franchiser's ability to drive the bottom line for an owner?"

Driving the bottom line for property owners is Richfield's job, Conran explains. "I'm not trying to build a chain of hotels for the Richfield brand and I don't have a price list," he says. "I customize every contract and base our compensation on a combination of things that ring the bell for an owner: a percentage of the gross revenue, a percentage of the gross operating profits, and a percentage of improvements to revenues and profits. That's how the owner knows we're working in his best interests."

In fact, adds Conran, the bottom line has become the bottom line of his sales pitch to clients. "When I first got into this I thought I'd be selling hospitality," he says. "It didn't take me long to realize that I was selling profitability."

CONRAN'S ACCOMMODATION: MANAGE YOUR CUSTOMERS
When Tom Conran left academia in 1977 for a sales position at a Connecticut hotel, he was a little naive. "I didn't even know hotels had sales and marketing," he remembers. "I just thought people called and made reservations." Seventeen years later, Conran thinks he's gotten a handle on his work.

SELLING ISN'T COMPLICATED "To sell, you need to create a list of clients, and there are only two kinds: existing clients and everyone else."

CONTROL YOUR DESTINY "Don't wait for the phone to ring. Identify your clients by appropriate segments, target the top 10 in each segment, then concentrate on them."

IDENTIFY REFERRAL PARTIES "Know the people who can give you qualified sales leads. They can give you the inside scoop on potentially good clients [whom] you could never identify yourself."

PLAY THE RELATIONSHIP GAME "Selling is about finding your client's hot buttons. Selling is not just business, you have to get into your client's 'other' life. Do they play golf? Do they cook? People like to talk about things besides business. Most clients find talking about their own business boring."

COMMUNICATE REGULARLY "Communications are especially important when you don't have what the client needs. Don't hide when you're falling short. Don't let your client hang. If you're missing a piece of information, or if you're running behind, make sure the client hears it from you first."

This column originally appeared in Selling magazine.

Copyright 1993-2008 by Joe Brancatelli. All rights reserved.