GlobeSt.com UPDATE: Mom-Pop Hoteliers Organize to Survive

ORLANDO-With average daily occupancies hovering around 30% at some of the family owned and operated lodging properties, small hotels and motels in the Walt Disney World corridor are organizing for the first time to survive the recession that may put many of them out of business for good.

Janak Desai, owner of the 64-room Baymont Inn and Knights Inn on U.S. 192 in east Kissimmee, FL, is chairing the newly formed, 50-member Kissimmee-Highway 192 Hotel & Motel Association. The property members each have from 50 to 100 rooms.

Hospitality industry consultants tell GlobeSt.com, in another article on this page, the smaller properties near Disney are faring the worst in the current economic downturn.

“They’re dependent on Disney,” Richard C. Kessler, president/CEO, The Kessler Enterprise Inc., Orlando, tells GlobeSt.com.

And Disney, right now, is hurting as badly as its smaller room rivals. The theme park operator, however, has the deep pockets for a marketing blitz the smaller operators only dream about. Disney also has shut down an estimated 2,000 rooms out of its total 22,000-room portfolio among 18 hotels at its 30,000-acre Lake Buena Vista enclave.

“It is most challenging for small inns to compete with the behemoth operations,” Robin L. Webb, a national hospitality industry consultant and former hotel operator, tells GlobeSt.com. “Unfortunately, the level at which small inns can compete with larger, full-service resorts, usually is price.”

Webb is vice president/managing broker, Arvida Realty Services Commercial Division, Winter Park, FL.

“While many smaller properties may offer more personal service and personal recognition to the guest, before doing so, they must first get the guest through the door,” Webb says. “Without the existence of large marketing budgets, smaller operators must rely heavily on guest satisfaction and repeat business. That reliance makes personal guest satisfaction even more significant.”

The Arvida executive tells GlobeSt.com “it is interesting to note that the entire gross revenue of a 40-unit lodging property with a $50 average daily rate is exactly equal to the marketing budget of a 400-room house with a $100 average daily rate if they both are running at 75% occupancy.”

Webb says “the only way for the 40-unit property to attract the guest for the first time is price or exclusiveness, and few smaller Central Florida properties are developed to compete on uniqueness of design or presentation.”

The alternative course of survival action is for smaller properties to affiliate with national franchises. But franchises today are “expensive, equaling about 10% of gross revenues typically, once all fees ot the franchisor are considered,” the consultant says.

“The bottom line for many properties does not equal 10% of their gross once the mortgage payment is met, so making a franchise decision can be a challenging one.”

On the plus side, however, is the flexibility of a small operation. “The good news in all this is that the small operator is typically much more nimble than a major chain operator; able to react quickly to changes in the marketplace; and to adjust payroll and some operating costs almost over night,” Webb tells GlobeSt.com. “That is their key to survival in declining markets.”