LAS VEGAS—So what do Bruno Mars and AmericInn have in common?
According to Paul Kirwin, president/CEO of the lodging chain’s parent company, Northcott Hospitality, who channeled the pop star’s amped-up dance moves in a hip-hop routine to open the 2017 AmericInn Convention and Trade Show earlier this month here at Bally’s, it’s the key attributes of persistence, improvement and dedication to history, legacy and identity.
“I’m no Bruno Mars,” huffed the executive, catching his breath after ditching his gold-lamé jacket and backup dancers to address the crowd of some 350 owners and managers. “But he’s quite an exceptional guy and in a lot of ways, a role model for us at AmericInn and each of us as individuals.”
While an odd symbiosis at first glace, the CEO gave a synopsis of Mars’ struggles to get to the superstardom he currently enjoys, noting the musician’s commitment to continuous improvement, adaptation and evolution, and suggested parallels to the midscale chain’s growth and expansion.
Kirwin also cited the conference’s theme of “Delight and Deliver” as an “in-your-face statement” about the brand’s commitment to service, stressing it was “a hallmark” of AmericInn and in its DNA. “It’s critical that we recommit to that legacy,” he said, also emphasizing the same for the chain’s self-description as “America’s Welcoming Neighbor.”
That said, the CEO termed 2016 “a very successful year,” setting a record in terms of revenue, which came in at $220 million systemwide, with comp-unit RevPAR growth just over 1%. He noted there were three categories that created a drag on occupancy, primarily properties in the so-called “oil patches” in states like Oklahoma, Texas and North Dakota; the trickle down in agricultural areas where farm prices have taken a beating; and supply growth in larger markets.
“We were happy, all in all, that occupancy was flat, given those challenges. What really drove the growth in comp-unit RevPAR was our performance on ADR and there we did an all-time high of $94,” said Kirwin.
He added, “Although the Midwest region, which is largely where we compete, was softer than some other areas of the country in hotel performance, our market share improved to 112%.”
Citing another performance metric—brand contribution—the CEO said 55% of system revenue went though brand channels, such as AI.com [AmericInn.com], which grew by 14%. “We want to get it much higher and we’re absolutely committed to doing that,” said Kirwin, telling the audience, “We’ve got to work together to invest in the growth of AI.com traffic because it’s the clear road to higher profitability for us in the future.”
In addition, the chain’s loyalty program, Easy Rewards, hit an all-time high contribution of 34% and increased by 80,000 new members.
Currently at 198 hotels, the brand over the next two months will be opening five new locations: three conversions and two new-builds with four in Minnesota and one in Iowa, said Nasir Raja, EVP of franchise development and operations, with an equal amount opening over the next several months.
“If I look at my pipeline, I would say most of our growth continues to come from our core: Minnesota, Iowa, Wisconsin and the Dakotas. But we have a lot of interest coming from Michigan, Illinois,” he said.
Right now, AmericInn remains concentrated on its core, but also has been acquiring land sites in what it terms the perimeter of those states. “We were buying but now we’re building because buying is a bit expensive, and we will seek to put them in key markets in the perimeter, so we’re strengthening the boundaries of the brand,” said Kirwin. “To the extent we grow ‘out,’ we need to do it incrementally.”
When asked how this meshes with the brand’s announcement that it would be opening several hotels in the Middle East and the Indian subcontinent via a partnership with Dinky Puri and Rahul Raghuwanshi, cofounders and principals of Singapore- and Dubai-based Eaglewing Estates and Hotels Pte. Ltd., Kirwin said, “We see international development as opportunistic. Today, large brands will not do Master Franchise Agreements because being global is critical to their growth plan. Being global is not critical to our growth plan… We have a project in Dubai that we may get signed in the next six months. We met briefly [at a conference]with the group and they told me they signed an LOI for two properties in the Delhi market that are under construction. We’re confident we will grow there [in India]… We see that development largely serving domestic and regional guests.”
The CEO said the international brand models would be bigger (approximately 200-300 rooms) and more often than not, be suites oriented. “There’s a lot of extended-stay business in those markets,” he said. Additionally, the properties would have more-robust F&B offerings, such as a three-meal café, to meet regional expectations. “We’re fine with that as long as it’s limited,” he said.
Looking ahead, Kirwin anticipates a strong summer season and the debut of the company’s first television advertising campaign featuring two different ads.
“Historically, the brand hasn’t done TV because, generally speaking, the geographic scale of the brand compared to the cost of TV just didn’t make sense. But today, the way cable is, there are so many opportunities to buy what I call ‘splice and dice’ media and that now allows us to go to a select group of markets that are big feeder markets for AmericInn and buy in an affordable way that we couldn’t do five, 10 years ago,” said Kirwin. “And, candidly, the franchisees have always advocated [TV advertising] for us and with that more favorable pricing, we said, ‘Let’s make it happen.’”
Mark Masuda, VP of marketing, sales and distribution, said the brand has the opportunity to get “very targeted” in its media placement and it will be “strategically timed.” He noted the investment into the campaign is approximately $750,000.
“One of the other things that enables TV is that we’ve continued to grow systemwide revenue, and marketing is funded as a percentage of that. In the past five to eight years systemwide revenue has grown over 20-25% so that allows Mark to do things the brand couldn’t do 10 years ago because there were other things we needed to do,” added Kirwin.
The CEO urged attendees to “make hay” in the upcoming season, which he noted will be colored by greater numbers of employed people looking to travel, and moderate gas prices.
He noted revenue gains will be achieved “largely by driving rate… I think it’s important everybody recognize summer travel is going to be a critical opportunity in order to drive profitable revenue through [the]hotels, and the way to do it is to really be smart and aggressive in terms of revenue management and rate management.”
A 3-5% rate bump is being sought for key summer periods. The CEO cautioned, however, when guests pay more, they expect more. Toward this, Kirwin said the brand would look to have all franchisees in compliance (originally expected by year’s end 2016) with installing automatic entry doors. “This is a standard we’re going to be a little less patient on and we’re going to push harder for because the reaction from guests and the feedback from the hotels that have done it has been really strong,” he said.
AmericInn also is revising its WiFi program. “Over the past five years, the sort of capacity [franchisees]have had to provide for WiFi in the hotels has just gone up and up and up and any imperfections in terms of the system design creates complaints from guests… We know moving to a new program is going to move the needle, and basically our goal is to get WiFi up into that 90-something-percent satisfaction level, which we think is critical to have for an amenity people have said is so important to them,” said Kirwin. He noted having WiFi in line is equally important to Northcott Hospitality, which owns 10 AmericInns and operates 10 for other owners.
The CEO also emphasized the need to maintain cleanliness, friendliness and helpfulness, a trio of attributes research shows trumps even the latest bells and whistles, he said.
AmericInn’s meeting guest expectations earned it a J.D. Power & Associates’ award for “Excellence in Customer Service” for the second year in a row, noted Masuda.
He detailed some of the consumer-facing email campaigns AmericInn has implemented, targeting specific holidays, such as New Year’s Eve; personal events, including dedicated birthday emails; and what the VP referred to as “calls to action” emails, e.g., a last days of summer promotion and, most recently, a sports-themed March Madness brackets email.
“Not every email’s intention is: ‘Book now! Book now!’ It’s staying top of mind, staying in front of the guest, being engaging, being that partner property that keeps in front of them so when they’re making their next booking decision, we’re in the selection set; we’re top of mind,” said Masuda.
To give searchers more to look at online, the VP said AmericInn is now adding 25 photos of each property. “We want to capture every room type from multiple angles. We know this is a powerful way to market and sell hotels,” he said, noting hotels that have complied with installing new granite and updated casegoods are eligible.
He added AmericInn.com also has installed a new group landing page, allowing groups to customize a page, e.g., for a wedding event, and features a booking panel.
Masuda said on the brand’s mobile app, the booking panel has been moved to the front to be more accessible to guests.
“People want to see what the rates are. It’s going to be cleaner, easier and more intuitive than it has been in the past. And it’s going to be ready in time for summer,” he said.
In other shifts, AmericInn will be migrating to the Sabre CRS platform post-Thanksgiving, following Sabre’s acquisition of Trust and its Your Voyager program that the brand has been using, and which Sabre will be eliminating.
It also will be sending out rate alerts this summer to advise franchisees of peak days they can increase rates to take advantage of demand. On the guest side, AmericInn has updated the packaging—but has kept the same products—on its in-room bath amenities.