Date: December 17, 2009
To: Nancy Poor - WHG
From: JAY PATEL - INTERIM PRESIDENT OWNERS 8 ASSOCIATION
Re: Your communication to External Entities
Thank you for taking the time to read the concerns of the franchisees as we greatly appreciate any positive discussion that may ensue from open communication. As the interim president of O8A, which now represents over 1300 WHG franchisees, it is with extreme concern that we are sending you this email. As you know, the intended recipients for the November 10, 2009 email were Mr. Eric Danziger and the brand presidents of the WHG brands. We are quite concerned that the email information was forwarded to outside entities and further distributed to individuals not affiliated with WHG without the consent of O8A. As you know, these outside entities were sent this information in an effort to supress our concerns rather than creating positive and progressive dialogue with the Wyndham franchisees.
In the future, please refrain from taking such steps as they work counter productively in our pursuit of creating an exceptional working relationship with our franchisor and business partner. In an effort to protect our association, we have sent this information to our legal representative in order to protect us from any future concern in this matter. Please carefully evaluate the disclaimer that has been updated and attached with this email.
Finally, we hope your attorney Mr. Spalty has forwarded our latest communication to WHG offices, as we work towards the following: Our goal which should be to help create a group that can voice their opinions and create common ground with the parent. We must work with them to help create an exceptional business environment where both the Franchisor and Franchisees can flourish (from the O8A website).
If you have any concerns regarding any of the information in this email, please feel free to correspond with us directly or through our legal representative Mr. Mahesh Patel (mpatel@patellaw.net).
Respectfully,
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 utilizing 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 respresentative of the affiliations of sender..
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December 9, 2009
The following letter was sent to Mr. Danziger from our attorney Mr. Mahesh Patel's office:
Date: December 6, 2009
To: Mr. Eric Danziger - Wyndham Hotel Group President
From: Jay Patel – Interim President O8A
Re: Upgrade of Software System follow-up and other Issues
We continue to question your decision to suspend use of MSI and HSS systems from WHG franchisees. As mentioned in our initial letter regarding this matter, we stress the fact that most of the hotel owners are having severe financial difficulty in the current economic environment and any unforeseen capital improvement expense will be devastating for their businesses. The following information pertains to the Software Systems and continues to expand into other areas of concern.
1) MSI and HSS representatives have assured us that the newer versions of their software systems are in full compliance with new PCI compliance guidelines and they have provided assurances to their clients.
2) Wyndham Worldwide purchased their version of HSS in 1999 and modified it to work with their reservation system. WHG had the ability to update the software however; they did not update the HSS or MSI but rather decided to abandon future use of these systems. You have recently also abandoned use of the Brilliant System. WHG can still hire programmers to update their old version or a new version of these software systems.
3) Softhotels continues to be full of glitches. Last month, we received a letter from an O8A member using Softhotels that had sent documentation where his Softhotels night audit doubled revenue in the system. He had demanded that this be taken care of immediately and within 48 hours the issue was resolved. Again, this was one of the many issues that have been documented on our website for over 2 years now.
4) One of our members just had the Softhotels package shipped to him without him actually signing up and he received a 20 K bill on his WHG statement. We request that you put an end to this practice immediately. Franchisors cannot force equipment on a franchisee as this violates our property rights. This practice also violates the acceptance clause in the software agreement, which states “Acceptance of the Integrated System occurs upon installation at the Facility and successful completion of acceptance testing by the installation service providers.”
This also contradicts your payment clause which states “We will not confirm an installation date for the Integrated System at the Facility until you have paid us or concluded payment arrangements satisfactory to us.” In fact, this practice of WHG began back in the Power Up days where we were given our “FREE” PMS system. Unfortunately, most of the franchisees were not aware that they had the right to refuse the equipment as WHG sent every hotel an addendum document and then told them that if the document was not signed then WHG would put them into default. Many of the franchisees did NOT sign these addendums but yet they still received this initial hardware and software package from WHG. We continue to evaluate the legality of any upgrades when owners under the older franchise agreements did not sign any addendums. Further, if we had known the financial implications of your hardware and software agreements, many of the franchisees would not have signed your financially detrimental agreement.
5) Most of the owners believe the actual reasons for forcing owners to change the software are different from the one given by franchisor. It appears to be more financially beneficial for WHG to rollout new software and charge owners 7-8 K per site which is an approx 49 - 56 Million dollar collections considering over 7000 locations. Although this may be the practice of most franchisors, WHG is the only economy lodging brand franchisor that is imposing such high costs on the franchisees. WHG will likely benefit a considerable amount from this and future software and hardware rollouts and training. Further the hardware WHG is selling is over priced old technology. The base package that had been sold this year had older processors which were sold to us at today’s prices.
6) The owners also believe that the software also has a very high monthly maintenance fee. The new agreements are also forcing a mandatory 5% increase in monthly maintenance fees every year, without justifying any reason for the annual increase.
7) The new contracts do not guarantee that there will be no new hardware or software upgrades after four years time. Hence, there is no assurance the franchisor will repeat the whole process after four years. Many of the franchisees foresee a change coming in the next few years as Softhotels has and continues to have many flaws.
8) Your license agreement section 4.1.2 states “Until Acceptance, the Hardware shall be kept at the facility and shall not be removed without our prior written consent. We have the right at any time during normal business hours and upon reasonable notice to inspect the Hardware and for that purpose have access to its location. You represent and acknowledge that the Hardware shall be used only for the business of the Facility and that no item of Hardware will be used for personal, family, or any other business purpose.” Further section 4.2 states “No Unauthorized Software. You shall not load, store, file, run, test or use any software on the Hardware except (i) the Software, and (ii) other software that we specifically authorize you to run on the Hardware in writing before it is first loaded onto the Hardware.” This affects the front desk operations and the performance of the hotel as 1) Most of the hotels only have space for 2 computers at the front desk. Since, both these computers will not allow access to MS word in order to type letters for customers and day to day operations, the work at the hotel will be affected. It can also result in less annual revenue. 2) Most of the hotels also rely on internet surfing to market their hotels. The economy lodging brands of WHG, utilize the front desk personal or managers at the front desk to complete this task while they work at the front desk. Since your software prohibits internet surfing on these systems the hotel work and revenues will be affected in a negative manner.
9) Your license agreement section 4.3 states “Replacement. We will not require that you replace the Integrated System for a period of four years after the Acceptance Date. At any time after Acceptance, if you believe that some or all of your Hardware requires replacement, you may purchase replacement Hardware from us or from our authorized vendor. The replacement Hardware will be subject to the warranty and service obligation then offered. The warranty on the replaced Hardware is not transferable and will terminate when the replacement Hardware is accepted. Your purchase of replacement Hardware is at your expense and you must cooperate with our instructions on changeover from the replaced Hardware.”
This will affect the bottom line of the franchisees. The issue of your approved vendors charging more than 2 to 3 times the actual market value for hardware has been raised numerous times with different representatives of WHG. This brings us back to the original issue of the franchisor taking royalties on sales from approved vendors, and in return allowing the vendors to abuse the franchisees by charging much more than the market value for goods they supply. It also raises questions about the integrity of WHG in this whole debate about system compliance.
10) Your license agreement section 4.5states “Communications. We may require you to purchase additional or replacement communications hardware or software and install the same as part of the Integrated System to keep pace with changes in the required methods and means of communications between Chain Facilities and the Central Reservation System, the Brand Information Source, and the Email Network.” Currently, with the existing systems we do not have this problem. Should you require additional or replacement hardware, it will be a double whammy for the hotel owners who are already buried in debt and fighting to overcome these unnecessary expenses of system compliance to begin with.
11) Your license agreement section states that “9. Damage Limitation. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL WE OR ANY RELATED PARTY BE LIABLE FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS OR REVENUES.” Numerous technical problems have been brought to your attention with Softhotels. Some of the issues may be resolved however WHG’s lack of communication on this issue lends us to believe that many issues still exist. The recent revenue miscalculations and other accounting bugs in the software have been devastating for the franchisees. It will be inappropriate to sign any agreement which has Damage Limitation clauses until these bugs are fixed. Further, in some states Lemon Laws may be utilized as an avenue to protect the citizens and business operators from financially damaging products.
12) Your license agreement section “11.1 We shall be entitled to terminate this Agreement immediately:…. (c) At any time after the fourth anniversary of the Acceptance Date, if the Integrated System becomes obsolete in our judgment based upon technological advances or improvements, changes in the Services or any other reason” This clause further solidifies the issue raised earlier in point no. 7 of extensive costs and this whole process of being repeated after four years.
13) Your license agreement section states “11.2 In addition to the right to terminate this Agreement, we may suspend the Services to the Facility, including, but not limited to Hardware maintenance services upon the occurrence of any of the events described in Section 11.1. Because we still incur costs on your behalf, you must continue to pay fees associated with Central Reservation System service under the Franchise Agreement during such suspension period.” Franchisees do not agree with this assessment of yours and do not believe the franchisor is authorized to keep charging for a system after they have suspended the service. You have also not provided any details as to which costs you will incur on behalf of the franchisees.
14) Your license agreement section states “12.4 Your Forms. We are not bound by any terms of your purchase order forms or notices of acceptance which attempt to impose any conditions at variance with our terms and conditions included in this Agreement or in our invoices, standards manuals, technical specifications or elsewhere. Our failure to object to any provision contained in your printed form is not a waiver of any provision of this Agreement.” This infringes on franchisees rights and also infringes on property laws. Numerous states have their own laws which prevent malpractices. The franchisees believe it is highly improper to make them sign such clauses by using force in the form of franchise agreement default.
15) Franchisees believe the MSI and HSS systems will be abandoned in order for the franchisor to have full control over the franchisee in the form of restricting the rate codes and enforcing questionable Wyndham Rewards Fees that were generated for years. MSI and HSS limit the abilities of WHG to control the Wyndham Rewards membership number during guests stays.
16) WHG is currently helping Expedia Inc. in creating a monopoly for itself, by creating rate codes that only help expedia and give them an unfair advantage over the other OTA’s through the use of Micros and Softhotel. In the event of an Anti-trust lawsuit, WHG can be held accountable along with Expedia for such practices and the results will be devastating for the hotel owners who would likely suffer financially. Although, brought to WHG’s attention numerous times, WHG continues to participate with expedia in such questionable business practices. Several years ago, WHG generated an SOR code that helped expedia charge the customers excess state and city taxes which often amounted to an additional 33% tax payment by the customers. These additional tax fees were taken by Expedia and now this issue has come to the forefront. There are numerous cases and some judgments that have been awarded against Expedia in regards to this issue. Although the hotel owners had complained in 2004 and 2005 about this to the franchisor, the franchisor ignored their concerns and the franchisees became an unwilling participant in this entire fiasco. The hotel owners do not want this to be repeated and as a matter of principal would like to oppose any software which aids in the facilitation of such practices.
We hope that you will take an opportunity to discuss this information and respond to our concerns. We respect you for opening up initial discussion with your franchisees however; question your decision on suspending open discussion. O8A has stated from its inception that open communication is the best and most useful method to help create a better business relationship with your franchisees. We continued dialogue with your office however; two of our communications to your offices did not receive any responses as they were pertaining to critical issues. Avoidance of discussion of these issues continues to be detrimental to our relationship with the franchisor. Many of your existing brands continue to face declines in growth and it appears that from articles written in lodging publications that WHG appears to be focused on new acquisition rather than establishing better relationships with existing franchisees. We hope that our assessment is incorrect and you continue to discuss our concerns in an amicable manner. We welcome any discussion and I am available if you wish to discuss further at my office @ (336) 998-9116.
Respectfully,
O8A
November 21, 2009
Dallas Attorney, Mr. Mahesh Patel of Patel and Associates will assist O8A through the communications process with WHG. Patel and Associates represents many franchisees with franchisee litigation and also practices in other fields of law.
Patel & Associates:
301 S. Central Expressway
Richardson, TX 75080
(T) 972-643-1813
www.Patellaw.net
November 20, 2009
Re: Communications with Wyndham Worldwide Corporation
Dear Mr. Patel:
We represent Super 8 Worldwide, Inc. ("SWI"), a subsidiary of Wyndham Worldwide Corporation ("Wyndham"). We understand that you are Interim President of Owners 8 Association ("08A"). Although we do not know if O8A is presently represented by counsel, in our prior dealings with 08A it was represented by Dady & Garner. As it has been more than a year since we wrote to that law firm involving issues raised by 08A, we write now simply to advise you to direct this letter to the attention of that firm if they still represent 08A, or to whatever firm now represents O8A.
We understand that you have recently communicated issues you have regarding SWI's upgrade to its property management systems to numerous people and groups, including SWI and Wyndham management. Responding to your communication Wyndham management advised that you should raise any issues you have through your attorneys, who should direct their communications to our attention.
Thank you in advance for your cooperation.
Very truly yours,
Edward R. Spalty
Armstrong Teasdale LLP
Date: November 18, 2009
To: Mr. Eric Danziger - Wyndham Hotel Group President
From: Jay Patel - Interim President Owners 8 Association
Re: Upgrade of Software System
We respect your concerns and opinion regarding the letter that was sent out by O8A last week and appreciate any constructive dialogue leading to valuable results for our members. The association has always left communication open and is willing to entertain discussion in correcting any mis-information that may be discussed. In the last 2 years, we have had several officials from WHG mention that some of our information is incorrect. To that effect, we have asked for discussion or written clarification with quantifiable data regarding our inaccurate information. This would allow us to rectify any inaccuracies and mis-information that may exist in our member communication.
Unfortunately, whg officials have NEVER followed up with this pertinent information and thus they have not educated the franchisees. During our meeting in NJ, we had asked Mr. Valletta and the FAB to provide us with communication regarding corrections made to softhotels. We were told that the 70 issues posted on the O8A website were mostly corrected and addressed. In the last 3 months, we have not received any further communication regarding this matter. The outline of our discussion in NJ had been sent to our over 1300 wyndham franchisee members and requests for this data have never been fullfilled. Your latest communication to us has pointed towards incorrect information being distributed as your reason for not communicating further with us. Again, we have always been an independant association of franchisees of WHG and continue to voice our concerns in an open manner. We hope that WHG continues to address the issues and enlightens us to any inacuracies that may exist.
Respectfully,
Jay (Jimmy) Patel
Interim President O8A
November 18, 2009
Jay,
As you know, I have always and will continue to listen to our customers concerns and comments, and it was with that in mind that I read your recent letter regarding the upgrade to our property management systems. Unfortunately, it is misleading in many regards, and I was not afforded the opportunity to respond to correct those misstatements before you posted it to your membership. As you also know, in the past, we were forced to limit discussions regarding Owners 8 and Wyndham Hotel Group to those occurring through our attorneys. While I have attempted to have a reasonable dialogue with you since my coming to WHG, you continue to distribute misleading information, such as the letter I mentioned above. These types of communications could have an impact on our business and contractual relationships with other owners. While I continue to respect your interest in continuing communications, I believe that it is appropriate to revert back to communicating through our attorneys for the foreseeable future. I trust that you will raise any issues you may have with your attorneys.
Eric
Date: November 10, 2009
To: Mr. Eric Danziger - Wyndham Hotel Group President
From: Jay Patel - Interim President Owners 8 Association
Re: Upgrade of Software System
On October 20th 2009, all the franchisees were notified of the mandatory upgrade of their Property Mangement System. Therefore any site that is currently using any PMS system other than Softhotels or Micros Opera will be required to upgrade by March 31,2010. As franchisees this has created a tremendous amount of concern due to the financial implications of such a change during the country's worst economic climate since the Great Depression. After reading numerous emails from franchisees and subsequent discussions, we feel that in the current economic climate it is only appropriate to postpone the deadline for these upgrades and find an acceptable interim solution. Furthermore, most franchisees do not seem to have any considerable problems with the existing HSS or MSI systems which can be modified and made PCI compliant.
The WHG memo states that "In order to strengthen our ability to effectively support our customers and their technology needs, we are undertaking certain technology initiatives, including consolidating certain systems and migrating onto common platforms, where possible..." These were the reasons given in 2005 and 2006 when the existing MSI and HSS systems were refurbished and upgraded. Franchisees were forced to upgrade at an expense of 5,000 to 10,000 dollars per site. Many of the franchisees were unable to expend these amounts at that point in time and some of these franchisees continue to pay monthly installments from these earlier upgrades. WHG has over the last few years continually made changes to their Property Management Systems and has in fact attempted to utilize several different systems that since have been abandoned. Unfortunately, the franchisees continue to upgrade and change their systems while WHG continues to show no clear direction as to which system they plan to utilize in the long term.
Currently, WHG is pointing to PCI compliance as a reason for the abrupt end of support for HSS and MSI, however, our research has led us to differing information. We have discussed your concerns about PCI compliance with the representatives of HSS and MSI. Both of these vendors have assured us that they are in full compliance with the existing laws and are willing to provide a guarantee of compliance with upcoming laws if WHG decides to continue with HSS or MSI. They have further stated that they are providing these same services to a number of other franchise organizations and numerous independent hotel owners without any complaints or compliance issues.
The franchisor is not responsible for any fines by the financial institutions to franchisees, nor is the franchisor responsible for any claims by individuals or companies against an individual franchisee, hence we feel the reason given for the retirement of this software is somewhat inaccurate. Further, we feel that WHG may be being misguided by the new software suppliers. The enclosure explains that for level 4 customers (majority of Wyndham franchisees will be considered level 4 customers with revenue under 1 Million), the PCI compliance deadline is December 31st 2011 in most of the financial institutions.
Further, a majority of the Super 8and Days Inn locations are smaller properties that are processing credit cards separately from the Property Management Systems. Most of the credit card processors have updated the processing software to be in compliance with the new laws that are scheduled to be put in place. Furthermore, these changes and upgrades to the credit card processing equipment can be done with a very small fraction of the cost of upgrading the software and paying for training and installation from WHG.
Currently, we are still being quoted total installation costs of 12,000-18,000 dollars during a period where our revenues are typically 25-30% below the previous year. Also in the new quotes, WHG is no longer showing a cost breakdown of hardware, training, etc and is only indicating a total value for these items. This appears to be an attempt to hide the actual cost breakdown to the franchisees. At Super 8, we are already spending additional capital expenditures on signage, which due to being forced to use WHG approved vendors, is typically costing franchisees 60-75% more than using local sign vendors. Many Days Inn operators are still implementing internal and external sign changes. Some of the Amerihost owners are in the process of rebranding to other WHG brands and are incurring vast expenditure. Microtel owners, who recently formed their own independent franchisee association, are also being forced to incur excessive capital expenditures during this current downturn.
Softhotels continues to evolve as they continue to make upgrades in order for the software to function correctly. It has also come to our attention that this same software is available to hoteliers at a cost of $3500 for the software. WHG continues to charge excessively for the hardware and the training for this software package which results in a greater financial burden for the individual franchised location. The hardware that had been sold at the beginning of the year was outdated however it was being sold to us as the latest hardware available. Essentially, we have been paying for yesterday's technology at today's prices. As stated before in some of our prior communication to WHG. Choice hotels has implemented their newest 100% web based software known as Choice Advantage for a fraction of the cost that WHG is mandating that we spend. Further, this is only their second PMS software that they have implemented in their history as opposed to WHG which have gone through 5 separate PMS systems in the last few years.
In light of the above-mentioned reasons we urge you to postpone the suspension of MSI-HSS software, until December 31st 2011 and to evaluate each franchisees individual situation in order to determine if there are any PCI compliance issues on a site by site basis. This would be the most effective avenue to take and thus would be less financially cumbersome on the franchisees. We also look for a significant discount in the pricing for any standardized PMS system that is being implemented in order to justify the cost per room. Any PMS and signage costs that we incur during this economic environment are not beneficial to our guests in any way. The truth to the matter is these changes which will negatively impact the franchisees financial condition will positively effect the WHG P&L statement.
Thanking You,
O8A
12/31/08 - Follow up letter to WHG CEO
DATE: DECEMBER 31, 2008
DATE: DECEMBER 31, 2008
To: Wyndham Hotel Group – CEO Mr. Eric Danziger
From: Jay Patel – Interim President Owners 8 Association
RE: Follow letter to our letter of 12/6/08
In our initial letter to you on December 6. 2008, we had pointed out the progress of our association and the goals of the Owners 8 Association (O8A). The initial letter was written in an effort to reach out to you and create a positive working relationship between the franchisee group and WHG. As you are aware, we currently represent an extensively large group of your franchisees. We have read your initial communication which was sent out to the entire WHG franchisee community and do feel that the letter has emphasized some positive aspects that we as franchisees have continued to hope for from WHG. More specifically, the following paragraph indicates to us that as the president of WHG, you are willing to listen to our concerns. In your letter of 12/23/08, you wrote: “I regard our mutual relationship as successful when our common goals are realized. Success means having a relationship with you that is everlasting. And of course, success implies system-wide growth! Although somewhat aspirational in nature, I promise to work hard in leading WHG in a way which attempts to yield all of those goals, for they are the guiding principles of what makes a company great!”
These statements indicate some very significant directives that you are willing to undertake as the president of WHG. First, you have suggested that you are willing to work towards common goals of both the franchisees and the franchisor. Second, you have also implied that you are focused on an everlasting relationship with the franchisees. Thirdly, you have also hoped for system-wide growth. To that effect, this is our second letter that is written in an effort to create some meaningful discussion and dialogue in regards to the concerns and goals of the franchisees. It appears to O8A that your goals are similar to our goals however, without extensive and open communication none of these goals can ever be achieved.
In the last few weeks, many of our competitors have shelved many of their new objectives and upgrades for the upcoming year. As you are aware of the current economic climate and the bleak economic future for the upcoming year, we feel that WHG must also consider extensions on many of the new initiatives. AAHOA had also sent a letter to all the brand presidents to this regard and unfortunately, the WHG franchisees have not received any type of assurances addressing our concerns. The following paragraph was from the initial letter that we sent you from O8A: “In the current economic downturn, a majority of us are not in any financial condition to pay for new signage, new PMS systems, or even paying $880 to attend an annual convention. SoftHotels continues to have excessive issues and many of those who were unfortunate to be forced to buy and implement this overpriced software have shared their concerns with O8A. Most of the franchisees are more interested in paying their mortgages, paying their employees, paying their monthly bills, paying for operating supplies, etc. We are in a very difficult financial position and our failure will directly affect WHG. These additional expenses which result in extra revenue to our franchisor need to be re-evaluated immediately. It is the duty of the franchisor to address our concerns as we are business partners and our failure is your failure. We continue to expect some type of positive discussion from our franchisor as our issues are valid and our concerns are significant.”
Recently, we have also been notified that WHG will begin to pass of credit card processing charges to the franchisees for credit card payments of franchisee bills. This is a cost savings method being employed by WHG however, we as the franchisees do not have the ability to recoup our CCP fees from our customers. Therefore, we find it quite disturbing that WHG has implemented another process to reduce its costs at the expense of the franchisees. These CCP expenses for guest payments are always referred to as the “Cost of being in Business”, and these fees are always absorbed by the franchisees. Implementation of fees will also have a negative impact on franchisee payments as many of us who are working through difficult times will have to extend payment times in order to avoid excessive fees from WHG.
We continue to hope that you have the ability to take the necessary positive steps in order to remove this communication gap between the franchisees and WHG. We have always stated that open communication and creating common ground will lead to future success for both the franchisees and franchisor. Take the next great step and begin some positive discussion with your franchisee group.
Continuing to hope for Positive CHANGE
Jay Patel – Interim President O8A
“Owners Working Together”
12/16/08 - Leter below sent to WHG
UNIONIZATION AND ITS IMPACT
Franchisees and Franchisors must work together as costly unionization of ecomony segment looms
Many of us have received post cards in the mail in the last few weeks from what appears to be a franchisee organization called UNITE HERE. It addreses concerns that appear to be those of Motel 6 franchisees. O8A attempted to contact the group in an effort to clarify the intent of their mailing. After conducting further research into this matter, we have found that this is an effort of the labor union Unite Here to expand it's presence in the ecomony segment. O8A has contacted both Wyndham Worldwide and Accor to let them know that as franchisees, we realize the extreme costs associated with union staff and the detrimental affect wide-spread unionization would have on the lodging industry. It is the best interest of both franchisors and franchisees to keep our labor costs under control as many experts point to high union labor expenses as the pitfall of the airline and auto industry.
In the upcoming Congress, Democrats will have control of both the Senate and the House of Reps. Further, The Office of President will also be under democratic control. It is public knowledge that the unions are heavily supported by the Democratic Party. The Employee Free Choice Act which as we have mentioned before is a deceptive name for a bill that the unions are aggressively pushing for the purpose of unionizing most of America's businesses. This includes the lodging Industry that is currently suffering from low occupancy and low revenues due to the current economic environment. However, as things improve through the upcoming year and the economy rebounds in its typical manner. The Union issues will begin to creep back into politics. The franchisors better take heed and understand that the franchisees and the franchisors are and will need to remain on the same side of this issue. The franchisors need to begin to work with franchisee associations in an amicable manner on these issues. Wide-scale unionization would be devistating to the industry.
With their recent mailing, Unite Here is attempting to present itself as group that works to better the Motel 6 flag. This clearly is not the case as their goal is strictly to increase the wages and benefits of their members at the expense of franchisees. With the economy which we're faced with, franchisees have little room for any additional operating expense, particularly a 20-30% increase in payroll. If United Here is successful in their cracking Accor, who's stopping them from expanding to other brands?
O8A encourages it's members and all lodging owners to be aware of this critical hurdle we may face and contact your franchisor to let them know we must work together on this issue.
Jim Miller - interim Secretary
Owners 8 Association
12/7/08 - Letter below sent to new CEO at Wyndham
DATE: DECEMBER 6, 2008
To: Wyndham Hotel Group – CEO Mr. Eric Danziger
From: Jay Patel – Interim President Owners 8 Association
RE: Current and Prior Issues
It has been over one year since many concerned Super 8 Motel franchisees united together to form Owners 8 Association. We wanted to create a uniform group which would help represent our concerns to our franchisor. We began with a small group of franchisees, which Super 8 President, John Valletta, initially labeled as a small disgruntled group of franchisees. He attempted to belittle the group by using the franchisees marketing monies and sending out a 16 page letter attacking the group. Accordingly, as you had infringed on our legal rights to form a franchisee group, we had our legal council respond to you. Since that time, O8A has now grown to a group of over 830 Super 8’s and combined with 319 other WHG franchisees now represents over 1,100 WHG franchisees. O8A also has affiliated with the CFA (Coalition of Franchisee Associations - www.thecfainc.com), which represents several different franchisee groups in order to create a united voice in governmental matters pertaining to franchisees. Our goals have always been to represent the franchisees issues in order to protect our investments and allow us to prosper in conjunction with our franchisor. In the current economic downturn several new factors have created excessive difficulties for the franchisees. Declining revenues and occupancy have created hardship on many of the franchisees. We have not seen many positive steps taken by our franchisor despite the fact that issues were presented over a year ago. Now these issues which are significant and have not been resolved are being trumped by the fact that lack of revenue at a majority of the motels has created more hardships and issues that need to be evaluated by the WHG.
Our Super 8 issues which were discussed with WHG officials during the regional meetings have never been addressed or resolved in any matter by WHG. As you had continued to avoid direct discussion with the group, we began legal communication with you through one of our attorney’s. A presentation was developed by O8A which discussed the group’s four major issues. Along with the issues, there was significant information regarding the group members and surveys taken by O8A. These issues were, technology standards, frequent stay program, customer service fees and re-inspection fees. The issues and discussion regarding these problems were presented along with possible solutions to the issues. WHG’s legal department was presented these issues in August 2008 and despite continual contact by one of our legal council, there have not been any new developments. WHG legal continues to state that the matters are in review and that some issues are being addressed. During this time period, WHG has seen the resignation of Mr. Steve Rudnitsky, the CEO, and Tony Berger, the COO. Recently, some changes in terms of realignment of duties have been made by WHG. Most recently, we are aware of your hiring and hope that this is a positive step for the franchisees. As you are aware, WHG revenues from existing hotels is lower than previous years. Also, the revenue of other competing franchisors had grown at a slow, yet modest rate. WHG media announced the following: System-wide RevPAR decreased 2.7% in the third quarter of 2008, reflecting 4.2% declines in domestic RevPAR.. In comparison with other major franchisors such as Choice and Hilton, WHG was an underperformer. WHG stock has dropped to a 5 year low while other hotel stocks have not hit the floor. More significant to the franchisees is the fact that this represents a continual decline in our revenues while WHG continues to mandate new expenditures.
In the current economic downturn, a majority of us are not in any financial condition to pay for new signage, new PMS systems, or even paying $880 to attend an annual convention. SoftHotels continues to have excessive issues and many of those who were unfortunate to be forced to buy and implement this overpriced software have shared their concerns with O8A. Most of the franchisees are more interested in paying their mortgages, paying their employees, paying their monthly bills, paying for operating supplies, etc. We are in a very difficult financial position and our failure will directly affect WHG. Although, it has been apparent that WHG has little respect for our concerns and has not taken any positive steps towards discussion of our concerns, we continue to hope that our franchisor will take our concerns seriously. These additional expenses which result in extra revenue to our franchisor need to be re-evaluated immediately. It is the duty of the franchisor to address our concerns as we are business partners and our failure is your failure. We continue to expect some type of positive discussion from our franchisor as our issues are valid and our concerns are significant. O8A is aware of the fact that WHG is the number one visitor to our website and you are constantly monitoring our O8A.org site, we hope that this transitions into further meaningful dialogue. We are available for discussion and hope that you will take some positive steps forward.
Continuing to hope for Positive CHANGE
Jay Patel – Interim President O8A
“Owners Working Together”
7/11/08 - Letter below sent to WHG regarding issues with SoftHotel.
To:
Steven.Rudnitsky@Wyndhamworldwide.com,
John.Valletta@Wyndhamworldwide.com
Date: July 11, 2008
To: Wyndham Hotel Group
From: Jay Patel - Interim President O8A
RE: CONTINUAL PROBLEMS WITH SOFTHOTEL PMS
Owners 8 Association as of July 11, 2008 is comprised of 816 Super 8 Motel locations and 211 other Wyndham franchised locations. Therefore, we now represent issues for over 1,027 Super 8 and Wyndham franchisees.
Below, you will find a compilation of issues with the current Softhotel PMS. Many of these issues have been forwarded to individuals at the corporate level however, to our knowledge the issues are NOT RESOLVED. These issues negatively affect our operations by reducing our capability to run the properties in an efficient and profitable manner. This also affects your royalties in a negative manner and we continue to hope that increasing revenue throughout the brands is the focus of Wyndham Hotel Group. Our current information leads us to make conclusions that are contradictory to this statement.
Of the major franchisors, WHG is the only major franchisor utilizing a vast array of PMS systems. According to our information you are currently utilizing IPTU, HSS, Brilliant, MSI, and Softhotel while most other franchisors are limited to 1 or 2 PMS systems. Unfortunately, we are uncertain if Softhotel glitches will ever be removed or if WHG will decide to implement yet another new PMS system in the future.
As one of the largest franchisors in the world, we find it puzzling that WHG does not have the ability to utilize a single software solution that is functioning in an acceptable manner. Most other franchisors do not change their PMS system this frequently and continue to make updates to their existing proprietary software. However, WHG continues to follow atypical paths in the lodging industry. As always, we are attempting to enlighten you to the issues between the franchisees and franchisor. This issue has been a major focus of our group and should be a major focus of our franchisor. It does not seem logical for a franchisor to force franchisees to buy a software solution that will negatively affect their revenue. Therefore, we feel that it should be of utmost importance for Wyndham to stop the rollout of the software until the issues are resolved. Further, as a franchisor, I do not believe that it is in the best interests of WHG to reduce the revenue of the franchisees and franchisor. Again, we are assuming that WHG focuses on increasing revneue at the franchisee level.
The issues with Softhotel as presented by yet another franchisee. This franchisee was forced to buy this software that has many bugs and issues that have negatively affected revenue at his property.
Will Wyndham ever resolve the issues and how can you expect us to sign up for overpriced software that is full of glitches? As always, if our information is inaccurate then we are gladly open to listen however, WHG currently continues to hide behind their attorneys rather that discuss the issues with the franchisees directly.
Below are the 52 issues and growing list sent in by yet another franchisee:
Issues with Softhotel
1. Misreporting allocations
2. Monthly revenue reports generate different data depending on the report generated.
3. Availability is often incorrect and prevents my staff from booking reservations.
4. Cancellation policy does NOT print on the confirmation letter nor the
confirmation email. Policy is unknown to guest services with this system.
5. Group function is poorly designed. Room allocations are unnecessarily manual.
6. ALL operations are extremely slow.
7. System does not follow an intuitive progression for checking in a guest.
8. System does not follow an intuitive progression for making a reservation.
9. System requires numerous amounts of unnecessary clicking and pointing with regards to
checking in and reservations.
10. Assigned rooms (not occupied) shows up on the housekeeping list.
11. System reports “unhandled exception error” when making reservation. Tech supports
response was that this is a known issue and will be addressed in the next
update. We were updated since then on 4/15 and the issue is still there.
12. The inability to have notes printed out on the housekeeping list.
(Such as crib or rollaway request, do not disturb requests, linen change, ect.)
13. Inability to post misc charges for faxes and copies for non- guest clients.
14. Print on the reports (especially housekeeping report) is too small.
15. Total amount of guest charges that is reported on the screen during a checkout is too
small. Ten or 12 point fonts are not sufficient for an important part of checkout.
16. Reports in general are not well designed. Lots of white space which translates to several
pages. Reports should be designed to fit on 2-3 sheets of paper for them to be
functional.
17. User interface is poorly designed. The system requires clicking on tiny little pictures on
the screen to access the most used functions.
18. Being Green. Myportal has a link on the home page suggesting Wyndham is making an
effort to reduce the toll pollution has taken on our planet. Softhotel could simply be
“GREEN” be allowing a linen change schedule.
19. Button on the screen should have titles obvious to the user. For instance, on the home
screen there are 3 different buttons with slightly different pictures of computers and 2
separate buttons with pictures of envelopes.
20. No way to cancel the Cash function at check in or on a reservation once the post window
is open. There is a “Cancel” button, but it doesn’t function, you are forced to post an
amount and then you have to edit it out.
21. The system is not “seamless”. I still have to check Travel agent commission reports,
monitor Wyndham Rewards free night stays and bill for them, and Monthly Franchise
reporting.
22. Groups are now being booked through CRS and I am getting no notification. This affects
staffing and ordering supplies. Now I constantly have to monitor reports to stay on top
of my room inventory.
23. The “Arrivals” report includes guest that will be in house that day, which makes the
reports confusing and difficult to read.
24. There is no way to set up a weekly rate in the system.
25. Making multiple reservations for different dates is difficult and time consuming. Also,
you must ask for the guests credit card for each new reservation made.
26. When editing rates the system locks up often and requires that the system be re-booted.
27. Inability to check in a sub room if master has not checked in prior.
28. Inability to over-ride inane functions such as the previous. The system is telling me what
I can and cannot do – it should be the other way around.
29. Takes almost 5 minutes to change rates for a 6 month period of time
30. Cancelation policy is not visible on screen when making a reservation – my staff has no
idea what the cancelation policies are for any given date because the system isn’t
showing it.
31. Manually have to change rooms to tax exempt – the system should do this automatically
after a guest has stayed 30 days. – One more thing I have to manually track
32. I still cannot print a receipt for an extended stay guest. The system populates huge
receipts consisting of hundreds of pages – this is absurd. Guests expect to be able to get
a receipt upon request. UPDATE: I had a guest that stayed with us for 35 days. At
checkout the system populated a 38 page receipt. I understand that this is a "known
issue" but it is one
that needs IMMEDIATE attention. In a society that is more and more "Green"
conscientious, a receipt of such excessive length is environmentally unfriendly and
unprofessional.
33. The inability to change each days’ rate while making the reservation or at check in.
34. If I increase a rate in the system, and make any type of modification to an existing
reservation it changes that guests rate which results in rate adjustments later.
35. The system should charge room rate and taxes at check-in. Training my staff to
remember to post room charges for pre-audit Check-outs and post-audit Check-ins
confuses them. It is unnecessarily complicated and could be simplified by posting the
charges at check-in.
36. I want the ability to pick and chose which functions my staff has available to them. I do
not want them to have full manager access -- I cannot do this with this system.
37. The detail function when looking up a reservation is too difficult to decider.
38. Travel agent and 3rd party websites do not require zip codes yet Softhotel does. Tech
support told me to use a local zip code and leave a note on the reservation to get the correct
zip code. This is not an acceptable solution. My staff will invariable overlook the note and I
will not have a proper address.
39. The system does not save phone numbers in history. Frequent Wyndham Rewards guest
get upset when we ask for a contact number each time they stay.
40. There is no Postage option on the folio for the guest charges. Guests leave things in
hotels often. I would like to be able to track how much money is being spent on Postage
each month and Miscellaneous is too broad a category to track.
41. Training guides are lacking import functions; for example, No-Show procedures.
42. Backdoor changes to the system are done and we are not notified of these changes.
43. Front desk manager property access does not have the power to change/ update rates.
44. Walking in multiple rooms – system does not print Registration Cards.
45. The Search function is not working properly (7/8/2008).
46. System reports ADR as being higher than it actually is.
47. Direct Billing statements lack sufficient information.
48. Credit Card Transactions Report lists account numbers rather than room numbers; which
makes it difficult to find an error if one has been made.
49. Cash function is very confusing for staff.
50. System asks you to check out canceled ‘SUB’ rooms when checking out the Master.
Tech Support has to override this function. It cannot be done from the property.
51. Several of the Property Access options for the staff are not functional.
52. Cannot remotely log into system.
This location just recently joined the O8A and sent in the following email:
I am attaching a list of Softhotel issues that I have sent to my FSM, DBD, and the Softhotel people that I have been working with. I have been working with Wyndham's Softhotel team for several months now with no results. I have been adamant that this software is still in BETA form. I have Beta tested for several different games. If this were a game or any other software for that matter, we would get out money back.
Softhotel was forced on our property in mid-March. Since the installation we have experienced numerous errors and flaws in the system. I have compiled a list of 52 issues with this PM System (and it is continually growing). I have been working with several people on this issues, however I continue to get the same response. "We are working on that issue and hope to have it resolved in the near future." I hope the list I have compiled will detour other properties from using this system.
I know I am losing revenue with this system. It is mis-reporting my room availability on several future dates. It is showing that we are overbooked, when in fact I have inventory available. I lost revenue this weekend CRS booked a group of 9 rooms with a 6pm hold. The notes on the reservation had a drop date of 6/4. There is no notification system in softhotel when a group is booked without my knowledge and in affect no way to enforce a drop date. The rooms were discovered the day of arrival on a sold out weekend. I am seeking compensation from my FSM and from Softhotel.
I am unsure of the average installation cost. We got a wavier for the monitor and the printer. We paid just over $15,000 for the system.
This information was posted earlier on our website and was sent in by another franchisee:
Subject: SoftHotel Problems as sent in by a member of O8A
1. The groups are hard to pull up and make reservations for. Not everyone at the front desk gets it. I am unsure if it is a training issue or just a computer glitch. It is easy for someone to get in to a reservation and change it. Maybe password protect it to Sales and Management?
2. Takes entirely too long to transmit information back to central. If we change a room in the system, it takes 5-10 mintues to show up clean as an assignable room.
3. Will sometimes bump a guest that is already in house to another room. We tried to make a room stayover this morning and it bumped them out of room 101 to room 223. No reason to it but we had to put the room in as clean wait a fair amount of time and then put them back in room 101.
4. If you set tax exempt, it for some reason still puts taxes on the room. Is this a glitch or is there something that we are not following through with?
5. There need to be LESS rate plans. There are way too many to choose from thus we are underselling the amount that we can get for the room. Not sure if this is a load issue on our side or not.
6. Sometimes when you run a report, it does not hold true to the parameters that you set in. You can command promt it to make a report for 2/07/08-2/16/08 nd it will not hold true to those dates.
7.Is there any way to make the message icon bigger or highlight the fact there s a message differently? There are messages put in and they are overlooked because the icon is smaller than a fingernail.
8. The printer is very slow to print on the folios but will spit out a report in 2 seconds. Is it just our computer or is there a way to speed this up?
These were the responses from a SoftHotel Technician addressing the above issues and in parenthesis we have added some more reasoning for the problems:
1) Too slow –
This system is extremely slow, If I am to set group block It may take up to six minutes, System gets locked several times esp while we try to search in history.
A. You certainly should not be experiencing lockups or system slowness to that level, I will connect remotely and make sure everything is configured correctly on your property. If SoftHotel is not configured correctly, it can severely effect performance.
2) Grid limitation –
Reservation does not appear on grid unless rooms are assigned, Going backward and looking to past folios is not allowed
A. Guests only appear on the room board once the room is assigned to their reservation because without assigning the room, the system does not know which one you would like used. Accessing previous guests folios can be done via the advanced search option, We can walk through this process on the phone.
3) Direct Bill –
Limited room rate and trip reward qualification
unable to adjust room rate once audited or posted.
Unable to separate third party commission on hotel level.
Unable to produce a statement with correct invoice numbers which leads to major confusion to the vendors when it comes to reconciliation.
Unable to produce statement with folio numbers that match newly generated account numbers on statements.
Unable to produce detailed statement with itemized charges.
A. I am not sure what exactly you mean in regards to the trip reward qualification, we can clarify on the phone.
B. Adjusting a room rate that has been posted to a direct bill account simply requires that you reverse the posting, and then re-post it with the correct amount, you then apply the reversal as a payment to the original posting and only the new adjusted rate will appear on the statement.
C. Unfortunately, at this point, SoftHotel does not calculate commissions, however this may be an enhancement we could see in a future build.
D. Direct bill invoicing is being addressed in one of our upgrades this year, we can discuss exactly how you would like to see it, and I will gladly pass that along to our development team for consideration.
4) Post audit Rate correction –
When it comes to delete or apply credit for early departures, Room revenue is not adjusted in final monthly report. Once audit is done Adjustment to mass room account is not allowed.
A. Room revenue should be calculated by adding up all of the “Room” codes posted throughout the month, including adjustments. I may be misunderstanding exactly what you mean here, but we can discuss it further.
5) Limited fund transfer function –
If we are to apply credit card fund to multiple rooms then , initial master folio of paying guest does not reflect transferred amounts.
A. When you setup one guest to pay additional guests charges, all charges from the subordinate accounts appear on the master accounts folio. This happens when the amounts are posted during the night audit. This may be a configuration problem, I will check into it when I connect to your system.
6) Trip reward qualification –
We have tried many times loading rates but still trip reward is applied automatically ,
A. Trip rewards qualification is setup at corporate for rate plans, if you have rate plans that are qualifying that you do not want setup that way, Revenue Management should be able to help you remove those settings from your local rate codes.
7) Limited direct bill audit –
Very hard to apply payments to appropriate invoice since statement does not reflect the same account number on the same invoice in payment application screen.
A. As mentioned in item 3 on the list, we are looking to add additional functionality around this during this years upgrade schedule, I believe we can find a suitable workaround for you until this upgrade reaches your property.
8) No Maintenance report –
There is no way room maintenance log is created. unable to documents repair item and keep up with repair history.
A. This is an item which also is scheduled to be included in a release this year.
9) Limited inventory management –
There is nowhere we could keep track of lost and found items, Inventory of cribs and rollaway bed is not possible.
A. I agree that this would be a valuable addition to the program, and will add it to our future enhancement list.
10) Limited E mail billings or faxing –
Emailing detail statement or faxing directly from module is not possible, Also group contract terms could not be customized.
A. Emailing of statements is possible from within the program, faxing is however not available from within program at this time, as it requires an additional piece of hardware be added.
B. There will be a new group contract and pickup report added to version 2.2.13 tentatively scheduled to be released in June of this year.
11) Very limited Housekeeping report –
We are not able to add comments on housekeeping reports,
A. I will forward this suggestion as an enhancement for a future version to our development team.
12) Suggestions –
Internal front desk messaging would be helpful to communicate with staff
We are still not sure why we are getting inventory messages. those should be user directed not to property.
Remote log in would be very helpful
A. There is a module in the system to send messages to users, via the messaging icon on the bottom status bar. We can walk through its use on the phone.
B. Inventory messages allow you to follow up on any problems that were encountered when a message was sent to CRS and to keep aware of inventory levels for future dates. They are addressed to users flagged with “Receive Admin Messages” in the user profile.
C. Remote login is something we are currently working to bring to SoftHotel, in fact, it has already been added to the program, and is currently being tested for production properties. This is something you should see implemented in the very near future.
13) Unique Situation –We are under contract with corporate lodging where they Pay us rate of $55.00 if we sale below 25 rooms per month, if over then $37.99. How could i go back and adjust rates in this case
A. This would require accessing the checked out folios and performing a room rate adjustment, applying that adjustment to the original posted amount and then applying the credit to the newly adjusted total. We can go over this as well.
Many of the problems outlined above still have no answers yet you are forcing owners to pay a huge amount of money to upgrade to these systems.
Another comment from a franchisee using SoftHotel:
I think the new PMS system is bull. I have had more problems with this system then I have ever encountered in any of my other businesses. Since I have had this system I have been over booked 7 days. This weekend I am overbooked by 25 rooms. I have spent more then 40 hours trying to figure this out. The first conversation we came to a conclusion (8hours later) that my software is somehow attached to a property in Wisconsin. The next time I called they said the problem is due to my employees. This is outragious. The training that they offered was childish. I learned more just by playing around on the software. I think we need to compile all the owners against this software and have Wyndham pay for our damages.
We hope that this information will enlighten you to the problems with SoftHotel. Also, we are aware that WHG is following our path very carefully however, you continue to avoid direct discussion with our group. This is yet another situation where "Ignorance is bliss" does not come into play. You are dealing with our livelihoods and are contractually bound to not implement any program that will negatively affect our revenues. We hope that you will at somepoint listen to your franchisees as we are the foundation of WHG and without our hard work would not have the ability to exist as a franchisor. If WHG officials feel enlightened enough to discuss our information directly then we are readily available to discuss our concerns. As always, working together we can make a difference.
Jay Patel - Interim President
OWNERS 8 ASSOCIATION
Owners Working Together
COPY OF THE LETTER BELOW:
Date: May 20, 2008
To: Wyndham Hotel Group
From: Jay Patel – Interim President
RE: Preliminary information for any upcoming meeting.
Owners 8 Association now represents 800 Super 8 Motel locations in
North America and along with the other Wyndham franchisees, we are an association of almost 1,000 Wyndham franchisees. Our membership continues to expand due to the irregularities and the perceived unfair franchising practices of Wyndham. As always, we are continually working towards resolution of our issues. Despite the obstacles that Wyndham has created towards discussion, we continue to push forward in hopes that Wyndham officials will resolve our franchisee concerns. The following questions have been created by the O8A and we will expect answers to these questions. Further, we also seek implementation of some of these recommendations in order for us to move forward in a positive manner. Increased communication and understanding between the franchisor and franchisees is essential to a successful brand where both the franchisees and franchisor will flouris
A. Super 8’s Technology Standards
- Softhotel install needs to cease until more owners are comfortable with SoftHotels. Wyndham needs to give seminars regarding the software which was the same technique used during Triprewards rollout. We need an elected board to consult with SoftHotels to get the system to help the. Owners not just help Wyndham. The cost needs to be reduced drastically. Training should be minimal or free and provided at mandatory state meetings. Software should cost no more than $2500. You should be able to buy your hardware locally based on specifications. According to a recent judgment against Dominoes (ruling below), the franchisor cannot mandate only one vendor for the PMS system. They must provide specifications and allow franchisees to purchase the system. Why does this not apply to this situation? However, if Wyndham must sell the hardware, the costs must be reduced. Is there any reason that any of these options cannot be utilized? It is financially more feasible for the owners and the results are similar and fair.
FOR IMMEDIATE RELEASE. May 23, 2008
St. Paul, Minnesota
Domino’s Pizza LLC, the franchisor of Domino’s Pizza stores, cannot force its franchisees to install the Domino’s PULSE computer system, a federal district court ruled today. The Honorable Richard H. Kyle of the United States District Court for the District of Minnesota concluded that the franchise agreements between Domino’s and its franchisees prevent Domino’s from being able to force franchisees to buy the Domino’s PULSE computer system from Domino’s. In a case brought by several Domino’s franchisees with stores in Minnesota, Missouri, Ohio and Maine, the court stated that the franchise agreements clearly do not permit Domino’s to mandate that franchisees must install PULSE. The court also stated that Domino’s must provide franchisees with the “specifications” for PULSE (or any other required computer system) so that the franchisees can acquire computer hardware and software meeting those specifications “from any source.” “We are thrilled that the court found that the franchisees can continue to acquire their computer system from any source as is required by the franchise agreements,” said Scott Korzenowski, who, along with Michael Dady of Dady & Garner, serves as lead counsel for the Domino’s franchisees. “The franchisees’ ability to go to the marketplace to acquire its computer system ensures that the franchisees will be able to continue to obtain a high-quality, state-of-the-art, competitively priced computer system.”
2. Direcway is a very slow system that Wyndham utilizes on the basis of security. However, it can be proven that Direcway is not any more secure than any other delivery method. The software must have its own on board protection that will create a secure data stream. SoftHotel is web based and therefore the slow transmission process of Direcway is completely obsolete and creates more problems for the motel operators. It creates a system that cannot function as web based solutions have a remote server that needs to be accessed in high speed not dial up. According to research by the federal government, there is no internet network that is completely secure. All networks can be breached and are susceptible to hackers. Further many of our competitors are utilizing much more cost effective solutions that have not resulted in any major network security failures. Therefore, the argument on security that was provided to the franchisees is totally inaccurate and flawed. Can you show any concrete reason for continuing with this over priced slow method of communication which is destroying functionality of your proposed software solution?
3. All new system software or hardware typically takes a few years in order to remove any and all glitches. Why does Wyndham continuously impose and mandate different PMS systems and then after evaluation determine that a different system would work more efficiently? It seems prudent that Wyndham would research and evaluate any software for a minimum of 2-3 years before mandating anything on the owners. Also, there should be much more advanced notice of any new rollout to the owners. SoftHotel was introduced last summer and had never been mentioned or discussed with the franchisees. Other brands have always implemented a slower rollout with more advanced notice. Other than for financial gain, we do not see why Wyndham rushes into so many mandates without any clear direction or understanding. When can you put this into perspective?
B. Triprewards:
Triprewards now known as Wyndham Rewards, has been a program that was flawed from the onset. The current program is geared towards automatically signing members and many members join without any knowledge while Wyndham charges the fees to the operators.
1. Why are you the only franchisor in the lodging industry that forces a customer to
uncheck a box to opt out of membership? In the industry it is the norm for customers to take the initiative to join and therefore we would like to know when you will you put a fair practice in place
2. The front desk attendants must not have the ability to automatically enroll guests
without their knowledge and the entire process has legal ramifications. When will you stop this improper practice? You have created a process that awards properties and personnel for signing up extensive members without their knowledge and this is an improper practice. When will you cease this activity?
3. As you have created a larger database of members by utilizing these improper
methods, you are utilizing proactive matching in order to assign points to members and charging fees to the properties. How can you implement this process that appears to be completely flawed? Further, assigning points to members who had stayed at a property 6 months earlier is also improper. The frequency program had no impact on the guests prior stay. How can you justify this as the member was not part of Triprewards during their stay at the other Wyndham property?
4. We would like a detailed accounting of all aspects of the Triprewards program including but not limited to current numbers of members, revenue received by Wyndham from Super 8 owners as a result of this program, use of the monies received from Triprewards, number of points redeemed, number of points terminated, and the status of terminated points.
5. When a guest contacts
TripRewards
Customer
Service
Center regarding
missing points, the
Customer
Service
Center should be required to contact the motel 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 TripRewards system, guests may be receiving points when they are not entitled to receive those points and Super 8 may be requiring Owners to pay Mandatory Marketing Program Charges when those charges are not justified. When will this practice cease?
6. When can we expect a program that is more cost effective and more beneficial
to the members and franchisees?
7. More of the marketing funds need to be spent on actual marketing rather than other areas that are not beneficial to the franchisees. Will we ever be given a copy of the Marketing Budget Breakdown? As franchisees, we would like to know how our marketing dollars are spent and we are entitled to know these values. We would like to see less overhead and more marketing from Super 8.
C. Customer Service Fees:
- Customer Service Complaints need to be divided into two sections that can help clarify them. First, there should be a section for complaints on rates or charges which should have no bearing on allotment. Fees should not be charged and penalties should never accrue. These issues should be left to the property to resolve without any franchisor intervention. Second, there should be a section for complaints regarding cleanliness. These issues are related to the property and its conditions. Wyndham must allow the property time to respond to these as is the current process. However, if a response is sent regardless of whether the guest is satisfied with the response, there should not be any fees charged to the property. When do you plan on removing this improper penalty and allotment charge?
- Customer Service complaints that refer to internet connectivity should be directed to the property if they are made during a customer’s stay. However, if it is after the stay, these complaints should not be taken as the issues vary due to many customer’s hardware or their system drivers. These complaints made after the guest’s stay should not be taken or should be sent to the property as an information only file.
- Wyndham must weed out any frivolous, invalid, unreasonable or irregular complaints. The customer service personnel should have the ability to evaluate customer service issues before forwarding to the properties. Again, when will this process that is utilized by other brands be implemented at our brands.
D. Re-Inspection Fees:
- We do not agree with the re-inspection fees as they are being utilized by Wyndham in order to generate extra funds.. Many of the inspection failures are due to minor infractions, as noted by Mr. Jim Darby, during the Super 8 regionals. Currently, almost 1/3 of the Super 8 system may be falling into this failure category for various reasons, of which QA is likely a large percentage. According to Mr. John Valletta, the fees are charged in order to recoup extra expenditure for an actual reinspection. However, we know that these reinspections in most cases never occur; therefore the fees cannot be charged. What is the current policy regarding fees when no reinspection occurs? Regardless, we feel it is the franchisors duty to work with the franchisees when problems occur and fees should never be accessed. If Super 8 finds that properties are failing drastically due to QA liabilities then they must work directly with the owner to resolve issues. However, if the owner’s are unwilling to bring their properties into alignment then they must remove the property from the system and stop further fees. When will this fair process be implemented?
- Inspections should be much more fair, currently Wyndham inspectors inspect all brands which creates further improper assessments. Wyndham needs to address this problem as inspectors lack consistency. Wyndham inspectors must as a prerequisite be required to have worked at a lodging facility of comparable stature. Only by practical manner will they understand the intricacies of cleanliness and management of a lodging establishment. When will this become a consistent process with well trained inspectors? Recently, Wyndham had to remove a Days Inn inspector due to numerous complaints from franchisees, this further justifies our request.
- Due to the nature of the current inspection process, it is imperative that owners or GM’s are present at all inspections. Therefore, we propose a minimum of 48 hours notice in order for the responsible person to be present during the inspection. When can this be implemented?
E. The FAB
As always we continue to wait for Super 8 to implement a more traditional and franchisee friendly process for electing members to the FAB. As stated before and as seen by the actual irregularities of the current selected board members, it is imperative that an elected board is created. During regionals, some of the selected FAB members eluded to the fact that they had little power to influence any Wyndham decision. Further, it was even mentioned by one particular FAB member that they will never be given any type of power on the FAB. However, conversely in the presence of the Wyndham hierarchy and those attending, these same individuals did a FLIP FLOP and discussed the fact that they can influence any Wyndham initiative. As franchisees, we know that the later is untrue and therefore, we wish to know when a fair and proper election process will be put in place for the franchisees?
F. Capital Improvement Plans
As you know, Super 8 and many of the Wyndham brands compete in the economy segment. Therefore, we need to be given a 5 year and 10 year capital improvement plan. Capital investments must be planned far in advance in order for the franchisees to budget accordingly. Are there any plans to help the franchisees in this manner? It makes much more sense for the owner’s to be prepared in advance for any significant financial expenditure.
G. Incentive Program for Owners
There should be an incentive program for franchisees who perform above the system REVPAR. The franchisees could receive credits applied to their account if they perform above the system averages. The result would be that franchisees would try to attain significantly better results and Wyndham could generate greater royalties. Have there ever been any plans to implement such a program? It appears that such a program would benefit everyone involved.
H. Signage
Super 8 introduced a new sign program during the regional training sessions. There are several questions that arise due to this new sign rollout. Why change a sign that has been working perfectly fine for the brand? Our customers have become familiar with the signage and the franchising system is a fairly new system. We are not an old chain of franchisees. Relatively speaking, in consideration of other brands, Super 8 is a new chain. The current signage does not appear old or outdated and therefore a change does not seem necessary. If Wyndham feels a new sign is necessary, it would seem prudent that they should pay for the change out through marketing. Why does the owner appear to be penalized for remaining in the franchising system?
Super 8 is currently limiting sign vendors to just a handful and the result will be that the sign replacement costs will be much higher than if the signage was produced to specs by local vendors. Why has Super 8 and Wyndham moved away from this practice that creates a much more economically viable situation for the owners? We would like to have access to sign specs and have the right to select our own local vendor who can produce signage much more cost effectively.
Currently, Wyndham, being one of the largest franchisors in the industry should have he ability to negotiate much more economical pricing however, they continue to seek vendors who will pay a fee to become approved vendors. This whole practice has become a Wyndham systemwide approach to generating additional revenue. Why must the franchisees be penalized by paying higher signage pricing while the franchisor benefits from both mandating sign changes and vendors?
I. Accounting Department
The accounting department for Wyndham is comprised of individuals that are not willing to discuss the franchisees issues in a timely and respectable manner. Wyndham has systematically created a deplorable system of financial management. The billing is often distorted and irregular as many questionable charges are placed on the statement. These line items when disputed are never resolved in a timely manner. Further, interest begins to accrue on items that are in dispute. When will Wyndham realize that a streamlined, accurate billing practice will help resolve issues here? Further, the individuals in the accounting department would have the ability to respond to franchisees in a timely manner, if the billing were streamlined and contained fewer errors. Wyndham has the right to bill for certain items, however, we did not send in a blank check that allows Wyndham to randomly charge fees in any manner. A franchise agreement was signed by each individual licensee but we did not give Wyndham free reign on our finances. Why is it not in Wyndham’s best interests to resolve this by implementing a flawless statement?
The above issues which range from Technology standards to the Accounting department represent the bulk of the current issues. They do not reflect on all the current aspect of problems the franchisees undergo on a daily basis, however, they are significant issues that need to be addressed. We continue to seek an answer and resolution to these issues in order to move forward in a positive manner. Currently, we have not seen any positive dialogue or positive movement from Wyndham and we hope that this will change soon.
Respectfully,
Jay Patel - Interim President – O8A
LETTER SENT TO JOHN VALLETTA AND STEVE RUDNITSKY ON 4/26/2008 REGARDING REGIONALS AND THE FAB
Date: April 26, 2008
To: Mr. Steve Rudnitsky and Mr. John Valletta
From: Jay Patel – Interim President - Owners 8 Association
RE: The Regional Training Conferences and the Super 8 FAB
During the past few weeks, Super 8 has continued to hold regional training conferences for the Super 8 franchisees. The training conferences have been useful in allowing the franchisees to determine the direction of Super 8. Many issues were discussed during the sessions and a significant amount of data was discussed at the meetings. The conferences were also geared towards unveiling the new Super 8 signage and purchase options for the signage. Also, during these conferences we had the opportunity to meet some of the Wyndham selected FAB members. In this letter, we will be discussing some of the findings of the owners group and will also leave some questions open for discussion. We are all aware of the corporate position to avoid discussion of any issues with the organization and that this was the direct outcome of the letter Mr. Valletta distributed to the entire Super 8 franchisee community. This letter was distributed at the expense of the franchisees and it was likely funded with dollars from the Super 8 marketing fund.
Let us begin with discussion of some of the statistics that were presented to the franchisees. We were told that Super 8 has continued to see positive growth over the last 4 years. The growth in sheer numbers was very insignificant compared to our competitors in the same market segment. The growth rate of the system was in the 1% range. These stats are based on information that was presented to us during the meeting. According, to Super 8 this slow rate of growth was due to the fact that Super 8 was only interested in adding selective well performing properties. This is an excellent answer and an equally important issue as we as franchisees have invested greatly in this brand and would like to see quality properties. However, the O8A cites other reasons for this slow growth. We would be interested in finding out the total number of new applications that Super 8 had received during previous years and the total number of voluntary exits by franchisees. O8A continues to point towards the poor business climate created by Super 8 and Wyndham. Equally significant are the excessive brand standards that have worked to deter franchisees from continuing their relationship with the Super 8.
During the main session, statistics were presented to the franchisees that suggested that Super 8 was growing in both ADR and OCC at a more significant rate than its competitive set. The comp set as per the data provided to us by Mr. Valletta included Days Inn, Microtel, Motel 6, America’s Best Value Inn, Red Roof Inn, Travelodge and Econo Lodge. Let us remind you that some of these brands were the brands that Mr. Valletta and Super 8 considered as NOT in the same category of competition as Super 8. The quote from Mr. Valletta’s January 7, 2008 letter was the source for our concern. According to Mr. Valletta, “We do not consider Super 8 to be in the same operating category as Motel 6, Budget Host, Rodeway Inns, Red Carpet Inns, Scottish Inns and other budget chains, and I doubt that you do either.” The positive variances that were discussed with the franchisees only represented less than +1%. Therefore, considering the skewed nature of the comp set that was implemented to discuss the data, these positive growth values would likely be negligible. Many of those operating the brand may have seen some positive movement; however, this may be negated by the exceptional increase in operational expenditures much of which is the result of decisions made by Wyndham. As owners and operators of this system, we would like to be given accurate data that is representative of our brand. We hope that with some true dialogue and communication with the franchisees that the brand will undergo much more positive growth in the future. We can refer to our survey results from the O8A that suggests that 75 % of the owner’s would leave Super 8 today if there were no penalties involved. Therefore, if the owner’s were actually content and satisfied with the current performance of Super 8 then there would not be a need for an association such as O8A and the discontent would not be so severe.
Some interesting stats regarding Triprewards were also revealed to the franchisees. Wyndham has continued to point to this program as the reason for their success; however, the statistics provided have never suggested that Triprewards was the source of any success. Wyndham has always assumed that any increase in ADR and OCC should be attributed to Triprewards. In order to justify and clarify the statement that Triprewards has been the source of any positive movement, data from your Triprewards’ client base needs to be utilized. According to the data provided at the meeting, TR customers are likely to spend more and stay longer with Super 8 however, since this is a program that is not brand specific these assessments are not valid. Further, a survey of TR customers and their trends will identify whether they value the program as significantly as does Wyndham.
Most of the other frequency programs in the lodging industry are geared towards corporate clientele rather than leisure clientele. The significance is that corporate clientele find these programs much more appealing and are much more likely to utilize the points and become loyal customers than are leisure clients. The majority of Wyndham brands are geared towards catering to leisure clients and therefore the program is flawed. As franchisees, we have continually requested information on the redemption rates of TR points and as of today this information has never been shared by Wyndham. Also, we have discussed the fact that points will expire if they are not used or if the member’s account shows inactivity. The source of this information is point number 7 of the Triprewards Terms and Conditions:
7. TripRewards points expire four (4) years after being posted to the Member’s account, unless forfeited or cancelled earlier due to membership inactivity or otherwise in accordance with these Terms and Conditions. All issues regarding the value, redemption and expiration of airline miles and rail points will be governed by the terms and conditions then in effect for the applicable airline or rail rewards programs. We again are asking for the current stats regarding expired points as they represent an extensive amount of money that the franchisees have paid in the form of the 5% extra royalty.
The information provided at the meeting also indicated that 817,000 new members were added to Triprewards last year. Of this only 37% of these members were enrolled at the property level. This further indicates that 63% of these TR members joined in another manner, however these were not specified. We as the franchisees funding the program would be interested in the source of these new members. We would also be interested in a breakdown of new members by each Wyndham brand.
Also, discussed during the conferences was the Innov8te room design. According to the information provide at the meetings, the new designs were implemented at a few selected properties and the guests utilizing these rooms were “wowed”. The room designs that were shared with the franchisees were similar to those utilized by Hotel Indigo. These designs were hip and modern and were targeting a market segment that is not representative of the Super 8 core base. Despite this franchisees may still be interested in implementing these design ideas however, what was disappointing was the fact that the Super 8 corporate staff was unaware of the costs associated with the room design. Franchisees discussed the monetary costs for these room designs with the corporate staff and despite implementing some sample rooms, Wyndham officials were unable to discuss the approximate room upgrade costs. More significantly, according to information provided during the Q/A session, franchisees will be required to implement the new room design during transfers. Therefore, if any existing Super 8 franchisee decides to sell their property, the new owners will be burdened with an excessive punchlist that will likely deter any possible sale. Here also, there is an extensive possibility that the prospective franchisee will look towards other brands that may give a much better ROI. The most significant point is that these decisions by Super 8 / Wyndham are effectively reducing Super 8’s franchising abilities and further deteriorating the value of the existing franchisees.
The second issue that we wished to discuss in this letter was the selected FAB board. We had the opportunity to discuss our issues with some of the FAB members. While some of these individuals do agree with some of the owner’s issues, they have reiterated the fact that they DO NOT have the ability to significantly impact any specific issue. Therefore, this selected group of individuals CANNOT thoroughly and effectively represent the franchisees. While they may agree on some of our issues, the current structure of the selected board does not allow them the ability to assist the owners in a complete manner. O8A has surveyed its members and shared with you the fact that over 90.1 % of the members are dissatisfied or very dissatisfied with the FAB. Again, we feel that Wyndham could significantly improve this perception by creating an elected board that has some strength and has the ability to effectively represent the owners and their issues.
Also, during the meetings we found that some of the FAB members discussed the issues with the franchisees at length and further indicated that they felt some of the issues were valid and that they had a very limited role. However, during the Q/A session held these same individuals presented contrary positions and indicated that the FAB could effectively mold any decision made by Super 8 Corporate / Wyndham. As a member of this franchising system, I found this quite disturbing. As an example, I will discuss with you the fact that one of the franchisees had discussed the irrelevance of Direcway. Further, the franchisee discussed the fact that the cost of $150 plus tax every month was quite excessive. During the convention last year, the issues regarding Direcway were discussed at the Q/A session and Mr.
Valletta answered that Wyndham would review. The FAB representative that we spoke with as a group discussed the fact that Wyndham was aware of these excessive costs and was evaluating other methods of more economical and secure reservation delivery. The FAB member went as far as to state that Wyndham had explored terminating the contract with Hughes but was restricted due to penalties. In the QA session, one of the franchisees asked the same question of Mr. Valletta, he promptly directed the question towards the IT department. The IT person gave an inaccurate answer that stated that Direcway was a secure system and that due to this fact Wyndham would not explore other options. This in itself further suggests that the FAB member did not accurately and truly discuss the facts on Direcway. It is what franchisees refer to as “LIP SERVICE”. We as franchisees are tired of this and would like some effectiveness in exploring our concerns. According to the Federal Government, there are no “SECURE” networks as all networks are subject to security breaches, including the US Government. Much of this security lies in the imbedded software that you are utilizing. Other brands are using different and more cost effective hardware and software solution to deliver reservations and therefore the explanation given to the franchisees was totally inaccurate. We as franchisees continue to expect Super 8 / Wyndham to find a more effective and economical platform to deliver reservations.
Working together and discussing the issues will bring about positive change that will benefit both the franchisees and franchisor. The current status quo will continue to deteriorate Wyndham's franchising business as there is a continually expanding rift between the two groups. Our O8A has expanded to over 750 Super 8 locations within a short period of time. Much of the credit for our growth can be attributed to Wyndham and its deteriorating relationship with its franchisees. We continue to hope that Super 8 and Wyndham have the ability to listen to their customers. As we always respect our customers at the property level, our thoughts are that the corporate officers should also respect their customers and discuss the issues with them. We hope to hear from you soon as we continue our efforts to collectively bring positive and progressive change to our great chain of motels.
Jay Patel
Interim President O8A
SURVEY RESULTS LETTER SENT TO JOHN VALLETTA AND STEVE RUDNITSKY ON 3/30/08
Date: March 30, 2008
To: Mr. John Valletta and Mr. Steve Rudnitsky
From: Jay Patel - Owners 8 Association
RE: Super 8 Locations and Survey Results
In a continuing effort to improve the quality of the Super 8 brand, we have composed the following information for your review. Owners 8 Association continues its efforts to advise Super 8 and Wyndham of the opinions of its franchisees. The franchisees are the backbone of this and all other chains and it of the utmost importance that their opinions are reviewed by the franchisor. We have also calculated the total number of Super 8 Motel locations within the latest Super 8 directory and will also discuss the relevance of these figures. We continue to work with the franchisees and expect the corporate individuals of Super 8 to discuss our concerns with us directly.
The Super 8 directory indicates that there are currently 2,041 Super 8 Motel locations within the system. However, the current UFOC indicates that only 1,477 locations were in compliance with chain standards. Further, the UFOC also stated that these 1,477 locations were used for calculating the system wide ADR and Occupancy. These figures suggest that only 72% of the locations currently operating were part of these calculations. More importantly, it indicates that 28% of the locations were not part of these statistics. Also, we would like to understand, the current status of these locations that represent almost 1/3rd of the entire system. As owners of this great chain of motels, we would like to receive information on the status of these locations. It appears that a very large percentage of the chain is failing the standards or below average. Please offer us some clarification with these figures.
The O8A conducted a survey of its members and has found some very significant information. This data should help Wyndham understand the opinion of the Wyndham owners (franchisees/customers). Please review the following data:
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Owners opinion of Property Managment Systems
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10% Very Good Value
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31.6% Valuable
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41.6% PMS System Very Good Value and Valuable
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22.78% No Value
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31.6% Very Poor Value
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54.38%PMS System No Value and Very Poor Value
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3.7% No opinion
Other Survey Results
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59% Have Never Owned another Brand
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41% Own or Owned other Brands
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6% owned Super 8 for 20+ years
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21% owned super 8 for 11-20 years
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33.33% owned Super 8 for 5-10 years
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39.5% owned Super for less than 5 years
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51.2% Do NOT live on site
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48.8% LIVE on site
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97.6% Manage their property
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2.4% Use a Management company
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18.98% of Super 8's less than 40 rooms
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51.9% of Super 8's 41-60 rooms
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70.88% of Super 8's are less than 60 rooms
15.85% Of Super 8's 61-80 rooms
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11.39% of Super 8's have more than 80 rooms
27.24 of Super 8's greater than 60 rooms
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The above data should help you understand your customer and their management techniques. It further suggests that over 70% of your owners are operating less than 60 rooms and this value is very significant. The excessive costs of a new PMS system represent a much higher per room cost to the owners. Changes such as new signage will further represent a much higher cost per room to the owners.
Trip rewards Survey Totals
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90.3% TR not valuable and very poor value
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57% very poor value
33.7% no value
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4% valuable
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4% very good value
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8% valuable and very good value
According to the owners, a large majority of the owners feel that Trip Rewards is either a very poor value or the program has no value to them. Many of us have bee discussing this program with officials of Wyndham for years now and Wyndham has not been listening to its franchisees. More significantly, only 8% found the program of any good value. Many of these problems in perception can be resolved by implementation of the possible solutions that O8A had presented to you earlier. Many in the Wyndham franchisee community feel that this program could affect us positively, however; currently the TR program is not functioning effectively. Wyndham continues to distort the data in an effort to increase membership numbers and as a result increase the extra 5% royalty on TR member stays.
Owners opinion regarding Wyndham's Direction regarding Super 8
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Dissatisfied with Direction
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39.50%
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Very Dissatisfied with Direction
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35.80%
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Dissatisfied and Very Dissatisfied with Direction
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75.30%
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Satisfied with Direction
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18.50%
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Very satisfied with Direction
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1.20%
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Satisfied and very satisfied with Direction
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19.70%
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No opinion
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4.90%
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These values also speak for themselves. Over 2/3rds of the Super 8 Owners in O8A are either dissatisfied or very dissatisfied with the direction that Wyndham has been following with the Super 8 brand. Only 19.7% are happy with the current direction of the brand under Wyndham’s leadership.
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Owners Opinion of the FAB
1.2% Very Satisfied
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1.2% Satisfied
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2.4% Very Satisfied and Satisfied with FAB
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38.2% Dissatisfied
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51.9% Very Dissatisfied
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90.1% Dissatisfied and Very Dissatisfied with FAB
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7.5% No opinion
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We found this to be one of the most significant results of the survey. As we have been discussing in our previous emails to you, the survey results have further supported our notions. Over 90% of the owners surveyed were dissatisfied or very dissatisfied with the Super 8 appointed FAB . The FSM ’s and DBD ’s have continued to direct the owner’s towards the FAB . Wyndham corporate officers have further directed the owner’s to discuss their concerns with the FAB . However, over 90% of the owners are not satisfied with the FAB board. Therefore, there appears to be a significant disconnect between the franchisor and franchisees. Again, we feel that an elected board will create a significant improvement with the franchisees.
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Owners Opinion of their DBD
12.5% Very Satisfied
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32.5% Satisfied
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45% Very Satisfied and Satisfied with DBD
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30% Dissatisfied
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13.7% Very Dissatisfied
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43.7% Very Dissatisfied and Dissatisfied with DBD
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11.25% No Opinion
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Owners Opinion of their FSM
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7.4% Very Satisfied
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38.3% Satisfied
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45.7% Very Satisfied and Satisfied with FSM
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21% Dissatisfied
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24.7% Very Dissatisfied
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45.7% Dissatisfied and Very Dissatisfied with FSM
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8.6% No Opinion
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There appears to be a split on the satisfaction of both DBD ’s and FSM ’s and therefore there is some room for improvement in both areas. Considering all the other data presented, it appears that this is somewhat more positive than the other data.
Owner’s Perceived Value of Super 8
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0% Very good value
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46.2% Valuable
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27.5% No Value
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25% Very Poor Value
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52.5% No Value and Very poor value
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1.25% No Opinion
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Over half of the current owners of Super 8 feel that there is value in the Super 8 brand. As owners of the chain, we have continued to discuss the fact that Super 8 has a perceived value. Due to the nature of the direction of Super 8, many owners are feeling discontent with the brand and the value of the chain has been deteriorating. The brand has been stagnant and this is based primarily of the perceived value of Super 8. Wyndham needs to focus on some improvements in order to increase the perception of value of the brand. This is somewhat positive as 46% still perceive a value despite their other opinions. With some needed improvements, Wyndham could help further improvement with this value.
Will Owner’s Renew their Super 8 license
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5% Very likely
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22.2% Likely
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27.2% Very Likely and Likely to Renew Super 8
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24.7% Unlikely
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35.8% Very Unlikely
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60.5% Unlikely and Very Unlikely to Renew Super 8
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12.3% No opinion
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As a concerned group of Super 8 Motel owners, we hope that you review this value very closely. Again as we have been discussing over the last few months, owners have fewer plans to continue with Super 8. Over 60% of the owners are not planning to renew their Super 8 license. Further, this should give you further insight into the direction of the brand. As these trends continue, the Super 8 brand will become another chain that will have been destroyed by improper management decisions made by the corporate officers.
Owners willing to leave Super 8 at a reduced cost NOW
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29.6% Very Likely
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37% Likely
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66.6% Very Likely and Likely to Leave Super 8 at reduced cost
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16.04% Unlikely
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9.8% Very Unlikely
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25.8% Unlikely and Very Unlikely to Leave Super 8 at reduced cost
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Owners likely to End Franchise Relationships with Super 8 NOW if no Penalties for leaving
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56.8% Very Likely
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18.5% likely
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75.3% Likely and Very Likely to leave Super 8 if no penalties
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11.11% Likely
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7.4% Unlikely
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18.5% Unlikely and Very Unlikely to leave Super 8 if no penalties
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6.1% No opinion
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As these results suggest, too many of the owners are willing to leave Super 8 Motels. We are very disappointed that such a large portion of the franchisees wish to leave the chain. Further, with no penalties the amount of owners willing to leave increases from 66.6 % to 75.3%. This is a tremendous statistic; over 3/4th of your current owners would leave the system if there were no damages or fees. Again, as owners of this chain, these figures have created excessive concerns with the O8A. The figures are much more negative than we had previously thought and Wyndham and Super 8 needs to focus on some of the ideas that we have presented to you. This deterioration in the franchise system will adversely affect all those owners who have invested in this brand.
As we continue to move forward in a positive manner, we expect our franchisor to begin to take our concerns seriously. The writing is on the wall and we hope that you will take the time to review the data thoroughly. If these trends continue, the investment of the owners will deteriorate and the effects on Wyndham and Super 8 will be very significant. As you are aware, Wyndham’s stock price continues a downward spiral and is currently near its 52 week low. The value of Wyndham stock has declined by over 40% over the last year and therefore we feel that this information and data is of excessive significance. Some positive changes are needed to reverse this decline as the current owners of Wyndham brands do not wish to see further decline in Super 8 or Wyndham brands.
As always, we are willing to discuss our issues with individuals at the corporate offices. Direct negotiation will be much more effective than discussion through legal channels. You have continued to avoid O8A and even resorted to belittling the organization, however, we continue to take the respectable direction of attempting to open negotiation with you. We feel that the owners, who are your customers, have offered you increasingly significant information and hope that you attempt to discuss our concerns with us in a direct manner.
Sincerely,
Jay Patel – Interim President
Owner8Association
OWNERS 8 ASSOCIATION
Owners Working Together for Positive Changes
Feb 29 letter to WHG
Date: February 29, 2008
To: Mr. Steven Rudnitsky
From: Jay Patel - Interim President O8A
Re: Owners 8 Association
The Owners 8 Association sent an email to the Wyndham Board on February 23, 2008, in an effort to begin direct communication of the issues that are facing the Super 8 Motel owners and operators. Initially, we had approached the Super 8 FAB with the issues that we wished to discuss and to determine the overall receptiveness that they may have towards our issues. Subsequently, Mr. Harvey Jewett sent the association an email describing their abilities to act on the owners’ behalf. The letter from the FAB did not specifically state if they could support O8A in its attempt to resolve many of the Super 8 owners’ concerns. The next step was to develop a communication channel with our Super 8 President, Mr. John Valletta. Unfortunately, he has made the decision that he would not want to discuss any of our issues without involvement of legal representation. In response, we had sent the attached letter addressed to the Wyndham Board. As you are the President of Wyndham Hotels Group and are Mr. Valletta’s superior, we are requesting your assistance in the matter. We would like to bring the issues to your attention and would hope that you discuss these issues with the Wyndham board in an effort to create an exceptional franchisee and franchisor relationship.
The goals of O8A are to create a win-win relationship between the franchisees and franchisor. A strong Super 8 System will benefit both the groups in a positive manner. Unfortunately, despite the O8A's approach, which has been to treat all individuals with respect and integrity, Mr. Valletta has shown little understanding and respect for our association. As members and franchisees of the Wyndham family of brands, I am requesting that we are given the time and opportunity to discuss our issues in an effort to positively effect the growth and prosperity of this great Super 8 brand. Further, our thoughts are that if the president of Super 8 Motels feels that he must attack the franchisee group and attempt to belittle our association by distorting the facts then there may be a need to reevaluate his position. As franchisees of the Finest Economy Lodging System, Super 8, we know that our current president is not willing to discuss the issues directly with his franchisees. Therefore, he is undermining the Super 8 Motels system.
We continue to hope that Super 8 and Wyndham have the ability to listen to their customers. As we always respect our customers at the property level, our thoughts are that the corporate officers should also respect their customers and discuss the issues with them. We hope to hear from you soon as we continue our efforts to collectively bring positive and progressive change to our great chain of motels.
Sincerely,
Jay Patel – Interim President
Owners 8 Association
Further follow-up letter to Mr. Rudnitsky, Wyndham Hotel Group President.
Date: March 4, 2008
To: Mr. Steve Rudnitsky - President - Wydham Hotel Group
From: Jay Patel - Interim President Owners 8 Association
RE: Owners 8 Association
The association has sent you a hard copy of two of our most recent letters. Your offices should have received them yesterday. We continue to attempt to discuss our issues with officials of Super 8 / Wyndham however, Wyndham officials have not indicated any positive efforts towards resolving some of the owners' issues. As we continue to move forward with our issues, several news articles have been published in the print media. Mr. Rich Roberts, VP of Communication at Wyndham Hotel Group, has sent in some of the following information to the print media in question.
The following quote was taken from the ALN - Law Journal Newsletters (LJN's Franchising Business and Law Alert) of March 2008. The article indicates that Wyndham officials have suggested the following information regarding Owners 8 Association:
Wyndham franchisor executives have been in communication with
the new association, but the parties appear to be far apart on the issues
raised by Owners 8. “John [Valletta, Super 8 president] acknowledges the
organization’s validity and its right to represent its Super 8 members,”
wrote Rich Roberts, vice president, communications, Wyndham Hotel
Group, in an e-mail to FBLA.
If your corporate offices are willing to discuss our concerns as you have discussed with the media, we have been attempting to undergo the same. Further, you have acknowledged our legitimacy and our rights to form and discuss issues; however, Wyndham, our franchisor, has not shown any forward progress regarding discussion of these issues. We continue to look forward to your positive receptiveness of our willingness to discuss this issues directly.
In another article published on March 1, in the IndUS Business Journal, Mr. Rich Roberts refers to the success of the TripRewards Program.
"The vast majority of the 6,000 franchised hotels that participate in the TripRewards program have embraced it. One measure of success is the program's popularity with guests. The TripRewards program is attracting an average of 280,000 new members each month, and more than 7 million people have enrolled since its inception four years ago."
This article suggests that the TripRewards program is a successful program that has thousands of members added each month. We would like for Wyndham to provide us with some data that can be shared among the franchisees, which indicates the effectiveness of the TripRewards program. This information, once provided, may help ease some of the concerns of the owners and subsequently, this information would be very helpful to the franchisees.
We continue to try to work with Super 8 / Wyndham in an effort to create an exceptional working relationship.
As always, we hope that you will begin to discuss our concerns directly with us and help bring some resolution to the issues.
Jay Patel – Interim President
O8A
