- Published on Thursday, 19 July 2012 16:06
Written by Tim Svenson
Article Read: 1429
The interest in buying motels and having them operated under management by competent and professional management teams has grown substantially over recent years.
The ability to own a successful motel business from afar, without having to operate it oneself is more a reality now than it has ever been. Professional management teams are often comprised of a husband and wife who are experienced in operating motels and who have a genuine interest in improving the trading performance of the motel over and above its current trading. The sitting at reception and babysitting the phones is not their idea of fun and holds no interest for them.
The key to this type of operational arrangement working are the two words "professional management". In the past it was the "norm" to enlist anyone who said yes to the question and the owner's expectation was that this arrangement would work. In many cases it did not work and it ended up resulting in motel managers in general receiving a bad rap. Managers were often labelled lazy, incompetent and in some cases dishonest, if the business did not perform as well as it had in the past.
Some of the mistakes of the past are still being made however. The old saying still rings true that "if you pay peanuts you get monkeys". The manager's remuneration is dependent on a number of things including experience, roles, performance, skills, etc. If a manager feels they are being underpaid, it is highly likely their level of service (in a service industry) to the business and guests will be diminished. This results in a poorer motel operation and damage to the business' reputation and performance.
Remuneration packages for motel managers are generally determined by the market and the negotiation process between the owner and manager. The type of motel involved and particular work required to be completed by the management team will affect the package offered. Is the management team required to manage the property, cook, clean, complete the accounts, etc? This will be different from one motel to the next depending on the size of the property, whether there is a restaurant onsite, the location of the property, and the requirements of the owner. Is there a food and beveridge allowance built into the package for the management team? Management packages can be fixed salaries or in many cases are a fixed salary plus a bonus system based on the achievement of certain goals, such as reaching a sales income target or profit target for a particular period.
Many motel owners in recent times have owned and operated a motel for a period and have then decided to acquire another. Obviously one cannot be in two places at once, hence placing one or both of these businesses under management. The owner then takes the role of overseeing both businesses and relief managing as required.
The motel industry is a service industry and, if a high level of service is not provided, the customer will take their business elsewhere. A common complaint is that some managers will not go the extra mile to look after a customer, such as doing those little extras that make a customer feel looked after and wanting to return.
An ongoing worry for owners can be the security of the income of the business. The fact is that most managers are honest, however over the years a few have done the wrong thing in this respect and it only takes one to leave a sour taste in one's mouth. There are security measures that can be put into place to minimise the risks however.
There is no doubt that the current market acquiring motels is largely affected by the current economic situation around the world and the political instability resulting in a lack of confidence within all markets. First time motel owners are fewer in the market at present and experienced owners/operators are the most active in seeking out motel business opportunities. Generally first time owners will operate the motel themselves and are less likely to put a motel under management, at least until they have a good understanding of how the business and motel industry works. The result is a higher demand in today's market for the professional management team.