Meng Wu
Meng Wu
BUSN 102-012
Instructor: Edward Hennessey
Feb. 20th, 2013
Super 8 Hotel Franchise Profile
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Entrepreneurship:
History of the Super 8:
Super 8 hotels are economy hotels with more than 2,100 locations throughout
the US, Canada, and China. It typically offers families and frugal business travelers
affordable single, double and suite accommodations. All properties feature the brand’s
8-point Promise.
The first Super 8 motel, which had a 60-room property in Aberdeen, S.D.,
opened in 1974 charging $8.88 per night by Dennis Brown and Ronald Rivett. The
original rooms rate hence the numeric brand name. The brand philosophy is providing
consistent, friendly service and clean rooms at affordable rates. Super 8 hotels is a
subsidiary company of Wyndham Worldwide Corporation.
Advantages:
Expand nationally recognized name: A significant advantage of franchising for the
parent company is the fact that the franchisors can expand nationally recognized name.
With more and more franchisees, a parent business will get instant recognition. The
increasing branding awareness of the parent company will helpful for the sales of
their product.
Rapid expansion: Because of the providing financing to potential franchisees and
lower failure rate for franchises, more and more potential franchisees draw in
franchising model. Franchising has grown so rapidly that the parent company will be
open many stores in different areas even in different countries. In the some time, more
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franchisees are helpful to improving the branding awareness of the parent company.
Shared profit: As the parent company, they often required the franchises to pay the
royalty fee. Royalty fee may be a large share of the profits or the stat-up fees or a
percentage commission based on sales, not profit. So the parent company don’t need
to take part in the management of the stores, but also have the right to shared the
franchises’ profits.
Reduced Capital Requirements :If a parent business franchising its operations, the
other major advantage of franchising is the fact that the parent company will reduce
capital requirements. If a parent company’s ability to raise capital is too limited,
franchising operation is always the most effective way to solve the capital problem.
Disadvantages:
Increased Variation: Franchising is popular domestically and internationally. But the
increased variation also causes the other problems. As a result of the different cultures
and customs, franchisors have to be careful to adapt their product or service to the
countries they serve. The more branding and marketing will make difficult to control
and manage.
Lack of control over quality: Another major disadvantage of franchising is the lacking
of control over quality that the parent company can’t cover. Due to more and more
franchisers and markets, the parent company always feel hard to control the quality of
their product or services. The uneven level quality will make the parent company lose
the branding awareness. Once costumers lose confidence in products, it’s so hard to
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rebuild their confidence again.
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Marketing or Advertising:
The brand marketing of Super 8 utilizes a variety of methods to built branding
awareness among diffident markets for supporting their hotel brands. They combine a
powerful mix of marketing, involving advertising, promotions and public relations to
focus their target consumers. They also insist their brand philosophy: providing
consistent, friendly service and clean rooms at affordable rates in global marketing.
All properties in North America, and most properties in China, feature the brand’s
8-point Promise:
1.
• Free in-room high-speed Internet access
2.
• Free SuperStart® continental breakfast
3.
• Upgraded bath with hair dryer, adjustable shower head and curved shower rod
4.
• Free coffee in your room, in the lobby, and on the road
5.
• Kids 17 and under stay free with a parent
6.
• Wyndham Rewards® members earn 10 points for every dollar spent*
7.
• Cable or satellite TV with free premium channels
8.
• Guaranteed best available rate on Super8.com or the first night’s free
In different nation, Super 8 has planed different marketing strategy for the
potential consumers. In 2012, Super 8 media plan has delivered over 1.1 billion
impressions against Adults 25-54. They tried to encourage people to choose Super
Destination as travel destination by their compelling message. In last year, they
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continued to integrate across all media, like TV, radio, magazines and Internet. All
social media would reinforce the value and position of their brand.
Integrated marketing initiatives may include:

National print, television, radio and online campaigns

Exposure on top search engines and other online ad networks

Regional co-op marketing programs for many brands

National public relations

Key sponsorships for target demographics

Targeted promotions to drive trial

Direct marketing including email campaigns

Social Media
The advertising fee arrangements for the franchisees:
Markets 1 -5 (ex: New York City, Los Angeles, Chicago, etc.) from $4000 to $8000
per week/per station for a top performing station.
Markets 6 – 20 (ex: Dallas/Ft.Worth, Houston, Phoenix, San Diego, etc.) from $2000
to $5000 per week/per station for a top performing station.
Markets 21 – 50 (ex: Denver, Cleveland, Kansas City, etc.) from $1000 to $3000 per
week/per station for a top performing station.
Markets 51- 150 (ex: Akron, Wichita, Baton Rouge, etc.) from $800 to $2000 per
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week/per station for a top performing station.
Markets 150+ (ex: Myrtle Beach SC, Green Bay, Topeka, etc.) from $500 to $1500
per week/per station for a top performing station.
Assume that we are going to start a Super 8 as franchisee in Philadelphia, in the
first type of the cost it may takes you from $4000 to $8000 per week for a top
performing station. Besides, as far as we know that Super 8 made advertisement in
several national TV channels for about 30 seconds. This may cost about $100,000. So
totally the advertisement fees are about from $112,000 to $124,000 per month.
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Operations Management:
Procurement has a vital role in the hotel industry, with hotel performance
depending largely on how well it operates. The procurement in a hand need to
ensuring continuous supply, in other hand require to mark sure materials and
equipment required to operate a hotel, enable its warehousing and transportation
divisions to function properly and ensure the sales of the prepared services. The
central procurement of room supplies mainly is furniture such as the TV, tables,
mirror and difference size of the beds. The other life essentials like soap, tissue paper,
shampoo and towels. Because of providing breakfast services, Super 8 also consider
the food supplies.
Due to renovating an existing property and upgrading to meet new brand
standards is easier with the right resources, Wyndham Worldwide Group Designated
Service Provider(DSP) program offers full-service furniture, fixtures &
equipment(FF&E) sourcing, procurement and installation services.
Advantages:
As a part of the Wyndham Worldwide Group, the same procurement would
grantee the high standards of the product. And the same product would make the
consumer feel the branding awareness. DSPs work hand-in-hand with Wyndham’s
approved FF&E suppliers to ensure interior design projects meet quality.
Disadvantages:
As new owners of the Super 8, you have to choose the DSPs product instead of
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self-selection to avoiding the higher payments of the supplies. And the some supplies
would make your hotels looks common, no creative supplies.
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Costs:
1. Super 8 hotels be estimated need the total start-up investment to be $163,870 $3,781,200.
2. Wyndham Worldwide does not provide financial assistance for these fees, but can
help with other costs down the road.
3. During the course of the 20-year plan, franchise owners must agree to pay
Wyndham Worldwide royalty fees of 5.5% of room sales. This goes toward their
ongoing support, including their electronic reservations system, marketing and
operational support.
4. Each new Super 8 hotel owner is required to pay a franchise fee between $24,000
and $26,500. These fees are paid directly to Wyndham Worldwide and must be paid
up front during the application process.
5. Franchises licenses start at 20 years.
6. An application fee of $1,000 applies to all new franchise owners.
Cost = Revenue
Fixed Cost + Variable Costs = Total Costs
Fixed Cost includes building and franchise fees.
Variable Costs of franchisee are including procurement, advertisement and royalty
fees.
Fixed Cost = total start-up investment$263,870 + franchise fees $25,000+ application
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fee $1,000 = $289,870
Variable Cost = advertisement 10% + procurement 10.2% + royalty fees 5.5% =
25.7%
Average room rate in the 341 South Black Horse Pike, Bellmawr, NJ, US is $
X = number of room
Variable Cost = (X)$59.88(0.257)
Revenue
We keep 73.3% of our sales since we pay 25.7% to our franchisor
When Cost = Revenue
$289,870+ (X)$59.88(0.257) = (X)$59.88 (0.733)
$289,870= 28.50x
X = 10170.87 rooms to break even
If this super 8 hotel owns 50 rooms and all of room are used per day, it will take 204
days to break even.
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Human Resource Management:
Super 8 provides corporate training for its franchisees. Wyndham Hotel Group’s
School of Hospitality Operations (SoHO) is a premier hospitality educator. They are
focused on helping the franchisees of Wyndham Hotel Group how to manage hotels
and create experiences for their guests and employees. From general manager
orientations to self-paced online courses, their goal is to help franchisees attain
relevant skills and knowledge.
Advantages: Their classes are led by experienced, knowledgeable trainers who are
committed to creating a learning environment that provides opportunities to help
broaden franchise owners and their employees skills and professional knowledge. It’s
helpful to the new manager to know the skills how to manager a new Super 8 hotels to
avoiding failure.
Disadvantages: The training program of new franchisees may lead the parent
company into a financial dilemma. Besides, the new franchisees that may have a
short-term drop will cause unnecessary expense. The meaning of training and
education is actually teaching a group by the opinions and experiences from the
supervisor of the program. This may limit the innovation and creativity of the new
franchisees. That is to say you may lose some new and potential high-profit idea from
the mind of franchisees. The training program takes time and vim from both of
franchisees and franchisor. Sometimes it is not valuable if the franchisee does not
have high skill because he cannot bring you more profit compare to other competitors
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in the same industry.
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Work Cited
Nickels, William G., James M. McHugh, and Susan M. McHugh. Understanding
Business. 10th ed. Boston: McGraw-Hill Irwin, 2008. Print.
Richards, Leigh. "Advantages and Disadvantages of a Parent Business Franchise
Franchising Its Operations." EHow. Demand Media, 20 Sept. 2011. Web.
22 Feb. 2013.
"Super 8 Motels Franchise Cost & Opportunities." Super 8 Motels. N.p., n.d. Web. 22
Feb. 2013.
"Super 8 Hotels | Reservations, Deals, Room Rates & Rewards." Super 8 Hotels |
Reservations, Deals, Room Rates & Rewards. N.p., n.d. Web. 22 Feb.
2013.
"How to Open a Super 8 Franchise." Mahalo.com. N.p., n.d. Web. 22 Feb. 2013.
"Franchise Opportunity for Super 8." Www.nuwireinvestor.com. N.p., n.d. Web. 22
Feb. 2013.
"Super 8 Bellmawr NJ/Philadelphia PA Area." Super 8 Hotels. N.p., n.d. Web. 22 Feb.
2013.
"Wyndham Hotel Group - Wyndham Hotel Group." Wyndham Hotel Group Wyndham Hotel Group. N.p., n.d. Web. 22 Feb. 2013.