Tuesday, November 26, 2013

The Truth About The Greensboro Wyndham Hotel Deal

As you may or may not be aware, the developers of the proposed downtown Greensboro Wyndham Hotel are asking the City of Greensboro for an incentive deal that includes $8 Million for the hotel plus hundreds of thousands of dollars a year for a parking garage.

The local media is trying to smooth over taxpayers' concerns noting that the hotel will be managed by the Wyndham Hotel Group but there's something they're just not telling you:

 If the hotel were such a great deal the Wyndham Hotel Group would be investing their own money but that's not what is happening. The Wyndham Hotel Group is charging the owners of the hotel for the use of the Wyndham name and providing management services for a fee. Wyndham Hotel Group is investing nothing, zero, nada cent in the project. They're just selling the franchise just like restaurants sell franchises. Wyndham Hotel Group wins even if the hotel is a complete flop.

Anyone remember Western Sizzling, Western Steer, Roy Rogers? They were all franchises too. Very successful franchises whose corporate owners made vast fortunes selling franchises while their owner-operators went out of business one by one.

Many years ago I worked for the construction division of Golden Corral Steakhouses. One of the founders of Golden Corral was a Greensboro construction contractor and developer named C.L Price-- a very big man who loved to gamble and drink mostly with other people's money. He was at the time one of Greensboro's elite developers, one of several I've worked for over the years. In the locations where the corporation considered the restaurant's success to be sure fire, Golden Corral paid the entire expense of building and operating the restaurant but if the location was questionable they found a franchise operator, aka, sucker, to invest her or her hard earned money and corporate spent nothing. In 2 years we built 400 Golden Corral Restaurants in the Southeastern United States and I set foot on well over 300 of those properties. Today you can count on your hands how many of those restaurants remain.

And when you consider the fact that Greensboro's current downtown hotels only have a 56% occupancy rate on average, and 2 other downtown hotels are in the works, the chances that it will flop are mighty high.

Related: City issues fake hotel study.