Do Not Disturb
IT'S A DOG'S LIFE
IN THE HOTEL BUSINESS
BY MICHAEL MATTHEWS
February 22, 2007 -- One of the ways I gauge a hotel, be it a grand dame property or a humble roadside inn, is the price that I'm paying per square foot per night. I find the price-per-square-foot measure logical. After all, when we calculate the value of our homes, don't we think about how much per square foot we can sell them for?
As I've toured the world during the past two years, I've generally paid anywhere from a dollar a square foot per night--that's for a 400-square-foot room selling for $400 a night--to more than $2 a square foot. At the bottom end of the scale, I paid 31 cents a square foot for a Radisson hotel in New York State that remains the best all-around lodging deal that I've discovered recently.
I don't mind hotels making money off me. After all, hotels are a business. And I've made my living in the hotel business.
But I don't like being screwed. So you can understand my ire at paying a whopping $5.71 per square foot a night for a room that had no bathroom, no turndown service and no coffeemaker. We were told to bring our own food and that room service would deliver it, cold, once a day. The mini-bar service offered just two items. There wasn't a concierge or a lobby bar. There were no wake-up calls available and no morning papers delivered.
Talk about daylight robbery. Where was I? London? Hong Kong? Nigeria? Nope. Right here in the good old USA at a PetsHotel.
The PetSmart chain is where I go to buy Millie Matthews, my Queensland Healer mix, dog food, toys and pretty much anything else she needs. PetSmart caters not only to dog lovers, but also to owners of cats, birds, reptiles, rodents, fish and basically anything that's alive and doesn't talk back. PetSmart has now opened the PetsHotel division, which offers day and overnight care for cats and dogs. There are already several dozen PetsHotels around the country and PetSmart says it will open as many as 200 units during the next few years. Most PetsHotels will be attached to PetSmart stores, but some will be free-standing properties.
My relationship with PetsHotel began a couple of months ago. The wife and I were headed to Maine and the daughter was off to North Dakota. So off to PetsHotel it was for Millie.
There was no doorman, but there was a nice, smiling, uniformed receptionist. We filled out a standard hotel registration form: name, address, optional E-mail (mine, not Millie's) and credit card information (ditto). Then a shot report (Millie's, not mine). And then, like all good hotels, a "personal preference" form. Rather than wanting to know your favorite booze or the wife's favorite flowers, however, they wanted to know Millie's favorite toy, her ablution schedule, food, allergies and the like.
Then I was shown to what was to be Millie's accommodations for the next ten days. It consisted of concrete floor, a water bowl and a cage measuring 2.5 feet by 3.5 feet. And talk about lack of privacy! Millie's cage was wire mesh and there were rows of them with a corridor in between each row. The only video entertainment was a communal television set tuned to the animal channel. So much for any democratic thoughts on channel selection. And no pay-per-view, naughty-naughty channels, either.
Millie's accommodations, one of 110 available, cost $21 a night. But I opted to pay $10 a night more for a larger cage--sorry, a "suite." I also paid an extra $16 a day for Millie to partake of "playtime" twice a day. The minibar service offered "lactose-free ice cream and doggie biscuits" for $3.00. So, including playtime and one treat a day, Millie was bedding down for $50 a night.
Total weekly staff on payroll of this PetsHotel was 14, including receptionist, walkers and dog "caregivers." Then there is the housekeeping team that washes down the 110 rooms and cleans up. No banquet or food and beverage staff, of course. No chef, no maintenance staff, no sales and marketing staff. In fact, the PetsHotel has less overhead than a badly run B&B.
The math is pretty easy to work out. At 70 percent occupancy at an average nightly rate of $40 per night, the PetsHotel is grossing $1,124,200 per annum. The hotel's payroll won't break $300,000. Throw in another $150,000 for heat, light and water. The rent of 5,000 square feet would probably max out at around $100,000. That means an operating profit almost $600,000 or nearly 50 percent. (Oh, yes, there must be some capital costs for start-up. How much could that possibly be? Fifty or sixty grand?)
Back in October of last year, The New York Times ran an article claiming that hotels were commonly selling for a million dollars a room and producing returns of just 5 percent. How pathetic is that? A five percent return on people.
On the flip side, I think PetSmart has at last found a way to make some real money out of the hotel business. So I bought PetSmart stock after Millie's first stay and did so strictly on the strength of the outrageous price per square foot they were charging for accommodations at its PetsHotel division.
I'm pleased to say that the stock is up 30 percent since I bought in. With the profit I've made, I can afford to send Millie back to a PetsHotel the next time that I go on the road.
This column originally appeared at joesentme.com.
Copyright © 1993-2007 by Michael Matthews. All rights reserved.