QUESTION
Note: A number of shareholders have asked about the hotel initiative. Most questions ask for clarification as to how that would work (because it is so different than hardware stores as a distribution channel) and what it would mean to Winning Brands.
ANSWER
We have been interested in hotels for a long time, and in fact have had isolated hotel purchasers of our product through the years. However, in 2011, the sector was made the subject of a determined test to introduce our products as a “system” to be used throughout the hotel – laundry, guest rooms, amenity facilities, canvas and poolside etc. The system approach requires a more sophisticated (value added) sales approach, but results in a more involved relationship with the client hotel. This means that we needed to know about the behind-the-scenes realities of this setting, and propose specific uses and a cost-benefit proposition that makes it sensible for the hotel to adopt the entire system.
Our Manager of this project, already introduced in earlier weblogs, has focused on the practicalities. We wanted to end up with an addition to our business model (for distribution of 1000+ through North America’s home improvement industry) that was equally logical and scalable to significant potential.
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We have determined through testing that a 200 room hotel or smaller will require on average $500 per month (at wholesale) worth of product (including all relevant Winning Brands SKU’s), taking into account seasonal adjustments.
The Stage 1 Goal: Hotel Sector was to reach 10 hotels that not only agree to participate in the study, but then prove that the system is delivering the proposed benefits by switching to our brands for the relevant applications. This is the point that we have reached. 10 hotels in Palm Springs have started to use our products as a system, and are placing paid re-orders at the projected figure.
The next planning threshold, Stage 2: Hotel Sector, is to attain 100 properties. We have already noticed an admirable willingness on the part of hoteliers to share beneficial ideas amongst industry colleagues, leading to introductions. Accordingly, in January, we are commencing service to 2 additional local properties that are national banners, with a 3rd national banner decision pending (for local use, first). The targeted 100 properties are likely to contribute approximately $600,000 per annum. The number 100 is not the maximum extent of our ambition for this sector, but rather the number that could be serviced using the distribution model in place for Stage 2 in this sector.
It has always been difficult to estimate the number of hotels in the USA accurately, because definitions vary, registration protocols differ across municipalities and states. 140,000 is considered a moderate estimate. The California Department of Finance has estimated 23,000 in the state. Winning Brands considers a next threshold target of 100 properties to be within reach in 2012, conservatively, based on the emerging Stage2 operating system that has been developed to serve this sector.
