Hotel & Motel Management / August 12, 1996
By Larry Luxner
CAGUAS, Puerto Rico -- Hotel industry experts say the two most important guest amenities for hotels of the 90s are in-room fax machines and in-room coffee service.
While Garrido y Compañía Inc. doesn't qualify as a fax maven, it certainly knows its coffee beans. Sensing an untapped opportunity, the Puerto Rico-based family business -- which owns Café Crema and ranks as the island's largest gourmet coffee exporter -- has created a $1.2 million spinoff company to provide premium Puerto Rican coffee to guests staying at the nation's finest hotels.
The unusual subsidiary, known as Guest Choice Inc., opened for business Apr. 1 in Phoenix. It is 85% owned by Garrido and 15% by William H. Simpson, the company's president and an expert on the hotel supply business. The start-up firm already has close to a 100% market share in Puerto Rico, with signed contracts to distribute Alto Grande and Garrido premium coffees in such upscale island properties as the Caribe Hilton, the Dorado Hyatt, the Condado Plaza and the El Conquistador. It's also landed an account with the Drake Hotel in New York and a few others which Simpson declined to name because negotiations are still pending.
In a May 30 interview, the veteran coffee executive told Hotel & Motel Management his company aims to supply hotels with a variety of coffee makers, as well as Alto Grande and Garrido gourmet coffees in their own self-contained filter pouches, along with related items such as sugar, creamers, stirrers and artificial sweeteners.
"Currently, we're doing some light marketing, mailing flyers to interested parties, but we'll soon be marketing to the entire U.S. through direct mail," he said. "We are start-ing out with prominent hotels in the greater Phoenix and Tucson area. We'll also be expanding to Las Vegas, which is a very tough market because hotel managers there would rather have the guests gambling in the casinos than staying in their rooms drinking coffee."
But if the coffee's good enough, maybe the guests will do just that -- at least in the morning, when the casinos aren't open. And if the idea catches on, Guest Choice hopes to land accounts with major chains such as Ramada, Holiday Inn, Marriott and Hilton.
One way of hooking the hotels is by stressing the quality of Puerto Rican coffee, which is well-known in Europe but not as famous in the United States.
Garrido, whose coffee sells on the U.S. retail market for up to $24 a pound, has 203 acres of coffee trees in production at Hacienda Alto Grande, near the mountain town of Lares in northwestern Puerto Rico. In 1993, master taster Willy Pettersson of Sweden's Gavalia Kaffe -- one of the world's largest mail-order coffee catalog firms -- said his visit to Alto Grande "revealed not only exemplary high-grown coffee from small carefully tended farms, but one of the best contemporary processing facilities" he had ever encountered during his world search for fine beans. Besides Gevalia Kaffe, Hacienda Alto Grande coffee is also sold to J. Martínez & Co. of Atlanta, Hena Coffee Inc. of New York and Japan's Ueshima Coffee Co.
Simpson said the company plans to offer Alto Grande super premium coffee for the so-called "gold floors" of such luxury chains as Hyatt, Marriott or Inter-Continental, while placing three less expensive Garrido brands -- 100% Colombian, Garrido Gourmet and Garrido Gourmet Decaf -- in lower-priced hotel rooms.
Simpson, 52, landed his current job after five years as chief executive of Amenities Service Inc. in Anaheim, Calif., and an even longer tenure before that with ARA Services in Philadelphia. He says that of the 3.5 million U.S. hotel rooms, perhaps three million would qualify for in-room coffee, and that only 35-50% of the industry is currently being exploited. At the moment, three companies control the lion's share of the in-room coffee market: Amenities Service, Mr. Coffee Concepts and Courtesy Products Inc.
To back up his argument, Simpson points to a speech made at last year's American Hotel & Motel Association convention in Atlanta by Henry Silverman -- president and chief executive of HFS Inc., the parent of Days Inn, Howard Johnson's and Ramada hotels -- in which Silverman identified the two most important amenities for hotels of the 90s: in-room fax machines and in-room coffee service.
Unlike a fax, says Simpson, the average per-room cost of coffee, condiments and cups -- for a hotel that runs 70% occupancy -- comes to only $5 a month.
"It's less expensive than providing a bottle of shampoo or conditioner, and it's an amenity that helps to maintain or increase occupancies," he said. "When you consider that 55% of the population drinks coffee, it's nice for them to be able to wake up in the morning and make a pot of coffee in their room while they're taking a shower."