During my conversation with a hotel owner in Albuquerque two days ago, it was fascinating to listen to his "state of the union" for hotels. He is east Indian, and the owning and operations of hotels/motels have been an integral part of east Indian immigration for half a century. The entire business model fits the east Indian family culture quite nicely.

However...the hotel business is not nearly as lucrative as it once was, as customer acquisition costs are crowding out margins big-time. Here is what I mean: 20 years ago, if you wanted to stay at a Hilton, you went to hilton.com or called their reservation hotline. So as part of your franchise fee to Hilton as an owner, you got the benefit of their reservation system and it "fed" you your customers.

These days, folks are using trivago, expedia, booking.com, and dozens of other, third party sites to place their reservations. So not only does the Hilton hotel franchisee pay his ad fees to Hilton as a percentage of the sales for that guest's stay, he now also has to pay Expedia anywhere from 10 to 18 percent commission for a reservation of of their system. And even though that Expedia guest didn't make his reservation through Hilton, the hotel owner still remits a percentage of that stay to Hilton, to pay for their reservation system!

Folks think someone owning a hotel must be filthy rich and just raking it in, but the truth is, margins are incredibly slim. Labor is basically 50 percent right off the top. Customer acquisition costs are then second place at 20-22 percent. So right off the bat, you're down to 27-28 cents on the dollar left to work with to eek out a profit. Then you've got supplies, repairs, maintenance, breakfast food costs (around $7 per rented room according to him), parking lot maintenance, insurance, property taxes. So you are down to just literally a few cents on a dollar for profit.

And then when we are talking labor costs...he's suddenly looking at huge spikes in labor costs to try to attract and keep employees, and he's like "where does that money come from? I don't have a profit any more?"

We tend to look at business owners as rich people who have a lot of froth they can trim off and just pay people more. But like in my franchise business, on the typical 30 day month, the revenues don't come to me until around the 27th day. The first 27 days on the average month, I'm just paying overhead. So if we have a snow storm that month, I don't make a profit. If we have rainy weather for a week, I probably don't make a profit that month. There isn't anything left. The monies were used to pay for the bills. And this month, even though we've had a great month, I will be in the red, as I have three pay periods in the month. So I will be around -$24,000 for May.