PAII CEO Resigns, PAII Board of Directors have been removed

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Breakfast Diva's picture
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Jay K. has just given his notice. The PAII board has been removed. No one seems to know the whole story and the board of it's parent company DIA has not released any notice. Here is Jay's letter to the membership this afternoon:

 

Every year at this time I remember my days in high school, in Latin class specifically, when I learned about the Roman god, Janus.  Janus was a deity with two faces and represented new beginnings, as well as passages, doors, transitions, etc.  One bearded face is looking to the past, while the other looks to the future.  The Romans named the month of January in honor of this god.  It seems both coincidental and appropriate that as January begins, I share with the association and industry that I recently tendered my resignation to the PAII board of directors.  In my farewell column, I will look both at the past and to the future.

Believe it or not, my first-ever interaction with PAII was around 2002, well before I was hired.  When PAII was still in Santa Barbara, California, and they were looking for a new CEO at that time, this young buck (I was 28 at the time) sent my resume to some lady named Jo Ann Bell.  I didn't even get a phone interview.  Smiling  Fast forward to the spring of 2007, and the job opening showed up on my radar screen once again.  This time, I think the decision-makers at PAII saw something in this 33 year old kid.

The PAII conference was in Myrtle Beach that same month, just 90 miles up the road from Charleston.  I had cleared a fantastic and fun phone interview with board member, AnneMarie DeFreest, and asked if I could get a badge and come to the show "incognito."  I wanted to check things out, and what a great opportunity at which to get a feel for the culture of PAII - their annual conference.  I walked into the convention center, got my badge from a curious and whispering PAII staff, and ventured into the men's restroom.  Upon entry into the restroom, I was greeted by some incredibly friendly innkeepers, asking who I was, where was I from, what inn did I have, etc.  I thought to myself, "Well, isn't THIS a friendly group of people."  I sat in the audience of a few classes and the "State of the Industry" panel discussion, which included as I recall Eric Goldreyer, Phyllis Murray, Deb Mosimann and a few others.  I started thinking, "OK...these people know what they're talking about.  They have some visible passion."  I was beginning to really like this group.

Then I had my two formal interviews with the full board at both the Hamanassett Bed and Breakfast and the Haddonfield Inn. This is when I fell in love with PAII.  The passion, enthusiasm and dedication of this group of volunteers - and simply their fantastic personalities - sealed the deal for me.  So much so that I dragged my Southern-bred wife and 18-month old daughter out of Charleston, South Carolina, to South Jersey.  The board-CEO relationship is critical to the success of an organization, and I knew that we would strike the right balance and work together incredibly well.

There is no question that PAII was facing many challenges at that time.  Despite the work of some very good people I admire, the trajectory had been moving downward for several years.  I was honestly relishing the opportunity to reverse the trends, repair relationships and elevate the association and the industry's standing in multiple ways.  When I was a kid, I took a personality test that said my personality type was a "gardener," and I couldn't wait to start tilling the soil and planting some seeds at PAII.

Here is a little list of the highlights:

    Reversed the shrinking membership and brought new innkeepers into PAII, as well as brought back scores of long-gone members
    Launched and maintained a well-loved magazine, Innkeeping Now (keeping print alive isn't easy in this day and age!)
    Hosted and improved our industry's best conferences, including the Innkeeping Conference & Trade Show, as well as regional conferences
    Launched the industry's first-ever, grassroots campaign to kill stereotypes and convince travelers to give B&Bs a shot - the Better Way to Stay campaign
    Improved the portfolio of member programs and services, including quadrupling the volume of educational offerings to innkeepers
    Rebuilt and built positive relationships with all of the allied associations in our industry, including the scores of provincial, state and local B&B associations and Select Registry
    Served and elevated the B&B industry in leadership capacities at the US Travel Association, Advocates for Independent Business and other impactful organizations
    Successfully represented the B&B industry's interests with some big-hitters like TripAdvisor, Yelp and various legislative and public policy officials
    Cultivated positive press for our industry in publications like the Wall Street Journal, USA Today and dozens of other trade and mainstream news outlets
    Engaged sponsors and vendors in new ways that made them truly a part of the PAII family, including the launch of the Key Supporter recognition program
    Overall, strengthened the financial positioning of PAII by improving the top and bottom lines and diversifying our revenue streams

Over the past six and a half years, and during one of the most difficult economic times we have seen in our lifetime, we were able to accomplish some wonderful things.  And when I say "we," I truly mean that running PAII is a team endeavor.  We've had dozens and dozens of dedicated volunteers help in so many ways - from introducing speakers at conference...to teaching their peers at the same events...and giving feedback and input on our Advisory Council and Committee of 100...to dedicating hundreds and hundreds of hours of service in critical leadership posts on our board of directors.  And the PAII staff ALWAYS gave more than we paid for.  Their commitment and desire to serve our members and industry always humbled me.

I want you all to know that my resignation comes not as a result of some seven-year-itch or desire to go on to bigger and better things.  I love this industry.  Love the people.  But there have been changes in circles higher than my seat, and I had a vision for PAII that wasn't necessarily congruent with their vision.  We have agreed to disagree about many decisions made here at PAII, and I tendered my resignation on December 30th, giving a required three months of notice with my final day of employment to be March 30, 2014 with the offer to continue my hard work as President and CEO until that time. 

I wish my exit was under different circumstances, but I offer nothing but my sincerest best wishes to all the members of PAII - the aspiring innkeepers, vendors, interim innkeepers and innkeepers - and all other good people within the B&B industry.  I'll close by sharing a fortune I received recently in one of those classic Chinese cookies: "We can't control the wind, but we can always adjust the sails."   If you wish to reach  me, feel free to email me at jkarennj@gmail.com.

Warmest regards,

 

Jay

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Wow

thanks for sharing that with us from the Asheville Innkeepers. 

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Arks's picture
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What a GOOD LETTER! Very informative.

DIA may be DOA.

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Yes I agree..quite informative. I have no reason not to believe him as I know them both and trust them more than I do someone else. That's all I will say.

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WOW been away for a while, that was some read. Jay is indeed a great person, who knows maybe he will start something better. I hope all doors open for him

Arks's picture
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Thanks for posting.

A mess of which I want no part!

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I will second that one. Erika will have to get all the scoop and clue us in when she gets back from the conference. I could say lots, but I will bite my tongue on this one.

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Just received this e-mail from the new CEO of PAII:

My name is "Pete” Holladay and I am a member of the PAII Board of Directors and also the President of DIA, Distinguished Inns Alliance. I will be available at the Conference to meet with anyone who is interested and to answer whatever questions I can.  However, the recent posts on various blogs require immediate attention.  Space does not allow a long dissertation but more lengthy, printed, copies depicting the formation of DIA will be available at the Conference as well as biographical information on the PAII Board of Directors and the DIA Board of Managers.

In a nutshell, DIA was formed to find people passionate about our industry and willing to invest money to keep PAII alive and serving the innkeeping industry.  PAII was purchased and encouraged to form their own Board of Directors and DIA would virtually keep "hands off". It is important to note that the investors have never received one dime from their investment, not even a cup of coffee! Some investors have "given" their share(s) to PAII (some taking a tax deduction erroneously thinking their "gift" was tax deductible).

Within the past year it was determined that PAII was having financial difficulty and the Board of Managers of DIA found it necessary to step in and do their best to help PAII through these difficult times so that it could continue to serve the innkeeping industry.

Several years ago, PAII established BETTER WAY TO STAY and many innkeepers, vendors and friends contributed to this worthwhile endeavor. Subsequently, PAII, without any authorization, established a separate corporation and moved funds from PAII into this new corporation. This corporation, Innkeeping Foundation, had been established as "not for profit" with a separate Board of Directors and no direct ties to PAII.  The DIA Board of Managers insisted that these funds be returned to PAII and put into a restricted escrow account to be used solely for the purposes for which they were raised. It is important to note that although the new corporation was incorporated as "not for profit", it was not tax exempt, nor had tax-exempt status even been applied for. Although not purposefully deceptive, DIA did not think this was proper.

Knowing that this transition could be controversial, Jay K. was working on a statement to be shared with the members, feeling that news of the Board changes should come from him.  In the meantime, however, Jay decided to resign and submitted his resignation on December 30th. The PAII Board and DIA were as surprised as anyone and not prepared for this development.  Although not what the Board had anticipated, we knew that Jay had thought this through and was doing what he felt was in his best interest and that of his family.  Jay is still President and CEO of PAII and will remain so until March 30, 2014.  However, the PAII Staff and the PAII Board of Directors are covering his duties.

The degree of financial concerns should not be understated. PAII has many ambitious and worthwhile programs all geared to serving the innkeeping industry. In order to continue these programs, however, money must be raised. This is why it is so important that contributions to BETTER WAY TO STAY be robust.  All B&Bs and Country Inns benefit from the increased exposure brought to us by programs funded by BETTER WAY TO STAY. Individual inns and B&B associations are beginning to realize real dividends from this national exposure. It is imperative that PAII continue these programs, but it can only do so with your help.

As many have stated, Jay was the face and voice of PAII and will be sorely missed.However, one of Jay's greatest assets is his organizational ability and Jay leaves PAII with an exceptional staff that is more than capable during this transition period.

The PAII Staff and Board of Directors are looking forward to another fantastic Conference and are anxious to welcome you to Charleston!

Sincerely,

Pete Holladay

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I don't like this BWTS situation at all. It just screams of lack of transparency on a fund that was intended to be ultimately transparent. And the suggesting that they want control of these funds?

If the intent of DIA was to do this for the industry, they shouldn't have been buying shares, they should have lent money with a plan to get it back and make this a non-profit or a "not-for-profit" with real transparency for the betterment of this industry.

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What I take from this:

  1. Funds were misappropriated
  2. DIA is looking for more money to run BWTS (see #1)
  3.  The BOD is still in place and Jay is doing nothing as they are doing his job.
  4. Someone isn't telling the real story

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Madeleine wrote:

What I take from this:

  1. Funds were misappropriated
  2. DIA is looking for more money to run BWTS (see #1)
  3.  The BOD is still in place and Jay is doing nothing as they are doing his job.
  4. Someone isn't telling the real story

From what I understand the board of directors have left PAII November 22. I don't know if they left or were let go. From what I understand the four who own PAII through DIA are now the "board of directors". But I'm not sure I really understand anything.

I'll try and fill you all in as I attend the conference. But I am NOT the best to report as I have avoided any kind of corporate or business games my entire career. I don't read people or situations well. That's why I've always been in the restaurant/hotel service industry. People there are more open from my experience.

Riki

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egoodell wrote:

I'll try and fill you all in as I attend the conference. But I am NOT the best to report as I have avoided any kind of corporate or business games my entire career. I don't read people or situations well. That's why I've always been in the restaurant/hotel service industry. People there are more open from my experience.

Riki

The reason I think you are a rock star Riki! I love that about you.

I will let sleeping dogs er snakes lie for the moment as well. Money is a corrupting force, says the girl who lives down the road from the nation's capitol...

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A ton of money went into BWTS - this cheapskate even anted up $300 and that was not easy to do. I still do not see Pete as saving anything. Heck, his Mid-Atlantic Conference is a direct competitor to the PAII Conference as many went to it instead of a PAII Conference. One way to end competition.....

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Sorry to hear of this shakeup.  It smells bad for PAII.  I have no doubt Jay will land on his feet.  Wise people always do.  

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Holy Cow, just read this post!  It is a sad, sad day for PAII.  Jay was a great leader and was going in the direction THIS innkeeper liked.  I dropped my membership after they raised the rates but that was not a reflection on the association only this innkeepers budget. 

Hope that those attending the conference next week will share what they hear about the future of the association.  

I am leaning to agree with Arkie, maybe it is a good time to start a real non-profit association.  One that understood the diversity of the members but brought us together as one industry. 

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Isn't this a perfect time for innkeepers to create a REAL, non-profit professional association with only the goal of bettering the profession, and not bettering the group's bottom line?

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 I was just on the PAII forum and they are not at all happy. From what it looks like the four shareholders have replaced the volunteer board. It appears they do not want to take the noprofit route If this is indeed true I regret just renewing my membership as I don't see how they can serve the members an at the same tome make a profit. Indo believe this may be the end of PAII. Pete did a good job with the MidAtlantic yearly conference, but that is a to y kettle of fish compared to paii. I am not a spring chicken myself, but at his age I don't see the energy to run paii.

Riki

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sorry repeat

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Sorry repeat ...new tablet

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sorry repeat

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Not much of a website, but here it is: http://distinguishedinnsalliance.com/

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Harborfields wrote:

Not much of a website, but here it is: http://distinguishedinnsalliance.com/

interesting typo.

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Oh good grief...there's a title and one sentence statement on the website and it's got a typo?!?!

 

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And it's the name of a state (in a graphic, no less.

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OH MY! that does not bode wellcrying

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If they are "for profit" I wonder where the main profit comes from.

Vendors paying for space at shows? That probably just pays show expenses.

Membership dues? Again, not all that much. Pays for the headquarters office, staff, website, etc., but probably not much profit.

Ads in the magazine probably just pay to print and mail the magazine.

Overall seems better to have been a non-profit. But I don't know much about it. I should probably just shut up!

But I'm thinking back now, of all the innkeepers who said they would gladly pay the higher dues for the good of the organization. Wonder if they realized it was for the good of the owners, not the members.

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Jay has given a 90 day notice and has not accepted another position at this time. My sincerest hope is that whatever restructuring is happening, that there is still a small chance of them straightening the crap out and Jay stays. It's probably just wishful thinking crying

 

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Thank you for posting this. I emailed Jay to thank him for all he has done.

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Madeleine wrote:

Thank you for posting this. I emailed Jay to thank him for all he has done.

Jay is a remarkable young man who came from a non-innkeeping background, but who learned very quickly how to be an advocate for B&B's.  The folks on the PAII forum don't think he has another job to go to.  It'd be nice to overload his email mailbox.

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Thanks for the info Innkeep! I knew they were owned by a company rather than being a real professional association like the American Medical Association or the Bar Association. That always seemed strange to me.

What a mess!

Wonder if someone should start a new forum topic like "PAII Management Shakeup" or something so visitors will more easily find the discussion.

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I just changed the title.

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Breakfast Diva wrote:

I just changed the title.

Good job!

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From the PAII forum

Unbeknownst to most people in the industry, PAII is owned by Distinguished Inns Alliance (DIA) and is a for-profit company. There were a number of stockholders who were involved in the ownership of PAII going back 13 years when the company was purchased from Pat Hardy and JoAnn Bell.  Ralph and I were stockholders in DIA and donated our shares to PAII, along with a number of other stockholders, when there was serious interest in taking PAII non-profit.

DIA as the ownership entity for PAII has the right to appoint the board of PAII. The current PAII Board consists of 4 DIA stockholders. They have named Pete Holladay as President and CEO of PAII.

So ... the volunteer board is out, the stockholders who think PAII can be run as a for-profit organization are in.  Guess I made a mistake by sending in my dues last month.

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[quote=Innkeep]

From the PAII forum

Unbeknownst to most people in the industry, PAII is owned by Distinguished Inns Alliance (DIA) and is a for-profit company. There were a number of stockholders who were involved in the ownership of PAII going back 13 years when the company was purchased from Pat Hardy and JoAnn Bell.  Ralph and I were stockholders in DIA and donated our shares to PAII, along with a number of other stockholders, when there was serious interest in taking PAII non-profit.

DIA as the ownership entity for PAII has the right to appoint the board of PAII. The current PAII Board consists of 4 DIA stockholders. They have named Pete Holladay as President and CEO of PAII.

So ... the volunteer board is out, the stockholders who think PAII can be run as a for-profit organization are in.  Guess I made a mistake by sending in my dues last month.

[/quote

Pete Holladay??? What a piece of crap! I have not gone to one of his Conferences since Jay was the keynote speaker in 2010 - that is what sparked the B & Bs For Vets . I Cancelled my registration well before the minimum cancel fee expired - they would keep $35 and refund the rest. Well Innkeep and I went to Jay's speech and that was all I planned to do. When I asked about my refund, the credit card machine was not working. 6 weeks later after several requests about my refund, I received a check for $75, not the $110 I had been expecting. I have never attended another of his Conferences. Sorry, I would not spend $89 for a PAII membership with Pete as the CEO. He might be a "nice guy" but I have no confidence in him as a leader and advocate for this industry. He does the Mid-Atlantic Conferences because they make money for him - not knocking him for that as we all have to make a living, but I do not see him as moving the industry forward!! Just my 2-cents.

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Dupe

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I am shocked to say the least and the new ceo....come on...you have to be joking. Good old boy realtor???? I mean I know him and like him, but ceo of paii...that I find to be a return to the old days.

I am just very sorry to hear about Jay resigning. As he stated, he has brought the industry to such a better place.

And the whole board gone!! Should make for a very interesting conference next week.

Anyone going who can report back.

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Everyone will be here on Innspiring soon...they have to. 

WELCOME TO THE DARK OTHER SIDE INNMATES! Smiling Come on in, the water's fine...

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When you say "The PAII board has been removed" you mean online board/forum, not whole board directors, right?

I am not super surprised, I wish Jay all the best in an arena where he can do even greater things!

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Joey Bloggs wrote:

When you say "The PAII board has been removed" you mean online board/forum, not whole board directors, right?

Yeah I guess Diva means the chat board. When I go the the PAII site I don't even see a place to log in. If you click "My Account" it just reloads the homepage. If you click Resources at the bottom of the page it also reloads the homepage.

I'll bet a lot of folks are mad about being silenced this way. Of course, there's always Innspiring!

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You're right Arkie, the form link is not where it used to be on the website! I didn't poke around to find it, but I went to an old e-mail that had a link for it, so I got into the forum.

PAII's whole Board of Directors have been removed.

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Joey Bloggs wrote:

When you say "The PAII board has been removed" you mean online board/forum, not whole board directors, right?

Good point. It could be taken either way, and perhaps they would silence the chat board until the dust settles. But if it's all owned by DIA (or is it DIVA?) then I guess they, who every they are, could replace the board of directors. 

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PAII Board of Directors!

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Thanks for the innfo innkeep. A Virginian is in the story again.

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...there have been changes in circles higher than my seat, and I had a vision for PAII that wasn't necessarily congruent with their vision...I wish my exit was under different circumstances

Maybe he was fired by the doily lobby. Or maybe TA bought PAII and fired the whole board and exec. director to shut up the whining us small-timers.

Quite a surprise. Jay is a great guy, bright and dedicated. He was probably a lot more popular with the membership than those in "circles higher than his seat."

But what do I know. I left when they more than tripled my membership fee. No regrets, but it would have been fun to read the PAII forum over the next week.

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Those of you who do not have access to the PAII forum might be interested to read this post by a DIA investor and former PAII board member.

There are also several posts from other board members offering similar perspectives.

 

My partner, Frank Salvo and I own the 1889 WhiteGate Inn in Asheville, NC. Until January 2, I was a board member of both DIA and PAII.  Frank and I invested in DIA almost 10 years ago and sold our shares, for a nominal amount, to PAII about 4 years ago when there was a move to take PAII non-profit. We were active stockholders, attending all meetings until we sold our shares. A year ago at the Las Vegas PAII conference, I was asked to serve on the DIA board to help get DIA active again after 3 years of dormancy, because a potential sale of PAII was being talked about. 

 

More recently, I was asked to serve on the board of PAII and became Finance Committee chair. On January 2, I resigned from both boards. Since I feel well qualified to look at recent events from both sides of the fence, I would like to respond to Pete Holladay's e-mail to the PAII membership.

 

"PAII was purchased and encouraged to form their own Board of Directors and DIA would virtually keep "hands off". It is important to note that the investors have never received one dime from their investment, not even a cup of coffee!”

As stated, DIA was "hands off" and in fact, really borderline negligent during the past 13 years. There was no legal requirement for it to be active, but by doing so, it let a separate and distinct culture grow at PAII, a non-profit 501-c6 type of culture. Of course, PAII wanted to stand on its own because DIA NEVER stepped forward to help PAII during its darkest months and years. They let PAII members and Board members loan money to the association when the recession hit hardest.

"Within the past year it was determined that PAII was having financial difficulty and the Board of Managers of DIA found it necessary to step in and do their best to help PAII through these difficult times so that it could continue to serve the innkeeping industry.”

As Finance chair, I was privy to all records, and due to DIA demands all aspects of PAII’s financial history, budget, income, and expenses were looked at, all the way down to line item analysis. There was DIA board determination that monies must be hidden somewhere or certainly misspent. There was no "smoking gun" discovered, and no improprieties, just a few minor accounting errors that were easily resolved.  DIA's board persisted, however, that the Innkeeping Foundation (IF) was set up to divert corporate assets or opportunities but the reality is that the IF was looking out for PAII's best interests, both financially and strategically.

Average gross income at PAII actually increased 2% from 2007-2012 while costs were controlled better than by Jay's predecessors of the previous 5 years (2002-2007). These are obviously not stellar results but they show marked improvement. It takes time to get out of a financial hole considering the compounding results of year after year of poor performance, and the impact of The Great Recession. Under Jay's leadership PAII's financial strength was heading in the right direction. In fact, my last act as Finance chair was the authorization of the payoff of PAII's last outstanding loan, to a former board member, in the amount of $24,000. Does this sound like a company in financial difficulty?

"Several years ago, PAII established BETTER WAY TO STAY and many innkeepers, vendors and friends contributed to this worthwhile endeavor. Subsequently, PAII, without any authorization, established a separate corporation and moved funds from PAII into this new corporation.”

DIA's board basically accused Jay and the PAII board of criminal activity by putting Better Way To Stay where the financial supporters both wanted it and assumed it was, into the Innkeeping Foundation, a non-profit. The IF was compensating the for-profit PAII for the work it was doing on the BWTS campaign. There was no requirement then or now, that dictated PAII had to seek permission from DIA to do this. They never once cited any statue or by-law and just kept stating "you didn't get our permission." And to really complicate matters, the DIA controlled PAII board cancelled the agreement with the IF, effective January 11, immediately before the conference. They now insist BWTS funds should stay with PAII, which is now in COMPLETE control by the investors.

"The PAII Board and DIA were as surprised as anyone and not prepared for this development.”

Really?  Jay's resignation did not come as a surprise to me. And based on what he was put through the past 9 months I am only surprised it did not come sooner, but he is a fighter and his love for PAII kept him in the fight. Jay endured a great deal of accusation, questioning, and threats over the past 9 months in an environment void of trust and shared vision. He was working under a cloud of suspicion and inquisition, all of it unfounded. PAII board meetings were scheduled without consulting the PAII CEO and Chair. The new PAII board simply would not let Jay do his job. As of January 2, they have relieved him of all duties and will not even permit him come to the conference.

 

Oddly enough, Jay was fully prepared to stay at PAII had an offer to buy PAII been accepted by the DIA board and stockholders. It was a serious offer but it was rejected and I cannot discuss the details, except to say if it had gone through, PAII would be changed to a non-profit, the old board would probably be back, and we would not even be having this discussion.

 

The one consistent I have seen over the past 9 months, starting with mediation between DIA and PAII last April and continuing through January 2, is that everything revolves around the money. The remaining stockholders demand that they be compensated for 100% of their initial investment, in a company that based on a business appraisal done before mediation, has no monetary value. No amount of cajoling on my part over the past 9 months has changed their minds. Based on the financial performance of PAII over the past 13 years, how can they expect a 100% return on their investment? As brutal as it may sound, the remaining DIA stockholders have been crystal clear that it is all about the money. Nothing in their actions has demonstrated their concern for the industry.

 

I want to be crystal clear also when I state that DIA has not done anything they are not allowed to do. But they have sorely underestimated how much goodwill PAII relies on. The foundation of that good will was the board and Jay.

The PAII members are demanding answers and deserve answers to their questions. Please contact Pete Holladay as he requested at pete@paii.org.

The jury is still out for Frank and I on how much time, energy, or money we will be willing to commit to the "new" PAII.  We do look forward to the conference and catching up with old friends, taking advantage of the great workshops, and learning more about becoming the best innkeepers we can be.  See you in Charleston.

Sincerely,

Ralph A. Coffey

1889 WhiteGate Inn & Cottage

173 East Chestnut Street

Asheville, NC 28801

Ralphcoffey48@gmail.com

__________________

Yvonne Martin, Innkeeper
The White Oak Inn, Danville, OH

 

Madeleine's picture
Offline
Joined:
09/29/2011

Thank you for posting that Yvonne.

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Joined:
06/24/2008

Thank you Ralph for more insite to this mess. 

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