Wednesday, January 31, 2018

Hotel owners to ring in a successful ROI

As the annual budgeting process ends, hotel owners are finalizing the review of their properties' business plans. 

The question for owners, therefore, is how to evaluate the budget. 


Should they approve or reject the numbers and the plans? What should they consider when making a decision?

A meaningful budgeting process aligns the owner’s and operator’s visions for the hotel. It ensures the operator has explored potential avenues to optimise returns and asset value for the hotel and is given the right benchmark for the forthcoming year. It also ensures that the owner’s funds are spent wisely to maximise performance. 

yet owners must look beyond the numbers in successfully negotiating the annual business plan.

Below is a checklist to aid in your review:

What’s the view

What is the current and future market environment? Take a thorough and realistic assessment of recent and upcoming changes in supply and demand, and the potential impact on the local hotel market.

Watch the pitch

Operators with proactive and forward sales and marketing plans outperform those that adopt a reactive approach.The operator should present comprehensive strategies supported by activity plans and targets for each target segment and channel in rooms and other key operating departments. The plan should also include the total production targets by the operator’s channels and branded programs.

Bottoms up

Never underestimate the power of a party: food and beverage (F&B) outlets and banquet are significant profit contributors, but they can also be a drain if not optimized.To help you determine whether an outlet is making or losing money, take a look at the revenue and covers per meal period of every outlet in the hotel for each month of the year. Other key metrics such as revenue per available seat, profit per square metre, covers per employee and utilisation of the meeting space can also be employed.

Mouse in the cheese

Minor operating departments such as spa, telephone, laundry and boutique gallery are often overlooked as they are insignificant enough in times of plenty. Yet during periods of low occupancy, they can bring down profits. They are the mouse in the hotel’s cheese. Owners should consider whether some of the operational functions (e.g. laundry or housekeeping) or underutilised spaces (e.g. retail space, spa) should be outsourced or converted to lower expenses to generate more profit for the hotel.

Managing the pocketbook

Several key expenses that have substantial impact on the operating profits include production (F&B), credit card commissions (admin), payroll (all) and energy costs.Owners should benchmark key expenses and employ ratios such as per occupied room, per cover and per available room to compare with historic results and with other similar hotels (where available).

Productive staff

Owners should request that operators include an estimation of labour hours and headcount (permanent or casual) for all departments for benchmarking. All outsourced or casual labour assumptions should be clearly stated. Revenue per labour hour is a useful metric in many areas, such as rooms cleaned per eight-hour shift or covers per service period for housekeeping and restaurant teams. Given the tight labour market in most hotel markets today, statistics and strategies to improve employee productivity and retention should be presented. The operator should also clearly state in its budget the planned annual salary raise and discretionary bonus assumptions.

Beauty pays

Maintaining the property is integral to keeping its value. An effective preventative maintenance program will prolong the life of the asset and lengthen the cycle between refurbishments of any hotel. Accordingly, owners must seek inclusion of a preventative maintenance plan (including expenses) within the annual maintenance plan and monitor its effectiveness on monthly basis. This will also mitigate the risk for early requests for capital expenditure over and above the furniture, fixtures and equipment (FF&E) reserve.

The big spend

Renovate, refurbish, upgrade. When should they be done? To what extent? Will they really add value?The capital budget should fit within the overall long-term strategic plan and vision for the asset. It should be prepared in light of the existing business opportunities, the long-term goals as well as the estimated life cycle of the asset. Evaluation of inclusions in the FF&E budget should not only depend on meeting the operator’s brand standards. It should also specify whether or not an investment will generate efficiencies, incremental cash flows and meet the required ROI criteria.

Monday, December 11, 2017

Principles for HOTELIER LEADER'S

Continuous learning drives everyone to find a better way, every day. It's not an expense, it's an investment in continuous renewal.

In our careers as hoteliers, we have all learned there are clear differences between "leaders" and "managers." Leaders tend to be more inspirational and often have a vision of where they want to take their organization. The need for leaders is very clear - without their innovation and motivation, all industry and society itself would tend to be rather uninteresting and monotonous. One can look at industry giants from past generations such as Walt Disney, Lord Charles Forte, William Harrah, Conrad Hilton, Howard Johnson, Sol Kerzner, J W Marriott, Rai Bahadur M.S. Oberoi , Cesar Ritz , Ellsworth Statler, Juan Terry Trippe and Kemmons Wilson and recognize their leadership contributions in the evolution of the industry.
While these leaders set their vision in play, every one of them needed other people who could implement the vision through focus, effort and dedication. These people embraced the reality of that vision and primed it to be the success that it became. These people, usually titled " Managers" are the ones often responsible for handling, directing, organizing, monitoring and delivering results through other people. Each of the above global leaders in hospitality had a group of managers who assisted them in immense ways to launch the vision and thereby change the industry.

This is a five part series that will address areas of concern and interest for today's manager.
1. Understanding the Organization
2. Motivating the team
3. Using your management style effectively
4. Communicating with clarity and candor
5. Maintaining relationships throughout the organization

1. Recognize the "corporate culture" of your hotel or organization
Whether one works in the corporate headquarters of an international brand or as a department head in a 75 room hotel, one needs to recognize that there is a corporate culture in place. The size of the organization is not necessarily the determining factor of how that culture may have evolved. Some organizations tend to encourage competition among departments, while others tend to focus more on collaborative efforts. Some allow rumor and conflict as a means of senior management power, while others emphatically address this as a counterproductive approach.
New or long term managers should evaluate their organization and determine how to individually fit in and contribute to the success of the organization. The culture of your organization will likely either generate high staff turnover or it will encourage dedication and tenure of service.

2. Think like an owner
The hotel industry is one that goes through economic cycles like most others, but it frequently has peaks and valleys that may occur within that cycle. Successful managers will be valued when they use their knowledge and expertise to contribute to the organization's long and short term goals by thinking entrepreneurial.

3. Launch and believe in the Mission and Business Plans
Thinking like an owner for a manager often means taking the "vision" and creating practical business plans that the staff can "see" in the form of a "Mission Statement." Examples include marketing plans that are actually used, with monthly reviews of action plans and quarterly updates for the following 12 months. Staffing guides and payroll figures should be checked at last semi-annually to be certain that our hotels are competitive. Forecasting out for the next 6-9 months should become a regular weekly event to identify peaks or valleys. Revenue management tactics should be part of daily activity and, of course, budgets and income statements should be reviewed monthly..

4. Innovate regularly and fairly
"Innovate" can be a frightening word to both owners and managers. Leaders excel at attempting innovation, but managers are sometimes tentative at trying something new.
Successful managers innovate by solid communication throughout the organization about what they are trying to accomplish. If the occupancy is off, there will be a need to reduce payroll, but there are so many creative ways to address this other than automatic layoffs or assigning people based only on seniority. Innovative managers will explain the situation to all staff and try to get their input on ways to reverse the drop. In earlier LESSONS FROM THE FIELD columns, I addressed this specific topic. All of our staff have lives outside of work and may very well be able to suggest and deliver ways to increase business.

5. Understand the reality of the markets - including mergers
The 2000s and continuing through the past 8 years have seen a tremendous consolidation of many brands and management groups into larger organizations. Some are interested in the industry long term, while others may be more focused on growth in real estate values, franchising of under-represented markets or brands. Today's successful manager keeps current on trends, opportunities and market realities. Online research and learning is incredibly easy and affordable today.
The informed manager will be able to be successful in a merger or able to move to another position if the merger is not a logical fit for both parties. The key message here is "the informed manager" - just showing up every day will not lead to long term success.

6. Recognize the reality of politics
Few of use enjoy "office politics" but it is a reality. Many hotels today are owned and some managed by families, which can add an additional variable. On the other hand, many family businesses have outstanding track records in building loyalty and results.
Successful managers deal with politics by being prudent, communicative, tactful, and knowledgeable in their work. This means a balance between anticipating what the organization will need with what you and your area may need. There are only so many resources available and those who are viewed as contributing to the company consistently are likely to be able to avoid the worst of negative politics.

7. Embrace time management and priority setting
The world of today's hotel managers has evolved from activities to results. This means measuring the benefits of those activities, and making priorities from those measurements.
Neither occupancy or average rate alone represent success today, but ignoring the benefits of building one or the other can quickly affect cash flow and potentially staff. Revenue Management strategies means examining the trends, the forecasts and the marketing mix and acting prudently.

8. Be 100% committed to quality - every day
Many of the major brands today are reducing the number of corporate staff conducting pure, on site "inspections" . This does not mean they are lowering standards, but are using the benefits of technology. Services from AAA assessments, guest feedback at TRIP ADVISOR and other sites combined with email guest surveys are providing everyone with the potential of information overload.
Today's successful hotel managers use the first seven points in this article to make their staff aware of what is important. Commitment to quality has to be part of everyone's responsibility.

9. Learn something NEW every week
There are two restaurant "gurus' that I have admired for years. Both Bill Marvin, The Restaurant Doctor"
http://www.restaurantdoctor.com/ and Jim Sullivan , http://www.sullivision.com/
have in person and through their online services constantly remind all of us that we need to continue to learn and improve as managers. Check their sites out for a huge selection of materials and ideas.

10. Work with Budgets and the bottom line
One of the goals of literally all hotels and businesses is to make a profit. There are times when economic cycles make it easy to exceed budgets. In other times, the cycle makes meeting budget a struggle. Record gasoline prices, expensive airline tickets, and business cutbacks in travel are all making profitability a challenge.
On a personal note, I discovered that I learned more about how to effectively manage hotels and watch cash flow in times of economic uncertainty than in good times.

Wednesday, November 15, 2017

The World of Hospitality

Greatness is not in where we stand, but in what direction we are moving. We must sail sometimes with the wind and sometimes against it -- but sail we must and not drift, nor lie at anchor. by ~ Oliver Wendell Holmes, one of the most widely cited United States Supreme Court justices in history
I recently shared my definitions of the word HOSPITALITY in a column published in this online service and asked readers to contribute their definitions.

The response was very positive and I am pleased to share a sampling of the responses from a diversity of people and places.

Defining Hospitality My original article included personal and professional reflections as follows:
  • Hospitality is much more than a word today. It has become an industry that runs the danger of becoming too high tech, with too little high touch.
  • Hospitality should have many adjectives, but many of us cannot precisely define it.
  • Hospitality means providing service to others, yet not being cast as a servant.
  • Adjectives that should apply to Hospitality include: Attentive, courteous, amiable, cordial, agreeable, gracious and welcoming.
  • Hospitality also means demonstrating consistent excellence and quality in people skills (staff and guests), product and ambiance. It should also mean profitably providing value and worth at any price level, while demonstrating your own unique points of distinction.
  • Hospitality should be smiles, trust, caring and sharing your operation's success, regardless of you job title. Most of all, Hospitality should be a "place", where people can still be exceptional individuals, where they can extend their own personality and style.
  • Hospitality is a place and a feeling where one can build their own self-esteem and pride, by providing positive memories and experiences to our guests.


Reader input came in from many different people. There were definitions from people relatively new to the industry and from seasoned veterans. Some were individual operators and others who managed companies and multiple brands. There were educators and there were those who supported the industry.Enjoy their reflections and definitions of Hospitality.

A shared definition from a relatively new Director of Sales and Catering and one of his sales managers
Hospitality is "Providing your guest with the same amount of attention and service as you would expect if you were in their shoes." Jed Arrogante Director of Sales and Catering and Angela Hueth , Sales Manager - The Westgate Hotel, San Diego , California

From a resource that works with many family owned hotels and companies
"When it comes to hospitality my thoughts drift toward Marriott. Based upon my travels of 23 years plus throughout the United States of America, Europe, Scandinavian countries, Caribbean Islands, etc., the following are my thoughts on hospitality. Hospitality is - To be invited and made to feel genuinely welcomed and relaxed. To be treated with a disposition of cordiality, reception and support. To be professionally guided by the host to meet and exceed the guest's expectations. -Mike Henning, Founder and President Henning Family Business Center Effingham, IL

From a lifetime career hotelier who operates in multiple locations and continents
"Hospitality is being a Service provider. A Hotelier taking care of their guests is like a Doctor treating, caring, comforting and thinking about the well being of their patients. Manhar P. (M.P.) Rama, CHA, Chief Operating Officer JHM Hotels, Greenville, SC

From an industry professional now in academia:
"For me Hospitality is defined as "self discovery." This might sound trite, but it is based on the tenet that as humans we need other people who allow us to discover our strengths and weaknesses. So, hospitality provides the medium for us to explore different places, culture and things."
Jennifer Calhoun MBA, CHE, Assistant Professor/Director, Hospitality and Tourism Institute (HTI), Prince George's Community College, Largo, Maryland

From a professional who has worked with a major hotel brand in support services, central reservations delivery and as liaison between hotel owners and the brand:
"To me, hospitality is about exuding warmth....genuine care....an innkeeper showing pride and sincere offering of their "space"...Me casa su casa." - Shannon Evans, Manager, Strategic Planning, Phoenix AZ

From a well known and established training resource
"Hospitality is treating others with warmth and generosity, authentically! "
Doug Kennedy, President and Founder, Kennedy Training Network , Hollywood, FL

From an International Executive Search Group
"Hospitality requires a Passion for serving"
Phillip Alfus , President and CEO, The Alfus Group, , New York, NY

From a franchisorHere is the definition of Hospitality I generally use:
"Hospitality is providing outstanding hotels with exceptional associates, for ecstatic guests and delivering defined optimum results in profitability to the owners and investors."
Ramesh Gokal, CHA President & COO VISTA INNS Murfreesboro, TN

From a leading educator at one of the largest hospitality programs anywhere with multiple campuses and specialties:
"I have been teaching this subject for a number of year and find that people try to put it in a small box. I suggest and finally have resolved to use the following:Hospitality - The care and feeding, and their supporters who care, for people away from home. This really does expand the skills and knowledge of where our students may eventually find themselves - Vast areas that many may not have thought that really belongs to hospitality . Originally, I used just the Care of Feeding of People away from Home.

I have since amended it to include those people who are the suppliers, association groups etc. -An interesting exercise is to divide groups of students into their areas of interest- hotel- food- Travel and tourism- and Sports, event and meetings- Let them then define the different aspect, segmentation etc. and when finished put it all on the board. Most students have never thought their options were so vast or that the skills and knowledge and attributes we teach are transferable across all of these options. "
Caroline A. Cooper, CHA, Ed.D, Executive Director, Business & Hospitality Relations, Johnson and Wales University, Providence, RI . Dr. Cooper is also the current chair of the AH&LA Educational Institute's Certification Commission.

From a European based industry consultant:
"As your article leads to express, there may be many definitions of Hospitality. Some may be more meaningful to the customer; some other, more meaningful to the professional. I wish to contribute with a couple, addressed to the professionals:Hospitality is to create a working atmosphere that empowers and motivates "front liners" to furnish guests with a memorable experience. Hospitality may be obtained by creating a wise combination of three crucial elements: a well conceived architecture in the largest sense; the design of an operational concept that may fulfill all expectations; and a human factor with the attitude and proven aptitudes to deliver excellence. "
Jean-Claude Koster, CHA, EHL, Président, Koster Associates, Consultants to the hospitality Industry, Madrid - SpainFrom several global hoteliers in property management

From South Korea:Here is my (quick) definition of Hospitality:
H = home: the original ‘Public House' was exactly that: a house where the inn-keeper welcomed strangers to stay with him: at a (fair) rate
O = openness: a place where one is welcomed with openness: genuine and caring
S = secure: where you are ensured that you can indeed sleep without a worry
P = peaceful: in order to be refreshed upon departure
I = intelligent: a place where they have given your stay more than a good thought
T = trust: the re-assurance that you are ‘not taken for a ride'
A = able: where there are ‘able' men (and women) there to serve you
L = listen: where one is being listened to
I = informative: where you can gather news and information as well as share it
T = together: in the sharing warmth of other travelers and providers
Y = YOU: are our Number One: the Guest
Jean Keijdener, Country General Manager, Executive Office, Somerset Palace, Seoul, South Korea

From Myanmar-Hospitality means patient listening and understanding of people's feeling and desire. Hospitality is no religion, no nationality and no border.
Zay Ya Min Din, Managing Director Amazing Hotels and Resorts, Yan Yangon, Myanmar

From Kenya"I would like to agree with your definitions of hospitality. My definition is simple - it is the offering of kind reception, accommodation and entertainment to a stranger, a friend or a partner in business".
David Opele, Intercontinental Hotel, Nairobi, Kenya

From China " Greetings from the Ancient City of China, Xi'an. My definition for hospitality will be "providing local knowledge to our customers"," gracious good bye", "knowing the culture of each individual".
Jim Khoo, General Manager, Holiday Inn Xi'an Greenland Century City (Pre-opening Office), West High-tech Development Zone , Xian , PR China

From a recent international hospitality school graduateOne can notice that hospitality may have two different meanings.
The first one from the point of view of the guest and the second one from the point of view of the service provider or the so called the server. A guest would define 'hospitality' as a process which takes place in a hotel, restaurant etc. where he/ she receives' a service that is beyond his/ her expectations. However on the other hand a server may define 'hospitality' as a simple process in which they can impress the guests without putting one's life in danger. For example if a server just smiles when he/ she serving the guests he/ she can count himself/ herself in the good books of the guests.
Utsav Arora, Graduate of International Hotel Management Institute, Lucerne, Switzerland. He is currently living in India and planning to open a restaurant there.

From a career professional serving the industry as a sales resource and trainer for several major brands:
"Hospitality necessitates an ongoing humility from us, the practitioners. It requires our natural instincts of being right to become deferential to our guests and our prospects. To these people, it should convey a feeling of safety from a physical AND an emotional perspective. Hospitality is the reason my business card is replete with all lower case letters out of respect to the capital letters in my life (my clients)."
ed. iannarella, president, stonehenge consulting group lancaster, pa. relocating to Ft Myers, FL late 2008

From their web sites

  • At Renard, customer service is not a "Department" it's an "Attitude"! Sylvia Menezes, Senior Consultant RENARD INTERNATIONAL HOSPITALITY SEARCH CONSULTANTS Toronto, Ontario , Canada
  • Fundamentals of Resort Hospitality: Delivering Welcome-Home Ambiance "Managing resorts is really about creating incredible experiences. It's ensuring every owner and guest enjoys special moments, high-touch service, and quality vacation time. Resort management does encompass budget, reserve funds, board management, and all the other back-office functions that are integral to success. But you can have it all and still not deliver the hospitable environment that creates and maintains your relationships with your team members, customers, and owners. Front-line team members make or break your hospitality. Service is all about actions-but it's also ambiance. It means that special touch, as well as consistent behavior and standards. It means intuitively anticipating a guest's need for quality that you can directly control and develop among your team members. Practicing a common-sense approach to providing remarkable vacations can be done at all levels, every day, and in every action."


My personal thank you to the readers who took the time to share their thoughts - the insights are meaningful and cross cultural boundaries.