To Profit From ‘Out-of-the-Box’ Thinking;
Improves Guest Impact
|May 2001 - What do you do if you are a multi-billion
dollar company comprised of 210 multi-million dollar operating units, and
several of your senior operating executives request a view of laundry costs
down to the level of general ledger detail? Answer: You
put in a business intelligence application that lets them answer their
own questions. At least that’s what Rex Warren, Starwood’s Vice President
of Finance for North America, did last July when the behemoth management
company attached Execuvue® from Aptech Computer Systems, Inc. in Pittsburgh
to its SAP enterprise management software.
“The design of our SAP application does not really lend itself to data mining,“ said Warren. “Because we have such a huge data warehouse, we need to retrieve data quickly and present it more easily in a way that triggers results. And we had to - fairly immediately - bridge that gap in our financial reporting systems. Our vendor did that for us within 90 days.”
Even more significant, Starwood has begun using Execuvue to electronically import Smith Travel Research data and feed it into the application’s drag-and-drop report format, a refinement that has helped them spot early occupancy and RevPAR trends in their markets. “The Smith Travel reports are important indicators of competitive ranking in our industry. We use them to look at segment and regional market-share data,“ Warren explained.
Prior to being able to electronically import the data to Execuvue, Smith Travel faxes would come to the revenue management team and they would spend hours massaging the information into their corporate format for distribution to the management group and hotels. This process siphoned resources into back office operations and away from guest impact activities. “Our goal was to reverse that trend. We wanted streamlined back office operations so more creative thinking could be focused on guest impact,” said Warren.
Publicly traded, Starwood (NYSE: HOT) was created in 1998 from the merger of three heritage companies: Sheraton, Westin and Starwood Lodging. By cultivating the ‘best of the best’ from each of the three companies, Warren realized the process of bringing them together would produce an entirely different organization, and that internal systems had to track with the new management style, typified by aggressive, agile, “out-of-the-box” forward thinking.
“The hospitality industry has to take a fresh view of things in the current economy. Budgets are a prime example. There are times when budgets are counter productive, and a classic example is the period we are in now. When we budgeted 2001 last October things looked fabulous; two months later the economy was in the tank. One of our biggest challenges is learning to rely less on annual budgets, and performing more on our real-time revenue stream. Starwood is way ahead of the industry in this,” Warren observed.
Flips Financial Function on Its Head
Warren also noted that access to better information has caused Starwood’s senior operational executives to think more proactively. Tools like Execuvue enable this. “The typical financial thinking says ‘Here’s the way our system can show the numbers, so here’s how you’re going to get them,’” said Warren. “With Execuvue we flipped that on its head and said to our senior executives, ‘Access the numbers any way you want.’” But, Warren cautioned, Execuvue is so flexible executives have to specifically think about what they’re requesting. “A manager will say, ‘We need to compare production labor to food costs for these hotels.’ And then you have to ask, ‘Why only those units?’ ‘What are you looking for?’ Another request might be ‘I need to see group room rates in all our hotels,’ and we’ll ask, ‘For what period of time, and what markets? Do you mean historically? Do you want it for all our brands?’” Execuvue will give you exactly what you’re asking for and it forces you to think specifically.”
One example of specific proactive thinking was when executives detected a need to squeeze costs out of Starwood’s escalating laundry expenditures. “With Aptech’s Execuvue we can go in and look at all laundry costs for every one of our hotels: labor, cleaning supplies, man hours, payroll benefits - property by property or region by region,” Warren stated. “Being able to spot a trend like this and isolate causes before it gets out of hand gives us an advantage in controlling expenses.” Starwood also publishes a monthly Red Flag report targeting properties that go above or below thresholds for financial, non-financial, market-share, and guest satisfaction data that allows managers to take appropriate action at high speed. Starwood expects the same kind of speed from their vendor, as well.
Jump Start Results
“Aptech’s staff are all hotel people. They clearly understand the business and were able to comprehend our mapping needs quickly. With other vendors you have to train them in your business on your dime. But we saved a huge amount of time during the implementation because of their experience. I’ve seen them work all night, many nights in a row, on things that weren’t necessarily their doing. They’re helping us get to the end of the page. They have a great customer service focus, which is what Starwood is all about.”
Customer service and using technology to increase guest impact are twin engines that drive Starwood’s position as one of the industry’s leading chain management companies. In addition to owning and managing several billion dollars in real estate, the company also has a large franchising division and manages hotels for third parties. Their flags include Sheraton, 4 Points, Westin, St. Regis, Luxury Collection, W Hotels, Ciga, ITT Sheraton.
Aptech Computer Systems, Inc.
135 Delta Drive
Pittsburgh, PA 15238
Sales: (800) 245-0720 or (412) 963-7440