A recent column in this series titled “A Common Sense Review Process for Capital Investments” addressed the logic and an approach in planning and executing major projects. Both a certain financial amount and government regulations relating to depreciation tables define most major capital projects.

These ventures usually have some sort of potential risk. The ROI (Return on Investment) is usually justified by an expected improvement in the profit potential, by  complying with brand standards/requirements (if appropriate) or by introducing significant physical additions or improvements, such as adding a new wing, spa, meeting space, retail, etc. that should increase revenues and the overall value of the hotel.
The article offered a guide and a process to considering capital projects and I appreciated reader feedback and suggestions for future columns.
This particular column focuses on a different aspect of capital investment and it came from a discussion group at   a business-oriented social networking site mainly used for professional networking. 

Jeff Keeley, an experienced hospitality professional with previous GM positions with Embassy Suites, Hilton and Radisson had accepted an assignment as the General Manager at the Crowne Plaza Oklahoma City. He posed the following question to one of the many specialty groups available for discussions:

“We recently renovated our property. We lost numerous accounts prior to renovation due to the condition. What is the average ramp up period coming out of renovation? Any ideas on reducing this?”

Some of those discussion points offered were as follows:

Miriam Moorman, MBA (from the Austin Texas area) is an experienced Hotel Manager (Wyndham and Embassy Suites) with a well-rounded background, including Hotel Operations, Sales and Marketing, as well as Casino, Airline and Travel Agency experiences.   She is currently the General Manager/Director of Sales and Marketing at Radiant Properties.

Her perspective echoed Jeff’s:

“I'm extremely interested in this as well, especially given this economy. I'm worried that we may have an overly optimistic view of how quickly this financial investment in renovation is going to actually begin paying off. The previous owner also had a terrible reputation for letting the hotel go so I'm dealing with that as well. If anyone has been through a similar situation, any ideas are welcome.”  

This was one of my first responses to discussions and I offered the following ideas for their consideration:

“There are seldom automatic answers to what is "average" relating to regaining lost customers. One must consider why the accounts were lost. 

Questions to consider 

1. Was it because of the condition of facilities or they were not available? 
2. Were they lost because of unsatisfactory service before or during renovation? 
3. What, if anything, has been done to re-acquaint those former customers? 
4. Where did your former clients direct their business and what needs to be done to regain their patronage? 
5. If it was lack of facility, targeted promotions to those customers making them aware of the upgrades can speed recovery. 
6. If customers left because of unsatisfactory service, evaluate the final contact with them at the time and plan in detail for how to regain their trust. This means a detailed marketing plan approach with strategies, tactics and measurements. 

Recognizing the global economic downturn must be factored in to budgeting and planning, but one need not look at recovery from a “doom and gloom” perspective. Examining markets and matching them to your new product is also a likely action step. You might consider engaging a professional for a short-term market analysis for a non-biased perspective and work with them to create a realistic plan to assessing your particular situation, including support from your franchisor.”

Several other people in the network offered their ideas for potential solutions and best practices

Dallas Teague-Snider, CMP , of Birmingham, Alabama, is a knowledgeable hospitality executive with more than 20 years in the industry. She has a number of recognitions including her Certified Meeting Professional Designation (CMP), Top 40 Under 40 Business Leaders / Birmingham Business Journal and Who's Who is Hospitality / Birmingham Business Journal.  She is “The Impression Engineer at Make Your Best Impression” and Owner/ Chief Principal at LeadReferral  www.leadreferrals.com

She offered the following insights:

“As a former DOSM for a few properties, I encountered this a couple of times in the past. I currently outsource my services. My last large project was to re-brand and rebuild the business for HealthSouth Conference Center. You can learn more about that on my website  www.leadreferrals.com . 

1. Consider hosting an event with your local chamber of commerce and invite the business community to see your efforts.
2. You can create a buzz and offer something that will entice them to attend ( an incentive- not a free mug).
3. You can then do a drawing for a board meeting, comp nights etc. anything that can add value. 
4. Get out and be visible. 
5. You really need to assess your target market and make a strategic plan to reach those decision makers. It would be a pleasure to speak with you if I can be of service”. 

I think you have some good advice here from Ms. Snider and my old colleague, Mr. Hogan. I can tell you reputation can definitely be difficult to overcome. We've suffered with that problem at one of our hotels, a previous Quality Inn & Suites we gutted and converted to a spectacular Hampton Inn & Suites. 

We have significant meeting space and a gorgeous lobby that even features a grand piano if you can believe that in a Hampton. Every time we mention it to a client their response is "Oh, you mean that old Quality Inn???"

And unfortunately, as much as we say it's a totally different hotel they still have a vision in their head of what it looks like, and more importantly, what renovations of tired hotels usually yields - nothing spectacular.

I emphasize "usually yields" though, so if your renovation is truly spectacular you MUST get them out to the hotel. As Dallas mentions, don't be cheap. A free night doesn't cost you much, and you're not displacing any business, so give away free night stays to anyone you're targeting. Invite them to see your hotel and experience the services and amenities you have to offer. 

The best thing you can do is make sure your sales staff has great quality brochures and sales collateral with meaningful and vibrant pictures of the facility. The pictures should pop off the page, so don't be timid about using a professional photographer either. I just had a photo shoot done and was able to negotiate them down to $2,500 for the entire hotel. This is WELL worth the investment. 

All that being said, sales has the responsibility here. They should be involved in all area associations such as local Business Travel Associations, MPI if you have meeting space, the Chamber, CVB, etc. 

And they should be carrying around collateral everywhere they go. If photography isn't an option, go with nice looking digital photos and put them in a digital frame you can buy at Staples or similar stores for about $150. Digital photos look great like this. 

Hosting a CVB or Chamber event is great and absolutely necessary also. We recently did this for the hotel referenced above and have already secured 6 new LNRs for the hotel in the 4 months since we hosted it. 

Also, don't forget about packages. Understand what attractions or draws you have to your area and create some packages to target that audience. Remember, your goal with packages isn't to make money on the extra services, it's to use the extra services to create more value in your hotel. The best example is a free room upgrade. If you normally charge a $20, $30 or $50 premium for an upgrade, this is where you can really drive value.

After all, how much more does it cost to clean a suite than it does a standard room??? Free breakfast if you normally charge for it, a 30-minute massage for 50% off, are some other ways to build more value in your offer. 

There are obviously more things you can do, but short of writing a business plan these are the best things you can do right now. Good luck with your hotels Jeff and Miriam!”

“As a former GM of 15 years, I can relate to your conundrum. While back yard marketing and promotions are essential to this kind of turn around, nowadays one can't afford to ignore the digital back yard. 

Traveler Reviews and Ratings are now read by 66% of travelers and have more credibility than marketing, advertising or website content. The influence of these comments gives you a unique insight into the shopping behavior of your guests and must be managed. 

An important step in your 'turn around' must be to adopt a dynamic content strategy for customer reviews and comments on the critical sites most often associated with revenue, namely major OTA's like Expedia, Travelocity, Priceline, and Orbitz. Additionally, TripAdvisor houses millions of reviews and boasts 30 million unique visitors per month. You must take every opportunity to tout your renovation and changes in responses on sites like Expedia, Hotels.com and TripAdvisor, sites where revenue is generated and influenced. Do not let user-generated content that is old or negative dominate the content. 

Even if a brand site is responsible for the majority of your online revenue, remember that 8 of 10 bookings on the web admit to comparison shopping on 3rd party sites and then making reservations on brand sites. Additionally, over 40% of meeting planners cop to researching hotels on sites like TripAdvisor and TravelPost. 

Monitoring these reviews can be a daunting task, but a number of automated systems are available to help (I'm partial to our own, the Avalon Buzz Report, www.AvalonReport.com). 

In addition to the exciting ideas touting your renovation to clients whom you know, make sure you are communicating with those that are shopping your hotel online to enhance your image and book/look ratios!”

Many hotels are facing this challenge and I appreciate the input from the people who contributed their thoughts and ideas on ways to address the problem.

Social and business networks have been receiving tremendous coverage the past six months and this is an example of how one can reach out to others productively in meaningful ways.

“Our real problem, then, is not our strength today; It is rather the vital necessity of action today to ensure our strength tomorrow.”
Dwight D. "Ike" Eisenhower (1890-1969), 34th President of the United States, 5 Star General and Supreme Commander of the Allied forces in Europe in WW II.

Feel free to share an idea for a column at [email protected] anytime or contact me regarding consulting, customized workshops, speaking engagements …………. 
And remember – we all need a regular dose of common sense.

Autographed copies of LESSONS FROM THE FIELD – a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES can be obtained from THE ROOMS CHRONICLE www.roomschronicle.com and other industry sources. 

All rights reserved by John Hogan and this column may be included in an upcoming book on hotel management.   The opinions expressed in this article are those of the author and do not necessarily reflect the views of this publication

John Hogan, a career hotelier and educator, is frequently invited to participate at franchise meetings, management company and hospitality association industry events.  He is a successful senior executive with a record of accomplishment in leading hospitality industry organizations at multiple levels, with demonstrated competencies as a strong leader, relationship builder, problem solver and mentor. He conducts mystery-shopping reviews of quality in operations and marketing, including repositioning of hotels.

Expertise and Research Interest
• Sales Management and training
• Turn-around and revenue management
• Professional Development & Customer Service
• Hospitality Leadership and Executive Education
• Making Cultural Diversity Real
• Accreditation & Developing Academic Hospitality programs

He writes weekly columns for a number of global online services and has published more than 400 articles & columns on the hotel industry.  He co-authored (with Howard Feiertag, CHA CMP) LESSONS FROM THE FIELD – a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES, which is available from [email protected], ROOMS CHRONICLE www.roomschronicle.com  and other industry sources.  He resides in Phoenix, Arizona and expects to publish in 2009 his 2nd book based on his dissertation – The Top 100 People of All Time Who Most Dramatically Affected the Hotel Industry.

Hogan’s professional experience includes over 35 years in hotel operations, food & beverage, sales & marketing, training, management development and asset management on both a single and multi-property basis, including service as Senior Vice President of Operations in a specialty hotel brand for six years.

He holds a number of industry certifications (CHA, CHE, MHS, ACI) and is a past recipient of the American Hotel & Lodging Association’s Pearson Award for Excellence in Lodging Journalism, as well as operational and marketing awards from international brands.  He has served as President of both city and state hotel associations.

John’s background includes teaching college level courses as an adjunct professor at three different colleges and universities over a 20-year period, while managing with Sheraton, Hilton, Omni and independent hotels.  He was the principal in an independent training & consulting group for more than 12 years serving associations, management groups, convention & visitors’ bureaus, academic institutions and as an expert witness.  He joined Best Western International in spring of 2000, where over the next 8 years he created and developed a blended learning system as the Director of Education & Cultural Diversity for the world’s largest hotel chain. 

He has served on several industry boards that deal with education and/or cultural diversity and as brand liaison to the NAACP and the Asian American Hotel Owners’ Association with his long-term involvement in the Certified Hotel Owner program.  He has conducted an estimated 3,200 workshops and classes in his career. 

Service to the Industry and Hospitality Education includes working with the Educational Institute Certification Commission of the AH&LA, the Hospitality Industry Diversity Institute, the AH&LA Multicultural Advisory Council, the Accreditation Commission for Programs in Hospitality Administration, the Commission for Accreditation on Hospitality Management Programs, the AH&LA and AAHOA Education and Training Committees, the Council of Hotel, Restaurant and Institutional Educators (CHRIE), the International Hotel Show and the Certified Hotel Owner program for the Asian American Hotel Owners’ Association.

Dr. John Hogan, CHA MHS CHE
[email protected]