News for the Hospitality Executive
Open Sales Positions: Can You Afford Them?
There is an old adage that states: "You have to spend money to make money." Never will truer words be spoken than over the next several years. Virtually every industry and every operation has been cut to facilitate shareholder value, operating capital conservation, or owner return.
So where, you may ask, is revenue coming from?
Your sales channels and your sales teams — the same teams that have seen their leadership eliminated, their FTE's reduced, their travel curtailed, their customer centric funding lost, their training eliminated over the last three to four years, and who have struggled to become proactive after our "fun run" of 2002-2008.
With demand beginning to show signs of life, and occupancy still the driving factor in REVPAR growth, you are likely having to fill more rooms at nominal rate growth with a smaller staff who are more than likely underfunded, under trained, and probably not as efficient or productive.
Simple math in today's dollars tells us that the cost of an open / unfilled sales position is nearly $2,300 a day or $1,300 in profit (See table 1). Annually, that could represent $850,000 in top line revenue and almost $500,000 in profit. Who can afford that?
Sales Manager annual goal of 5000 room nights
Conversely, should you opt to keep that position open for an entire year (See table 2) your savings will equal a mere $81,400.00 providing you with a net profit impact of ($411,600).
Sales salary of $55,000 per annum
For every month you leave that position open you are losing $34,000 in profit.
Naturally there is a point of diminishing returns in sales staffing but as you re-energize your capital spending you should also be reevaluating your sales productivity and return versus loss.
With new supply filing the pipeline, a shrinking labor pool as our population ages, more specialization within our industry, a sales environment where many people came of age in an "order taking" economy (and who stumbled in a proactive selling environment) the questions are: who will lead, who can sell, how good are they, and do I have enough of them?
We have all seen the impact of discounting as our sole means of demand/revenue generation. Now with demand growing how will you shift your mix to become more profitable by bringing back the higher paying customers? Correct sales staffing and deployment are the keys. Utilization of interim solution partners such as Strategic Solution Partners allows you to address the dynamic environment of change we face with aggressive and experienced personnel.
So as you look to improve you future revenue performance, assess the following:
"You have to spend money to make money"
Reprinted with permission from Cayuga Hospitality Review. All rights reserved.
Cayuga Hospitality Advisors
Immigration: Today’s Challenges and a Way Forward for Hospitality
Employers / Charles A. Conine / March 2011
the US Adopt International Financial Reporting Standards? / Blair
Vago / October 2010
Dynamic Data to Enhance Guest Experiences / David Sterling / August
Talk Tourism / Jason Swanson / June 2010
Meetings Work - A Step by Step Guide / Robert Woods & Florence
Berger / April 2010
Management: An Update* / Bill Carroll and Mac Noden / April 2010
Decision Criteria for the Gaming Industry - Time to Revisit and Review
/ Stephen Sherf / March 2010
A Year of Challenges for Restaurants; Thriving in Another Tumultuous
Year / Michael Lukianoff / February 2010
Sure the Right Contingency Plans Are in Place; Secrets of a Hotel Asset
Manager / Jim Burr / October 2009
on Adoption of International Financial Reporting Standards (IFRS) for
the U.S. Hospitality Industry / October 2009
You Think Like a Leader or a Manager? / William P. Fisher. Ph.D. /
Wake Up Call, The Shadow of 9/11: Terrorism and Premises Liability for
Hotels / Carroll Dubuc / September 2009
Need to Reset Your Exit Strategy / Jim Burr / September 2009
|The Electronic Guestroom / Jules A. Sieburgh / September 2009|
|LEADERSHIP: The Basis for Management / William P. Fisher Ph.D. / September 2009|