Software to Stay Above RevPAR Curve
May 2003 - John DePaul is a stickler for three things: hiring the best employees; utilizing new, forward-thinking technology; and exploring creative ideas whether they are about RevPAR, employee retention and training, or his calendar. That’s why the president and CEO of Philadelphia - based Melrose Hotel Company continues to post positive RevPAR trends 16 months-running while the industry shows declines; trimmed a 102% turnover rate to 37% in 2002 with the help of a new Human Resources lieutenant; and prioritizes time with his family, which includes three young children.
“Like Melrose Hotel, they’re small, but they have wonderful ideas,”
says DePaul, who seven years ago spearheaded Melrose parent company’s,
Berwind Property Group, LTD (BPG), purchase of its first hotel, the AAA
Four-Diamond Westin Great Southern Hotel in Columbus, Ohio, and quickly
rolled out three more properties in as many years. BPG is a value
added real estate investment company, and one of the 200 largest private
venture firms in the country. Melrose hotels are full-service, upscale
traditional properties that cater to corporate accounts and discriminating
leisure travelers in major metropolitan areas. Melrose's attention
to detail, plus innovative thinking and back office and business intelligence
software purchases, are paying off. DePaul notes, “The decline in
business travel in 2001 coupled with the events of September 11th clearly
impacted the urban, upper-upscale hotel market. Our decision to invest
in software, and recruit and train the best talent softened the impact,
and gives us an edge as business conditions improve.”
“We use our back office vendor as our IT department,” said Melissa Hauser, director of finance with Melrose Hotel, who shares with DePaul the goal of ultimately moving the server to the corporate office and then bringing regional offices online. “The system will grow as we do.”
When Hauser joined Melrose Hotel a year ago, her first action, following the software purchase, was to standardize the chart of accounts for each property. “As we acquired hotels, we took whatever chart of accounts and back-office systems were there. It was difficult to look across all the hotels and compare cost per occupied room by position, housekeeper, or cleaning supplier. Now, having all our properties on the same chart of accounts makes it much quicker to extract the data, and to bring new hotels on line.”
DePaul agrees. “Instead of getting financial reports on the 15th of the month, I can look at my P/L on day two of the closing process and manage the close.” Melrose Hotel’s new business intelligence software also facilitates exception reporting and the team’s innovative thinking.
Innovative Edge: Exception Reporting, 12-Month Rolling Forecast
“Every report we now do manually can be duplicated in either Profitvue or Execuvue,” said Hauser, referring to the back-office and business intelligence software Melrose Hotel purchased from Aptech Computer Systems, Inc. Hauser is currently migrating her staff from entering monthly reporting numbers into Excel, which is time consuming and prone to human error, to capturing numbers in Profitvue. She is also weaning executives away from paper P/L reports to a focus on exception reporting, which is possible through the business intelligence software.
“Our vision is to create a best practice methodology within the operating company. Ultimately I would like to send our ownership partners a month-end email, and they could print out what they want in either PDF or HTML format,” said Hauser. “Executives could move from managing every line on the financial statement to exception reporting. They could look for variances; we can create a snapshot for them of areas that are positive or negative. Out of that would grow a best practice methodology for costs per occupied room in cleaning supplies and labor statistics. We could ask, ‘Do you want to do laundry in-house or out-of-house? How much does it cost the properties to do it each way?’”
Another best practice Hauser is eager to implement with the back office system is a rolling 12 month forecast, by which she hopes to avoid the labor intensive once-a-year budget process. “People tend to look more at the trailing 12 instead of the rolling forecast,” explains Hauser. “Once we get our forecasting data loaded into Profitvue, we will be able to concentrate more on the rolling forecast using the information provided by the trailing 12 months.
Again, DePaul agrees. “Now that we have an automated, common platform of reporting, we have the ability to query financial questions without burdening the property level Director’s of Finance with time-consuming data collection. They can spend their time actually analyzing the data and less time finding and inputting the data. This new platform gives us a tremendous edge, too, as we acquire more hotels. We can plug and implement our chart of accounts well before closing instead of waiting for the close of the acquisition to physically get access to the accounting office.
“During the past two years, we passed through the eye of the storm brought on by unprecedented geo-political events and economic ailments, and we have emerged a better company for going through it,” DePaul concludes. “ Strategic upgrades of talent throughout the organization, and partnerships with forward thinking technology companies such as Aptech softened our exposure to the downturn.”
About Melrose Hotel Company
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