|By Bruce Wienberg, CHA, April 2005
Having observed many hotels, both as a General Manager for 12 years and as Regional Service Manager for Best Western (where I work with almost 50 properties), the common thread in a successful operation can be summarized in three “P”s: - Price, People and Property. These three basic principles need to be addressed daily by the General Manager and owner, with equal emphasis, to ensure a balanced, well run hotel that can focus on satisfying its guests.
Price: also known as your rate.
You need to know your market, and what your competition’s rates are… and not just what they tell you over the phone. Do some research into their third party website rates, their local corporate rates and group rates. Then see how their physical property compares to yours, from supplemental facilities to services to style, design and location. Armed with this data, you can then do an accurate assessment of what your guests would be willing to pay for each market segment at your hotel.
You have to set your rates at a level that will support your operation. If you cannot, there are two choices. Reduce your operating expenses or increase your revenue through achieving a higher occupancy. Remember that it is always better to focus on revenue generation, as you can – theoretically- increase revenue to an infinite amount, but only reduce expenses by 100%!
People: your management team and staff.
As every GM knows, without staff your hotel is sunk. You simply cannot operate without staff. Our industry is notorious for high turnover, and in many cases it is deserved. Don’t be one of those properties!
Pay a little more than the market rate, and ensure that your staff see you on the floors and at the front desk, every day. Learn your employee’s names, about their families, about their hobbies. Lavish praise on them when it is due, and sometimes when it’s not. Host monthly pizza lunches; be creative with small incentives.
These intangibles are far more important than an extra ten or twenty-five cents in wages. Conversely, be sure to have a written plan for disciplining staff. They have to know what is acceptable behavior, what the procedures are, and that you will carry them out firmly, and fairly. You must be consistent to gain their trust.
Property: design, maintenance and capital.
You can only ask- and get- the rate you desire if your property is up to the task. That doesn’t mean everything has to be brand new, but it does mean things have to be perfect.
“Perfect” means everything must be clean, and everything must work. It also means that if some items are dated, or worn out, you will need replace them. Put away a fixed percentage of monthly revenue to ensure the capital is there in 2, 3 or 5 years when items need to be replaced. Ensure you walk the property daily, that you inspect rooms and give this feedback to the staff who can improve things – your housekeeping and maintenance staff. They need to know that any dust, dirt or garbage is unacceptable, anywhere on the property. Make sure there is a workorder system, and that you check that things are getting done. Make sure you would want your friends and family to stay at your hotel.
Think of the 3-P’s as a tripod supporting the hotel; if too much weight is applied to one leg, the tripod collapses. Similarly, if one leg is too short, the tripod will tip over. The 3-P’s are so intertwined, that a hotel cannot successfully operate for long if one leg is not supported equally along with the other legs, or if too much emphasis is placed on a single “P”.
If your rate (Price) isn’t positioned properly, you will not have enough guests to pay for updating design issues, or for proper maintenance or capital purchases (Property). If your staff isn’t properly motivated and managed (People), the required guest service, housekeeping and other services will not ensure returning guests, and therefore the income will not be generated to support the Property. And if the Property is not well maintained, in good shape and with up-to-date design, then the People will not be motivated and happy at work, and the guests will not make their reservations nor pay the rate you would like.
Owners, along with General Managers, must look beyond the next day or the next week, and see the big picture. Their skills, time and (for ownership) money must be applied to ensure all areas of the operation are running equally effectively. Think about how the 3-P’s apply to your operation, and see if your tripod is fully supporting your hotel.
Bruce Wienberg, CHA