News for the Hospitality Executive
|Lessons from the Field
A Common Sense Approach to Success in the Hospitality Industry
|By Dr. John Hogan, CHA MHS CHE, April 17,2009|
Understanding What We Measure and Making it Count!
Strategies for Hotel Controllers
|By Dr. John Hogan CHE CHA MHS
April 17, 2009
“Too often we measure everything and understand nothing. The three
most important things you need to
If you’re growing customer satisfaction, your global market is sure
to grow, too. Employee satisfaction feeds
Jack Welch, retired President and CEO of General Electric
A column I wrote titled A “Bakers Dozen” of Strategies for Hotel Controllers offered 13 thoughts for the person who is charged with being the financial manager of the hotel.
There is an enormous range of responsibilities for financial controls in today’s hotels and much of this depends on the type and size of the hotel property. Finance and accounting do not usually provide much reader feedback, but I was pleased to have requests from groups and associations asking to reprint it in their publications.
This column will follow up on the strategies to a degree, but it will focus much more on the approach and message contained in the Jack Welch quote above.
The hospitality industry is facing serious issues with the global economic and political uncertainties.
While Welch retired as CEO of one of the world’s most complex conglomerates in 2000, his message above remains accurate. Welch served as a leader who was not afraid to be a change agent. The many books about his style and approaches include reflections on very challenging economic cycles in his 20-year tenure as well.
With that in mind, I have taken Welch’s three points and offer the following discussion points to hoteliers at the property level.
1. Measuring customer satisfaction.
The advancement of technology has virtually eliminated much of the value of comment cards, but the need for feedback remains very real. Online services such as TRIP ADVISOR, Orbitz, Sabre and priceline.com have avenues to allow immediate and widely shared assessment. There are allegations of planted or false postings on some of these sites, but follow up usually identifies those situations. The question then becomes “how to measure customer satisfaction?” There are a number of reasonable approaches, remembering how timely responsiveness must be to ongoing success. These include:
2. Measuring employee satisfaction.
Welch had his share of critics relating to how GE evolved during his tenure. He sold many businesses that he and the GE Board did not view as long-term contributors to the company success and he reduced the total number of GE employees with those sales.
He also made major inroads in professional development and training at all levels. In his autobiography “JACK: STRAIGHT FROM THE GUT”, he identified Crotonville, a 52-acre campus in Ossining, New York as a major component of the changes needed to be implemented to make GE continuously successful. It was used for both a training ground for leadership and as a forum to deliver technical training or important messages in times of crisis.2
With multi-generations working at our hotels today embracing both the high tech and high touch of hospitality, the need has increased for additional training and development at all levels.
A handful of the major brands and management companies have evolved their corporate culture to address the need to maximize employee engagement and satisfaction , but I continue to see too many managers and owners paying minimal attention to their staff.
The successful owners and managers of the future will increase the commitment
to professional development and training whenever and wherever possible
throughout the hotel. The results will be better qualified professionals
in more departments, providing better service while enjoying their
Many people understand the concept, but not enough actively engage in measuring all the components.
ReVPAR obviously affects cash flow, and measuring trends via www.strglobal.com (formerly Smith Travel) or other sources helps anticipate revenues and expenses Regular proactive interaction with the sales team and front office management will help project more accurate short and long-term forecasts.. Understanding cash flow and position helps long-term profit improvement decisions, as well as anticipating capital needs and the ROI needed to justify them.
Measuring cash flow also helps ownership and managers realistically assess the operational performance of their hotel.
Hotel controllers are often the chief financial officer of the hotel. I have recapped the Strategies the article on Hotel Controllers. Those strategies include:
1. Take the lead on establishing and administering all financial systems and internal controls. This includes an approved and complete plan for overall financial checks and balances for control of operations. In the case of high volume food and beverage, gaming, retail or other revenue centers, this is critical to cash flow management. Most hotels use approved industry standard accounting systems and formats.
2. Create the guidelines and expectations for the preparation and updates of all operational budgets, forecasts, operating results, financial reports. While the controller should not physically prepare all documents, s/he should provide guidance, forms and overall direction. This includes profit projections and planning, sales forecasts, expense budgets, capital requirement/needs, cost standards and the required approvals for implementing the agreed upon plans.
3. Identify the annual hotel's capital plan and establish time lines and protocols for implementation. Capital needs are identified through many sources, including planned renovations, changes in competition, market variables, brand requirements, legal obligations and ownership preferences. It is the ultimate responsibility of the hotel controller to estimate returns on investment and to offer recommendations to ownership and senior management.
4. Implement firm procedures for the preparation of operational statements returns in compliance with government regulations, company, franchise and ownership requirements. There are many entities requiring detailed and consistent reporting.
5. Set up and administer all government reporting and tax filing activities to guarantee accurate, timely information is provided in compliance with laws and regulations. This includes local, state/provincial and federal agencies.
6. Formulate and manage local accounting policies that coordinate with ownership’s or brand systems and procedures. We all realize that data and reports can be stated in creative ways and it falls to the controller to keep comparisons of performance to budgets, forecasts and updates accurate and consistent. Clear and concise recaps of the financial reports that interpret operational results of operations to all levels of management and ownership (where applicable) are essential
7. Operate as if you were a financial consultant for your hotel(s). Consultants ask questions to make certain time sensitive reports and information are provided to maximize revenues and profits. Done in a proactive and ongoing way, this can greatly assist operations.
8. Monitor compliance with hotel and accounting policies and procedures, legal requirements and contractual obligations. These could include obligations under a management agreement or brand contracts. A system of internal controls, auditing and security procedures should be in place to make certain disparities or variations are brought to the attention of the General Manager and/or appropriate ownership or management representative to safeguard the hotel's assets.
9. Manage the accounting department and other areas as appropriate. Some hotel controllers oversee Security/Safety staffs while others are responsible for Human Resources. This is a local decision but the goal is to maximize resources and/or effectiveness, not to save a few dollars by eliminating a management position.
10. Supervise the installation and maintenance of accounting computer systems and equipment to secure optimum performance. The Controller should also be the one to typically approve all contracts, with the co-authorization of another senior manager.
11. Maintain a fiduciary accountability to the company and management. Many large organizations have Controllers reporting to the hotel general manager, but with a dotted line to a corporate officer or other responsible person. This is a system of checks and balances.
12. As a member of the hotel executive team, share the professional expectations provided to you from ownership and/or management clearly with all members of the staff. Newcomers to the industry sometimes imagine huge profits when they compare their hourly wage with the rooms’ rates paid by guests. Those of us who have been in the industry for more than just a few years realize that profits and losses go in cycles, and that it is important to share the realities of the cost of doing business at all levels. All staff should understand the total costs of ownership, including support staff such as security, engineering and sales, franchise or royalty fees, management company fees, the concepts of debt service and more. Make those expectations understood, explain the value and rationale to all staff and be certain these expectations can be measured fairly.
13. Increase the commitment to training whenever and wherever possible throughout the hotel. Many controllers in the past functioned apart from the operating staff. The successful controller of the future will maintain a required equilibrium with the departments they may be monitoring, but they will also learn to:
2 “JACK: STRAIGHT FROM THE GUT”, Warner Business Books, 2001 Chapter 12 Remaking Crotonville to Remake GE
Please share an idea for a column or contact me regarding consulting, customized workshops or speaking engagements at firstname.lastname@example.org anytime.
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.
He writes weekly columns for a number of global online services (hotel online.com, eHotelier, 4 Hotels, Hotel Resource, etc) 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@example.com, 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.
Expertise and Research Interest
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
|Also See:||“A Bakers Dozen” of Strategies for Hotel Controllers / Dr John Hogan / April 2009|
|A Different Appraisal of Our Biggest Challenges in 2009 / Dr John Hogan / April 2009|
|Reflections: Mentors and Friends - Vermont Hoteliers Borden and Louise Avery and their Son Allen / Dr John Hogan / March 2009|
|Remember to Embrace the Essentials in Sales; Revenue and net profits can often depend on how one of the most fundamental practices in sales- how incoming phone calls are handled / Dr. John Hogan / March 2009|
|Getting the Most Out of Your Hotel Franchise Investment; Working With Your Hotel Franchisor for Everyone’s Success / Dr. John Hogan / March 2009|
|Getting the Most Out of Your Hotel Franchise Investment; Evaluating the franchise business model as a potential franchisee / Dr. John Hogan / March 2009|
|Getting the Most Out of Your Hotel Franchise Investment / Dr. John Hogan / Dr. John Hogan / March 2009|
|Four Steps: How to Make More Sales Calls than Any Other Way Or Trade Shows Can Be Invaluable If. . . / Dr. John Hogan / February 2009|
|A Baker’s Dozen of Strategies for Hotel Chief Engineers / Dr. John Hogan / February 2009|
|"A Baker's Dozen" of Strategies for Hotel Banquet Managers / Dr. John Hogan / February 2009|
|Making New Year's Sales and Marketing Resolutions Real and Practical / Dr. John Hogan / January 2009|
|Planning in a Challenging Economy - Probing Hotel Expenses / Dr. John Hogan / December 2008|
|Planning in a Challenging Economy - Fundamentals of Hotel Sales Planning / Dr. John Hogan / December 2008|
|A Message for Hoteliers: Giving Thanks - and Not Just One Day Each Year! / Dr John Hogan / November 2008|
|Hoteliers Must Remember the Lessons of Reasonable Care! / John Hogan / November 2008|
|Enthusiastic and Sincere Attitudes Will Pay Off For Hotel Salespeople / Hotel Common Sense / John Hogan / November 2008|
|Unleash the Potential! Recognize the True Value of Your Front Line Sales People / Hotel Common Sense / John Hogan / November 2008|
|Defining Hospitality - Readers Respond with their Insights / Hotel Common Sense / John Hogan / October 2008|
|Understanding the Value and Power of Breakfast / Hotel Common Sense / John Hogan / October 2008|
|A Bakers Dozen of Strategies for Hotel Restaurant Managers / Hotel Common Sense / John Hogan / October 2008|
|A Bakers Dozen of Strategies for Hotel Food and Beverage Directors / Hotel Common Sense / John Hoganv/ September 2008|
|My Definition of Hospitality. What’s Yours? / Dr. John Hogan / September 2008|
|Principles for Success as a Hotel Manager: 6 Observations on Finding and Employing Problem Solvers / Dr. John Hogan / September 2008|
|10 Hotel Sales Action Steps to Succeed in Today’s Competitive Marketplace / Dr. John Hogan / September 2008|
|10 Hotel Sales Mistakes to Avoid in Today’s Competitive Marketplace / Dr. John Hogan / August 2008|
|Ways to Identify and Build Repeat Guests / Dr John Hogan / August 2008|
|Principles for Success As a Hotel Manager - Maintaining Relationships Throughout the Organization / Dr John Hogan / August 2008|
|Principles for Success As a Hotel Manager - Part four: Communicating with Clarity and Candor / Dr. John Hogan / July 2008|
|Principles for Success As a Hotel Manager - Part three: Using your management style effectively / Dr. John Hogan / July 2008|
|Principles for Success As a Hotel Manager - Part Two: Motivating the Team / Dr. John Hogan / July 2008|
|Principles for Success As a Hotel Manager Part One: Understanding the Organization / Dr. John Hogan / July 2008|
|Updating Hotel Marketing and Sales Strategies Mid Year NOW Is Essential / Dr. John Hogan / June 2008|
|Don’t Underestimate the Impact of the Hotel Sales Office / Dr. John Hogan / June 2008|
|Factors for Successful Interviewing Potential Hotel Sales Candidates / Dr. John Hogan / June 2008|
|The Importance of Meaningful Sales Team Job Descriptions / Dr. John Hogan / May 2008|
|For Hotels with Limited Service, Fewer than 100 Rooms - How Do You Determine if You Need a Person Dedicated to Selling / Dr. John Hogan / May 2008|
|Extending Your Sales Team or Make Travel Agents A Regular Part of Your Sales Programs / Dr. John Hogan / May 2008|
|Finding Business Leads Can Be Easier Than You Think / Dr. John Hogan / May 2008|
|Understanding the Differences Between Marketing and Sales / Dr. John Hogan / April 2008|
|Identifying Your Customers / Lessons from the Field A Common Sense Approach to Success in the Hospitality Industry / Dr. John Hogan / April 2008|