June
In Part I, I covered the first five
reasons why
hotels underperform in response to what hospitality professionals
felt were
the top 10 reasons why hotels underperform.
- Poor hiring practices
- Lack of training
- Little to no regard for the customer and their complaints
- Management unwilling to empower staff with problem resolution
- Hotels don’t understand how to market themselves across all channels
Now let’s look at reasons six through 10
#6 – Poor housekeeping and lack of
renovation facilities
I am confident that you understand the
impact that
TripAdvisor’s Dirtiest Hotels List can have on a hotel. This
kind of
press will sink your ship and no matter how much the hotels on this
list
attempt to defend their hotel’s reputation, they’ve suffered certain
irreparable
damage.
As hotel bookings and prices begin to climb,
many hotels are
considering renovations they postponed when money was tight. “Next year
is
going to be crunch time,” said Joel Ross, principal of the hotel
investment
company Citadel
Realty Advisors, because improvement projects “are way past due and
people
still don’t have money.”
If you can afford to renovate, start with
the portion of
your hotel that is in dire need of a refurbishment. If your lobby is
falling
apart, concentrate the first part of your renovation on this section of
your
hotel. If your guest rooms are tired and worn out, go with this next.
However,
if no one area stands out as needing a renovation much more than
another area,
examine the positioning of your hotel, what kind of business you
compete for,
and where you make your money from on a regular basis.
#7 – Too much time pushing paperwork and
not enough time
with guests
Hotel GMs are celebrities in their own right
whether they
like it or not. They are the CEOs of their hotel and guests love to rub
elbows
with the man or women in charge.
But do hotel GMs feel the same?
One of my divisions brings meeting and
conferences to hotels
and I typically interact with a Director of Sales and Marketing. That’s
a given
but I haven’t been introduced to or thanked by a GM for bringing a
potential
piece of business to his/her hotel since 2010.
When I was a kid I wrote a letter to then
President Reagan
about a conversation I had with my Dad about the state of the economy.
A few
weeks later President Reagan (most likely a staffer from
communications) sent
me a response and that simple gesture ended up in a picture frame that
proudly
hangs in my office today.
If you want to make a lasting impression on
your guests, one
that you couldn’t afford to buy, step out of your office when you feel
the need
to regroup and thank them for their business. Your kind words will
generate a
mountain of positive word-of-mouth that will only cost you a few
minutes of
your time.
#8 – Lack of pragmatic revenue goals and
misusing budget
and P&L
It is a challenge, to say the least, to
predict annual
revenues precisely but it’s imperative for hotels to maximize hotel
revenue and
profit in order to create realistic revenue budgets and goals.
According to Patrick Landman with Xotels, hotels should become more business minded. “Too
often
General Managers still influence the strategic decision making process
of
hotels based on feeling, market knowledge, and ‘experience’.
This is an excerpt from the article written
by Bonnie Buckhiester for HotelNewsNow.
Here are some of the characteristics of a
Total RM effort
and the extent to which hotels are incorporating these practices into
their
overall revenue management programs:
- Profitability by market
segment: Tracking contribution (profitability) by market segment
from a “total spend” perspective is a key element of Total RM.
Hoteliers believe they know instinctively what segments produce better
flow-through, but often this information is anecdotal in nature and, at
best, is confined to the rooms and/or food and beverage divisions, not
ancillary revenues. Whereas most hotels track costs per occupied room
in aggregate, few typically track costs/profits on a segment basis. And
from the F&B perspective, although outlets are tracked separately
from catering, aggregated data is typical, not data by segment. While
some hoteliers are inventing their own methods to track individual
market segment profitability, what a Total RM effort requires is an
industry-wide consensus on permanent changes to the Uniform System of
Accounts, changes that enable hotels to drill down into accurate market
segment contribution. In this regard, annual budgets will be built by
manipulating business mix to drive profitability.
- Expanded role for the revenue
manager: Another obvious component of a Total RM program is
increased involvement by the revenue manager in optimizing all revenue
streams, allowing them to have both tactical and strategic influence on
other revenue centers. At present, most revenue managers spend the
majority of time on rooms revenue management. Although there’s
communication with the F&B division and there’s more technology
available to optimize group business, in terms of sheer hours, rooms
division takes the lion’s share of most revenue management efforts. For
Total RM to become a reality, demand management is needed that manages
demand and profitability in tandem for every revenue stream in the
hotel.
- Identify “net-net” rate
levels: Another element of Total RM lies in identifying “net-net”
rate levels by extracting associated costs unique to that rate. These
costs are typically divided into two categories: internal and external.
Examples of an external cost would be global distribution system fees
and travel agent commissions. An example of an internal cost would be
the F&B costs associated with a package or the costs of special
benefits associated with a frequent guest program or consortia
contract. More often now, hotels focus on “acquisition costs,”
identified especially when comparing online-travel agencies bookings to
brand.com
bookings. But still, internal costs are less likely to be identified by
market segment. The obvious advantage of knowing the “net-net” rate is
being able to identify the most profitable rates as well as segments,
room types, etc. Lower rates often become “second-class citizens” to
revenue managers, front-desk teams and sales personnel, whereas higher
rates appear better but don’t take into consideration all the
associated costs.
- Track RevPAR by room type:
Tracking RevPAR by room type by month to more clearly identify
sub-optimal value propositions is another element of a Total RM
approach. Although most property management systems provide this data,
rarely is it put to good use as reliable business intelligence. It is
amazing how much strategic information can be gained by looking at room
type RevPARs by month. Lower RevPARs mean either volume or rate is out
of alignment to demand realities, and small adjustments can be made to
correct this.
- Drill-down displacement
analysis: Another important component of Total RM is a greater
reliance on detailed, drill-down displacement analysis to strategically
select/deny business, including calculations on spend by revenue
center. Hotels are generally taking much more time to conduct proper
displacement analysis but not always to the “total spend” and “total
profits generated” level. There certainly are good group modules
available in some of the revenue management software systems, but for
those hotels that operate without an RMS, properties should at least
use the profit profile functionality in the sales/catering system or
create a spreadsheet that takes all the revenue streams and profit
ratios into account.
- New performance metrics:
Another element of a good Total RM program is the systematic use of new
metrics. An example is the metric catering revenue per occupied group
room. Most hotels already track F&B covers per group room and
establish minimum F&B levels in contracts, but creating metrics
that track revenue and profit per occupied group room is a good start.
Other metrics include: revenue per square foot, profit per square foot
and revenue per available seat hour. In a Total RM environment, these
metrics would appear on the monthly profit-and-loss statement. And once
new performance metrics become a routine part of weekly revenue
meetings, there’s typically much more focus on selecting business from
a Total RM perspective.
- Track upgrades: For Total
RM, it’s important to track upgrades methodically so that lost revenue
opportunities are identified, monitored and mitigated. In most hotels
this is not done routinely, and in this case the old adage holds true:
You can’t manage what you don’t measure.
- Dynamic transient baseline:
More often than not hotels establish static baselines with exceptions
managed manually. A dynamic baseline approach is much more effective in
optimizing demand. When the hotel updates the sales/catering system on
a daily basis for close-in dates and weekly basis for medium- and
longer-term dates, sales managers have the added advantage of selling
with the most up-to-date data. This is especially important as booking
windows shrink for all market segments.
- Dynamic pricing of catering
menus: This is a trend that is becoming more and more evident in
the industry and goes way beyond “holiday” pricing concepts or F&B
minimums. Conference planning guides provide price ranges for banquet
menus facilitating demand based pricing. Meeting room rental prices
also transition from static pricing to demand pricing. For example, if
one period of the day is in greater demand than another (either by day
of week or month) then the price reflects the demand level accordingly.
- Unconstrained demand forecasting
for catering: This concept is based on tracking pace and turndowns to
determine total demand in as detailed a manner as is done for the rooms
side of the business (e.g., based on availability, space not released,
minimums not met, price resistance, etc.).
- Advanced menu engineering:
In a Total RM environment, advanced menu engineering is conducted
whereby price elasticity is tested menu item by menu item.
- Emerging participation in
F&B benchmark reports: Although occupancy, ADR and RevPAR are
the primary metrics tracked in benchmark reports, F&B statistics
are emerging. This trend may be driven faster than expected due to the
impact of Asia/Pacific hotels where F&B revenue and profit levels
can exceed rooms division performance. At least for North America,
hotels can submit performance data to STR and track metrics such
F&B revenue per room sold. As Total RM emerges, this practice will
become more widespread, providing hotels with an added measure of
performance against the market.
If any hotel is going to move to the very
highest level in
its revenue management effort, these types of initiatives must be
considered.
Regardless of the point at which your hotel may be in starting down the
road to
Total RM, it will take serious commitment to finish the journey and
benefit
from a more sophisticated approach to profit optimization.
#9 – Little or no involvement in online
reputation
management
When it comes to building positive awareness
about your
hotel, it takes a lot of time and effort to build and maintain your online reputation and that
starts
at the property level.
So what is online reputation management (ORM) and why is it so
important?
Wikipedia defines online reputation management as “the practice of
monitoring
the Internet reputation of a person, brand or business, with the goal
of
suppressing negative mentions entirely, or pushing them lower on search
engine
results pages to decrease their visibility”.
The days of measuring customer satisfaction
via the
traditional hotel comment card are long gone. Reviews are now online
and there
for the public to see, as are quality ratings. Moreover, research
demonstrates
that travelers are seeking out hotel reviews and consider the online
review a
vital decision-making component for their future travel plans. Consider
the
following:
- 90% of customers read online
reviews before booking a hotel room
- Poor online reviews = lost
bookings and lower revenue for your property
- Good online reviews = greater
consumer confidence and more revenue for your property
Adele Gutman, VP of Sales and Marketing with
Library Hotel
Collection (formerly HK Hotels), shares these online reputation management takeaways:
- Reputation creates demand.
- Everything you do is reputation
management: from hiring and training staff to the type of linens you
order for the guest rooms.
- Imagine the reviews you want,
and then become the hotel that inspires them.
BTW Adele and her staff don’t pay lip
service to customer
service. Three of Library Collection’s four hotels rank #1, #2, and
#5 of
hotels located in New York City on TripAdvisor.
Ignoring your online reputation, or
responding
inappropriately to comments, can have a negative effect on your hotel’s
branding, which can then be detrimental to its overall revenue. This is
especially true if negative reviews dominate the search engine results.
There
is, however, an upside to this. Traditionally, happy guests are the
best source
of new/referral business, and online forums are the new and more
powerful
word-of-mouth.
So here are just some of the ORM tools
currently available
that will help you to manage your online reputation effectively.
TrustYou/Review
Analyst monitors Online Travel Agencies (OTAs), Review Sites,
and major
Social Venues such as Twitter, Facebook, YouTube, Flickr, FourSquare,
and more.
Revinate
is an easy-to-use software service that tames and demystifies the
all-important
realm of social media, giving employees the chance to both turn
individual
disappointment into delight and make operational improvements that
increase
loyalty and drive sales.
ReviewPro
offers a web-based, analytical tool that allows hotels to efficiently
aggregate, organize and manage their online reputation and presence in
leading
social media sites and provides analysis, business intelligence,
competitive
benchmarking and reporting needed to help hoteliers effectively manage
their
property.
#10 –
Inferior superiors in key positions
Where do you start and what’s the solution?
Does it go back
to poor hiring practices? The need for a hotel to fill a position
quickly? Less
qualified pool of candidates?
Chris Rickborn, is the COO and co-founder of
Unrabble,
a cloud-computing
hiring software company that helps busy startups make great hires and his five tips may be
just the
solutions you are looking for.
- Stop Giving Open Book Tests:
Writing lengthy job descriptions loaded with job requirements may keep
unqualified candidates from wasting your time, but you’ve also just
given every candidate a cheat sheet. Job seekers are taught to break
down your job description and weave it into their resume, which will
make everyone look equally qualified. Sell your company, your vision
and the position, but make job seekers tell you what they can do for
you — not what you told them you want.
- Don’t Confuse Experience With
Skills: Job candidates can often blur the line between a previous
experience and a skill, which is a trap you need to avoid. Don’t assume
that candidates have certain skills just because it’s a keyword on a
resume, a previous job title or experience at a similar business. Have
an in-depth conversation with your top candidates to discuss what they
are best at and learn how they have acquired those skills through
experience.
- Make Sure the Timing Is Right:
Where is the candidate in his career? Is he capable of taking a big
risk at this point in his life? What kind of adversity has he faced in
previous jobs? Does he seem too anxious to hit a home run or does his
experience tell you he has the patience it takes to succeed?
- Skip the Initial Telephone
Interview: I’ve never liked doing telephone interviews based on the
initial review of a resume — it’s way too time-consuming. But I do like
communicating with candidates, because that’s when you learn the most
about them. After I’ve looked at a candidate’s background I might send
off a short message and say, “Tell me about this experience” or, “What
do you know about this skill?” How does he respond? Does he respond?
Can he write? Is the exchange comfortable? The ability to communicate
articulately in writing is a trait of top talent, regardless of the
position. If you engage candidates in a more in-depth and ongoing
communication string rather than conducting a one-and-done phone
interview, you will quickly learn who stands out from the crowd.
- Separate the “Can Do” From
“Can Get it Done”: In most startups, resources are tight and the
timeline is very short. When you’re hiring for a key position, make
sure to ask yourself if you need someone who “can do the job” or
someone who “can get the job done.” The “can do” is the candidate with
the hands-on skills who can accomplish the task without any help. The
“can get it done” is the candidate who will deliver but may need other
resources to make it happen. Both can be valuable attributes to have,
but you need to clearly understand which one you need to avoid a hiring
mistake that could set you behind.
About the Author
Tom Costello is the CEO and Managing Director of iGroupAdvisors, a performance improvement consulting firm that specializes in the hospitality and travel verticals. Connect with him on LinkedIn, Facebook, and Twitter or contact him by email.