Mr. Hill

Executive Leadership

Lean Thinking for Hotel Operators: Steps to Survive

By Roger G. Hill , Chief Executive Officer & Chairman, The Gettys Group Inc.

It's difficult to predict how long the recession will last. Many hotel operators made difficult cuts and reluctantly are looking for additional ways to save. But more steps must be taken. Consider:

• Monitor business trends daily
  
  Think in shorter increments when evaluating financial health. Look less than a month out while analyzing revenues with a constant eye toward trimming costs, redistributing assets and controlling spending. Use the Internet to glean immediate information as to where bookings stand in your region and for forecasts of near term business. Maintain urgency in reviewing business trends and be ready to respond to changing information. And read and react quickly to what customers are posting on the Web concerning the property. Respond to criticisms and negative comments with proactive and immediate fixes and improvements. Then be sure to post comments on the web sites ensuring readers and customers know there was a rapid and positive response.

• Create new revenue streams
  
  Try to reach new customers with novel offerings. Consider approaching foreign wholesalers or partnering with regional properties to develop cross-business. Think outside traditional strategies and approach target groups and market segments previously ignored.

• Cross-train staff
  
  The talents are in place. Use them more efficiently and more effectively. That means having an employee doing more than one task. A concierge can learn to work the front desk. The front desk person can double as a concierge. There are many other flexible interchanges in hotel staffing to better use the work force. Not only does enhanced training create more employee value. It motivates staff too and gets their minds focused away from the periling possibilities of downsizing.

• Be flexible
  
  Don't dismiss possibilities for cost-cutting and make decisions immediately. For instance, when seeking savings consider shutting down a wing or a ballroom of the hotel rather than cutting across the board. Determine where your property value is highest and pour energizes there. Every day that space and money are wasted drains the financial picture. Look towards using empty spaces in ways to better attract clients and providing unique services.

• Creatively cut the bottom line
  
  You have used a vendor for years and built trust. But it may be time to find a competitor willing to provide services more economically. Look at your public relations budgets. Rather than retaining a costly communications firm, look to freelance specialists who can deliver quality campaigns at fractions of the cost. Look at beverage and food costs. Think of how to creatively trim costly items from the menu. Buy more seasonal produce and be more creative in entr'ee development with an eye towards savings. Work proactively to trim even the smallest of costs. It will pay big dividends in the end.

• Don't dilute your product
  
  Facing empty rooms, it's tempting to cut rates to the bone to draw more guests. That's a bad move. Once rates drop, it's difficult to raise them. Instead consider short-term promotions: pay for three nights and stay a fourth for free; spa or meal discounts; and free parking in costly urban areas. Stay value focused while not cutting price.

• Spend capital wisely
  
  It can seem like heresy to suggest spending money these days. But consider a small capital expenditure or long planned renovation that will enhance value for years to come. Not only will designers and contractors be more than willing to bid for your business. They will offer quality, accelerated timelines, and value pricing. Structural enhancements can too attract new business and make a property stand out among competitors. Consider too redesigns of rooms and furniture and makeovers of common areas. Make restaurant areas more attractive with cosmetic changes and new attractions in bar areas.

• Keep your message positive
  
  It's amazing what a vase of fresh flowers in a hotel lobby can do. It preaches vibrancy and is a bright light in tough times. Make sure advertising and promotional messages are encouraging and inviting. Emphasize the importance to staff to be friendly, efficient and determined to meet the customers' needs at a moment's notice.

• Use the power of your brand system
  
  More than ever, tap into booking systems and networks offered by brand sponsors. Consider when brand allies are doing in other markets. Look to brand colleagues for advice. And make sure to stand out on brand websites and promotional materials to increase market viability.

• Plan for the future
  
  In down times, don't abandon big dreams. There's no capital cost to brainstorming. Gather top staff and toss around ideas for post-recession business. Think of enhancements to someday upgrade the property and increase appeal. Sketch out a long term vision for the future based on economic turnaround. Picture a rebirth and property renaissance as motivation to wait patiently for the better times to come.

• Keep up the property
  
  Cutting back on essential property care can do irreparable harm in the long run. Do not ignore maintenance and cosmetic upkeep. It may save money in the short term. But a shabby look ruins reputations. Word can spread quickly it a property heads on a downward spiral of appearance. Listen to what clients and even competitors are saying for signs of disparaging image perceptions.

• Go green
  
  Explore government tax incentives to help in energy efficiency and cutting costs. Evaluate power management, lighting, heating and cooling systems, and insulation. Consider greener water cooling systems and trash hauling operations. Ask vendors to deliver packaging with less wrapping to cut waste disposal costs. Federal assistance makes upgrades affordable and energy savings in the long run will cut costs.

• Empower your employees
  
  Look to staff for suggestions as to cost cutting and improving property performance. They are the ones dealing most often with guests and know the property intimately. In difficult economic times, workers have more incentive to make sure companies save money and operate more efficiently. Solicit their feedback through group sessions, intranet sites, and suggestion boxes. Keep an open door policy and encourage supervisors to invite suggestions. Initiate award recognition for the best suggestions and offer economic incentives for staff advice.

Nearly 25 years ago, Roger Hill co-founded Gettys, a Top 10 hospitality interior design, procurement and development firm. Under his leadership, Gettys has grown to a global team of business-minded professionals who specialize in hotels, resorts, spas, casinos and mixed-used developments the world over. A respected industry veteran, he is frequently called upon by hospitality and business media outlets to provide insight into the redevelopment, renovation, and repositioning of hotels. A graduate of Cornell University, Roger has served as an appointed delegate for the White House Conference on Small Business, and is a member of ULI, YPO and ISHC. Mr. Hill can be contacted at 312-836-1111 or info@gettys.com Extended Bio...

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