Creating Financial Leadership in Your Hotel

The How to Versus the Want to

By David Lund Hospitality & Leadership Expert, The Hotel Financial Coach | February 26, 2017

The business of managing the hotel finances is not terribly technical or complicated. What makes it challenging is that it’s usually a very large job involving many people. In a 500-room hotel, you can easily have 20+ forecast contributors.  The communication system in the hotel is the key to both smooth management and predictive financial results. This is the how to.

If hotel finances are not a complicated matter, then why is it such a challenge in so many hotels? The answer lies in finding the want to. 

It’s not a big surprise to learn that most leaders in the hotel don’t naturally want to be managing numbers. They typically didn’t get into the hotel business with the idea that they would be business people with forecasts and budgets to run.  They’re “people people”; artists and creators. We all know the stories of how so many of us found our way to hospitality and fell in love. Most of your non-financial leaders landed in hospitality for a short stay and decided to move in. Now a few years later they find themselves in roles with responsibilities to get the numbers done and they don’t like it.

They Don’t Like it for a Few Reasons:

  1. They are often responsible for numbers that are created by someone else;
    someone who expects that leader to own the numbers their given. This never
    works. If you're cooking up the numbers in your hotel and giving them to
    your department managers and expecting them to own those, then stop! This is
    a complete waste of time as they will not take any ownership with these
    targets, they’re yours, not theirs. Know that these leaders are quietly
    thumbing their middle finger at you when you do this. You're placing a huge
    expectation on them and they don’t like it one little bit. Sure, you might
    get lip service but they do not appreciate this one little bit. What they
    really want is to create and be responsible for their own numbers.
  2. They don’t have a good financial communication system to use when dealing
    with the numbers. Non-financial leaders need a strong schedule and constant
    communication around the numbers. It needs to become part of the culture
    that the numbers are just as important as the guests and the colleagues.
    It’s not enough to publish daily reports and expect that the managers will
    read and use them. You need to have the numbers be an integral part of the
    daily communication system in the hotel. Not just arrivals and departures,
    vip’s, outlet hours and groups in house at your daily meetings. You need to
    shine a light on yesterday’s revenues, month to date revenues and the
    variance to forecast. Every day your leaders should know if we’re on track
    to make our top line and divisional revenues. If not, then how will they be
    able to react and adjust labor and spending to compensate and effect the
    flow? The finances need to become an integral part of your daily makeup.
    Exercise these muscles!
  3. They don’t take the time necessary to properly manage the numbers. Your
    leaders will always treat the numbers as second place or worse unless you
    show them that the numbers are just as important as the guests and their
    colleagues. How do you do that? Simple – make the numbers real and treat the
    leaders as adults who have financial power. Invite them into the captain’s
    lounge and show them the respect you have for their role. Be there and be
    supportive and helpful when things are not going well and be there to
    celebrate and encourage when times are good. We all know our business has
    ups and downs, its cyclical in nature so be the kind of leader who walks the
    talk and knows it’s not always easy for your leaders and you have respect
    for their challenges. This translates into, you need to invest in financial
    leadership. Just like service and engagement we are never done our work.
    There will always be mountains to climb.  How can we create the want to
    with hospitality financial leadership?

The want to do this in the three areas I identified is naturally low. Let’s be realistic for a moment and ask ourselves: “If they really wanted to manage their expenses and know how much they spent” they could figure it out. So how do we increase the want to? We do this by showing our leaders what is possible with good financial communication by investing in financial leadership in our hotel.  Leaders realize very quickly that it’s not so complicated, and mastering the numbers is 100% possible. Your leaders really want to be responsible for their numbers. I am going to tell you why they want to master their numbers, but first, a little story to reinforce the how to vs. want to distinction.

A couple of years ago, our daughter moved in with Johanne and I while we were living in San Francisco. She had finished university and had come to start her career and was staying with us until she got on her feet. One thing developed that we were not anticipating. She was a messy housekeeper and her room was often a disaster. I asked her several times to clean it up and somehow this just wasn’t working.  In this situation, it would never dawn on me to send her on a course to learn how to clean her room or by her the latest book on how to clean your room! She knows how to clean her room! So, what’s missing? Answer – she doesn’t want to clean her room. Period full stop. Doesn’t want to.  If I am going to have any impact on this situation I need to operate in the realm of increasing the want to. Once someone, anyone has an increase of “the want to, the how to is everywhere”. 

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.