Creating a Small Hotel Operating Plan that Fits Your Objectives and Budget

By Jed Heller President, The Providence Group | October 28, 2008

Strong communications between an owner and general manager are vital to the success of any property. The general manager needs to share the owner's vision while clearly understanding business strategy, objectives, accountability and metrics for success. In many cases, the owner and general manager will have already developed a broad based business plan that documents the goals and objectives of the property. Once these goals and guidelines have been established, it is incumbent upon the general manager to create a detailed operating plan to fulfill the vision.

The operating plan acts as a highly detailed roadmap that outlines very specifically the course of action that will be taken to achieve stated objectives over an agreed upon period of time. In general terms, an effective operating plan explains in detail what needs to be done, when, how, and by whom - essentially, it defines how the hotel will be managed on a day-to-day basis and sets a standard for hotel employees. The operating plan also serves as an outline of the capital and expense requirements for daily operations.

For small hotels, a sound operating plan will help managers address inefficiencies, operate more productively, and be better prepared for unforeseen market situations, all of which directly impact the bottom line.

Creating the Plan

In developing the plan, managers should include measurable details, but not to the level that it may restrict creativity. It should be written in a manner that enables measurement of progress toward specific operational goals and objectives, and should be consistent with the overall strategic goals of the hotel.

A well thought out operating plan is flexible and must be readily adaptable to new situations. The operating plan should also include contingencies for best case, expected case, and worst case scenarios. Potential risks should be identified and the plan should describe how those potential risks can be mitigated. For instance, how will the hotel maintain a high level of customer service if one of its key employees leaves? What external resources are readily available that can quickly address severe maintenance problems, like heating or plumbing, that will allow you keep your guests satisfied? A well-executed operating plan helps managers maximize profit in high and low seasons, anticipate swings in business and plan for staff and resources accordingly, so that the customer experience remains consistent.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.