Tough Question Requires Equally Tough Answers
By Steven Belmonte CEO, Vimana Franchise Systems LLC | August 06, 2010
"Are product upgrades and renovations really needed during hard economic times?"
That's a question I used to get asked a lot. But, as always, things change-and, obviously, not for the better, at least economically speaking these days. And so the question has changed. In these almost unprecedented hard economic times, the question isn't so much whether a renovation is needed-rather, it's whether a renovation is, first, viable and, second, whether it's a smart thing to do.
This is a question you absolutely must ask yourself, especially in this incredibly tough financial environment. As for the answer … well, here's what I think: There are two answers to this crucial question-and they both add up to an emphatic "Yes!"
First of all, it doesn't matter whether you're operating in a recession or in the most robust economy imaginable. The fact is that if your hotel doesn't meet guest expectations, if it's inferior to other, similarly priced properties in your market-well then, you need to upgrade. In fact, if you think you're being fiscally responsible by not upgrading your hotel's public spaces and guestrooms right now, you're mistaken. Failing to renovate could lead to an irreversible decline in guest satisfaction and loyalty-and that scenario, obviously, will destroy your bottom line.
Here's another piece of advice for hotel owners and operators: It's crucial that you have in-depth knowledge of your property's competitive position in the market. You have to take a thoughtful-and brutally honest-look at the quality of your hotel. Ask yourself if the property meets the needs of today's increasingly demanding guest. How does your hotel compare with nearby (and perhaps much newer) properties? If your hotel isn't cutting the mustard quality-wise, its future-and yours-is looking very dim.
In short, you can't afford to defer upgrades because of the poor economy. To put it another way, you can't afford not to invest in an upgrade, regardless of the economy's strength (or lack of it). The truth is, your guests don't care if the economy is in bad shape, as long as your hotel is in good shape-and if it isn't, they won't be back.
Now because of the economic downturn and the resultant difficulty in getting a loan, you may be wondering how you could possibly afford to upgrade when business is down and cash-flow has been reduced to a trickle. One thing to consider is repositioning your product in the marketplace. Don't let your ego get in the way-there's nothing to be ashamed of in repositioning to a "lower" segment, and there are many economy-focused products available. It may be the right decision, one that keeps guest expectations in check while eliminating the need to invest what could be millions of dollars to upgrade in order to meet high expectations. Granted, this is not an easy choice: Your average daily rate will be negatively affected, but it may be your only viable alternative. After all, isn't it better to reposition to a lower tier than to have your guests dissatisfied because their expectations are not being met? Think about it.