Maximizing Hotel Profits Even While Renovating

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | December 07, 2014

Money never sleeps, and neither do hotels. It's often one of the biggest challenges faced by hoteliers: maintaining facilities to the standards expected by discerning guests, and determining how and when to upgrade those facilities without turning away or losing business.

Hotels need upgrades, but it's important to keep guests happy while major physical changes are occurring around them. Careful attention must be paid in facility upgrades, and hoteliers must minimise guest disruption and use renovations as an opportunity to refresh and maximise branding and revenue generating opportunities.

Some hoteliers may take the view that there is never a good time to renovate their property; it can result in a whole or partial closure of their business. Unfortunately, there is no way to avoid substantial property refreshers in the longer term if hoteliers want to ensure their property looks its best and caters to the expectations and desires of targeted guests. The question then for hoteliers considering an upgrade or renovation: total or partial?

To Close or Not to Close

Many hoteliers struggle to decide whether a total or partial renovation is best for their property given the likely short-term impact on revenues. A major factor in the renovation decision is whether or not short-term cash flows are needed. If that is the case, then a partial or staggered renovation is often the best course of action. Major hotel brands usually take this approach, whereby the whole property does not close and a level of operating revenues are maintained. However, if long-term revenue and profit generation-or even repositioning the hotel at a different service or star level-are the key motivators behind the property refresh, it would be best to close the whole property while the refresh is undertaken. A major re-opening of the property then elevates visibility and interest: similar to the project undertaken by the Savoy in London.

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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.