What Hotel Owners and General Managers Must Do to Endure in This Economy

By Steven Belmonte CEO, Vimana Franchise Systems LLC | January 12, 2010

Most of the industry assessment professionals are in agreement that the current cycle will be far worse than the last two downward cycles in the early 1990's and early 2000. Even those few (and may I add they are in the extreme minority) that still have some glimmer of hope coupled with some capital resources are now stepping back to take a second look at their business missions and future projections. It goes without saying that they are taking the safe road and waiting out the economic storm before proceeding with any development projects. When you are facing a decrease in the key numbers-meaning occupancy average daily rate and revenue per available room-there is very little to be done on the property level except to outperform your competition and contain costs. Unfortunately, many hotels play the rate game and I am sure that is exactly what will happen again, even though history proves that we are all collectively losers when that occurs and that it actually does very little to generate new business. Hoteliers must focus "literally" on stealing more business with value added services, guest service and product amenities. This is where hoteliers need to embrace the mantra, "out of chaos grows creativity" in order to get through these tough times. Here are a few examples hoteliers can employ to maintain a competitive status:

  • Stay ahead of the marketing curve by creating a strong presence in social networking sites. If you have a presence in the blog, Twitter, and Facebook sites, it shows the younger consumers that you have your finger on the pulse and are in-the-know of the latest technological and communication tools. Hoteliers should be showing off their properties and taking ownership of their local area as the hotel of their city. When consumers search for a certain city's name in Facebook, for example, your hotel's name should show up.
  • Research what local competitors are offering and one-up those promotions. Be bold and creative. Caribou Coffee nailed this on the head the other day after their competitor, Starbucks, announced they were going to stop brewing decaffeinated coffee in the afternoons. Caribou shot back with a promotion announcing that coffee drinkers deserved better and offered a free decaffeinated coffee on certain days during a limited time window. They took advantage of the market's affect on a direct competitor to win new consumers. I'm not stating that hoteliers should offer free nights but they should have their eyes open for unique attention-getting opportunities.
  • Engage your guests in word-of-mouth grassroots marketing techniques through customer rating sites such as Expedia, Orbitz, Travelocity, and Hotels. It's a no-brainer, that consumers have turned to the Internet for the inside-track information about properties and they are relying on the experiences of those who have already stayed at the hotels. Whereas good reviews are worth more than an elaborate ad in a national magazine, bad reviews are a guaranteed business killer.
  • Strengthen personalized service. In order to ensure good word-of-mouth recommendations, your property needs to offer top-notch customer service to guests.

Additionally, in these tough times hotel owners should really make sure they are capitalizing on all the resources that their franchise company has to offer. The stronger franchise companies certainly have the ability and wherewithal to help your property reach it's full potential, from regional marketing, IT tools, share funding for regional advertising, substantial discounts with state travel guides, AAA, and a host of other programs that will ensure your property is receiving it's fair share of business. Far too often, these tools are readily available but underutilized by property management.

Finally, it's easy to say that any good property operator is watching and modifying expenses whenever and wherever possible. My suggestion is that in this challenging economy, there is, simply no sacred cows. In other words, every line item expense on the P&L should be appropriately sent out for comparative bids. That includes long term vendors you may have had a relationship with including food vendors, insurance companies, printers, uniform companies, everything from soup to nuts. A good general manager will sit down and spend the necessary time to competitively shop each and every item. You may well be surprised in the marketplace today, how much money can actually be saved through this process providing it's done thoroughly.

Even though we are all in for some tough economic times that will bring about many challenges in our industry we each need to be creative to stay afloat and drive competition. Mark my words, in 2010 those who were creative and diligent will not only survive but will be noted as trendsetters in the new era of our industry. Every hotelier should have the expression "Out of Chaos Comes Creativity" etched on their desk.

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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.