Top Line vs. Bottom Line and the Effect on Market Share
By Mark Heymann Chairman & CEO, Unifocus | February 28, 2016
The hotel industry spends a great deal of money today promoting and attracting customers, with the intent to gain market share, increase total revenue and drive top-line performance. But with all the technology developed and time and energy expended on maximizing the top line, rate and even occupancy are still highly driven by a hotel's competitive market. Within a competitive city market, you won't find a hotel getting a dramatic increase in rate over its direct competitors unless its location is very unique.
While driving revenue will continue to be of primary importance, especially for the franchisor, operating CEOs also need to heighten their focus on driving results to the bottom line. To do so without sacrificing market share, however, requires keeping operating costs in line not only with financial goals but also with service delivery goals. The solution is to find the point at which intent to recommend and return remains high while creating a least-cost structure for service delivery.
The Technological Advantage
A bottom-line focus requires a hotel's operating team to have a level of skill comparable to that of their revenue managers. But while many revenue managers, both regional and on-site, use yield management systems to simplify complicated analyses and put sophisticated data at their fingertips, few operators take full advantage of the advanced technology available that can similarly help with cost and service performance optimization.
This is particularly true in the workforce management arena, where typically more money is spent on systems to manage and control food and beverage costs than on labor management. Yet labor cost ranges from 40 to 60 percent of a property's cost equation while food and beverage amounts to around 15 to 18 percent in relation to total property revenue.
Part of the problem lies in managers' continued reliance on Excel spreadsheets and basic time and attendance software systems to deliver the data they need to meet workforce and quality management needs. Neither Excel nor time and attendance tools are sufficient to handle the complex calculations that are necessary to optimize labor costs and quality service delivery. It may be simple to calculate the number of housekeepers needed based on occupied rooms, for instance, but that calculation becomes far more challenging for other operating departments when one is also considering customer service demand patterns, production economies of scale, and multiple indicators that impact total labor needs. To do so requires a full labor management system (LMS), of which time and attendance software is just one component.
Today's LMS technology enables far more sophisticated planning, scheduling and task management than even five years ago.