Optimization: The Hotelier's Best Weapon Against an Uncertain Economy and Tight Labor Market

By Mark Heymann Chairman & CEO, Unifocus | March 10, 2019

The first quarter is already painting an interesting picture for 2019, with promising forecasts for growth in the hospitality industry tempered by the possibility of an economic recession by the end of the year. Here are just a few of the projections and points of view offered by experts that have contributed to this complex outlook:

  • Hotel occupancy is anticipated to continue to grow for the 10th consecutive year, achieving a fifth straight record level for the industry.
  • Restaurant sales closed strong in 2018, driving optimism that the momentum built will carry well into 2019.
  • Hospitality continues to face a tight labor market, with projected unemployment remaining mostly unchanged.
  • Wage pressure increases as more than 20 states raised the minimum wage, with the US hotel industry outpacing the nation in wage growth.
  • Factors such as climate change or "weaponization of travel" may affect hospitality in ways that are difficult to predict.
  • More than half of CFOs in the U.S. believe recession is likely by end of 2019 and Deloitte forecasts substantial slowing in economic growth in 2020.

These mixed projections mean the hospitality industry must accommodate short-term growth while planning for the possibility of a longer-term slowdown. It also must be flexible enough to respond to unexpected events, such as storms and other acts of nature or sudden downturns in tourism. And then there is the continued challenge of attracting and retaining talent in a low-unemployment environment. Put it all together, and the clear priority for hotel operators in 2019 is workforce optimization.

What Does it Really Mean to Optimize?

In simplest terms, optimization means consistently delivering against customer expectations to drive revenue, while managing costs to maximize profitability. Almost anyone can pursue a least-cost environment through cost cutting, but that approach is rarely optimal and usually results in compromises that hurt the business and brand. To truly optimize your operations, you must know your customer. And, you must focus your time, team, and budget on the specific things that keep them coming back.

That intent to return and recommend is the dependent variable in optimized performance, because achieving that level of customer satisfaction hinges on your workforce. All aspects of workforce performance-skills, attitude, availability, and timing-must be aligned if you are to meet the most important expectations of your customer. Because of this, employee engagement becomes a critical part of workforce optimization: In addition to knowing your customer, you have to understand your service giver's frame of mind and attitude when in the workplace.

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Coming up in June 2019...

Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.