Leveraging Spa Culture to Achieve Hotel Asset Management Objectives
By Kristi Dickinson Director of Spa & Wellness, Rancho Valencia Resort & Spa | August 18, 2019
The word culture has several definitions. In biology, it is an environment in which to grow something. In the arts, it is the manifestation of human intellectual achievement. In sociology, it is the customs, attitudes and behavior characteristic of a particular social group. These are all quite appropriate to a hospitality setting.
Think of the asset manager as the coach for the hotel; a catalyst for change. He or she has been given a vision from ownership, goals for the property, and will be held accountable to investors for specific deliverables. In the guest service-based hospitality industry, these plans will never be achieved without first influencing the people who will execute them. How can we use our most important asset, the people, to attain these objectives? Let's examine a few avenues.
Driving Key Performance Indicators
Purpose-driven companies attract and retain the best employees and are far more profitable and productive. Engaged employees connect better with their guests. They create a feeling for which guests will pay a premium and return often to experience. When you align staff with their purpose, the value of the property increases via the ability to drive rate and occupancy as well as the value of the brand and culture you have created.
Happy employees are more productive, waste less, and have more respect for equipment and grounds. For example, in a spa setting, a therapist richly immersed in the culture will offer to extend shifts to accommodate more appointments, build a repeat clientele and drive positive TripAdvisor reviews.
When a team member is committed to a property they will listen to their guests, identify latent demand and share ideas for new revenue streams. Deloitte research finds that "mission-driven" companies have 30 percent higher levels of innovation and 40 percent higher levels of retention.
The best ideas for generating efficiencies in operations will come from line employees as they work in these spaces every day. Oftentimes the solution to a facility challenge is much less expensive than a full replacement or renovation. Engaged employees are creative and will be committed to the success of the property, which often means patience with improvement timelines. Ask the team open-ended questions, talk about possibilities, identify obstructions and brainstorm solutions.
Owner-Management Company Relations
High emotional intelligence is critical in an asset manager as relationship management is the core of this role. The authors of Resonant Leadership, Richard Boyatzis and Annie McKee, outline the key social competencies of relationship management:
- Inspirational Leadership – guiding and motivating others with a compelling vision
- Influence – using a range of tactics for persuasion
- Developing Others – bolstering others' abilities through feedback and guidance
- Change Catalyst – initiation, managing, and leading in a new direction
- Conflict Management – resolving disagreements
- Building Bonds – cultivating and maintaining a web of relationships
- Teamwork and Collaboration – fostering cooperation and team building
You could not possibly write a better job description for an asset manager than the list above!
Relationships are critical in the hospitality industry at all levels. Culture is an amazing way to communicate the vision of ownership and ensure selection of a management company which aligns with their values. Re-focusing on common values can also help with dispute resolution when differences inevitably arise.
Maximize the Value of the Property
Culture is something that is incredibly difficult for competitors to replicate. Companies with strong cultures, such as Google, have a huge gap between balance-sheet equity and market capitalization. In that gap, lies the people.
Purpose-driven companies have been shown to drive an annual return on equity of 13.1 percent (9 percent higher than the S&P) according to Firms of Endearment – how world-class companies profit from passion and purpose. The book's tagline is "build a high-performance business on love (It can be done. We'll prove it.)" It is exciting that we are finally starting to quantify the value of the human to a business and shocking that this fact is often overlooked in valuing a hotel investment.
As a personal example from my current property, I have the good fortune of working with an amazing ownership group. When I began four years ago, I was given one task; improve morale. As we are an independent hotel, this essentially meant creating a culture. I decided to focus on a culture of positivity, pride in service excellence and the wellbeing of my team. In a very short amount of time morale certainly improved but so did many other areas. Guest satisfaction scores spiked, we earned our 5th star, Revenue per Available Treatment Hour grew at a 14% rate, and Profit increased 9 points. All of this in just over 3 years!
The spa department became a focal point for the resort as a result and significant capital investments shifted to our area. This energy created one constant positive feedback loop. All of these tremendous outcomes resulted through a simple strategy of culture first. So, you may ask, where do we start?
A Blueprint for Implementing a Strong Culture
The Culture Blueprint may be the most important type of blueprint an asset manager ever develops. It is also the title of a powerful book by Robert Richman (former Culture Strategist for Zappos.com) that has many lessons we can glean for our industry. Richman opens with:
"An engaged workforce is the golden ticket - driven employees who are passionate, active, constantly innovating, taking it to the next level, and owning projects as if the business was theirs. You win hearts and minds through influence."
He defines culture as a feeling. An experience that creates emotion. Richman encourages us to move away from the old command and control hierarchies (where emotional intelligence was not necessarily an essential skill in an asset manager) to a structure that is more inclusive and participatory.
He encourages us to ask questions of the team, i.e. "What would we do if we could do the impossible?" and "What is your biggest source of frustration?" This is often where the most opportunity lies. He also stresses that creating safety by announcing your intentions and helping the team see where they fit into the future is critical, as change is extremely difficult for most people.
The Seven Principles of Culture
These principles are the core of The Culture Blueprint, by following this framework, you will develop the strategy to align the people with the vision.
1. Culture is Co-Created - if people consciously create their reality together, it will produce a noticeable change in the feeling of belonging. People value that to which they contribute.
2. Share What You Want to Keep. What are they doing well? What is precious to us?
3. Culture Feeds on Culture –
a. Culture is the feeling created by people
b. People come together through relationships
c. Relationships are built through communication
d. Communication is made up of stories
e. Stories are made up of language
f. Thus, everyday language creates the feeling (use a language of possibilities no limitations)
g. The more you develop the language in the stories in the organization the more you strengthen the culture
4. Culture is Composed of Systems. In other words, it's what's invisible.
5. Culture is a Game. It must have goals and rules and keep score via feedback and the ability to opt in i.e. play.
6. The Story is Currency. It is a medium that contains value. It can be transmitted and exchanged.
7. The Secret to Innovation is to Create a Culture of Safety- make it okay to fail.
These principles also have great overlap with branding. Many is these stories can also be used externally for marketing purposes.
The Process of Transformation
Richman outlines that Potential turns into Action, which creates a Result, which creates the Belief that it is possible, which creates new Potential! This loop is the key to innovation.
For example, the asset manager might learn from a lobby attendant that he often sees guests walking in and out with coffee cups from a neighboring cafe. The lobby attendant suggests that a sundries shop be converted into a cafe. The asset manager examines the return on investment, presents it to ownership and the plan moves forward. The cafe is a huge success and even attracts more group business. The Potential was the idea from an employee for a new outlet, the Action was the renovation project, the Result was increased Food & Beverage spend and group contracts, this all created the Potential for more employees to share ideas because they observed a peer successfully contribute in this manner. The cycle continues and the property starts to truly transform.
Keys to Success
- Define the vision
- Include everyone in the conversation
- Honor the past and contributions thus far
- Communication of both wins and losses
- Measure success – teach KPIs and make direct connections between employee stories and business results
- Acknowledge efforts and express gratitude
Although culture may be more commonly thought of as the domain of human resources rather than traditionally finance focused asset management, it is absolutely critical that the importance not be overlooked. We humans are a delicate lot and we can make or break a developer's dream. When done well, with constant vigilance, the alignment of real estate goals with human purpose can be an undeniably remarkable achievement.
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