Jun 04

10 Questions to Ask Before The Next Travel Recession Strikes

Have you thought about the next travel recession or are you just enjoying the good times?

Get Your Contingency Plan Ready For a Crisis

We know the hotel business is cyclical, so why are we always surprised when it is upon us? How many hotel recessions have you been through? Personally, I have lost count.

While putting a contingency plan for hotels in place it may seem like a daunting task. However, the consequences of not having a plan in place can be devastating. You need to be ready for the inevitable whether the downturn is caused by a catastrophic event or self-inflicted by our insistence to keep building new product until our market is oversupplied. But we never are – we wait for the s**t to hit the fan, jump into reactive mode and make time-sensitive bad decisions with a short term perspective.

Sound familiar?

Contingency Planning for the “what if’s”

It should come as no surprise to you that there are tourism industry trends. We all know this “stuff happens”. Plan for the “what if’s”.

Make contingency planning part of the annual budget process or the next step after your budget has been approved.

Ask yourself what you would do if suddenly your hospitality business declined by 5%, 10%, 15%, etc.

This will happen as the result of normal tourism business cycles. Let’s say during the next great travel recession that you lose a major client and have a significant mix shift or new competition just opening at the start of a downturn. What will you do?

I can’t tell you how many times that has happened to one of our hotels. This could also involve a catastrophic event such as:

Terrorism attact
Fire
Hurricane
Public relations screw up
And many more

A Bottom Up Approach to Contingency Planning

Contingency planning must be a bottom up approach. Each department is asked to develop department contingency plans focusing on staffing levels (management & hourly), guest services, amenities, pricing, what are we giving away that needs to be eliminated.

Questions each department should consider:

10 Questions to Ask When Planning for a Travel Recession

How can we reduce our operating costs and maintain the same or similar operating margins?
Should we just cut costs across the board or are there areas where we should continue to spend? Cutting costs across the board is the easy answer and is often hurts the bottom line in the long term.
Should we cut direct sales and advertising expenses when we need them the most?
What service reductions will our customers understand due to the travel recession?
Do we continue to provide the extras to our loyal customers?
Can we treat our loyalty segment differently?
What concessions can we negotiate from our vendors?
What opportunity/alternative markets in the tourism industry could we solicit to fill the holes?
What is the right balance between prudent cost management and maintaining guest service levels that will pay long term dividends?
What is our recovery plan? Equally as important as the contingency plan.
How do we phase back in services and staffing?

Tip: Create Travel Recession Category Levels

Develop plans for the next travel recession in category levels similar to hurricane ratings, from level 1 to 5.

Category 1 means shelter in place with minimal disruptions and Category 5 means full scale evacuation.

Depending on Department Head experience levels there may be a need for some coaching prior to beginning the exercise.

Developing a Contingency Plan

Once the department plans are drafted for the next travel recession and recovery, Department Heads then present their draft plans to the Executive Committee for review and approval.

Consider having a joint staff meeting attended by all Department Heads so each department can get a sense of what others are considering during the tourism recession. Take advantage of cross department learning.

The Executive Committee focus is on consistent approaches across all departments and the right mix of cost management and guest services. Targets should be set by departments for acceptable department margins and acceptable guest services scores.

Recovery plans should have a similar focus. Department Heads then finalize their plans based on Executive Committee input. Don’t forget to address the Undistributed Expenses as these aren’t fixed costs – A&G, IT, S&M, HL&P, R&M – before you finalize your contingency plan.

How Often Should You Update your Contingency Plan?

Update your travel recession contingency plan on an annual basis – once you go through the initial process you will only need to tweak your plan based on more current information.

The key is to have a plan to effectively manage what you control regardless of market conditions and that includes everything down to the Gross Operating Profit line.

Plan to manage the plan implementation through weekly or monthly reviews. Tweak the plan as necessary and set aside some money to celebrate success.

Results of an Effective Travel Recession Plan

The end result of the bottoms up approach vs. a top down mandate will be a hotel crisis management plan with total buy in. Because you have done advance travel recession planning and aren’t being reactionary, additional benefits include:

Smoother execution
More effective results
Less impact on customers and staff
Less damage to brand/property integrity and a simpler and shorter recovery period

All stakeholders will be pleased that you have a contingency plan – your owners, your brand, your hotel team, and your customers. Everyone knows that “stuff happens” and your stakeholders will be thrilled that you handled things better than others during an travel recession.

Chuck is a Partner with Cayuga Hospitality consultants a network of independent consultants specializing in hospitality/lodging. He spent 32 years with Marriott International, beginning as an Assistant Restaurant Manager and worked his way up to Executive Vice President responsible for Marriott’s Caribbean/Latin America Region. Along the way he held positions as Director of Restaurants, Director of Marketing, Regional Director of Sales and Marketing, General Manager and Country Manager Australia. A graduate of the University of Hawaii, with a BS in Travel and Tourism Management. He is an active member of the Baptist Health South International Advisory Board and previously served as Chairman of the Caribbean Hotel and Airline Forum for the Caribbean Hotel and Tourism Association. He served with distinction in the US Army in Vietnam having earned a Purple Heart and Bronze Star for valor in combat.

Apr 30

8 Reasons Why Hotels Should Offer Valet Parking

If you are a hotel owner or manager you might be faced with a difficult question, should my hotel business offer valet parking?

It All Comes Down To Revenue, Revenue and Revenue

When reading the 8 reasons why your hotel should offer valet parking below, keep in mind that it all comes down to one thing, revenue.

Hotel revenue through your valet department can be a highly profitable part of your hotel that attracts additional customers and improves your customer satisfaction.

So, why should hotels have valet parking? The 8 benefits of valet in a hotel are:

Increased parking capacity for your hotel
Greater flexibility and control of your hotel’s garage and/or lot
Less stress about car accidents
Safer hotel environment
Better access and revenue for conferences, groups and meetings
Increased convenience for urban hotel customers
Extra service and capacity for airport hotel guests
Additional revenue for beach hotels

#1 Increase Parking Capacity with Valet

How does hotel parking work for an increase in capacity?

Valet parking can create a minimum 10-15% extra capacity in your existing lot by enabling you to stack cars one behind the other in parking spaces and to park cars in non-parking spaces.

If you’re looking for an even greater vehicle capacity, consider any nearby off-property space to park cars.

#2 Greater Flexibility and Control of Your Hotel’s Garage and/or Lot

For more efficient access to your guests’ cars, valet parking gives you greater flexibility and control of your garage or lot.

Consider the three examples below.

Long Term Vs. Short Term Guests

You can easily separate your hourly customers from your overnight guests based on demand, rather than having to designate specific areas for each.

Flexibility For Specific Situations

You have flexibility regarding where to park cars for specific situations, such as construction, periodic maintenance and cleaning.

When The Weather Turns Bad

In addition, if a storm is approaching, you can park cars where they will be the safest (even offsite if necessary). Don’t let vehicles get caught in a hail storm.

Before a snowstorm, if you park all your cars in one section of your lot you can more easily remove snow after the storm has passed by clearing the empty section, moving the cars and then clearing the rest of your lot.

#3 Less Stress About Accidents

With valet parking for your hospitality business you can restrict guest access to your lot so you no longer need to worry about guests falling or getting hit by other cars while walking through your lot.

You also do not have to worry about guests smashing into other cars with their cars.

#4 Safer Environment

Valet parking can provide a safer environment in two ways:

With restricted pedestrian access, there will be less worry about strangers roaming your lot and stealing from cars and other people (or worse)
You can also cut down on air pollution from guests sitting in their cars while their cars are idling

#5 Better Access and Revenue for Conferences, Groups and Meetings

For groups and meetings, you can park attendees’ cars together based on their group or meeting to enable easier access during the meeting and a quicker exit at the end.

You can also increase revenue by charging for valet parking at a reduced rate, rather than offering complimentary (free) parking, and still provide a group benefit.

More on pricing for valet parking below.

#6 Increased Convenience for Urban Hotel Customers

With valet parking, you can provide parking for your guests even if you do not have your own lot.

You can also increase revenue by promoting valet parking as a benefit for local customers who do not want to spend time driving around in search of a space or would rather wait inside your hotel instead of outside or in a garage when picking up their car.

#7 Extra Capacity and Services for Airport Hotel Guests

Valet parking enables you to increase your capacity for your hospitality business by using off-site lots for extra parking, plus provide a variety of extra services, including:

Curbside pickup of your guest’s car at the airport departure area and delivery to them at baggage claim upon their arrival
Park & fly or park, stay & fly for customers who will be away for an extended period or need to take an early flight
Provide a hotel car service for guests who would rather not use your van service but do not want to wait in a taxi line or get dirty looks from taxi or car service drivers

#8 Additional Revenue for Beach Hotels

For beachfront and nearby hotels, valet parking can provide the capability for you to offer combination parking/beach access packages to generate extra revenue during slow periods.

Valet parking staff can also help you control access of non-guests who try to use your hotel and beach without parking at your hotel.

Pricing – How Much Should a Hotel Charge for Valet Parking?

Attractive pricing for valet parking is critical to help increase your revenue, profit and customer satisfaction.

Two pricing keys to make valet parking work best:

Keep the incremental price of your valet parking vs. self-parking reasonable. Ideally, $5 or less above hourly self-parking options, $5/day above overnight and weekly self-parking rates.
Provide at least three or four hourly pricing options (0-2 hours, 3-4 hours, etc.) at prices competitive with nearby lots, net of the valet increment.

Do some number crunching to find out how profitable valet will be at your hotel.

Conclusion

After reading this article you now know of 8 reasons why hotel owners or managers should offer valet parking.

Again, it all comes back to revenue, and valet parking can become an extremely profitable part of your hotel’s operations.

Expanding your valet parking can help you increase your hotel’s parking revenue, profit and customer satisfaction, plus improve your operations, without major investment, especially if you have access to a third-party valet service or to temporary parking help (college students, etc.).

Mr. Van Allen served for 5-1/2 years as global leader for Non-Room Pricing for all Hilton brands, developing tools & processes globally for hotels to price non-room products and services, including food & beverage, meetings, parking and spas. Van Allen Associates provides marketing, pricing and business strategy to the hospitality industry. Van Allen Associates can also work with you in the way that is best for you, from up-front analysis, to recommending revised pricing, to ongoing tracking and price revisions. For more details and tools to help you revise your pricing to increase revenue, profit and customer satisfaction, go to www.vanallenassociates.com.

Apr 12

A Quarterback for the Digital Services Playbook

What do Superbowl champions and hospitality organizations have in common?

They both need:

Winning playbook to beat the competition
Great coaches to provide direction before during and after engagements
Quarterback to execute a winning plan in real time

The owners of both are the key to success.

1 Winning Playbook

A winning digital services playbook combines sales, marketing and revenue management to steal market share. Like Superbowl winners, the playbook is a dynamic document that continues to change. Team owners and coaches produce the strategy then players follow it.

It requires considerable thought and research. Developing a winning digital services playbook should be a major focus of hospitality owners and managers.

A digital marketing playbook must include events in the city, spend, organizational goals and timeline of offers. It should also anticipate market changes due to seasonality and competition. This playbook should be shared with players of vendors and revenue management as well.

2 Great Coaches

Hospitality digital marketing is complex. It involves a holistic strategy that combines website design and functionality, search marketing, social media and content marketing plus e-mail and campaign marketing. Typically, there are vendors that provide advice and guidance against data and systems in each of these areas.

Like Superbowl champion owners choosing coaches, hotel owners must make the right decisions about which vendors to partner with. Like the digital services playbook, putting together the best combination of vendors is an important task for owners. These coaches should be able to challenge the strategy and get the most of out of each of player.

3 A Great Quarterback

Executing real-time hospitality digital marketing in a changing market is hard. Like a winning quarterback, making the right play calls and timely adjustments is based on being able to read the situation. Keeping an eye on key performance indicators for digital marketing plus revenue management results is crucial.

There needs to be a digital marketing quarterback capable of making the right calls based on great coaching and a solid playbook. A quarterback doesn’t have to be right all the time. But they should be right enough to post a winning “score” for the owner.

Advice for Owners and Senior Managers

Spend time, effort and resources on digital marketing strategy. Ensure the strategy aligns with property assets, human and material.
Pick the right vendors and partners that fit the organization’s goals and are willing to work together.
Hire the best “quarterback” to develop and execute the digital services playbook.

About the Authors:

This is a joint article between Cayuga Hospitality Consultant members Bill Carroll and Stephanie Smith of Cogwheel Marketing. Bill is a former university football player and coach. Stephanie loves Hokie football.

Chris Breikss of Major Tom made the suggestion of having a good digital quarterback as a key to success during Cayuga Hospitality Consultants annual meeting and was the inspiration for this article.

Jan 30

The Art of Luxury in Hospitality

What is Luxury?

When thinking about luxury in hospitality, it helps first to define what luxury is. Luxurious experiences are often associated with premium-priced products or services. Luxury, therefore, is perceived as something that adds value to people’s lives via upgraded quality or service, normally in exchange for premium pricing. When saying people, we understand that each of us comes biologically outfitted with our own mind and personality.

As personality is a subjective characteristic of our individual being, it makes sense that different individuals will have different points of view about what constitutes a luxurious experience. Luxury should not be a necessity, however, worldviews tend to be misperceived in today’s day and age, where social media encourages us to compare the products and service experiences consumed by others.

Their shared experiences influence the opinions of others and therefore create new personal interpretations of what luxury is all about since we’re all driven by a strong sense of belonging. From the luxury service provider’s point of view, this can be problematic, but it also presents an opportunity.

Luxury is a Combination of Refined Service and Quality Product

Luxury is never determined by the physical product alone. Similarly, a product is never by itself innovative, but instead is the result of the combined effort of all inputs used. And so luxury always comes with its service sibling. Without a service component, luxury simply does not exist.

When it comes to luxury in hospitality, staying at a luxury hotel rather than a low-budget hotel will provide additional space, but without service, this satisfaction will only be temporary. Without any type of service component, a luxurious experience cannot exist.

The Evolution of Luxury

The meaning of luxury is constantly evolving. To clarify, let’s consider the past 100 years:

At the beginning of the 20^th century – around the 1920’s – luxury was related to the product; be it hats, gloves, shoes or independent luxury hotels. These quality premium products and services consisted of the craftsmanship and quality of materials employed in the production process and also the level of service provided through a great number of dedicated employees.

Over the following decades – around the 1950’s – single products became easily-identified and synonymous with luxury brands. An established brand name became a source of competitive advantage, and albeit not always providing the highest-quality product (thus making it difficult for new market entrants to succeed), they were associated with luxury due to customer perceptions and past experiences.

What we can take away from this is that brands have long understood how to leverage their reputation by charging premium prices on their products. This phenomena not only explains why today’s premium brands are still resting on their laurels from the past but also how lethargic – or creature of habit – consumer behavior is enabling brands that resist change to continue to hold on in “survival mode”.

Luxury is an Experience

The turn of the century introduced a new phase in the luxury service evolution with the arrival of the “millennial” consumer. Combined with the internet revolution we have witnessed, brands have struggled to transition from “simply” delivering a product to now being forced to provide new customer experiences.

Strategies have changed and companies are adapting. Alone over the past decade, we have seen the sharing community post daily activities and experiences, be it around travel, meals, or simply the sharing and allowing for followers to participate in insignificant daily routine happenings. Living new experiences is the luxury of the 21^st century.

Brands are coming to an understanding that they have to learn what new market segments expect, and they’re learning fast. A new way of learning today lies in gathering information and making sense of data provided to us through social media channels. New algorithms and artificial intelligence (AI) help us to filter through seemingly endless amounts of data. This is why today it is not unusual for brands to follow their customers on social media channels such as Instagram and Facebook to learn about their likes and dislikes as it pertains to creating new experiences.

Coming Full Circle – The People Factor

Luxury is all about experiences and experiences stem from service. So how then do we innovate and provide new experiences and create luxury in the hospitality service industry?

Similarly to products, service excellence requires key inputs such as energy, competency, and skills, which when applied, lead to unique new customer experiences. Service innovation must find its inspiration and source in the human touch.

Service excellence is not merely a competency, but mainly a mindset – a luxury mindset, to be precise. It’is when we strive for service excellence and perfection that we achieve the desired luxury experience. This requires a concentration on customer needs – knowing your customers, being interested and curious about them, and displaying passion and compassion in delivering uncompromising service and perfection. Finally, interest and curiosity are obtained from thoughts. Thoughts lead to ideas, stemming from individual minds so luxury service innovation is the effect of a mutual mindset in action. This is what we call the luxury mindset.

Luxury Experience is Key to Competitive Advantage

It is this uncompromising attitude or mindset, which is the key to competitive advantage. Successful operations are already taking advantage of this fact and it is, therefore, no surprise that the most effective companies today find their main source of competitive advantage in the people they employ. These companies go to great lengths to develop employee induction programs and place their employees at the center of their operations. Their credo is “Hire for attitude (mindset), train for skills.” For now, it will be these enterprises that will maintain a competitive advantage by shutting out the egos that ever so often distort focus and attention.

Finally, rapid growth in tourism over the coming years is expected to create a demand for the development of future leaders. This provides a unique opportunity for hospitality schools to position themselves with highly specialized segments, especially that of the high-end luxury industry. Having witnessed massive changes in technology, product, and service innovation, daily financial transparency of operations, big data inundation and highly specialized millennials will require an even greater adaptability and preparation.

It seems as though yesterday’s success model becomes outdated as early as tomorrow, and so frequent challenging of management, operations, and the status quo shall remain one of the key pillars of organizational success to ensure that we are still aligned with customer expectations, mastering change and a successful adaptation of tomorrow’s world of affairs.

About the Author:

Frank Schuetzendorf is the founder of Pariscape Consulting, based in Paris, France, and a senior lecturer in food and beverage at Ecole Hoteliere de Lausanne (EHL.) Frank built his 25-year career as an F&B professional in the luxury hotel market, working across Asia, North America and EMEA for Hilton International, Four Seasons, Dorchester Collection, Shangri-La, Althoff Hotels and Alain Ducasse Paris. Today his firm focuses on the translation of European standards and style of service into international destinations with a contemporary application. He is also a visiting lecturer at ESSEC Business School in Paris.

Apr 11

What the Millennial told me about Hotels…Dude!

The other day my daughter got married. She is a millennial; her younger sister is a millennial; her older two sisters are Gen X’rs. I, personally, am a Boomer, as is my lovely wife. Given those facts, I am qualified to 1) comment on living with five women the better part of my life, and 2) share some insight on firsthand knowledge of Millennials mindset and how that is causing my beloved hotel industry to lose their collective minds.

You see, sales and marketing is not just about setting and meeting cold call quotas, defining room night and RevPAR goals, working on rate parities and exacting revenue management strategies. None of those will work if you don’t understand your customer.

When it comes to marketing to millennial hotel guests, first we need to review some data, that frankly, may be surprising, even to those who have parsed it with a hospitality fine tooth comb:

From The Brookings Institution:

Millennials are the most educated generation in history.
33% of Millennial men are college educated, 39% of women are…
Largest % Millennial cities in the U.S., Boston, Madison, San Jose, San Francisco, Washington D.C., Harford, New York, Raleigh, Minneapolis-St. Paul, and Denver.
Minneapolis –St. Paul and Denver have larger shares of Millennials than Seattle and Austin.
And a comment from the study about just where Millennials live: “They also appear to be attracted to metros with more vibrant arts and culture scenes…and employed in areas where a large share of the workforce is employed in music, arts, writing, design, media, high tech and entertainment occupations.”

Duh.

From the L.A. Times, some insight on millennial travelers:

“Some surprising insights from their survey of millennials, when the specter of Airbnb looms…” for all trips:
- 35% prefer ‘upscale and luxury hotels’
- 33% prefer camping
- 23% short-term rentals or condo’s
- 70% prefer booking on a travel website, of those,
- 47% Book direct with a hotel or airline
- 23% book with a “real life” agent.
The less human interaction, the better. (We text, we don’t talk…)
When I am checking in, a kiosk is fine, or better yet, let me open the room door with my phone. “I am sure all your hotel front desk people are nice, but I know my mission, and who I want to talk to.”

And, from Malcolm Harris’ book: “Kids These Days: Human Capital and the Making of Millennials”:

‘Most educated generation, with very little payoff…’ Millennials carry the most burden of the nation’s $1.4 trillion, (with a T), student loan debt.
Millennials unemployment rate is double the national average.
Millennials earn 20% less than Generation X.
Millennials face a higher level of diagnosed depression than any other generation.

Oh yeah, and the historic backdrop behind your smug derision of my peculiar social media focus was; Columbine, 9/11, AIDS, the largest divorce rate in history, and the greatest financial crisis since the Great Depression.

So, get off my back, I need to Snap a happy-dog-faced-selfie-for-my-sanity.

OK, well, here is my highly unscientific research. Millennials are really smart. Millennials are more focused on what matters in life. Millennials will pay a lot of money for real, meaningful experience. Millennials plan like crazy for things that matter. Typically, millennials will do everything in life, later than we did, like: buy a home, get married, financially plan, have a baby—until those things are “just so” and lined up logically with an engaged life, milestones can wait.

Millennials work their xxx off when inspired, when something matters, when they are engaged and not derided. They are quirky. They have tattoos. And nose rings, and stuff like that. They are sweet and sentimental when you dive below the surface. They are anxious about the planet. Half my daughter’s closest High School friends joined the Peace Corps. They don’t get racism. They are spiritual, but don’t go to church. They do Yoga. They have class.

So, what about the knee-jerk, data-driven, hyper-focus of the lodging industry? You mean the Moxy-Tru-TRYP-Aloft-EMC2-Red-Virgin-Canopy-Centric-Boutique-Lifestyle-Authentic juggernaut?

Yeah, that.

To the hotel industry; a couple of anecdotes; When I told my daughters that Marriott was taking the desks out of Full-Service hotel rooms, (since corrected), they said, “What do they think we do, sit on the bed and text all day?! We need a place to work!” And when presented with an unnamed new “brand” of hotel with them in mind, a Millennial said; “Look, if I wanted to live in a dorm room, I’d go back to college, and frankly, I don’t just sidle up to anybody in a giant romper room with garish colors and a lot of electrical outlets…”

And, finally back to the wedding. We held our social events in my new favorite hotel in Detroit, “The Foundation”; 100-year-old firehouse, 100 rooms, dramatic F&B open kitchen space, another mind-blowing Aparium conversion. These Millennials paid north of $200 dollars a night and loved it. The staff was authentic, friendly, down to earth, with perfection in cocktails, food, and service. They also had pride, and tattoos, and nose rings and gorgeous hair.

As a hotel sales and marketing consultant, I ask, “What defines a great hotel for any generation?” Genuine humility in service, impeccable cleanliness, creative thoughtful design, authentic knowledge of your neighborhood, and the guest, who is the purpose of our enterprise, our livelihood, and why we love hotels.

About the Author:

Haydn Kramer is expert in sales & marketing and sales management. From “on the ground” direct sales with Residence Inn by Marriott to an Executive VP of Sales, Haydn has experienced a range of sales assignments across many brands and all lodging tiers. He was a pivotal member of Marriott’s “Sales 2000” task force that reinvented Marriott’s approach to “Sales” worldwide. Haydn was also entrusted with directing first “Large Market Sales Team,” which cross-sold all Marriott’s brands for the first time. He is disciplined and forgets no details, but is known to have fun while helping teams achieve sales success. He is an expert in the sales call process, true sales persistence, and the new advent of Social Media as a critical part of any effective hotel sales platform. He has consulted for Marriott, Hyatt, Hilton and several boutique, independent luxury properties across the United States.

Mar 12

Why Do You Need a Hotel Quality Assurance Audit?

Why Hire a Hotel Quality Assurance Consultant?

The first question is why? Why do we need a Hotel Quality Assurance Audit? Don’t we know how our hotel operation is performing? Our customers complete our guest satisfaction reviews and we compile the data. We speak to our customers every day and they aren’t shy about telling us what works and what doesn’t. TripAdvisor and other social media sites provide us with daily feedback.

All this is true, but it isn’t always a good idea to grade your own paper – especially if you want the real answer. Often guest satisfaction reviews, social media posts and direct customer feedback is like listening to the loud voices and missing the overall opinion.

Customers who fill in your surveys or take the time to give you direct feedback are often the customers who had a particularly bad or good experience. Of course this allows you to address a specific customer issue, solve a problem and/or reward your staff for a job well done. But are you really getting the feedback you need from your everyday customer?

An objective, non-biased third party perspective will provide the candor you need to take your operation to the next level. Or the competitive environment is changing and you need to adapt. Or you may be launching a new product or service and you want to focus on specific issues.

A hotel quality assurance audit will provide a wealth of information you may only be guessing at or it may simply confirm your direction. Yes, there is a cost involved, but if you are truly open to candid feedback and willing to put the effort into the follow up it is worth the investment. Just remember it is your responsibility to use the information and get the return.

Determining Who To Hire to Perform Your Hotel Quality Audit

The next question is who? Who does this kind of work and how much will it cost me. If you Google hotel quality assurance audits you will get a list of providers who all have glowing things to say about themselves – “mystery shopping data delivers hotel operations with precise feedback”, “customer experience measurement that helps you identify and measure the moments of truth”, “we will be your eyes and ears to ensure your service delivery matches your brand promise”, “a concise audit consisting of over 1000 touch points”, and so forth.

These services provide an objective point in time front of house guest perspective that is typically data focused. You have the responsibility to analyze the data, develop appropriate action plans and execute your plan – similar to what you do every day, but now you have additional data. The typical price range for a one-time inspection of this type of service is from approximately $600 to $1800 depending on the size and complexity of your operation. However, the real value of this service is in frequent inspections that allow you to measure progress over time against an established baseline.

If the thought of analyzing data from over 1000 touch points seems a little daunting, there are also services that are conducted by hotel industry professionals that provide both a front of house guest perspective and a back of house employee perspective. In addition to the quality assurance review, these services typically include an operations analysis of your property’s operations strengths and opportunities, probable root cause and recommended solutions. In other words, rather than provide a data-focused checklist that requires your analysis, these services take it a step further assisting with the analysis and defining solutions.

This is possible because a hotel industry professional is conducting the review and analysis rather than “Joe Guest” completing the Mystery Shopping Checklist. Obviously, this alternative is more expensive and pricing is dependent on the size and complexity of your operation and the scope of the review you agree to. Pricing can be more reasonable if you agree up front to contract with the firm to assist you with the ongoing execution of your improvement plan.

Thoroughly confused? It isn’t really as complicated as it may sound. A little time on the various provider websites and some phone calls will clear things up. Most providers will want to thoroughly qualify your needs and expectations before proposing a service and pricing. The services are typically customizable and providers have an interest in delivering what you want the first time in hopes of developing a longer term relationship. The key is to determine what works best for your property and your current situation.

If you’re considering hiring a hotel quality audit consultant, contact Cayuga Hospitality Consultants today. We can answer any questions that you may have!

About the Author:

Chuck Kelley is a Partner with Cayuga Hospitality Consultants a network of independent consultants specializing in hospitality/lodging. He spent 32 years with Marriott International, beginning as an Assistant Restaurant Manager and worked his way up to Executive Vice President responsible for Marriott’s Caribbean/Latin America Region. Along the way he held positions as Director of Restaurants, Director of Marketing, Regional Director of Sales and Marketing, General Manager and Country Manager Australia. A graduate of the University of Hawaii, with a BS in Travel and Tourism Management. He is an active member of the Baptist Health South International Advisory Board and previously served as Chairman of the Caribbean Hotel and Airline Forum for the Caribbean Hotel and Tourism Association. He served with distinction in the US Army in Vietnam having earned a Purple Heart and Bronze Star for valor in combat.

Mar 05

Brush & Co. Lodging Notes and Random Thoughts – March 2018

March is certainly coming in like a lion – weather “events”across the nation – although here in South Florida we seem to be enjoying an early Spring.

Hopefully your positive expectations for 2018 will be fulfilled – and surpassed – and you will find a real pot o’gold!

More From The Not-Quite-Crystal-Clear Ball

” U.S. Hotel Industry to Sustain Modest Growth in 2018” according to Zacks Equity Research as reported in Zacks.com. Consistent with the projections from STR, CBRE and PwC, the article indicates that “Despite the prevailing challenges such as unfavorable government policies, uncertainty in specific markets and RevPAR pressure, economic fundamentals appear strong enough to support modest growth in the hotel space in the short-to-medium term, and without any additional stimulus.”

Hotstats.com reports for ” January 2018: RevPAR Grows But Profit Slips for Hotels in the USA“. Profit per room dropped by 0.5% in spite of an increase in revenues as RevPAR grew by 0.6 percent due to increases in both occupancy and ADR.

” CBRE: Supply Growth to Peak in 2018” as reported in Hotel Business. In the recently released March 2018 edition of Hotel Horizons, CBRE Hotels’ Americas Research “is forecasting the net addition of approximately 101,000 rooms to the U.S. lodging supply inventory during 2018, an increase of 2% over 2017 average annual daily supply. This is the largest number of new rooms to enter the market since the 130,000 rooms that came on in 2009.”

Lodging Econometrics in an article in Hotel Business on the ” U.S. Hotel construction Pipeline – Present & Future ” says that 975 hotels/116,838 rooms opened in 2017, a supply growth rate of 2.3% and estimates that 1,145 projects/130,209 rooms will open in 2018, a supply growth rate of 2.5% and an increase of 17% in the number of projects. Upper Midscale hotels represent 47% of the pipeline while Upscale represents another 32%.

” Nationalism is a threat to hotel industry says Marriott’s CEO “. In an interview with BBC journalist Tanya Beckett backstage at IHIF in Berlin, Arne Sorenson, referencing the Brexit vote, Donald Trump’s election and a swing in opinion against immigration in many countries, said: “The risk for us in the travel business is that even though travel is different than immigration, if people aren’t careful about the way they talk about it, they seem to be the same issue.”

Suzanne R. Mellen, Senior Managing Director and Practice Leader of HVS Consulting and Valuation, article ” Impact of Countervailing Forces on Hotel Values and Cap Rates “indicates that “After more than five years of relative stability, new factors are at play in the hotel investment market that will affect hotel capitalization rates and values in a changing economic landscape. Hotel sales transaction activity declined in 2017, while cap rates continue to rise modestly, and hotel values held stable. The outlook for 2018, while uncertain because of the changing political and economic landscape, is more positive than a year ago due to the tax reform’s favorable treatment of commercial real estate and a more optimistic business environment.”

Brookfield Asset Management Inc., Canada’s largest alternative asset manager (and the 2014 buyer of Thayer Lodging Group, Inc. which makes it a player in the hospitality industry) said in an article in Bloomberg – ” Brookfield Selling Assets to Build War Chest for Next Downturn” – that “We see no signs of underlying economic issues, despite the U.S. economy being nine years into this expansion. While this economic cycle shows no immediate signs of ending, it is clearly in its mid- to later-stages of an elongated expansion, and so we are being cautious, preparing for less robust times.” Cause for caution includes equity markets hitting record highs, government bonds historically expensive, corporate and high-yield spreads at record lows, and “bitcoinmania” taking hold, creating a market capitalization of $500 billion with “as far as we can tell, zero intrinsic value.”

_______________________

Branding/Un-branding/Collecting

Hotel Owners and Brands need to work together, but it’s not always a happy combination. A lot depends on who holds the most “cards” in any relationship. An article based on comments at the IHIF in Berlin entitled ” Hotel owners increase demands on brands ” is a look at current thinking. “As costs increase and the price of assets rise, brands must work with owners to increase efficiency and productivity. And while hotel owners remained committed to the global flags, they are still insisting on more transparency and greater emphasis on the contribution of F&B and non-rooms income.”

Brand Finance’s annual report on the most valuable hotel brands “Hotels 50 2018” lists Hilton as the most valuable hotel brand, but down 24% from last year while Marriott is listed second but up 8% while Hyatt, at third, dropped 13%. Top 5 largest positive changes in value include Jinjiang (+71%), Quality (+54%), Melia (+52%), Comfort Inn (+41%) and SpringHill (+40%). The bottom 5 value changes are: Hilton (-24%), Crown (-26%), Novotel (-26%), Four Points (-35%) and Sheraton (-50%). “The report goes on to also rank the 10 “Strongest” brands

Carlson Rezidor Hotel Group is now Radisson Hotel Group and John Kidd, the new CEO says “Carlson has a different future now as Radisson Hotel Group ” as reported in Hotel Management. At the same time Hotel Business reports that ” Radisson Ups the Ante With New Collection, Loyalty Refresh “. The Radisson Collection – which replaces “Quorvus Collection” – is “a premium collection of hotels in landmark locations” bringing together “the most distinctive hotels in the Radisson Hotel Group portfolio, with 14 hotels confirmed to join the collection following the launch” this summer. This collection joins the “Luxury Collection” (Starwood/Marriott), “Autograph Collection” (Marriott), “Ascend Collection” (Choice), Curio (a Collection by Hilton), and, I assume, forthcoming “collections” from all brands that don’t yet have one.

Collections are an attempt by chains to bring into the fold properties that really don’t fit their prototypes for existing brands. The other approach for some unique properties means going “independent” and associating with groups such as Preferred Hotels. Jena Tesse Fox reports in Hotel Management that ” Deflagged hotels a boon for Preferred Hotels & Resorts“. Growing numbers of independents are “a sign of the growing strength and acceptance of independent hotels by the traveling public, and their appeal to owners” according to Philipp Weghmann, EVP of Europe for Preferred.

HotelNewsNow in an article by Sean McCracken says “Independent hotels enjoying a strong transaction market” as more and more traditional lenders and hotel investors view them as viable and perhaps even desirable targets. Data from STR shows 125 independent properties were sold in the U.S. in 2017, including the $515 million Pacific Beach Hotel Waikiki (839 rooms at over $600,000 per room). On a per room basis was the 80-room Hotel Yountville at $1.2 million per key. “Through the course of the year, independent hotels should for an average per-room price of $202,000, which as more than the average for branded upper-upscale properties ($190,000) but less than half that seen for luxury branded hotels ($423,000)

_______________________

Airbnb

Airbnb continues to morph. Skift report that “ Airbnb is Set to Launch a New Tier of Select Properties “. Airbnb Select is a program in which selected hosts with high ratings and reviews can be part of a curated collection of listings that undergo an inspection and professional photography process as long as they meet a lengthy checklist of requirements for particular amenities and safety features. The listings will show up more prominently and they may be able to raise their rates.

Getting closer to being hotels???? Another change – ” Airbnb does the inevitable: Invites more hotels to platform “. As reported in an article in Hotels, Airbnb’s announced independent-minded hotels that meet standards can list their rooms on the Airbnb platform. Add this to last year’s article in Skift “ Airbnb Experiments with Hotel-like Concept Outside Orlando “. Airbnd will partner with a real estate developer on an apartment building – “Niido powered by Airbnb” – that will allow residents to share their apartment for up to 180 days each year.

_______________________

This n’ That

As an industry, tourism in its many forms uses a large number of immigrant workers, some are illegal whether the employer knows it or not but most are currently legal under one form or another. Many of the legal workers may lose their status as TPS (Temporary Protected Status) is being revoked for some. There are currently 300,000 foreign nationals with the largest numbers from El Salvador (195,000), Honduras (57,000) and Haiti (55,000). The Center for Migration Studies of New York estimates 81 percent of the over 32,000 Haitians with TPS in Florida are in the state’s workforce and may need to be replaced. There is already upward pressure on wages and replacing the lowest level employees will only get more difficult/costly.

The AHLEF has launched a pilot program to offer degree programs that employees for ten hotel companies participating will be able to pursue higher education at no cost to the employee – certainly a “benefit” for many. I was originally drawn into the teaching by one of my college professors who was building a program to allow current industry employees to work toward their Bachelor’s degree while still working full time. Classes were held in various hotels here in South Florida and the hotel got a complimentary class for one by providing a classroom. I hope that the AHLEF program succeeds and grows.

The telephone department has already lost its status as a line item on the P&L summary and recently Robert Mandelbaum, Director of Research Information Services for CBRE Hotels’ Americas Research has penned an article “Other Operated Departments Become Even More Minor” He points out that guests’ use of their own devices has resulted (between 2010 and 2016) in a decline in revenues from both telecommunications and movie rentals of over 50 percent while profits dropped by over 60 percent. Guest laundry and valet revenue has declined by over 14 percent while profits dropped over 40 percent.

Most of us believe that the hospitality industry is a great place to work and Fortune magazine has listed the best companies to work for. “Five Hotel Companies Among Fortunre’s 100 Best Companies to Work For“ include Kimpton, Hyatt, Hilton, Marriott and Four Seasons. In another grouping “Five Hotel Companies Among Fast Company’s Most Innovative“. Top Ten results for Graduate Hotels (Travel), Best Western (augmented reality/virtual reality), Marriott (design), Hilton (wellness), and Equinox Hotels (wellness). There does seem to be a list for everyone.

The prolific hospitality industry pundit Stanley Turkel has written the 192^ndinstallment of his series “Nobody Asked Me, But . . . No. 192; Hotel History: The Negro Motorist Green Book” which was published from 1936 through 1966. The article, in Hotel Online, explained that it enabled the black traveler to travel when “faced (with) a swamp of Jim Crow laws and racist attitudes which made travel difficult and sometimes dangerous.” I remember speaking with an older (older than me at least) gentleman who recalled (with embarrassment) a time in the 1950’s when as manager of a Howard Johnson’s restaurant in Savannah, he was required to refuse service to a black couple. It is not that long ago.

About the Author:

Scott Brush is a former member of Cayuga Hospitality Consultants.

Mar 01

Cayuga Hospitality Consultants Announces New Services Division – Hotel Quality Assurance and Hotel Operations Analysis

With each of our consulting professionals possessing an average of 30 years of hands-on experience, Cayuga Hospitality Consultants excels in providing owners, operators and lenders expert insight and guidance through its new Hotel Quality Assurance and Hotel Operations Analysis programs.

The first question many will ask is simply “why do I need this type of service,” and the answer is for several reasons. You may think you gather all the customer satisfaction data from your internal surveys, from TripAdvisor and other social media. However, this information can be less than objective as the respondents may have personal reasons for completing the surveys or commenting in the public eye.

In addition, new competition may have recently entered the market, if so, the competitive environment has changed and you need an objective opinion on how this may have changed your position. You may be launching a new product or service and need a quick read on how it is perceived. And perhaps most importantly, the Hotel Operations Analysis will provide a professional opinion on service delivery from an employee or back of house perspective – something a standard quality assurance audit does not include.

Most Hotel Quality Assurance audits are performed using a standardized checklist and completed by hired hands often with little or no actual hotel experience. A guest centric view can be helpful, but operator results are presented in data format and usually just for public areas and guest rooms.

Using experienced hotel operations professionals in a mystery shopper role measures the entire landscape of customer service, employee performance, organizational perspectives, cleanliness, operational evaluation and post-stay engagement.

Cayuga’s Hotel Operations Analysis goes beyond a simple worksheet account of a single visit, our consultant’s focus identifies not just front-end issues and successes, it also explores back-end root causes to challenges and strategizes a plan to help owners and operators fix their breakdowns in service and facilities.

Division chair, Chuck Kelley, noted that, “A number of the calls that I receive looking for hotel operations evaluations are from owners and operators seeking help in figuring out what to do with a traditional data based report.” From there he determined that a void existed in the market, and working with several of the Cayuga Consultants created this new division that he says, “Offers an expert and thorough front- and back-of-house assessment, and also qualified recommendations that will make a difference.”

With a Cayuga Hospitality Consultant’s Hotel Quality Assurance findings report and Hotel Operations Analysis, our professionals complete their assignment with a webinar for clients to review their findings and recommendations and assist with developing next steps to promote sustainable improvement.

Cayuga’s consultants have performed in executive roles in all tiers within the hotel industry from select service to luxury full service. Every Hotel Quality Assurance and Hotel Operations Analysis assignment is tailored to meet the unique needs of each hotel and managed to work within a client’s specific budget requirements.

For more information on H otel Quality Assurance and Hotel Operations Analysis or to present your complex challenge requiring an expert hospitality consultant or team of professionals, contact Chuck Kelley HERE or call 866.386.4020.

Nov 21

Should the Mix of OTA Room Nights Be…?

What Should the Mix of OTA Room Nights Be…?*

Response to the battle cry “lower the OTA percentage of room night mix” may reduce EBITDA.

Ultimately, improving EBITDA through shifts in channel mix is based on a holistic analysis and execution of total integrated channel mix strategy over time. The shift must be augmented with sales and marketing actions and associated costs to achieve it and sustain EBITDA. To illustrate this point, we developed a simple EBITDA impact model for OTA and non-OTA channel mix shifts. The model is based on a 200-room, limited-service property with 70% occupancy and aggregate ADR of $100.

A simplistic (and potentially misleading) evaluation of decreased OTA room night mix impact is a reduction in OTA room nights (e.g., 1/3) replaced with non-OTA room nights. This evaluation predicts a substantial (e.g., a 10%) increase in EBITDA. Missing from the evaluation is how much it may cost to replace foregone OTA room nights with non-OTA room nights to sustain occupancy. And, can the shift be achieved with positive EBITDA improvement, given increases in marketing and sales expense to achieve it? In effect, some or all foregone OTA bookings must be replaced and there is some EBITDA neutral upper threshold sales and marketing expense level (e.g., 17%) to achieve it.

The answer to that question is complicated in general and even more complex for any one property. It is also complicated by the interplay of property-level billboard and dilution effects.

The billboard effect is the impact display in OTA sites has on driving incremental transactions through hotel direct channels such as the reservation center and the brand website by being displayed, but not booked, in OTA websites. In effect, the prominent presence in OTA display acts like a search engine, where the consumer views the OTA site but ultimately books directly with the property. There is ample published research to suggest that there is such an effect**. The dilution effect is the diversion of transactions from a property that would have been booked through hotel direct channels but instead are booked in OTA channels.

We developed an EBITDA model to evaluate the interplay of various possible billboard and dilution levels effects to illustrate how those impacts change the results for various levels of increase and decrease in the mix of OTA transactions. To illustrate this point, we developed a simple EBITDA impact model for OTA and non-OTA channel mix shifts. The model is based on a 200-room, limited-service property with 70% occupancy and aggregate ADR of $100.

See the table below for impacts of a 1/3 reduction and increase of OTA room night mix on EBITA, sales and marketing expenses and chain costs, (i.e., to achieve EBITA neutrality) when various billboard and dilution effects where present. For example, the model showed that:

The number and percentage increase in non-OTA room nights can be much greater with, for example, a 33% reduction in OTA room nights when a property-level billboard effect is substantial (e.g., one non-OTA booking for every two OTA bookings foregone) and even greater with a relatively low dilution effect (e.g., 10% increase in non-OTA diluted room nights for each foregone OTA room night). Depending on values for these effects, a required level of non-OTA room night replacement can be substantial (e.g., nearly 40% greater). As well, the EBITDA neutral threshold percentage level for increased marketing and sales expense growth can be much lower (e.g., 4.5% versus 8.5%) before EBITDA gains would be fully offset.
A major EBITDA loss risks exist if there is a substantial billboard effect relative to a dilution effect and foregone OTA room nights are not replaced. In this case, the impact on EBITDA can be substantial and negative (e.g., an 8% percent reduction).
Alternatively, that same 33% reduction in OTA room nights could be achieved with a slightly larger increase in non-OTA bookings (e.g., 13.5% versus 19.7%) and with a much higher EBITDA neutral threshold for a marketing and sales expense (e.g., 9.0% versus 4.5%), if the billboard effect was slight (e.g., one non-OTA booking lost for 4 OTA bookings foregone) and the dilution effect was significant (e.g., a 30%increase in bookings made direct for each OTA booking foregone).

Interestingly, that same analysis could be applied to evaluate the EBITDA effect of increasing the mix of OTA room nights. For example, in the appendix, we show that if there were no billboard or dilution effects, increasing the mix of OTA bookings could increase EBITDA by 2.9%.

For chain properties, there is another dimension of this type of analysis. Are there additional costs, direct or opportunity for chain-level efforts to reduce OTA room night mix? And, do these costs offset potential EBITDA gains for the property? The direct cost might include chain imposed assessments for that purpose. Opportunity costs might include the shift of chain expenditures and/or investments to support the shift that might have had a more effective impact on property level EBITDA. These might include, for example, the diversion of general promotional advertising and marketing expenditures to spending a mix change (book direct) campaign.

There can, of course, be a whole series of potential values for billboard and dilution effects (and the means to measure them) for a property and for specific circumstances such as quality classification, occupancy, ADR, channel mix, seasonality and so forth. So, measuring them can be difficult and further complicated by the fact that the impact magnitudes are likely non-linear based on the OTA room night contribution percentages and changes thereto. (NOTE: The model does allow sensitivity testing of such values on EBITDA. We selected a few values for illustration purposes.) Despite the difficulty, the impacts of these effects on EBITDA are significant. Therefore, owners and managers would be wise to evaluate the possible outcomes of their efforts to change the distribution of OTA room nights even if they employ some sensitivity testing of their values.

The practical implications are that changing the mix of OTA room nights requires a plan to replace them with non-OTA room nights and a need to know (or estimate) EBITDA-neutral threshold levels for sales and marketing costs needed to achieve the mix change. Moreover, including an analysis of the potential interplay of possible billboard and dilution impacts would be advised.

A dilemma for owners and managers is how to measure (or accurately estimate) property-specific billboard and dilution effects. One approach is to do sensitivity testing for such values (as illustrated in the model) and cautiously change channel mix over time while observing impacts on OTA and non-OTA mix, EBITDA and marketing and sales expenses. Another is to perform some A/B testing of increases and decreases in OTA participation to observe impacts on non-OTA bookings and EBITDA.

As well, asset managers might implement some operational means to observe over time patterns in guest channel booking behavior related to OTA participation, for example:

When checking in guests, ask if they have stayed at the property before and their primary channel source(s) for choosing the property. Do the same if they have not. If possible capture their email address. In all cases, track guests’ booking channels (or do so by relating rate codes used to channels). If they used an OTA channel, ask if they would be likely to use it again or book direct. Then track over time.
During guests’ stays solicit feedback on satisfaction and possible actions to improve their experiences. Better yet, use past stay experiences (e.g., through a customer relationship management system (CRM)), to take actions likely to improve guest satisfaction. At a minimum, resolve guest issues ideally in real time. Finally, celebrate successes and resolve mistakes over time; better yet, ask guests to do so as well, ideally via social media.
At check out and post stay solicit information about stay satisfaction and ask if they would be likely to book directly in the future. Better yet, capture their e-mail address in exchange for some future value for the next stay(s).

If all this sounds like effective asset management, it is. Many successful property managers and owners are already doing this and have discovered many other ways to improve guest satisfaction and financial performance. What is different is the discipline to connect such actions (and guest reactions) with channel choices and guest stay frequency. Capturing this supports the assignment of economic values to reduced channel costs and/or increased guest stay frequency. The bottom line is for asset managers to practice effective CRM, measure its impact, celebrate its success, address its failures and encourage guests to do the same via social media.

Owners need to estimate the value of such actions on EBITDA as a guide to resource allocation for asset value growth.

* This model was developed and presented at the Cornell Center for Hospitality Research Summit, October 2017. Contact the authors Bill Carroll, Ph.D. wjc28@cornell.edu and Trevor Stuart-Hill trevor@revenuematters.com for more information about the model and the presentation.

** See CK Anderson, “The Billboard Effect: Online Travel Agent Impact on Non-OTA Reservation Volume,”

Cornell Center for Hospitality Research Report, 2009; CK Anderson, “Search, OTAs, and Online Booking: An

Expanded Analysis of the Billboard Effect,” Cornell Center for Hospitality Research Report, 2011.

ESTIMATED IMPACT ON REPLACEMENT (AND NON-REPLACEMENT) OF OTA ROOM NIGHTS ON EBITDA GIVEN MARKETING SPEND AND CHAIN COSTS

Aug 22

Service, Profit or Both? It’s All About the Balance

Prioritizing Service Excellence, Profit, or Both?

Here’s how to balance that fine line between customer satisfaction and making money.

Most commentary on hotel service excellence expresses some or all of these themes: Exceeding customer expectations, anticipating guests’ needs, being responsive, creating the impression that someone cares, memorable moments, the difference is service, and so on. I couldn’t agree more, but it is very difficult to measure the impact of these themes in a vacuum. Yet at times it seems that it is all about the service and that other priorities will take care of themselves.

In the past, I discussed service expectations vary by hotel and customer as well as by other conflicting priorities. Let’s examine a few facts regarding hotel types and available resources:

Select-Service: A rooms product with limited F&B and other amenities. These properties typically operate with .5 of a Full-Time Equivalent (FTE) per available room and a handful of managers/supervisors.
Full-Service Commercial: Guestrooms, restaurants, lounges, function space and so on. These properties typically operate with .8 to 1.0 FTEs per available room and, depending on size, 20 to 30 managers/supervisors.
Resort: Depending on the level of amenities – mainly F&B, Golf and Spa – these properties will typically operate with 1.2 to 1.4 FTEs per available room and 30 to 40 managers/supervisors.
Luxury: Potentially all of the above plus a Guest Services Department with management staff. These properties will typically operate with 1.5 or more FTEs per available room and 40 to 50 managers/supervisors.

(Please don’t hold me to the numbers or exacting product descriptions, but for the purposes of this discussion they are in the ball park.)

The other reality is the level of experience and seniority of the personnel at these different types of properties. The higher you go up the food chain the more seasoned and capable the team is. The point is you simply can’t deliver similar styles and levels of service across all hotel types. Nor do you want to; you simply won’t have the same resources or experience levels.

Secondly, in this asset-light environment the operator is charged with balancing the priorities of the brand and the ownership, which in simple terms are:

Brand: The brand company wants to maintain the integrity of the brand, maintain loyalty of the brand’s customers, maximize their fees and continue growth.
Ownership: Ownership is more interested in cash flow from operations and return on investment. The question is: do they want sustained profitability or a short-term boost so they can flip the asset?

To be successful, the operator must understand his or her customer expectations, consistently meeting and slightly exceeding those expectations – never below and never too high. Operators must balance the conflicting goals of ownership and the brand by providing just the right level of service so guests continue to come back and provide good cash flow to ownership, which should therein encourage owner’s to reinvest in the property and the brand.

Picture the select-service hotel that decides to add room service to compete with the full-service hotel down the block. How about the full-service hotel that cuts back on the bell staff to improve short-term profitability? Or the luxury-tier operator who is so focused on being an ‘hotelier’ that they miss the profit motive.

In the early days of brand segmentation, this type of behavior was prevalent and it still exists today, though in more subtle forms. This is also why an up-and-coming manager in a full-service hotel may not transition well to a select-service hotel or vice versa – at times they have difficulty leaving the values they learned growing up behind.

The reality is the customer you brought over from the select-service to the full-service model by manipulating service offerings and reducing prices is not really your customer. Sooner rather than later you will need to go back to the status quo and you will quickly lose that customer who was there on false promises that weren’t true to the brand. You are far better off focusing on the consumer segment attracted to your hotel type, building a strong foundation of loyal customers as a result of consistently staying true to the brand promise and meeting expectations.

No matter what type of hotel we operate, we have to deliver the basics well and add to the service delivery relative to the customer expectation and brand promise. You really can’t expect the select-service staff to anticipate guest needs or create memorable moments – just the basics please. At the full-service commercial hotel, you have a few more facilities available, but in reality your prime customer – likely the business traveler – wants the basics and responsiveness to special requests. At a resort or luxury-tier hotel, customized service delivery to individual needs and making the customer feel special are the factors that will create value.

We all need to remember we are running a business. For the business to run successfully over the long-term and for you to stay employed, you need to meet customer expectations, keep the brand integrity in line and maintain strong cash flow to ownership. The operator’s job is the most difficult; it’s a balancing act and it can be a steep drop in either direction if you step the wrong way. Service excellence is an integral part of your success and it can be the differentiating factor. The point is that you can’t win with service alone; you have to get the other parts right as well.

This article originally appeared in Hotel Interactive

Chuck Kelley is a Partner with Cayuga Hospitality Consultants a network of independent consultants specializing in hospitality/lodging https://cayugahospitality.com/consultants/chuck-kelley/. He spent 32 years with Marriott International, beginning as an Assistant Restaurant Manager and worked his way up to Executive Vice President responsible for Marriott’s Caribbean/Latin America Region. Along the way he held positions as Director of Restaurants, Director of Marketing, Regional Director of Sales and Marketing, General Manager and Country Manager Australia. A graduate of the University of Hawaii, with a BS in Travel and Tourism Management. He is an active member of the Baptist Health South International Advisory Board and previously served as Chairman of the Caribbean Hotel and Airline Forum for the Caribbean Hotel and Tourism Association. He served with distinction in the US Army in Vietnam having earned a Purple Heart and Bronze Star for valor in combat.

Get Your Contingency Plan Ready For a Crisis

Contingency Planning for the “what if’s”

A Bottom Up Approach to Contingency Planning

10 Questions to Ask When Planning for a Travel Recession

Tip: Create Travel Recession Category Levels

Developing a Contingency Plan

How Often Should You Update your Contingency Plan?

Results of an Effective Travel Recession Plan

It All Comes Down To Revenue, Revenue and Revenue

#1 Increase Parking Capacity with Valet

How does hotel parking work for an increase in capacity?

#2 Greater Flexibility and Control of Your Hotel’s Garage and/or Lot

Long Term Vs. Short Term Guests

Flexibility For Specific Situations

When The Weather Turns Bad

#3 Less Stress About Accidents

#4 Safer Environment

#5 Better Access and Revenue for Conferences, Groups and Meetings

#6 Increased Convenience for Urban Hotel Customers

#7 Extra Capacity and Services for Airport Hotel Guests

#8 Additional Revenue for Beach Hotels

Pricing – How Much Should a Hotel Charge for Valet Parking?

Conclusion

What do Superbowl champions and hospitality organizations have in common?

1 Winning Playbook

2 Great Coaches

3 A Great Quarterback

Advice for Owners and Senior Managers

What is Luxury?

Luxury is a Combination of Refined Service and Quality Product

The Evolution of Luxury

Luxury is an Experience

Coming Full Circle – The People Factor

Luxury Experience is Key to Competitive Advantage

Why Hire a Hotel Quality Assurance Consultant?

Determining Who To Hire to Perform Your Hotel Quality Audit

More From The Not-Quite-Crystal-Clear Ball

Branding/Un-branding/Collecting

Airbnb

This n’ That

What Should the Mix of OTA Room Nights Be…?*

ESTIMATED IMPACT ON REPLACEMENT (AND NON-REPLACEMENT) OF OTA ROOM NIGHTS ON EBITDA GIVEN MARKETING SPEND AND CHAIN COSTS

Prioritizing Service Excellence, Profit, or Both?

Here’s how to balance that fine line between customer satisfaction and making money.

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