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Joys of being: biz cliches, new taxes and comic heroes

hotelnewsnow.com Featured Articles - ·9h
Hotel News Now needs to cover the entire hotel industry to keep its busy readers apprised of all developments—which this week include babies named after taxes, clichés that litter the conference circuit and superheroes blazing their ways to your city. It is very understandable that with the weight of operating, owning and managing hotels, many important news items will be lost in the mix. Do not fret. Hotel News Now keeps its eyes close to the ground and its ears tuned to pick up signals from around the world.
Article by David Lund

Hospitality Financial Leadership - Ego is Not Part of the Recipe

The Hotel Financial Coach - 17 July 2017
"If you want to be more than a flash in the pan, you must be prepared to focus on the long term. We will learn that though we think big, we must act and live small to accomplish what we seek. Because we will be action and education focused, and forgo validation and status in their pursuit, our ambition will not be grandiose but iterative--one foot in front of the other, learning and growing and putting in the time." Ryan Holidays - Ego is the EnemyIn the financial leaders' world, ego will not serve them well. Ego will put distance between them and their audience. Ego would have a leader being the star of the show and there would only be one act in the play.A secret weapon: Knowing how to get non-financial leaders to produce amazing results through their creativity and leadership support to manufacture this product on a continuous stream.If one succumbs to ego they take themselves out of the game as if they were once a star but now they are too important to engage and really find out what the other leaders need. Being ego driven means the financial leader is hiding out. He or she wears the ego like a thin suit of armor to deflect any legitimate acknowledgement that maybe they do not have all the answers after all. Ego serves to tell them they are too important to go to that level of engagement. This is a big mistake because they miss seeing what is really going on and miss the opportunity to change it. "Can't fix what we can't see."Einstein said, "More the knowledge lesser the ego, lesser the knowledge more the ego."This quote really sums things up quite well. Egotistical people really lack the knowledge because they have shut down. They are closed for business. They cannot learn and grow if they are shut down. The game is an incremental day in day out, conversation after conversation, idea after idea, support after support, financial leadership is a relationship-building deposit-based enterprise. Leaders out-give constituents. That is what makes them tick successfully. Ego has no place in this environment.I once worked with a financial leader who made it a point and even verbalized the fact that he only spoke with members of the executive team. He was too important to speak to anyone else. According to him the idea of communicating with anyone else was a waste of time and beneath him.Well, the truth was he was hiding out. He was not comfortable communicating with anyone who might challenge his way of seeing the world of his business. What a waste to leave out so many inputs that are there to help shape and grow a vibrant, continually evolving and growing business landscape!The other interesting aspect of this example is the chief executive allowed and even condoned this behavior. Information is the currency of leadership. If leaders want more currency, they need to embrace leadership practices that allow for its accumulation.Ego and hiding out will not produce more currency.What are egotistical people afraid of? They are afraid of the very real possibility that they do not have all the answers, some of the answers, or even the answer. Rather than giving up their fake self-image they hold onto it and believe in it. Ego is not who they really are and inside they know this is the case. Yet it is too scary to let go, or seemingly to scary. However, ego is only a habit. This is the good news. Let go and have that next conversation and acknowledge that maybe "I don't know everything and I'm willing to learn."If you want a copy of my Rooms Productivity spreadsheet send me an email david@hotelfinancialcoach.comTo get a copy of my financial leadership recipe F TAR W send me an email david@hotelfinancialcoach.comTo get a copy of my Flow Thru cheat sheet send me an email david@hotelfinancialcoach.comVisit my website today for a copy of my guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotelwww.hotelfinancialcoach.com

The Dirty Dozen Of Hotel Renovation

Hotel Mogel Consulting Limited - 17 July 2017
Hotel renovations are a necessary dread of our industry in order to keep apace with the constantly giving decor trends, star rating requirements and technological advancements. They are also stressful and frustrating. Having gone through dozens of this large-scale projects over the past four decades, I was able to navigate the treacherous waters of my own apartment's scope creep by following a general guideline of these twelve tips.1. Define your objectives. Be as specific as possible, and make sure that these are written and approved by your ownership group. My mistake this time around was that my vision was very different than that of my spouse which resulted in serious cost overruns and time delays.2. Timetables are split in thirds. Whatever you are proposing, figure one third of your time will be spent planning, another third in the actual work and the final third in quality control. Do not underestimate any one of these segments.3. Budgets never last for more than the time they were created. There are more ways for costs to overrun than you can count. I thought our planning was generous but we ended up about 25% over budget, and that includes several areas of great cost savings. It's natural to use a renovation to augment deep cleaning, upholstery renewal, upgraded security systems, LED conversions and any other new technologies. It all adds up!4. What's behind the walls? Our condo is only 15 years old, so there were no crazy surprises like what you would find in a century building. Nevertheless, we discovered significant shortfalls in wiring, plumbing and HVAC that all needed to be corrected before we could begin. Of course, these resulted in more cost increases and time delays, but the lesson here is to thoroughly inspect the state of affairs 'under the hood' before finalizing the scope and budget.5. Hire a great general contractor. Simply put, you have a hotel to run, not a construction site. Don't even think of doing both simultaneously. You need someone who will manage the project on your behalf. The GC became my single point of contact for the project, helping streamline communication and saving me time. He collected all my notes and disseminated them to the multitude of tradesmen onsite. He also fed back issues and prevented potential solutions.6. Let everyone know your deadline. In a residential move, this is straightforward; the closing date of your home's sale dictates the project's drop-dead completion date. While this gave us six months of overlap, the GC understood the final month was set aside for moving. With no secrets, the work was accomplished in the set timeframe. As a senior manager, you put decide what the maximum tolerable length of agony is that your property can endure before irreparable damage is done to its occupancy and reputation.7. You cannot walk away. In order to keep everything on track, I visited the jobsite at least twice a week, in addition to a weekly GC meeting. Apart from the obvious status reports, there were always new items and unexpected issues. The devil is in the details, and you won't discover those details unless you are periodically on the ground with the troops. To note one example, we did not specify the location of the thermostat. Without any direction, the HVAC folks placed it in what they thought was the optimal position, which did not take into consideration the high headboard which would have covered it. Good thing I was there to catch this before it was too late.8. Document all change orders. We kept a running tally sheet of over-change that we requested. While this did not lead to any real cost savings, at least we understood the detailed reasons for the overages. This approach will come in very handy when ownership needs to understand your budget predicament or to reconcile excesses.9. Create a positive work environment. I'm fussy about coffee. So too is my Italian, Portuguese, Lebanese and Turkish workforce. I knew that if I did not provide great coffee, one junior team member would be tasked on a continual Starbucks run. A hundred-dollar Nespresso machine plus lots of capsules turned out to be a wise investment. (As additional learning, the decaf capsules were never touched.)10. What ifs are expensive. Want to move a door, reposition a switch or add a dimmer? Most GCs will never say no. Just about anything can be built or modified; it is merely a matter of time and materials. So, be careful as to what you ask for, as your whimsical idea may be converted into reality but at a price too hefty to properly bear.11. Take lots of before photos. Try to image the best angles and where you stood so that you can replicate them exactly with the new look. The before-and-after comparisons may help you explain your cost overruns to your owners.12. Say thank you to your team. I didn't hire painters, carpenters, electricians, plumbers or HVAC specialists. I hired craftsmen who take great pride in their work. It's probably a small job to them, but clearly very important to me. Such professionals will feel similar pride in their work done to refurbish your hotel. No matter what the project is or the size of your property, it costs nothing to say thank you in person or by email, and it will always be appreciated.(Article by Larry Mogelonsky, originally published in eHotelier on Wednesday, March 22, 2017)

Legal rights, job quality, Brexit head up UK discussion

hotelnewsnow.com Featured Articles - 17 July 2017
It is fair to say major changes have occurred in the United Kingdom in the last three years, with three issues—Brexit, university tuition fees and zero-hours/gig employment—likely to dominate the business and political landscape. When politicians or commentators tell you that country X or Y is going through its most important, pivotal period in its history, I generally dismiss that as a lazy statement, but there is a strong argument in the United Kingdom that the last three years have been just that.
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Separating Group and Local Banquet Sales

Hotel Business Review by hotelexecutive.com - 17 July 2017
If your hotel has a reasonable amount of meeting space (+10,000 ft) and your banquet business is a significant contributor in your Food and Beverage Department (+20% of F&B revenue), you are going to want to separate local banquet business from group banquet business on all of your financial statements, forecasts, budgets and daily reporting. At this moment you may be asking, "Why would I want to do that? That sounds like a lot of work."

Renovation While Treading Lightly on Tradition

Hotel Mogel Consulting Limited - 14 July 2017
For those whose knowledge of Montreal is limited, a short history lesson is mandated. The province of Quebec, including Montreal, is predominantly French-speaking. Yet, there is a distinct Anglophone culture in this its largest city which steadfastly had maintained a strong influence over the province through political appointments and strong financial influence. This led to a mini-rebellion (quite significant in a Canadian context) in the late 1970s, ultimately culminating in a vote to separate from Canada in 1995 with the yes votes losing by less than a percentage point. Today, through a stream of legislation, both the city and the Ritz Montreal are truly bilingual. Those 'Anglo traditions' which the Ritz has nurtured for a century now blend seamlessly and form just a portion of its wider target audience.But history alone does not make a hotel, and the property closed its doors for several years to make way for a top-to-bottom renovation. In January 2013, after consuming over $250 million in capital, a new slimmed down Ritz-Carlton Montreal with 129 guestrooms and 45 private residences opened. Superficially, the property maintained its traditional exterior, lobby and oval-shaped ballroom. The original restaurant was expanded in seating and renamed Maison Boulud after a partnership with the famous Parisian chef, Daniel Boulud. Under the skin, there was very little if any of the old property that remained.Despite the name, the property is not managed by The Ritz-Carlton Hotel Company. It is affiliated from a marketing perspective and half of the ownership is held within the Torianni family. Taking the helm as CEO and general manager is Andrew Torianni. A self-proclaimed 'hotel brat', his father Marco retired from the Coiffure Hotel du Rhone Geneve in 2012. Andrew owes his deep knowledge of the hotel business to a 24/7/365 infusion, having lived on property for most of his years.On a recent visit to the hotel, I had an opportunity to sit down with Mr. Torianni in the Bar Boulud to discuss not only the property, but more importantly his perspectives on the state of the hotel industry.What are your thoughts on the sharing economy?You have to look at the accommodations industry a little like television. In the past, there were just a few channels. Now, with cable and satellite, there are many more options for the viewer. It took awhile for the TV networks to adjust, as they had to up their game with not only better content in general, but also productions that targeted at specific market segments. The same holds true for the accommodations industry. Where we now have many more products, including Airbnb, we need to understand how to make our products focused at specific market segments. Be clear in the definition of your target guest, then narrowcast your product and message to those audiences accordingly.Do you expect to see any business lost to Airbnb in the luxury segment?In a word, no. There are three aspects of hotels that Airbnb cannot duplicate. First and foremost, it is service. A hotel without it is really an oxymoron; it simply cannot exist, especially at the luxury level. The second is a vibrant lobby. We tend to underestimate the strategic feeling of camaraderie that comes from guests' interactions within. The third is food. Guests want great food, not just quick-serve equivalents. With these priorities well-established, a good hotel can weather this sharing economy storm.The Ritz has an older, well-established Anglo-Montreal client base. Yet, as I sit here, I'm estimating the average age of the patrons to be mostly in their 20s and 30s.This has been a critical focus for us. We retained the Palm Court off the lobby, and it still serves a traditional tea just as Cesar Ritz initiated in 1913. But next door is the Maison Boulud which breaks the mold. Here, we find an open kitchen with high top tables that seat a dozen, thereby encouraging a younger audience. Today at Maison Boulud, it is hard to tell if a patron is French or English speaking. The two societies often blend together, which at first seems incongruous yet somehow in our setting it works.Speaking of youthful audiences, how can a hotel best approach the millennial market?Think food! While it is probably incorrect to lump millennials into a single segment, one commonality is their focus on food, not just in terms of consumption but rather from the standpoint of experiences. Think of each meal as an Instagram or Facebook impression. Follow this and you will undoubtedly be successful.I see the pond. Where are the ducks?(Smiling) It's still a little bit too cold. They'll be here eventually, as they have been for the past hundred years.(Article by Larry Mogelonsky, published in Hotels Magazine on June 2, 2017)

The decline of shopping malls hits US hotels hard

hotelnewsnow.com Featured Articles - 13 July 2017
The boom of shopping malls in the United States gave hotel owners and developers ample room to build, but malls’ fall in popularity means the hotel industry needs to think about the future of retail space. The boom of shopping malls in the United States gave hotel owners and developers ample room to build, but malls’ fall in popularity means the hotel industry needs to think about the future of retail space. It might not seem obvious, but the fortunes of the hotel business—especially in the United States—are linked to the bricks-and-mortar retail industry. And as you’ve probably read, retail in general and shopping malls in particular are in economic trouble—a trend that presents both challenges and opportunities to hotel owners and developers. While it’s hard to quantify how many hotels in the U.S. depend on nearby retail for large chunks of their business, a lot of data exists showing the rapid erosion of the country’s retail business. So far this year, according to Fung Global Retail & Tech, the number of retail store closure announcements increased 218% over last year, with 5,321 closures to date and more certain to follow.
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Five Best-Practices for Managing Digital Marketing Content and Assets

MarketingProfs·Requires Registration - 13 July 2017
In today's digital world, marketers manage thousands of images and videos. These digital assets consist of a variety of file types, from JPG and TIF to PNG, GIF, RAW, MPEG, MP4, and many others. Marketers use these digital files for e-books, whitepapers, infographics, social media, webpages, and other branded materials. Finding the right version of the right file—right when you need it—is key for staying productive, and that's why digital media libraries have become essential.
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When Politics Scuttle Tourism

TravelPulse - Opinion - 13 July 2017
Ah! Miles and miles of unfettered, unpopulated beach and New Jersey Governor Chris Christie had it all for himself and his family on July 4 weekend—not in some remote island paradise, but right on the Jersey Shore, normally crawling with people on the biggest tourism weekend of the summer. The government shutdown, which came suddenly during the Friday night of July 4 weekend, was a surprise to tourists and the travel planning community who were planning to use any of the state parks, beaches or historical sites but sadly found all of the sites closed.
Article by Robert Mandelbaum

Management Fees - A Growing Expense

CBRE Hotels - 13 July 2017
An expense that has consistently grown at pace greater than the average of all other costs from 2010 through 2015 has been management fees. When growth of an expense item exceeds the overall average, owners typically become concerned. However, since management fees are designed to reward operators for positive performance, excessive growth in management fees is not necessarily unwelcome.Most management contracts include two components for compensation - a base fee and an incentive fee. The base fee is typically charged as a percentage of total revenue. Incentive fees, on the other hand, are paid to the management company once a certain profit threshold is reached. Incentive fees are designed to make management more conscious of the bottom line since owners achieve their returns and pay their debts from profits, not revenue.To gain a better understanding of this expense we analyzed the performance of hotels that reported paying a management fee for CBRE Hotels' Americas Research's annual Trends(r) in the Hotel Industry survey of property-level operating statements.The PercentagesFor the hotels that reported paying a management fee in 2015, the combined payments for the base and incentive fees averaged 3.5 percent of total revenue. This expense ratio was the greatest at extended-stay hotels (4.2%), and lowest at suite hotels with food and beverage (2.9%). Relative to the bottom-line, total management fees averaged 15.5% of profits.During the 2010 to 2015 recovery period, management fees typically grew at a faster annual pace than total revenue. In 2015, we observed a departure from that trend, when total revenue grew by 5.3 percent, but total management fees increased by just 5.1 percent. Through 2014, profits maintained their double-digit annual growth rates. Therefore, it can be assumed that the incentive fee component had a significant impact on the growth in management fees. However, when the pace of profit growth slowed down to 7.1 percent in 2015, this would have reduced the increase in the incentive fee component, thus muting the pace of the rise in overall management fee expense.Incentive FeesAs profits have increased, it is not surprising that the incentive fee requirements within management contracts have been met at a rising number of hotels. In 2015, 18.1 percent of the properties in our Trends(r) sample that reported paying a management fee also reported paying an incentive fee. This is up from a low of 5.8 percent in 2009, and 2014's ratio of 14.5 percent.With the number of properties paying a management fee growing from 2014 to 2015, but the pace of management fee payouts slowing down, one can assume the required profit margins, or profit level, needed to trigger the incentive fee are being achieved. However, the magnitude of the growth in profits has diminished, thus limiting the growth in the amount of the management fee payment.As expected, the properties that paid an incentive fee in 2015 achieved greater increases in both revenue and profits. During the year, hotels that reported paying an incentive fee saw their total revenue grow by 6.0 percent, while their profits increased 17.5 percent. At the properties that did not pay an incentive fee, total revenue increased by 4.7 percent, while profits grew by 16.3 percent.When analyzing incentive fee payment data over the two year period 2014 and 2015, we see that the intended "incentive" for management companies appears to be working. Properties that paid an incentive fee in 2015, but not in 2014, saw their profits increase by 30.3 percent in 2015. Conversely, for properties that paid an incentive fee in 2014 but not in 2015, profits increased by 20.4 percent in 2015.Given the relatively strong 20.4 percent increase in profits achieved at hotels that did not pay the incentive fee in 2015 after paying in 2014, it can be assumed that the incentive management fee requirements at these properties are very strict. Alternatively, the management contract for this group may have a revenue component to them. The revenues for the hotels that paid a management fee in 2014 but not 2015 suffered a 1.2 percent decline in total revenue during the period.Keeping Management MotivatedThe expected operating environment for U.S. hotels for the next few years is one of limited growth in both revenues and profits. Therefore, both owners and operators should brace for subdued growth in their respective paybacks: returns for owners and management fee income for the management companies.With revenue growth expected to be muted over the next few years, management companies will be even more incentivized to boost profit growth in order to earn more income for themselves. However, with profit margins currently well above long-run averages, and labor costs on the rise, growing profits will be a challenge. For owners that signed contracts with profit-based incentive clauses, these contract terms may prove to be of great value over the next few years.

Hospitality Financial Leadership - The Lily Pad

The Hotel Financial Coach - 11 July 2017
When you get promoted to a department head and executive committee position it's an exciting time in your career. This story is about my experience as a first-time controller.It all started when the phone in my office rang. At the time, I was the assistant controller at the world-famous Banff Springs Hotel, The Castle in the Rockies. It was my "BIG" boss, the General Manager and Regional Vice President, on the line. It was about 10 a.m. and he asked me if I could come to the sister hotel in his region, Kananaskis for lunch. I said, "I think so, I just need to ask the controller here if it's ok." He replied, "Don't worry about her, just get your ass down here." He said it in a way that made me think he had already talked to her and she was pissed. But he's the boss so he won this one. I like the way our GM operated, no BS and you knew who was in charge. His nickname was the Commander. We all liked his style, well most of us.About two hours later I hopped out of my car at the hotel and headed for the accounting office where I met with someone I did not expect, our corporate controller from Toronto. He was a great guy but why was he here and where was my GM.The corporate controller and I went to lunch. He explained what was going on. The previous controller was fired that morning for not ensuring that a basic internal control system was in place. The chief engineer was ordering supplies from a local hardware store. He would produce purchase orders for typical engineering supplies like light bulbs and filters. Then the hardware store would send a new color TV to the engineer's house and mail the hotel an invoice for light bulbs and filters. The hotel would pay the invoice because it matched the purchase order; however, the controller was omitting a crucial step.All goods received by the hotel required verification by someone other than the person who ordered them. In this case, the controller trusted the chief engineer's word as he handed in the invoices. This kind of stuff happens more often than you would think.It is funny how the engineer got caught. He told someone in a local bar what he was doing. He was drunk and bragged about his little scheme. Small towns are not good places to share secrets in a bar. A friend of the person who heard the story was best friends with the wife of the new General Manager of that hotel. The new GM learned about this a few weeks later and he flat out asked the chief engineer what was going on. The engineer vehemently denied any involvement or knowledge. Two weeks later the engineer had not been back to work and the rumor was that he fled to the Caribbean.My friend the corporate controller and one of his staff had been at the hotel for a few days and it was clear that something was up with the hardware store. The size of the accounts payable file and the amount of spending with this one little store were incredible. When confronted, the previous controller said he was aware that there was no proof of delivery, but he said he was not involved in the apparent fraud. The RCMP was also now involved and there was a criminal investigation. With that, he told me he was heading back to Toronto and my job was to babysit until a controller was found. If I wanted the job it was mine - all I needed to do was apply.I settled in as best I could. Things in the accounting office were a mess, to say the least. People and processes were not being used efficiently and several other internal controls were missing (or only partly functioning). It was the type of mess one would expect to find in a hotel where the controller was asleep at the switch.About the same time that this was going on and I was getting my feet wet so to speak, word came down that the previous General Manager (who had transferred to a property in Ontario) had been fired for telling one of the owners to F off! I did not know the guy but some of the stories I heard around the hotel made it sound like he was a handful and up to no good - affairs with staff in the suites, parties, and use of the hotel for his own personal playground. After a while, some things never surprise me. By no means are all GM's like this but it only takes a few to spoil the batch. Word then followed that this GM was suing the hotel company for wrongful dismissal (which they all do).The fraud investigation from the maintenance department was quieting down a bit and I was getting some of the mess cleaned up. One thing that was very odd was the way the capital was being handled. I found a big pile of returned checks and odd invoices. It was unusual that the checks were handwritten and several of the invoices were from the hardware store. There was something fishy about one other invoice; it was for six numbered Robert Bateman prints from an art gallery located in the hotel. That was odd because usually hotels buy art in bulk, not six at a time, and the invoice was a restaurant type, handwritten invoice with the print numbers on it. Well, more stuff for the cops to look at.The next day I received a very special package in the mail. It was from our corporate law department and it contained a legal form that I referred to as a marital list of common assets. The fired GM was also in the process of getting a divorce. The note on the document said: Have a look at the contents of the common assets, does it look strange? Well, the list read like the inventory of a 25-room hotel. He had literally dozens of VCRs and TVs, several satellite TV systems, and the clincher....He had six Robert Bateman numbered prints and the asset list had the numbers. Could this be any easier? Just yesterday I was looking at an odd invoice for six prints sold to the hotel from a local art shop. Would the numbers be the same?Sure enough - SIX matches. Holy crap what was going on here?That was only the tip of the iceberg. Following my discovery, the company sent the one and only internal fraud auditor to our hotel for a thorough investigation along with the RCMP. The investigator spent weeks at the hotel and found several dozen invoices for a host of items that the GM had fraudulently obtained. The total was almost $100,000. The former GM was eventually found guilty of fraud.This little episode showed me a few things. For one, if people are left on their own, they can do some major damage. Internal controls are critical for ensuring that you know what is going on. We were not able to find any fraud committed by the controller, just sloppy work. The maintenance guy disappeared forever and the former GM got out of jail and was running some rundown hotel on the strip in Banff.Life in the mountains.If you want a copy of my Rooms Productivity spreadsheet send me an email: david@hotelfinancialcoach.com.To get a copy of my financial leadership recipe F TAR W send me an email: david@hotelfinancialcoach.com.To get a copy of my Flow Thru cheat sheet send me an email: david@hotelfinancialcoach.com.Visit my website today for a copy of my guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel www.hotelfinancialcoach.com
Article by David Lund

Hospitality Financial Leadership - Measuring Labor Productivity Part 1

The Hotel Financial Coach - 6 July 2017
In hospitality, the measurement and management of productivity is hit and miss and miss again. Time and time again hotels are using ineffective measures to try and capture labor productivity measurements.It is important from the beginning to establish the goals for measuring productivity in your operations. This article will focus on rooms and Part 2 will be F&B.The goal in measuring productivity in the rooms division is to see, monitor and ultimately improve on the number of hours of work it takes to service a room. The expression to use is "hours per room occupied."Hours worked divided by the number of rooms sold. This labor productivity statistic is the most important tool available to manage your biggest expense in the rooms division.If you were making cars, you would want to know and continually improve on how many hours and minutes of labor it takes to make a car. Regarding rooms, labor comes down to how many hours it takes to service one room. You want to see this at the total rooms level as well as how it stacks up.The "rooms stack" is best laid out with the following sub totals: front office, housekeeping, room attendants, reservations and bell/door. These categories must be separate to see where there are productivity wins and challenges. To be able to see labor categories separately, use proper departments and job codes to fall into the different stacks. In addition to the separation of the stacks, you need to know the difference between hourly and management positions in each stack.To do this effectively and consistently there must be a payroll dictionary. Establishing a consistent way to segregate labor is not difficult. Start by defining the difference between management and hourly positions. For consistency, ignore salaried vs. hourly and union vs. nonunion. These are ignored because they differ greatly from location to location. Instead focus on job title. The word manager is critical. If the word manager or higher appears in the title, they fall into the management category. If supervisor or a lower title appears in the job title, they fall into the hourly category. Here is an example for "front office." It is important to recognize that management or hourly terminology is only a way to organize data and is not an indication of any regard.Front Office Stack"Front Office Hourly" - Front Office Clerks, Reception Clerks, Front Office Cashiers, Front Office Supervisor, Reception Supervisors, Night Audit Clerks, Secretary, Admin Assistant"Front Office Management" - Front Office Manager, Reception Manager, Assistant Manager, Front Office Director, Rooms Division Director, Night Manager & Assistant Night Mgr.Repeat the same exercise and organize rooms department and positions into the different stacks and by the "hourly and management" classifications.Once the classifications are established, track the hours worked in each stack. In turn, divide the hours worked in each stack by the total number of rooms sold for the entire hotel: for 1 day, 1 month or 1 year. Anytime you can capture the number of units of labor (hours of labor) it takes to sell the rooms and divide this by the number of units sold, you have rock solid data.The "hours per room occupied" measurement can be used everywhere. Starting with the annual budget. You will want to know the "hours per room occupied for the year" goal. If the total hours for the rooms division in the budget is 45,978 and the total number of rooms occupied in the budget is 37,525 then the hours per rooms occupied is (45,978 / 31,525 = 1.4585). This number 1.4585 is gold!In everything you do with rooms labor, you now know the measure of success. Meet or beat the productivity goal of 1.4585 hours per room occupied and you win. If you can use this target in your daily schedule, weekly schedule and monthly forecast you can continually adjust the course to track to your target. It is a simple and effective way to track to the goal.As the operations manager, you cannot have any effect over pricing or wages; they are out of your control. Any measurement that looks at labor as a percentage of sales in noteworthy but you cannot control it. As the operations manager, what you have control over is the schedule and hitting the productivity target if sales volume is down or up. The hours per room occupied is your speedometer and you can tell what stacks are up to speed or not and see if it is an hourly or management issue.The chart below looks at a monthly and year-to-date report for the rooms division:Note that all classifications do not have management positions. In the example above, room attendants and bell/door do not have any management positions.When you measure and track productivity this way you give leaders and managers on the ground a simple and effective tool. There will be days when you lose big on productivity goals. Days like Mondays in a leisure hotel. Challenging productivity days are heavy arrival or departure days, multiple occupancy, and low occupancy. On the other side of the coin, you will have days where productivity is naturally high: stay overs, long stay guests, business travelers, groups with heavy programs, and single occupancy guests.What operations managers need to see is the hours per room occupied goal. Knowing there will be losses and wins in the days and weeks is natural. Hitting or beating the monthly productivity target is the magic result for them to see and get excited about. Hours per room occupied is the only productivity measure they need to focus on. Get each manager in the rooms division to do their monthly forecast, weekly schedule and daily log all referencing their productivity target and the actual result. Like tacking on a sailing ship, you are constantly moving from a loss to a win and a win to a loss all the time keeping an eye on the desired final destination. Use hours per room occupied in addition to the number of arrivals and departures and room credits on your schedules.If you are interested in how you can set this productivity measurement in your financial statements, email me and request my article on "Do Your Hotel Financial Statements Pass the Test?" or visit my website, blog page. Having these measurements in your finical statements is critical.To get a copy of my financial leadership recipe F TAR W send me an email david@hotelfinancialcoach.comTo get a copy of my Flow Thru cheat sheet send me an email david@hotelfinancialcoach.comVisit my website today for a copy of my guidebook: The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel - www.hotelfinancialcoach.com

Jockeying for profits: Owner vs. brand

hotelnewsnow.com Featured Articles - 5 July 2017
A headline from a recent investment report published by Baird Equity Research caught my eye: “Hotel brand stocks hit year-to-date highs, as hotel REITs make new lows.” The article went on to explain that “Despite (revenue per available room) growth trends that have remained fairly stable in recent months, 13 hotel REITs hit year-to-date lows. In contrast, several global hotel brand companies made new year-to-date highs.”
Article by Saurabh Gupta

Of Course, Your Hotel Needs Refinancing!

HVS - 4 July 2017
The Imperfect PastHotels today are associated with unmanageable levels of debt, often leading to an NPA (non-performing asset) classification. The following causes stand out:Supply glut - Over the last ten years, branded hotel supply in India grew from 39,285 rooms in 2006/07 to 1,13,622 rooms in 2015/16; at a CAGR of 12.5%;Weak demand patterns - For the same period, RevPAR saw a de-growth from Rs.5,049 in 2006/07 to Rs.3,512 in 2015/16; at a CAGR of -3.95%;Project cost overruns - while the first two are macro factors, there are a significant number of loans that have turned bad because of internal issues like inadequate planning and inefficient project execution, leading to project delays and cost overruns.The Future: A Perfect AntidoteIncreased scrutiny and tighter lending norms have brought the focus to merit-based lending for hotel projects. Our interaction with investors and lenders that are currently active in the hospitality space points to the following factors fueling their interest:Business risk has replaced construction risk;Muted supply growth in most markets;Perceived upcycle for hotel industry.Essentially, what this means is that selected lenders do share the general optimism surrounding hotels in India and are willing to listen to your point of view and win your business.Why Should One Refinance Existing Loans?Simply put, refinancing can help correct the dichotomy of financing a high capital, high gestation business (like hotels) with a short loan term. The refinancing exercise can improve cash flows and push back the cost of capital as well as principal repayment to a time when the business has stabilised. It can also free up valuable equity for investors who want to deploy funds into other uses rather than filling up the gap in debt service.I. To claim benefits without re-structuring:According to the circular released by RBI in 2014 on 'Framework for Revitalising Distressed Assets in the Economy - Refinancing of Project Loans, Sale of NPA and Other Regulatory Measures', the holder of an existing loan can apply for seeking a longer repayment tenure with certain caveats. However, the exercise will be termed as refinancing and not as a restructuring exercise only if:It is a standard loan on the books of the bank;50% or more of the loan has been taken over by a new financial institution;The repayment period is in congruence with the project life cycle.Clearly, this means that the promoter/ borrower must approach a new bank to refinance the transaction and the existing lender cannot be of much assistance.II. For additional leveraging of assets:As explained above, reduced risk on existing hotel brings in additional bargaining power for the borrower. Based on the payment history, the borrower can enhance her/his existing loan. The reasons to seek this additional leveraging might be numerous:Funds could be used for general corporate purposes, as permitted by the lender;There might be bullet payments due and the hotel might not have sufficient cash flows to honour those;The borrower might be looking for a cash-out refinance to free up some funds for repair or renovation.The key is to put together a case which presents to the lender a transaction with high financial potential and relatively lower investment risk.III. For reduction in the cost of borrowing:The existing lender may not be willing to reduce the Rate of Interest (RoI) by lowering the spread on the Prime Lending Rate (PLR). However, another lender might value the diminished risk on the asset and offer a reduced RoI.Case StudyA project loan was sanctioned in the year 2012 on the following basis:Tenure: 15 yearsROI = Prime Lending Rate (PLR) + Applicable SpreadROI = 10.0% + 3.5% = 13.5%If we assume that the hotel became operational in 2015 and the PLR also dropped to 9.0%, the new RoI would be set to 12.5%. The borrower requests the existing lender to reduce the RoI by lowering the spread. On being denied that advantage, the borrower may approach another bank which might be more than willing to refinance the loan at PLR + 2.0%, i.e. at 11.0%.IV. For increasing the loan tenure: A stabilised hotel with consistent cash-flows may also be in the risk of defaulting on existing loan repayment. The key issue here is the relatively shorter amortisation tenure for an industry that is characterised by high capital stock and the cyclicality of business. Hotels in India have historically seen a door-to-door lending period of 10-12 years. Of this time period, 30% is typically spent in construction and another 30% in the ramping-up phase. A balance of 5-6 years is just not sufficient for interest and principal repayment.A stable hotel is a superior candidate for refinancing loans for a longer tenure. The dynamics of lending to an operational hotel are different because of its proven track record, which in turn reduces the risk outlook and makes the entire refinancing exercise possible. A twelve-to-fifteen-year refinance programme along with an additional disbursement (at higher LTV) can be procured at a reasonable rate of interest. This exercise may provide huge relief to the promoters who are not keen to infuse more equity to service shortfall in repayment.The following exhibit illustrates two scenarios for a 300-room hotel. This is the actual example of a refinance assignment recently undertaken by us. In the first case, the hotel may service the debt for the balance five years (from the original ten-year sanction) but, with a gross deficit of INR 176 crore, would need equity infusion by the promoter. In the second case, the promoter opted for a refinancing scenario with a longer tenure (15 years). We have illustrated the impact of this exercise without changing RoI or any key commercial term. Though the net outflow is higher to the bank, it frees up equity for the promoter and makes the asset debt-free in a reasonable time frame.V. Changes in the scope or specification of the project: There are cases when, after receiving debt capital, the scale or quality of the hotel project had to be altered. Clearly, a higher project cost will most often necessitate a larger debt capital outlay. In most cases, existing lenders are averse to enhancing loan amounts and, therefore, the need to approach a new lender for take-over and enhancement of the loan amount.Existing relationships with banks are a huge support system. Yet your regular banking network with years of relationships might be falling short of your expectations. They may be unable to lend enough or offer satisfactory terms. At the same time, many hotel projects are vying for the attention of a few willing lenders. In this rather unique credit market, three factors are essential to get ahead in the queue:A worthy project with rational cash flow projections;Excellent relationship with banks, based on mutual respect;High quality data presented proficiently.We believe that hotel development and acquisition financing needs specialised solutions and good projects certainly benefit from expert guidance. Over the next two years, we anticipate laws related to bankruptcy getting strengthened to penalise the laggards. If you are still deciding on the 'hows' and 'whens' of refinancing your existing loans, you are leaving money on the table and also treading on thin ice.

Deciding to Appeal a Hospitality Assessment

Hotel Business Review by hotelexecutive.com - 3 July 2017
The decision to appeal a hotel's property assessment for tax purposes is only the first of a series of judgments before the case is resolved. Who will defend the appeal? Based on what facts? How far is an appellant willing to go to gain a remedy for the assessment? Deciding to appeal seems straightforward, but before the decision is made, the hotelier needs to understand that appealing a property assessment can be more art than science. It's not just the facts and figures to consider. These have a supporting role, but an appeal puts them in context with other data to persuade an appeals board and, perhaps eventually, a judge that a property assessor with years in the business has made a mistake. It's showing convincingly that an appellant's opinion of value outweighs that of a professional assessor who works under strict laws, rules, regulations, guidelines and interpretations, many of them nuanced by the tax jurisdiction. Assessors can also benefit from a greater understanding of the appeal process than the appellant.
Article by David Lund

Hospitality Financial Leadership - Separating Group and Local Sales in Banquets

The Hotel Financial Coach - 27 June 2017
If your hotel has a reasonable amount of meeting space (+10,000 ft) and your banquet business is a significant contributor in your Food and Beverage Department (+20% of F&B revenue), you are going to want to separate local banquet business from group banquet business on all of your financial statements, forecasts, budgets and daily reporting.At this moment you may be asking, "Why would I want to do that? That sounds like a lot of work." There are some very good reasons to make this practice a standard in your hotel. I see many hotel financial statements and most are missing the boat because they do not separate group and local banquet revenues. Separating this reporting and setting it up properly provides powerful information you can use in your hotel to make better decisions and ultimately be more profitable. When you take the process apart and look at each piece, it is not complicated. It just requires someone who wants to do it. That begs a question: "Why would I want to set up separate revenue reporting for groups and locals inside my banquet department?"The first reason is to track the revenue and follow the profitability.You want to know how much banquet revenue is generated by groups in-house who occupy your bedrooms vs the revenues generated by local customers who use your hotel's meeting rooms and banquet facilities, but don't occupy rooms.We normally refer to the business coming from in-house groups as Conference Service. We call the business that comes from customers who do not occupy rooms as Catering and we also call them Group and Local.If a significant portion of your F&B revenue comes from banquets, there is a very good chance that you have two competing elements inside this revenue stream. You want to know how much revenue comes from each separate element. In rare circumstances (like a remote resort without significant local business), this separation may not be necessary. All other hotels that have a good mix of business would benefit from reporting this data separately.You want to know the revenue separation for all types of sales in the banquet department. The following areas need separate reporting: food, beverage, room rental, audio visual, gratuities and miscellaneous.Groups vs. LocalYou need to understand the spending characteristics of these two different customers so you can choose your customers wisely. If you are running a full-service banquet and meeting facility and, on top of it, you have a few hundred bedrooms to sell, you want to use the meeting and banquet facilities to drive room nights. When you do not have opportunities to fill your hotel with groups, you want to be able to sell your space to local customers who want to hold meetings and events without staying at your hotel.Understanding the spending and profit potential that each different element produces will help you develop your strategy for selling to groups vs local business. What does the average customer spend in local catering vs in-house groups? What are your minimum food and beverage sales per room occupied for your in-house groups? What is the minimum amount spent on food and beverage to release the main ballroom or other anchor rooms in your hotel? An essential element to properly manage your hotel is understanding these characteristics and the corresponding seasonality. Separating the revenues is the only way to go.When you review your financials, your budgets and forecasts you need to understand the makeup of the entire revenue picture in your hotel. Groups vs transient and corporate room revenue and local vs. in-house banquet business create a different picture each month, week and day in your hotel.Understanding what it will take to drive the maximum revenues and profits starts with understanding the piece of business that is going to bring you the greatest contribution of both and what time of year. In most hotels with significant meeting space, it is group business; when these group opportunities are minimal, like summer, holidays and weekends, you want to sell your space to local catering customers. Therefore, you need separate financial revenue reporting within the banquet department to measure your effectiveness. If you lump it all together as many hotels do, you are missing a huge opportunity to better understand and manage your business.The second reason is to organize your team: sales, conference services and catering so you can sell and service the business most effectively. This is where the water quite often gets murky.Depending on how you organize your efforts in catering and conference services, you probably have people dedicated to one or the other or, in some cases, both group and local elements. In your sales department for rooms, you have sales managers with segments to sell into, quotas to meet, and bonuses to earn. These sales quotas must contain food and beverage spending minimums. This is a critical hook that many hotels waiver on with groups in certain "need periods."In conference services, you want to know how much revenue each seller and each group is generating. You want to have Intel so you can see the overall spending of each in-house group. You want to know how much revenue is produced by each catering manager. These leading indicators help you maximize your revenues and profits. If you do not know how much revenue each seller in the various areas is producing, how will you know how effective they are and what is possible.Are you leaving money on the table by not having enough sellers in each area? Are the efforts of each seller today producing enough revenue to justify their positions? Are your F&B spending parameters effective and do they adjust seasonally to reflect your change in business mix? Do your catering minimums and room rental policies reflect the most up-to-date data? Most hotels cannot tell you these important statistics. The main reason is that they do not separate group and local business reporting.On top of all of this is the 6,000-pound rhinoceros in any hotel that has significant group business mixed with local banquet demand. How and who controls the meeting space in your hotel? What tools do they have to help them decide when to release banquet space for local business and when to hold onto it to sell to groups?Are you organized to make the best decisions for the hotel?In most hotels, this is a hotly contested subject. Most hotels have some guidelines but when you dig into the policy for meeting space vs room nights, vs room revenue, vs banquet revenues, vs group spending, vs local spending ,vs the profitability for each element, you are not going to find much in the way of evidence to win your case. You will find a lot of opinions but not a lot of facts to back them up.Having these spending and room night guidelines, by season, by day of the week, and by segment with an effective review process is the picture you want to build. By building this structure in your banquet department you will start to develop your revenue management muscles. The combined rooms and banquets, groups and local revenue management intelligence in your hotel is the result.You need to create the system to separate these two revenue streams in your banquet department to see what is really going on; and it is not difficult. It begins with how you organize your selling and servicing of groups, their corresponding banquet event orders "BEO's" and separate codes for group vs local. Next, it is a point of sale system "POS" that has separate revenue buckets for the group and local sales. These are easily set up. You need floor staff who are trained to "post" the banquet sales to the corresponding codes from the BEO's. You need to review and ensure that all revenues are posted correctly.Next, you need to set up daily reporting for the group and local sales on your daily flash reports. Your monthly financial statements and general ledger need to be programmed to have separate codes and reporting for the group and local sales inside the banquet department. Monthly forecasts and annual budgets that include analysis and reporting are also necessary.Summing it all up.Track and report your banquet group and local business separately. Do this on all your financial reports, daily, monthly and annually. Budget and forecast these revenue streams separately. Track and manage these revenue streams by the seller. These disciplines will lead you to full-blown revenue management processes that integrate rooms with banquets.Understand your business better with the right data and you will make better selling decisions and increase your overall hotel profitability.It is not complicated. What are you waiting for? To get a copy of my financial leadership recipe F TAR W send me an email:david@hotelfinancialcoach.com.To get a copy of my Flow Thru cheat sheet send me an email:david@hotelfinancialcoach.com.Visit my website today for a copy of my guidebook: The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel. www.hotelfinancialcoach.com
Article by L. Aruna Dhir

Would you like to make your Organization the best? Here's how!

L. Aruna Dhir - 27 June 2017
Organizations we work in are much more than structures of mortar, glass and steel. They are actually living things that breathe, inhale and exhale energy and embody characteristics and emotions mirroring all of us who come in and work here.The kind of Organizations we represent can be underlined in three important constituent elements -Progressive Organizations as edifices of good energy.Complex Organizations as matrixes of dynamic traits and mindsets of its workforce.Individual-focused Organizations with significance to the unique disposition and value that each of us bring.We, as complex beings, need to be mindful of all these elements.Progressive Organizations as edifices of good energyPeople-centric organizations such as hotels, hospitals, educational institutions and the like are a world unto themselves. These are people-rich businesses like no other - both on the inside and out - such that for them to be a successful and harmonious venture there must be thoroughly trained and rightly attuned ladies and gentlemen serving discerning ladies and gentlemen (borrowing from and re-phrasing Ritz Carlton Hotel Company's Rule of Business).A Progressive Organization is where we can achieve more than we could in a mediocre one. A Progressive Organization buzzes with happy employees and happier guests! In contrast, commonplace organizations are those where the only thing that attracts the guests is the off-season discounts.We all have worked in both kinds of organizations. There, really, is no ideal organization but both companies, leaders and the team endeavour to make it a win-win place by benchmarking brand values and evolving the brand ethos.Most of us want to work with wonderfully progressive organizations with utopian work environments without realizing that each of us is an essential cog in the corporate wheel. We as micro components and as a whole make the hotel or any other Company what it is - whether in tandem or in conflict with the hotel's parent philosophy.We must do a lot of internalization and introspection in order to make our organizations optimum places to be in. So, the buck must stop with us and not the Hotel owner, Corporate Training Manager, the General Manager or our Department Head alone. Organizations are complex Every place has its mixed dynamics as much as there are a mesh of people who work there and bring in their set of values, drives and energies adding to or depleting the corporate culture.I used to lament about the deep-rooted politics, credit-stealing, clique driven and yes-man culture in one of my previous hotels. And now when my niece talks of her experience with a SwissMNC or a progressively Indian Legal Services / Development sector and my husband brings his woes from the Consumer Durables line of business, I notice that things are not very different.And that the more the companies may be different in their areas and appeal, the more they are the same in their cultural dynamics.In the hospitality industry, the issue is compounded by the power of ten. After all, it is a business of the people, by the people, for the people; to shamelessly borrow from one of Abraham Lincoln's famous thoughts. No organization is immune to the extremely complex and intriguing four categories that a group of people put together in a common work environment bring in, viz. - There are great and efficient workers with questionable personal attributes.There are excellent people with poor set of work related skills.There are pathetic workers with deplorable personas, ANDThere are wonderful, top notch colleagues with exemplary attitudes.It is, indeed, a mixed bag of thoughts and feelings depending on the personal and professional characteristics of the people in question. Our response to them, our kinetics of equations at work and the interconnected web of relationships therein is a result of the chain of reactions set off by each of these conductors. Isn't it?Individual-focused OrganizationsThis finally brings us to the most important element. We, ourselves!Individual-focussed Organizations encourage the zeal and enthusiasm individuals bring to the table. Such companies fuel the passion of high performing individuals and charge up the fire-in-the-belly of employees who strive for excellence and optimal result orientation.Passion for one's work ensures that the tiller paves smoothly all the paths that lead to his work or Goal. Be it, then, the path of wisdom or desire or honesty or punctuality or efficiency or being not just able to lead but also always blend well with the team.Enthusiastic employees arm themselves with the essential requisites for the road ahead - such as education or experience - and keep them well honed.And, if it weren't for the fire-in-the-belly, then serendipity, creative genius, excellence, going beyond the brief and the marvel in the mundane would well be lost.Individual-focussed Organizations recognize this and inculcate such an environment where these attributes thrive and grow.ConclusionKeeping all the above three cogs of the big wheel well oiled and continuously serviced will ensure a smooth and long professional ride in a self-promoted conducive work environment; colour, caste, creed, character, cultural mooring notwithstanding.The essence of the hotel organization is no different whether you are in an exotic land or by the banks of an azure sea. So employ and integrate these three elements for a winsome formula whether you work in a beach resort in Belize, a luxury Spa in Phuket, the mountain top hotel in Swiss Alps, a Palace in India or a Wildlife Sanctuary in South Africa!
Article by Georges Panayotis

Is a global breach of ethics underway?

Hospitality ON - 27 June 2017
All the economic actors are asking for rules to guarantee that competition develops on healthy foundations. It is an essential principle that should not be subject to exceptions because any bending of the rules necessarily results in eliminating deserving businesses, through a distortion of the market to the detriment of the client as consumer, through a misappropriation of market shares... This does not get in the way of a certain propensity towards rule bending in favor of family in a call to tender to treat directly with a close partner without without ever making the call, and towards friendly arrangements to ensure personal decisions.But let's not be naive, the conduct of business is not a long quiet river; it is important to know, at the right time, how to develop alliances, to block initiatives, to apply enough pressure to win over those who are reticent and be able to reward involvement from partners. Does the end justify the means? "Yes," will implicitly answer those who have achieved their goal and were convinced of the pertinence of their strategy. "No," will respond the others who have been eliminated en route by marginal - but not immoral - practices...And yet, while the goal is to become established for the long term, and create a relationship of trust that is much more efficient than a power struggle, to be able to justify the mutual benefit at any given moment of actions taken, there is nothing like respect for rigorous code of conduct, or for an ethic that will make a better impression than an ephemeral success.Times have changed, although practices have not yet been totally adapted to this new atmosphere. Transparency has become an essential criteria in business relations for customer loyalty. Those who have not yet integrated it are frequently reminded of it by shareholders, service providers and even clients, without necessarily needing "whistle blowers". Not everyone is motivated by public well-being and the virtuous concern for business morals. Disclosure is never totally innocent, nor devoid of ill intentions to the detriment of a competitor.The market sanction is the most efficient and often the most painful. Recent examples show that there is no longer any guarantee for impunity. Nike and its manufacturers in countries where child labor is commonplace, Volkswagen and its accommodating antipollution software, BNP and its Iranian contracts, Lafarge and its jihadist funding are just a few instances that resulted in losses of market shares, crashes on the Stock Exchange and heavy fines. If it is more imposed than spontaneous, the moralization of business is supported by a global state of mind that favors fair trade, social responsibility, commercial honesty. More than ever, businesses are considered citizen organizations, which are no longer free to do as they please.But business and ethics are fully compatible because good practices have never slowed development. It may take a bit longer, and require more conviction, lead to some disappointment when the effort is not enough, but the result is much more solid and convincing.Today, politicians seem to want to do away with "old practices" that are not all necessarily legally condemnable but morally reprehensible. These include, albeit a bit late, the terrible sword of Damocles that weighs on their legitimate ambitions. They would do well to take advantage of this moralizing trend to fill in a few holes in the legislative racket, by getting the so-called stateless behemoths that operate offshore, by strengthening cooperation between responsible governments. It is a step in the right direction to sweep off our doorstep, although I am aware that we will never prevent rogue states from playing the financial egoism card.

How to Write a Persuasive Hotel Business Plan

Xotels - 26 June 2017
Why? Many do not have the time, don't know what to write or how to do the financials. But until you finish your business plan, you will not be able to get the financing either. So you end up with ideas sitting in your head not realizing your dream.Really it is not that difficult to make a good hotel business plan. It is merely a structured summary of your idea. Most people try to include everything about their hotel concept in the plan. This leads to an indigestible super novel like bookwork, aka a mess.They key is, knowing what to include, and what not to include in your hotel business plan. Create a clear road map for success. Excite investors rather than bore them to death like most business plans full of redundant information do. And you need to lead readers down the exact path you want.One of the main challenges for example is that after reading the first page most business I often don't fully understand what the hotel is all about. For investors and lenders it is crucial they can quickly comprehend your plan, without reading the whole document.We have put together a guideline / template with 10 critical points you must include in your hotel business plan;1. Executive SummaryThis exists of two parts:Mission Statement: Intro: a 1 line company description only the essence of your hotel (not 2 lines or a paragraph). It explains why you are in business or or which huge need you are solving, that currently is not being met. For example in the case of Qbic Hotels 'Moving modular hotels into under-utilized real-estate to reduce build-out cost and time.'Objectives: What do you hope to accomplish? I.e."Reach an annual occupancy of 90%."2. Company AnalysisMore detailed information on the USPs (unique selling points) of your hotel concept. 3. Industry AnalysisInformation on the current industry trends and the current state of the market and how this will impact your hotel. This is needed as investors want to be sure you really understand the hotel industry.4. Customer AnalysisIn-depth information on your target market, including geographic, demographic, socio-economic, psycho-graphic, behavioral segmentation details. Which are the types of guests who will mostly stay at your hotel? Explain how your hotel will meet the needs of these main segments in terms of location, amenities and services. Basically, how will consumers answer this question 'Why my hotel?'5. Competitive AnalysisA study of your local competition or global concept competitors, with each of their strengths, weaknesses, occupancy rates and market share (SWOT analysis). And don't forget the most important part; what differentiates you from them. What makes you stand-out?6. Strategic PlanThis exists of 3 parts:Marketing: How exactly will you attract customers / guests? How will you position yourself? What will your message be to the different segments of your business mix? How will your direct marketing work? What will is the plan for your hotel website, SEO, SEM and SMM? Will you do offline promotion?Distribution: Which 3rd party channels will you use and how will you manage availability? What technology will you need?Revenue Management: What pricing and yield techniques will you use? What will your payment and cancellation policies be?7. Operations PlanHow will you run the hotel? How much staff and supervisors will you need? What are their job descriptions / responsibilities? What background and experience should they have? When should they start? What are your service standards? Will you develop manuals? Which supplier will you use? How will you manage inventory?8. Management TeamInclude the bios of your team. Focus on what uniquely qualifies you to make your hotel such a success.9. Financial PlanProvide the start-up costs of the hotel (capital investment), the ingoing business costs, operational expenses and revenue projections for the next five years. Include KPI like expected occupancy, ADR (average daily rate) and REVPAR (revenue per available room).If you are raising money, outline how much funding will be needed and when. Explain how you will generate a return on investment for investors, or when lenders will be paid back.10. Key MilestonesThese are the most important achievement which once they have been completed, will make your hotel more likely to succeed. Think off:Location selectionPermits & LicensesBuild-out / Construction of the HotelStaffing and TrainingOpeningGOP Break-evenNOI Break-even10% EbitdaEach time one of the key milestones is achieved, the risk of lenders or investor decreases. And once your last key milestone is reached, chance of success is more or less guaranteed.11. AppendixProvide any other relevant information here. Don't clutter the main sections of your hotel business plan with too many details. Rather support them with attachments in this part.Many people have great business ideas. But that really doesn't matter. The difference between dreamers and entrepreneurs is the action mindset. Are you ready to ship your idea to the market?The first step is to put your ideas on paper. I hope this free sample will help you write a persuasive hotel business plan. Because no investor or lender will be interested if you cannot present a clear plan.Follow your dreams and go for it!Cheers,Patrick Landman @ XotelsFor Expert Help go to www.Xotels.com
Article by David Turnbull

No More Excuses - It's Time For A Change

Snapshot GmbH - 26 June 2017
Technology is not static, it's flexible, and just like processes and services in hotels, it needs to adapt to quickly changing guests expectations and market demands and, if possible, anticipate them. Hotels need to be able to add, tune, upgrade or even completely change their technology stack quickly. Scalability and adaptation to market changes must be a hotel's mantra when choosing a technology provider.This is a challenging and overall pretty new concept, because the legacy systems that have been in place in hotels need to urgently integrate with an entire new generation of SaaS solutions. That said, hotels that manage to embrace this new concept will have a competitive edge.So why is this concept so difficult for hotels to embrace? For one, there is too much friction between softwares. Integrations are the weak link of our industry. Even for some of the best tech companies, integrations can involve months of development and testing to create stable connections.But despite frequent outages, data validation struggles and lengthy waits to be "scheduled", the necessity to integrate prevails. Hoteliers keep accepting that "that's the way it is." That mentality coupled with long sales cycles leave hotels in a technology paralysis. Hotels buy and install key customer-facing technology then sit for seven years complaining about it before making a change. That idea is a scary one, particularly if we look at how quickly technology is changing.Hotels must fundamentally change the way they look at technology planning, purchase and usage. They should consider their technology systems as platforms (rather than servers in the basement) that can be constantly optimized, tweaked and adjusted.Technology needs to have multiple options or versions that fit various segments of hotels. Not every hotel needs an enterprise in mind designed operating software that can handle every task imaginable. So why should they pay for that? Hotels need a modular technology choices, that allows them to pick out the features that they want and need.This modular approach is scalable and doesn't require large upfront fees that swallow-up valuable CAPEX with non-questionable recurring maintenance costs, no matter if the hotels are using the system or not. Flexible pricing models allow hotels to be nimble, adding or removing parts they don't need, in order to keep their technology lean and cost efficient for any property size.Hoteliers can then download apps in seconds and A/B test before paying for the one they want. This flexibility translates itself into changing purchase and usage expectations of the same hotelier when buying hotel technology.With this freedom, as the business grows, the hotel can add features. If business needs change and a feature is no longer needed, the hotel can easily remove it.Hoteliers need to be able to do what hoteliers to best - meet and exceed their customer's expectations. To do this however they need to work with vendors and an entire technology community that promote greater interoperability, flexibility and open access to the data needed to power their guest experience.On paper, all-in-one or full technology stacks are practical for a hotel, but they too need to be able to integrate with new apps and integrate with multiple providers - the grass is always greener. And taking into consideration that an "insignificant" app today could be the next big thing of tomorrow, continuous R&D is a must.The large tech industries have long understood the concept of building platforms that work unilaterally. Our industry needs to adapt to that thinking.The good news is that many incumbent technology providers realize this, reflecting the changing mindset and fickleness of the hotel client base they serve. As we build those systems with open and flexible integrations and pricing, hotels can improve service quality and focus on taking care of guests in ways that no other industry can. Because, at the end of the day, that's what hospitality is really all about.

Who Owns the Guest? Easy - No One

Hotel Business Review by hotelexecutive.com - 26 June 2017
The OTA that was used for the booking has the guest's information (read: email address!), and sometimes they'll share that with the hotel, but not always. (Okay, maybe not even most of the time.) The hotel (or chain) needs that precious information about the guest to remind or entice them to come back and stay again, and again, and again. Should they get it? Who actually owns the guest?
Article by Paul Sarlas

7 Tips for Managing a Seasonal Business

Savvy IQ - 22 June 2017
A seasonal fluctuation can result from dips in customer demand or supply issues.No one can prepare for every possible contingency, but consider these seven tips for developing and sustaining a season-proof business. Here are seven tips to consider:1. Understand the cycles in your industry.Rapid growth of a company is not unusual for business owner who's new to an industry. And that can disguise a normal seasonal fluctuation, leading the entrepreneur to expect the healthy sales will continue.Base projections about seasonality on sales data from at least two or three years. If the business hasn't been around that long, check with peers and industry sources.2. Fortify planning skills."Measure twice, cut once" is an old adage that still rings true, especially for a new business.Look ahead at least six months to plan appropriately. To carry the business through slower periods (the shoulder season) and complete lulls (the off-season), consider stocking away cash reserves during the busy months.Look hard at every element, from inventory to staffing, to avoid tying up cash unnecessarily during quiet months. And don't forget to take advantage of slow stretches to prepare for the peak season.3. Build alternative income streams.Although it might seem like a diversion from the core business, set up additional revenue sources to counteract the off-season. Just don't let attention to the alternative stream overtake a focus on the primary business.4. Customer promotions need to be countercyclical.Don't overlook the opportunity to take advantage of times when competitors may be in quiet mode. Target audiences are often just as accessible before a busy season as during its peak.5. Be creative about staying in touch.Set apart a business by making a point of maintaining visibility throughout the year.Even if regular clients aren't much in contact during the off-season, they might still be around. Be creative about finding ways to stay in touch with them all year round. It's a great way to turn one-time customers into repeat clients.6. Manage the impact of seasonality on staff.Hiring employees, including manager-level talent, is a critical factor for success. In some cases, there's simply no getting around the seasonality factor and short-term contracts are unavoidable.Just be sure to manage expectations of seasonal workers. Be clear about the length of the job and keep abreast of important issues like full-time and temporary regulations and developments surrounding the minimum wage.7. Select a clued-in funding partner.Make it a priority to cultivate a relationship with a funding partner with a firm grasp of the industry and its seasonal nature. A funder with experience dealing with similar businesses can help facilitate what's needed for anticipated expansion, hiring and other capital investments.Seasonality affects nearly every business, with few exceptions. But building seasonality into the business plan will go far in ensuring success.
Article by David Lund

Hospitality Financial Leadership - What is the Financial Communication System?

The Hotel Financial Coach - 21 June 2017
"Systems are everything to a business. Don't change the people. Change the system." - Steve ChandlerWhen people understand and use the business system well we get a superior result. When people don't understand the business system and can't follow the business system we get a poor result. What's the business system in your hotel?By definition, a system produces something. In the hotel business, we have lots of systems we create, manage and follow. In operations, we have many great examples of systems we use to effectively manage. One good example is the system housekeeping uses to turn the house. We wake up every day with hundreds of dirty occupied rooms and we move through our system to check out and clean these rooms and ultimately sell them again a few hours later. It's not rocket science but there is a system to follow; to manage and to ensure its ongoing health is paramount to our prosperity. Room inventory is established, sections are assigned, staff is deployed, the cleaning is done, one by one the rooms come back, maybe we inspect them and we're ready for the next guest. Every day that we work the system, we learn what worked and we adjust and innovate where it didn't work."I cannot say whether things will get better if we change; what I can say is they must change if they are to get better." - Georg C. LichtenbergWith the financial piece in our hotel, we don't naturally see the process as a system we can develop and evolve. The reason we don't readily see this is because the system is hidden and it's not used by most leaders. Most hotels don't produce a monthly forecast and they don't get their managers to participate in the financial system. The system in most hotels is that the controller or director of finance produces the forecast and reviews it with the GM and then it is sent to corporate.In some cases, the departmental numbers are shared with the operations managers with the hope that they will aspire to hit these targets. Very rarely do we find hotels that have forecasts and budgets that have been created by the line managers. This line manager creation is the level you should be aspiring to in your hotel. Imagine your department managers know how much revenue is expected this month. At the same time, they know the corresponding expenses planned for the same period in detail from a zero base. With their payroll, they know their staffing formula and its fixed and variable components. Lastly, imagine your managers tracking their revenues in the month for the month and then, in turn, they adjust their expenses and payroll to control their flow through.When we don't have a system to follow this is impossible and it results in the tail wagging the dog. When we face a challenging month, revenue wise, we are largely unable to react. We are unable to react because no one knows what's in the middle of his or her statements. You might be reading this and shaking your head. Why is this the case? Why is it so hard to get my hotels and their department managers to know their numbers?The answer is: they don't have a system to follow. There is not a good system for financial communication in the hotel. We roll the dice every month. We roll the dice hoping the revenues materialize and when they do we expect a certain profit picture to emerge. When it does, this is great. When it does not happen, we are surprised. What happened to the revenues and why are the costs so high? Didn't anyone see this coming and didn't anyone react? The answer 19 times out of 20 is, that's right, no one knows what the HE double hockey sticks LL is going on financially in their hotel. Department managers don't know if they are making their revenues or not, and they have no plan for the day when the phone stops ringing.All of this is because the hotel does not have a financial leadership system. The executives have not created the system in the hotel. You can't buy this system. It must be created and maintained by the; GM, the director of finance, the executives and by each departmental manager. There is no other way. The attention to this system is an ongoing daily function that needs to be the obsession of the entire team lead by the GM. It's as essential to the hotel's health as being obsessed with great guest service and outstanding employee engagement. Without this financial obsession, the patient, the hotel is on its own, left up to chance. Chance is the development of events in the absence of any design.Create a financial leadership system in your hotel. It starts with the monthly forecast. Every leader who produces revenue, consumes expenses and schedules labor participates in the forecast creation. The forecast is produced by the department managers and consolidated by the director of finance. Inevitably changes will be needed to the details of the forecast to reach the overriding financial goals of the hotel. When this happens, we cannot just make changes and add a little revenue here and pinch a little expense and payroll over there. Leaders must make these changes to their forecasts to ensure any buy in. In the absence of this buy in your leaders are literally thumbing their middle finger at you. Don't make this critical error. Ensure all leaders start the month knowing what their numbers are and ensuring that they created their own numbers. Do not make the fatal mistake that so many make and skip this step.The second part of the system is that we give the numbers a voice, the right voice and we ensure everyone hears it every day. I can't tell you how many times I go to a hotel and ask the managers how room revenue is coming along this month or how banquet revenues are. They look at me like I just asked them how their ballet lesson was. Financially engaged leaders need to know their numbers and to help with this we make the numbers just as important as guest service and colleague engagement in all our daily communications. Leaders need to know every day what the sales were yesterday and month to date for rooms and food and beverage. They need to know the pickup in both areas and the bridge to make the forecasted revenues for the month. We make sure every communication meeting and lineup includes the financial update. Knowing where our business stands from a revenue point each day is critical for our entire leadership team.Tracking the revenue build in the month for the month is essential as it allows the leaders who have planned their expenses and payroll to adjust their spend according to how the revenue picture is emerging. Adjusting payroll and expenses is the quintessential action we want our leaders to be able to accomplish. To pivot when we're down 10% on the top line to forecast is the move we train for. If we don't teach our managers to adjust their spend to the projected revenues in the month for the month we miss the ability to manage the flow through. It is completely inadequate to leave it up to someone else to sound the alarm bell. It's inexcusable to have a look mid-month and see how things are "coming along." We need to hear the numbers daily, the pickup, the bridge and the latest projections so we can adjust our spend in the month we are in. In the month for the month is our battle cry!The fourth part is the review of the month-end financials by the same leaders and managers who produced the forecast, tracked their progress and made their adjustments. They review the freshly printed P&L and general ledger detail to ensure that their lines have the values they managed and not some other numbers. This ensures that we complete the circle and each manager and leader has the tools and processes to own their own piece of our financial process. This ownership is the key to the ongoing monthly financial exercise we take on.The last part of the financial leadership system in the hotel is that each manager and leader who participates in the system writes their own commentary, detailing the planning and execution of their part of the forecast and the month's business. Note what worked and what didn't. Learn every month and know that the job will never be done or mastered.Managing the operating financial piece in your hotel is not difficult. What makes it challenging is there are many people and departments involved and time marches on. To combat that, we need a simple effective system for financial leadership. We need a hospitality financial leadership communication system.What are you waiting for?To get a copy of my financial leadership recipe "F TAR W" send me an email at david@hotelfinancialcoach.comTo get a copy of my Flow Thru cheat sheet send me an email atdavid@hotelfinancialcoach.comVisit my website today for a complimentary copy of my guidebook"The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel" www.hotelfinancialcoach.com

How to Start your own Independent or Boutique Hotel

Xotels - 19 June 2017
Especially if you have never worked in the hotel industry you will be faced with many unexpected situations and complications you might not have imagined. The international hotel business is highly competitive and achieving good financial results is not as easy as it seems.In my experience in dealing with entrepreneurs and investors I have found that there is no shortage of creative ideas for innovative boutique hotel concepts. The challenge however lies more in the strategic and organizational areas of the business.Where to get started if you want to open your own independent hotel? What kind of hotel should it be? How does location influence my business? How to attract guests? How to control operational costs and run a profitable business? These are all important questions that should be dealt with prior to getting into the business.It will be extremely important you prepare yourself well, do a lot of research and develop a detailed business plan to ensure success. Unfortunately I still see too many startup hotels fail due to little planning. In my previous articles I already pointed out some common mistakes made in the pre-opening phase of hotels.In the next few articles we will be covering various important aspects and steps of how to open your own hotel. Topics we will coves include:Innovative Hotel ConceptsHotel Business PlanHotel Market ResearchHotel Feasibility StudyI hope these tips will help fellow entrepreneurs start successful new hotel businesses!Also look forward to your input, ideas and feedback ...Cheers,Patrick Landman @ Xotels

The Ever Present Threat of a Disability Discrimination Lawsuit

Hotel Business Review by hotelexecutive.com - 19 June 2017
Given the increasing number of disability discrimination lawsuits, it is imperative that employers know and understand an employee's rights to leave and reasonable accommodation when injured or disabled. A workers compensation injury is not only covered by rules in the workers compensation system, but is typically also governed by requirements, obligations, and limitations under other important statutes.
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116 | Take Ownership of Your Business with Kelly Harvel

The Lodging Leaders Podcast: Powerful Business Strategies for Hotel Professionals - 14 June 2017
Kelly Harvel, CHA is a life long hospitality professional with experience in all levels of the lodging industry, from local operation to national branding. He currently serves as President/COO of V&S Hospitality Management – a Full Service Hotel Management Company with a focus on operational customer excellence based in Palm Harbor, Florida.

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