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Brother, can you spare a Healthcoin?

The Analytic Hospitality Executive | SAS - 16 November 2017
Blockchain technology has arrived in the health care space, bringing anticipation of revolutionary change in operational efficiency, data management, security, fraud prevention, disease prevention, and perhaps even in payments. While these are not new goals, I am ever the optimist. As almost every article on blockchain technology points out, the technology itself promotes breaking down “data/process silos” and adoption of a process-wide, end-to-end view of transactions. This is truly great news for enterprise analytics platforms, for payment integrity, member cost management, and for health care fraud detection! I’ll return to the payment integrity focus in a moment, but first a (very) brief explanation of blockchain technology.

The case of missing financial leadership

hotelnewsnow.com Featured Articles - 15 November 2017
Several factors have combined to deemphasize the role of financial leaders on property, such as directors of finance, but hoteliers need to make the roles a priority as they’re key to protecting owners’ investments. I recently read a tale about Sherlock Holmes and Dr. Watson going camping. Asleep in their tent, they both suddenly wake up. Holmes tells Watson to “look up and tell me what you see.” Watson replies, “I see the starry heavens above.” Holmes asks him, “And what do you deduce from that?” Watson thinks for a moment, then says: “I deduce that we are but small and insignificant beings in a vast cosmos.” An exasperated Holmes shouts, “No, you moron! Somebody stole our tent!”

Combat wire fraud with analytics

The Analytic Hospitality Executive | SAS - 13 November 2017
As the banking industry continues to combat increasing fraud challenges, payment fraud is growing exponentially. This growth stems from a shifting payment landscape with new and varied payment options. Globally, governments are introducing new initiatives like faster payments and real-time payments which compress turnaround times. These initiatives are altering the Combat wire fraud with analytics was published on SAS Voices by Veena Hirannaiah
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Hospitality Financial Leadership - Chasing Your Dream

The Hotel Financial Coach - 13 November 2017
Yeah, runnin' down a dream - That never would come to me - Workin' on a mystery, goin' wherever it leads - Runnin' down a dream - Tom PettyIn life, we think dreams, big ideas, and accomplishments are someone else's domain, but not ours. We think those people are special, gifted, magical. They were the ones who were chosen for that higher calling to be that explorer, the writer or the leader that made a difference and really had something special to do and share wath the world.Well, that is not true.We all have that something and it is right there, inside of us and we can see it, feel it and we know its power. Yet we almost always ignore it, run from it and diminish its meaning and potential. The thing we have inside of us needs to be worked on every day like we are polishing a precious stone. But ignoring it and walking away from it and not doing the work is the path we almost always take.Why?Why do we not follow our path to adventure, pure engagement, a calling of the soul? Why would we not want to have a life full of such enthusiasm and joy?My dream hit me like a big rock, square in the forehead at 4 p.m. I had spent the entire day giving a class inside my hotel to 40 department managers on hotel finances for dummies. I did not tell them that was the name, it was coined something else. I really did not want to do this workshop but my General Manager had made it a mandatory."No workshop, Mr. Lund, and no bonus this year," he said, "It is the right thing to do." He said this because I explained why my forecasts were so weak."The other department managers give me crap information, always late and I end up changing 90 percent of it," I asked, "Why can't they send me good quality information and why do I have to hound them every time?"Well, at 4 p.m. that day class was over and I had a lineup of leaders wanting to talk to me and thank me for the day. I heard some amazing compliments:"Finally I know what you do with my stuff.""Had no idea that my numbers were sent to corporate.""No one has ever shown me the P&L this way.""When are you going to do another class on the financials?" and on and on.Unbelievable. I was elated and stunned. I felt like a celebrity, not the controller that when seen people would normally run in the other direction. These were the same leaders that were always late with their forecast or budget or month end commentary information. That evening I reflected on what happened and all I could think of was, this is a game changer. I am on to something. I remember telling my wife how much I liked giving the workshop and she said, "Do it again!" So I did.Fast forward seven years. I am now the regional controller in another country, having accepted a transfer four years earlier. My workshop had won my company an international innovation award the year after I created it. I had delivered the workshop many times in my hotel and inside my region, and refined its content and practiced my delivery. Every time I gave the workshop my students would line up and give me the most amazing comments. I loved spending the day lighting up these leaders. I also realized that my job as the chief collector of financial information in the hotel got easier and easier the more I educated my peeps.This was magicThe class changed my life and theirs, too. Now they saw the financial piece as not scary and not difficult. Remember your version of the boogie man when you were a kid? Where was your boogie man: under your bed or in the closet? You can insert your version. One day you turned on the lights, looked under your bed or in the closet and GONE! You no longer believed in the boogie man. Well, this belief, "I'm not a financial person," is exactly the same thing. The leaders believed this was something hard, beyond them and scary. The workshop showed them this was not true and, like the boogie man, they stopped believing they were incapable of being a financial leader. This was magic.I often thought about my workshops and dreamed of taking this idea to the world. Be careful of what you dream.One day my job came to an end. When it did I had a choice, go find another job like the one I had or go on an adventure. The idea of the adventure was very scary. So much uncertainty, I did not know where to even begin. But for me the other side of the coin was unacceptable. To go back to the grind, to return to the politics, the greed, was not in my cards. I remember going to an interview for a similar roll in another brand, I nailed the interview, said all the right things. I left that interview, got in the elevator and loosened my tie, and by the time I made it to the street I was pretty sure I was going to puke. I was freaking out. Why am I doing this? I know this is not what I want, damn it!That was it for me. No looking back - just looking ahead. My adventure was now underway. There was no way I was going back to the corporate world. I knew I had an idea that lit me up. I believed it would work and from that day forward, every day when I would wake up it was my mission to put wheels on this workshop and change the way hotels work financially. I could see my path.Funny thing is, the more I worked on my vision the more the path became clear. I know some days I would question my idea. Was this really going to work, would it be successful, would hotels hire me to change their financial leadership?I did not know the answer but I believed there was nothing else in this world that I wanted to do.That is what keeps me in action. I do not want to go back so I better make this work. That is a powerful incentive - to not want to go back to prison.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comEFTE and Productivity ExerciseHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"F&B Productivity SpreadsheetRooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WHotel Financial Coach - "Speaking Sheet"Flow Thru Cheat Sheet - EnhancedVisit my website today for a copy of my FREE guidebook:The Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel
Article by Mariano Faz

Asset Management Guide: Operator Search

TFG Asset Management - 13 November 2017
Feasibility Phase: Once a development has been secured and appointed to our team, the first task is to determine the hotel criteria, such as room mix, F&B outlets, leisure facilities, etc. We undertake an in-depth analysis of the market to identify niches that can be filled that will prove crucial to the hotel's long-term success. The first step is to understand current and future supply. Evaluating demand factors and the potential business mix for the property by using market data is key to developing a viable business model. From this analysis, we can then derive a detailed area schedule for the project.Initial Selection of Operators: The next step is to identify a hotel operator that will have the best chance of success managing the property.It is important to prioritise operators that already have a presence in the market. It helps to evaluate their current performance and use it as a benchmark.Using a brand matrix, we will identify 12 to 15 prospective brands to create our initial list. Following a comprehensive analysis, we will create a shortlist of five to eight operators.When selecting an operator, we must ensure the brand meets the owner's expectations. Not all brands are suitable for certain owners.When approaching potential operators, the asset manager should send each a Request for Proposal (RFP) highlighting the unique selling points of the project. This document includes a brief description of the owner, area schedule, preferred business model, project location and a brief market analysis outlining its potential.It is important to engage with each operator's development team. Through these discussions, the asset manager will better understand the operator's decision-making processes, its speed in responding to requests, its approach to the market, and many other insights.The management agreements will have a term sheet that includes multiple clauses that need to be revised and compared with the financial forecasts.The following are typical clauses found in a hotel agreement.Term - Length of ContractManagement Fees - Fees paid to the operatorBase Fee - Percentage of gross revenueIncentive Fee - Percentage of profitRoyalty Fee - Compensation for the use of the hotel's brand name, logo and service marks, base as a percentage of gross rooms revenue and in some case total gross revenue.Reservation Fee - Fees to support the cost of the central operations' office reservations system.Sales and Marketing Fee - Fees for brand sales & marketing campaigns charged to the owner based on rooms or gross revenue.Loyalty Fee - Fees for using the operator's loyalty programme and the cost of points and indirect costs due to redemption (ADR impact).Licence Fee - Fees for logo and image rights based on gross revenue.Furniture, Fixtures and Equipment Reserve (FF&E Reserve) - An amount deducted from the P&L and held in an escrow account, typically a percentage of revenue for future upkeep of the property.TSA Fee - Fees paid to the operator for technical expertise; these are incurred during the design and building phases to ensure the project is delivered to brand standards.Budget Approvals - The right for the owner to access the budget and have approval rights over it.Owners Priority Agreement (OPA) - An amount or percentage paid to the owner before the incentive fee is paid.Owners' guarantee - A fixed amount funded by the operator, in case of a shortfall in profits.Termination - The terms under which the owner can terminate the agreement with the operator and vice-versa.Keeping in mind the owner's expectations, the asset manager aims to create the most beneficial agreement for both parties, ensuring the operators are not overcompensated for their work and the owner's interests are well protected. While owners will always seek to pay the smallest fee possible, it is also in their interest that the operator is rightly compensated to motivate them, leading to better results.When negotiating a fee structure, we recommend prioritising compensation that is linked to performance. For example, we would recommend higher incentive fees that are based on Gross Operating Profit (GOP) as opposed to higher base fees linked to top-line results, as this incentivises operators to strictly control expenses.During this process, we obtain feedback from the owner in order to align their objectives with those of the operator. The final step is to sign a Letter of Intent (LOI). Once the LOI is signed, the legal teams negotiate the specificities of the management contract. Securing an operator is a complex process that typically takes anywhere between nine to twelve months. It is vital an experienced asset management team manages the process. An experienced team will take into account the priorities of operators and owners and will work to reach a mutually beneficial agreement in a short timeframe. A hotel management agreement is a long-term commitment between the operator and owner. It is vital the right agreement is put in place to avoid any potential problems in the future.

The open-border-policy that's shaping African travel

Jumia Travel - 10 November 2017
According to Dr. Wouter Geerts, Senior Travel Analyst at Euromonitor International, as opposed to the US and Europe where there are increasing calls for stronger border controls and barring certain travelers from entry, African leaders are seeing and using travel and tourism as an avenue for boosting the continent's economic prosperity."While there is a very long and hard road ahead, the intention of making travel easier for Africans is a very positive one. With strong increases in population numbers and disposable incomes expected over the coming decades, it is important for African governments and tourism boards to stop focusing solely on attracting long-haul travelers from the US and Europe, and instead look at their closer neighbors," adds Dr. Wouter.Research by the African Development Bank 'Africa Visa Openness Report 2016' shows that Africans still need visas to travel to 55% of other African countries. However, some countries have made good progress. For instance, Ghana is one of the countries fully supporting the Agenda 2063, having started to offer visas upon arrival for all AU member states in 2016, and visa-free travel for 17 countries, mostly fellow Economic Community of West African States (ECOWAS) members. Reports such as Jumia Travel's Hospitality highlights indicate that the adoption of visa liberalization policies could increase Africa's tourism by 5 to 25%.In fast-tracking the continent's integration, other aligned projects include infrastructural development and air connectivity. IATA predicts a stronger growth of 4.8% in passenger numbers in the next 5 years starting 2017, from the current 3% Africa's contribution to the world's air traffic.While attempts to open air traffic between African countries has been significantly slow, the World Travel and Tourism Council notes that opening air markets; which includes reducing or eliminating the existing lengthy government-to-government negotiations for every new airline or route, is a significant driver of travel and tourism. Regular review of airport capacity and infrastructure by states will further shape African travel, and support economic development.

Asset-Managing the 2018 Budget Story

Hotel Online - 9 November 2017
As summer tumbles into fall, hotel asset managers grapple with the annual challenge of reviewing and approving budgets for their hotel or hotels. As they leaf through page after page of a budget submitted by management and cobbled together with input from all facets of hotel operations—from housekeeping and food and beverage to maintenance and marketing—asset managers ought to look beyond the spreadsheets and revenue projections to conclude whether they are reading a great story.

Hotels want it both ways but that's impossible

hotelnewsnow.com Featured Articles - 9 November 2017
Hilton just announced it will roll out a “flexible pricing approach” that likely mimics airlines. Hotels may want to price like airlines, but are they ready for the related customer satisfaction nightmares? About two weeks ago after Hilton’s Q3 earnings call with investors, people picked up on what President and CEO Chris Nassetta said about the four brand launches in the works, and that news was the talk of the town for the next few days. We’re “taking it from 48 or 72 hours (cancellation windows) to seven days, and then seven days and beyond, with a flexible or semi-flexible pricing approach,” he said. “I think it’s going to … help us deal with this issue (of short-term cancellations) in a more meaningful way and a way that drives higher RevPAR growth.”

Tourism Boom: How Spain's Hotels Are Capitalizing by Owning Their Supply

Hotel Online - 8 November 2017
“In today’s world, either you change or you will be changed. So, either you act and then you make some hard decisions and take some risk … or somebody is going to be acting for you – that’s somebody called Booking.com, Expedia, Airbnb, Google, Amazon, Facebook.” They’re the words of Sébastien Bazin, CEO of AccorHotels, who spoke at this year’s South America Hotel Investment Conference on the need for hotels to take control – or risk losing their place in the driver’s seat.

Asset managing the 2018 budget story

hotelnewsnow.com Featured Articles - 8 November 2017
As summer tumbles into fall, hotel asset managers grapple with the annual challenge of reviewing and approving budgets for their hotel or hotels. As they leaf through page after page of a budget submitted by management and cobbled together with input from all facets of hotel operations—from housekeeping and food and beverage to maintenance and marketing—asset managers ought to look beyond the spreadsheets and revenue projections to conclude whether they are reading a great story.
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Avoid These Four Marketing Budget-Planning Mistakes This Season

MarketingProfs·Requires Registration - 8 November 2017
It's early November. The air is crisp, leaves are falling, and sweater weather is back. For B2B marketers, that can only mean one thing: planning season.

How shifting laws on tip-pooling could affect hotels

hotelnewsnow.com Featured Articles - 7 November 2017
U.S. Department of Labor regulations currently prohibit employers from setting up tip-pooling arrangements for employees who are not customarily tipped, such as back-of-the-house staff. But that could change. If you have a restaurant at your hotel property, you are likely quite aware of the ongoing controversies regarding “tip pooling,” a common practice in many eating and drinking establishments in which tips are pooled and split among employees. Under federal law, mandatory tip pools are permitted. However, if an employer is taking advantage of the “tip credit,” tips can only be redistributed to other employees who work in an occupation that customarily and regularly receives tips. According to the regulations, such positions would include other servers, bartenders, service bartenders, counter personnel and bus persons.
Article by David Lund

The Four Things My Hospitality Financial Leadership Workshop Taught Me

The Hotel Financial Coach - 6 November 2017
By creating and delivering my hospitality financial leadership workshops I learned 4 very important lessons. The lessons center around how this workshop helps leaders change and become financially engaged.
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When Competitive Research Crosses the Line

Hotel Business Review by hotelexecutive.com - 6 November 2017
Competitive intelligence is a powerful tool used to maintain an advantage over competitors. A wealth of competitive intelligence can be obtained through public documents like public filings, earnings reports, and legal documents. Compiling, reviewing, and extrapolating the competitive intelligence from those documents takes time and money. Succumbing to the temptation to shortcut the necessary effort can have costly legal consequences. Hospitality industry companies must thus be wary of engaging in methods that cross legal and ethical boundaries. Companies must also be watchful of any efforts by their competitors to gather intelligence from them.

The "TRICK" to Navigating the Turbulent Seas of Transition: Traditional Lodging Makes Waves on the High Seas, Part II

AETHOS Consulting Group - 3 November 2017
AETHOS Managing Director Thomas Mielke spearheads a profound look at the human resources staffing and skill set issues and challenges that are faced in the cruise sector. This is the second in a series of four articles focusing on human capital advisory in the cruise space.Approximately a month ago, following Ritz Carlton's previous announcement about moving into the cruise line sector, I contemplated the issues that must have been discussed in the board room prior to committing to such an endeavor. It stirred my thinking about a company's transition into a new business area that requires new skill sets and a firm's transformation from a company culture perspective to accommodate and welcome a new talent pool into its realms.Employers are acutely aware of the challenges they face nowadays, so they are preemptively having strategic discussions and preparing detailed action plans to cope with these kinds of business and organizational changes - whether it is a Ritz Carlton moving into the cruise line sector, for example, or Accor moving into a new hybrid segment with Jo&Joe, a brand described as "a vibrant living space, a home that is open to the external world [...] which provides a made-to-measure solution for the Millennial-minded Townsters and Tripsters."Sticking to the topic of traditional lodging leaving the shores, I wanted to hear and learn firsthand from an executive who has witnessed similar change. I sat down with Marco Ciraulo for a brainstorming session. Marco is a former Cunard and SAGA Cruises employee who subsequently gained experience within the hotel industry, including with Four Seasons Hotels & Resorts, before returning to the cruise line sector. He is founder and owner of Culina Consulting as well as a senior teaching fellow at the University of Surrey where he lectures on organizational change management, business strategy and hospitality operations, and where he holds senior executive education seminars.The "TRICK" to Success in Brand RepositioningCapitalizing on the knowledge obtained in the luxury hotel industry, Marco is currently involved in advising an established European cruise operator to move into a more high-end market segment. He is helping this operator develop a new hotel room product and Food & Beverage (F&B) concepts, as well as getting involved in defining the client's service and product proposition for its new fleet of luxury cruise liners. Both the soft- and hardware will be quite different from what the client's organization already has. The key question Marco and I were discussing was, how do you ensure that an established, well-accepted and functioning corporate culture and DNA can be carried over successfully into a new business venture and/or adjusted to accommodate the changing needs of the business? Marco's current assignment is very much a question of maintaining a more disciplined, i.e., process-driven, company culture within one part of the organization whilst aiming to foster and develop a more intuition-based and emotive culture elsewhere. The client company's goal is to encourage internal company transfers but it will also need to attract a new talent pool. Ideally, the two value systems will need to be compatible. It seemingly is a similar challenge as that faced by the Ritz-Carlton team: With already well-oiled and much appreciated corporate cultures and belief systems in place, the firms will have to make sure to attract a new type of employee profile without alienating "the base" to set up the new business ventures for success. To manage this, Marco and I suggest the following TRICK:Train and mentor - to ensure existing staff feel valued and understand that there are opportunities to grow and develop across the organization whilst new staff learn to value the legacy of the firm.Raise awareness - for what is different and the reason why it has to be different, making staff understand the new direction that is being pursued.Identify commonalities - to help bridge the gap between the "old guard" and the "newcomers," ensuring greater collaboration between one division and the next.Communicate, communicate, communicate - not only to ensure that the message comes across but also to anticipate and proactively manage potential resistance to change.Kick-start and foster innovation - to keep the firm agile and strengthen staff's openness towards new ways of going about things.Following the TRICK philosophy, and removing all potential 'speed bumps', is key to success. Marco elaborates on this, highlighting that "to get rid of those speed bumps, it is important to avoid any and all unnecessary politics that prevent a team from exceling due to, at times, lengthy decision-making processes at the head office level and/or senior management's occasional, unnecessary involvement and micromanagement of processes that really should be left to the team hired to do the job in the first place." Not wanting to dismiss the importance of trust and control, Marco and I agreed on the helpfulness of guidance and empowerment as conduits to success. Providing a platform and infrastructure to have the team work as entrepreneurs is key.Launching a Landside Brand OffshoreGiven Marco's hotelier's background, we were also comparing the hotel industry to the cruise line sector. Would a traditional lodging operator face particular challenges when moving offshore?In his view, so-called key differentiating factors in the hospitality industry are, in fact, often easily copied. "Having bigger rooms? Providing the better selection of F&B outlets or in-room amenities? It may be costly to replicate, but it can be done without a lot of innovation or time of effort needed, whether this is on- or offshore," he says. Success thus depends much more on the intangibles, the subtleties. In hospitality, it is often the people who make the difference as well as the brand affiliation and the customers' emotional attachment to it that make it hard for competitors to keep up. Ritz-Carlton, therefore, is in a good position - there is no question that it does 'the people side of things' extremely well.One of the main challenges a traditional hotel operator faces, though, when moving its operations to the seas is the increasing complexity of its staffing. Cruise ships employ an extremely diverse crew across the different trades. More often than not, a lot of them do not have a lodging or hotel background and may lack prior experience within the high-end hospitality industry. Adding to this is the fact that there is already tough competition out there for new recruits, with the cruise line industry being the fastest growing hospitality sector. Further complexity is added by the challenging work environment of long working days, limited pay scales and time spent away from home - all this reduces the pool of handpicked, highly skilled employees. When wanting to charge premium rates, this becomes a unique challenge. Moreover, time itself often becomes a challenge since one has to process a very large number of applicants, going through behavioral-based interviews before then organizing and carrying out behavior training and skill-based development programs. Nowadays, one hears it everywhere, but hiring for attitude and training for skill really is crucial in the cruise line sector.Re-concepting the Aesthetic and Service ExperienceAlthough people make the difference, traditional hotel operators should not forget that in the cruise sector the product is so much more than just the look, feel and location of the physical asset. Marco and I were discussing that cruise customers are obviously a captive audience. There are limited opportunities for them to 'pop out' and experience the destination on their own, and they willingly 'succumb' to the predefined agenda of the cruise operator. This means, though, that customers are also setting extremely high expectations.So, besides nailing the service levels and the customer engagement, cruise operators need to think of all the different components of their product - ranging from the physical look and feel of the ship and its venues and outlets to the social interaction on board, the destinations and ports of call that form part of the itinerary, the tour operators that carry out the excursions in the different destinations, the transportation companies that bring customers from A to B.... Getting the mix right and knowing what counts where is an art form. On land, customers typically do that for you, so when they opt for a cruise, they put a lot of trust in operators to get it just right and to their personal likings. To do this right for 300 or 5,500 passengers, that's what we call a challenge!But, in a way, this level of challenge can serve as an object lesson for all brands. After all, most luxury, boutique or lifestyle brands (be they hotel or F&B, etc.) all strive to become destinations in themselves - to build a sustainable community or, what offshore operators would call, captive audiences. So, perhaps the lessons to be learned go both ways... and the next tide of landside innovations in product or service standards will come like a message in a bottle from the seas.

Hospitality Financial Leadership - Measuring and Using EFTE's

The Hotel Financial Coach - 30 October 2017
If You Can't Measure It, You Can't Improve It. Management thinker Peter Drucker is often quoted as saying that "you can't manage what you can't measure." Drucker means that you can't know whether or not you are successful unless success is defined and tracked.In the hotel business payroll is the number one cost. STR recently reported that labor made up 50% of revenues for a sample of over 4,000 hotels of all types and sizes. Having an efficient and reliable way to measure payroll is critical in any business. In hotels, the impact of payroll is amplified considerably and the need to have something you can measure is the key. May I introduce the secret weapon and the star of the show? EFTE's!!!!!Abbreviations.com defines the acronym EFTE as "Equivalent Full Time Employee". I know from my experience that most hotels do not use EFTE's on their daily reporting and the use of EFTE's on their financial statements is not prevalent. The creation and use of this powerful statistic is not difficult. All the information you need, you already have, it's all at your fingertips. You just need to organize it and let it tell you what's going on inside your hotel. Measuring the dollars of payroll in your hotel is very important but understanding productivity is the most powerful tool you have. Getting to understand and measure productivity leads to the comparison of like data, this is where the EFTE is so powerful, it's like a power tool! Many industries use this statistic, and therefore it's not unique to the hotel world.First off let's define the use of the EFTE. EFTE's measure the number of "equivalent" full time employees. This is where most people get hung up. In the hotel business; we have full time employees, part time employees, salaried employees, hourly employees, unionized employees and even contracted labor. What the EFTE calculation lets you see is what's the total of these pieces of our hotel labor by area, department and in total. It also allows you to see the same information for a day, month or year in a comparable way. This is very useful and once you get started with EFTE's you're going to be hooked.Second, lets define the calculation. This is the second most common place where people get hung up. If you can manage a little multiplication and division then this is very straight forward. Remember the first work in the acronym is "equivalent". To calculate one EFTE we need to start with the annual calculation. Once we understand the annual calculation we can reduce the same calculation for any month in the year, a week or and a single day. Now, don't go south on me with the following math vomit. Once you run this through your internal bio computer you will get it. I did and I as one good friend like to remind me, I am not always the sharpest knife in the drawer.For the basis of calculating an efte we use 40 hours as the "equivalent" work week, 5 days * 8 hours per day. In hospitality, we all know most managers and leaders work more than 40 hours so don't let this part confuse you. The second part is the number of weeks in a year. (365/7 = 52.14) Leap year we use (366/7=52.29). We then take our 40 hours and multiply it by our annual 52.14 which equals 2086. Which is simply the number of hours a person working 5 days a week at 8 hours would work in an entire year. Note here we don't factor any holidays or vacation. We just want to know the number of hours one would work in an entire year.From this magic number of 2086 we can figure out the daily and monthly EFTE values.For the daily its 2086/365 = 5.715.For a month, it's the number of days in the month times 5.715.A month with 31 days is 31 * 5.715 = 177.1A month with 30 days is 30 * 5.715 = 171.5A month with 28 days is 28 * 5.715 = 160.0Now we know the basis for calculating the Equivalent Full Time Employee statistic for a day, any month and a year. Let's put it to work for your hotel.There are two key areas in your hotel where you will want to see EFTE's in your reporting. The two areas are daily labor/productivity reports and your monthly financial statements. For the daily reporting, we only need to get the report from our time clock or if we have a manual system the departmental hours worked summary is what we need. Taking the daily hours worked by department and major classification and dividing this number by the daily divisor of 5.715. The second part of the daily EFTE measurement is to divide the month-to-date hours by the month-to-date divisor.Daily hours worked in housekeeping in this sample is 185/5.715 = 32.4 daily EFTE'sMonth-to-date hours worked in housekeeping as of the 18th of the month 3725/ (18*5.715) = 36.2 month-to-date EFTE'sWe can use this statistic for any payroll calcification, big or small. From the number of EFTE's in the room attendant classification all the way to the total hotel EFTE's it's all the same math. We will also want to apply this same view to the forecast, budget and last year values, especially for the month-to-date results.With the monthly financial statements, annual budgets and monthly forecasts we also want to incorporate EFTE's. The report writer in your system needs to be messed with here and you will need the right person to go under the hood and write your financial formula. In addition, you will need to incorporate hours reporting on your monthly closing process. Create general ledger accounts to match each payroll classification you report on your financials. Run a monthly report from your time clock or post each pay period's hours and don't forget to accrue the stub period and reverse last months. Once you get into the swing of booking the hours on your financials its business as usual and now you have EFTE's on your financial statements.Imagine how much more insight you can gain on your business with EFTE reporting. With one glance, you can see the total EFTE's for budget 2018 compared to the latest forecast for 2017. Look no further now we can see the A&G EFTE count, the food preparation EFTE count, the EFTE count for the actual, budget, forecast and last year laid out side by side. Things are now much, much clearer in your financial reporting thanks to the super tool EFTE's.With hours reporting on daily reports and monthly financials we can now introduce productivity reporting. If you want a copy of my article on Rooms or F&B Productivity reporting send me an email and I would be happy to send it to you.EFTE use and reporting is going to change your world. Don't let anyone tell you it's not possible or practical. Your prosperity depends on good financial information and organizing what you already have into highly intelligent reporting is just around the corner.If you want a copy of my excel EFTE exercise send me an email and I will send it with my compliments.If you would like a copy of any of the following send me an email at david@hotelfinancialcoach.comHotel Financial Policy Manual - Inventory of "Sections"Hotel Financial Coach "Services Sheet"F&B Productivity SpreadsheetHotel Financial Coach - "Speaking Sheet"Rooms Productivity SpreadsheetFinancial Leadership Recipe F TAR WFlow Thru Cheat Sheet - EnhancedEFTE & Productivity ExerciseVisit my website today for a copy of my FREE guidebookThe Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotelwww.hotelfinancialcoach.com
Article by Bob Braun

Homeland Security Warns Against Threats to US Infrastructure

JMBM - 30 October 2017
July was another notable month for hotel data breaches - on a single day, several well-known hotel brands and managers, including Four Seasons, Trump Hotels, Hard Rock Hotels & Casinos and Loews Hotels all announced that customer data may have been compromised as a result of a security failure. Each of the incidents is related to Sabre Hospitality Solutions' credit card data breach in its SynXis hotel-reservations system, which Sabre first announced in a quarterly filing with the Securities and Exchange Commission on May 17. Based on Sabre's investigation, Sabre announced that the breach was contained to "a limited subset of hotel reservations," but the incident did allow an unauthorized party to access cardholder names, payment card numbers, card expiration dates, card security codes for some, and, in some cases, guest name, email, phone number and address.Moreover, the duration of the breach was long quite long. Sabre's investigation determined that the unauthorized party first obtained access to payment card and other reservation information on August 10, 2016, and the last access to payment card information was on March 9, 2017. The hackers had potential access for seven months.Hotel owners and consumers are, unfortunately, common victims of security breaches - all of the major hotel brands and managers have been breached, often multiple times. In analyzing the breaches, there is something that is common to almost all incidents: the vulnerability was not with a hotel, its manager or brand, but with a vendor.Hotels are not alone, of course in relying on vendors. Companies in other high threat industries like finance, retail, and healthcare regularly work with third party vendors, and these third parties commonly have access to their clients' systems and may share or store clients' sensitive and highly-valued data. But this Sabre breach (and those of the past several years) shows us that no matter how well-protected a hotel is from a direct cyberattack, its networks and data may still be easily accessed through third parties with weaker cybersecurity protections. In one of the most famous (or infamous) breaches, the 2013 breach of Target, cybercriminals were able to steal the retailer's sensitive data by accessing its systems with credentials stolen from a vendor responsible for Target's HVAC systems. Similarly, in 2017, thieves stole Netflix's "Orange is the New Black" episodes from an audio post-production company, not from Netflix itself.The typical hotel management or franchise agreement requires the owner to abide by or adopt data security policies and procedures in conformance with the brand's or manager's standards and to comply with data security laws and regulations. As a result, even where an incident is the result of the manager's or brand's failure to adopt or maintain appropriate standards, the owner will likely be directly liable for a breach, and may be obligated to indemnify the brand or manager for any claims arising from a breach.Hotel owners are at a particular disadvantage compared to other companies, since hotel brands and mangers typically select vendors, like Sabre, for multiple properties and often for an entire brand. Hotel owners may have little, if any say, in the vendor, the terms of engagement, and the impact of a breach. However, under the typical hotel management or franchise agreement, the hotel owner is required to bear the cost of a breach, whether in terms of direct costs (including notifying potential victims and the increased cost of cyberliability insurance) and the indirect cost of diminished trust in the hotel.While managers and brands are reluctant to cede authority to owners, owners should take active steps to protect themselves and their properties:Review data security policies and procedures critically, and require changes where the policies don't reflect current laws and regulations and, most importantly, current cyber-threats. Training programs should include a strong cybersecurity and monitoring for implementation and effectiveness. Most incidents can be traced to human error or malicious intent, not solely to technical systems.Require brands and managers to impose security requirements on vendors and to ensure that vendors take responsibility for the cost of a breach.Analyze cybersecurity policies to confirm that they adequately cover direct and third party costs of breaches. Since insurance is often one area where a hotel owner has greater control, it can be used as a lever to create a more secure environment.Require that brands and managers develop and test effective backup systems; while theft of data is expensive and embarrassing, newer strains of ransomware, wiperware, and fileless malware have the ability to destroy business records, and only a functional backup system can protect the hotel and its business.

The Top 5 Hotel Revenue Management Trends in 2018

Xotels - 26 October 2017
Let's take a look at the top 5 trends and changes that are driving hotel revenue management.1. A shift to profit managementAn increasing number of revenue managers believe that hotel revenue management has already moved to a specific emphasis on profit management. This may well be what we come to call our profession before long. A focus on profit has become more prominent as revenue managers move on from a reliance on the traditional key performance indicators (KPIs) of total revenue per available room (TrevPAR) and revenue per available room (RevPAR).Instead, revenue managers will use gross operating profit per available room (GOPPAR) as the main KPI. This puts profit at the centre of revenue management strategy, and managers will increasingly search for new techniques to increase the profitability of their hotels.A KPI we have been advocating of as well is NRevPAR or NetRevPAR, it is a step towards GOPPAR from RevPAR, taking into consideration cost of distribution and marketing. It focusses on a net reservation value.ROI is the objective of any hotel investment, so it is only logical the focus on profitability and ROI will continue to sharpen.2. An increased focus on direct hotel bookingsRevenue managers know that one key area to drive profitability is to steer guests away from online travel agencies (OTAs) and book directly with the hotel. This increases brand recall and loyalty, and generates repeat business. It also offers a unique platform to market the hotel via direct communication channels with the customer, offer deals and upsell additional services or room upgrades.OTAs of course have an essential role as a reservations source but they come a distant second to direct bookings for the hotel that takes profit maximisation seriously. To persuade guests to book directly on the hotel website, the benefit must be clearly presented to the would-be guest. Why should they go to your hotel's website instead of to an OTA? What is the advantage? This is where revenue managers will ramp up focus.3. Greater efficiency in use of dataHotels are inundated with all types of data metrics now. There are many KPIs and types of data for hotels to work with. This makes it even more important to understand how to leverage it, to cut through the data thicket and mine it for its true worth. Efficient use of customer data provides key takeaways that in turn drive business decisions.An RMS that encompasses data reporting and analysis tools is increasingly seen as less of a luxury and more of a necessity. This helps drive profits via the insights that efficient use of data provide.Revenue managers are increasingly working out new and improved ways to combine KPIs with specific data types. Software including customer relationship management and resource planning tools provide essential data and will continue to proliferate in use.4. Technology enhancements in revenue managementThe technology that powers revenue management systems is constantly changing. One of the most important recent, ongoing changes is the increased presence of automation. RM systems with automation are much more preferable than without. Automation increases RM efficiency and helps managers focus on driving profitability. They can spend more time on strategy, while data entry and logistics are automated.As a bonus, an automated system helps with aggregating and interpreting data. Other new trends in RM technology are the increasing prominence of machine learning and predictive analytics tools.Technology that integrates with the revenue manager's workflow is key. This can include communication channels management systems, guest review systems and benchmark reporting systems.5. A continuing shift in focus to mobileThe shift to mobile is not entirely new. 2017 in particular saw a significant rise in mobile interaction and bookings. But, it is set to rise further. 2018 will see even greater focus on mobile. Increasing revenue and profits will be increasingly dependent on a mobile website that delivers high performance.For this reason, revenue managers will be keen to ensure that hotel websites are optimised for customer engagement, performance measurement and business generation. Moreover, websites must be continually updated and maintained for optimum performance. It will be absolutely critical to the success of a hotel in 2018.The final word on hotel revenue management trends and changes in 20182018 will be an action-packed year for revenue management. These are some of the most important trends that we at Xotels see coming. Revenue management has developed quickly and established itself as a dominant force in driving hotel success, but 2018 could be its most evolutionary year yet.Cheers,Patrick Landman @ Xotels
Article by Diana Dowell & Ikedi Onyemaobim

Security Shortcomings Exposed By Las Vegas Massacre Prompt Sweeping Security Overhaul Discussions Among Hotels In The United States

Stokes Wagner - 25 October 2017
An Innkeeper's Liability for Guest SafetyInnkeepers are obligated to exercise "reasonable care" for the safety of their guests. This duty of reasonable care requires vigilance in the protection of guests from foreseeable risks -- a duty that requires not only warning guests, but also adequately policing the hotel premises. More specifically, innkeepers and hoteliers are liable for injuries to guests caused by the accidental, negligent, or intentional harmful acts of other guests, patrons, or strangers, if, by the exercise of reasonable diligence, the innkeeper could have discovered that such acts were being done or were about to be done and could have protected against harm either by controlling the conduct or giving an adequate warning to allow guests to avoid harm. That being said, innkeepers are not required to anticipate and guard against the unusual, unlikely or abnormal, or against something that reasonable care, skill, or foresight could not have discovered or prevented.In the context of a guest suffering a violent assault by another guest, a hotel may be held responsible if the hotel knew or should have known that the offending guest may become violent and it could have evicted that attacking guest. Guests of an inn, hotel, restaurant, or similar establishment are entitled to rely on that establishment operator to exercise reasonable care for their safety. In addition, the operator may provide its own security employees or use the services of a private security vendor. Further, innkeepers owe a duty to protect strangers from the acts of guests while at the establishment. Nevertheless, innkeepers are liable to such strangers for the act of a guest only when the hotel knew or, by the exercise of ordinary care, could have known the guest was likely to commit some act resulting in injury to the stranger.Whether a hotel is liable to its guests or strangers for a violent act by one of its guests primarily hinges upon the foreseeability of the act. Unfortunately for Mandalay Bay, hindsight is 20/20 and many questions will be asked about whether it should have noticed a guest making multiple trips to equip his 32nd floor room with an arsenal of guns and ammunition.Possible Next Steps in Hotel SecurityIt is no easy feat to balance the safety of guests with their desire for privacy. Also, the many intrusions and encumbrances of thorough security measures may at times seem antithetical to notions of luxury and hospitality. Most hotels have safety, security, and emergency response procedures in place that are reviewed frequently, tested, rehearsed and updated accordingly. Still, hotel security and guest safety measures remain imperfect. In fact, advances in hotel security have largely developed in response to breaches in security, changes in technology and other unfortunate acts. Admittedly, security in the hospitality industry is more reactive than proactive. However, given the devastation caused during the Las Vegas massacre, hotels must become vigilant in pursuing preventative measures.While many hotels already use closed-circuit surveillance systems, one such preventative measure may include installing state-of-the-art window locks and sensors to alert security personnel and law enforcement when a hotel window has been opened or broken. Additionally, many hotels may need to revisit their firearm policies to decide whether they will prohibit firearms on premises, or place restrictions on firearm possession, such as allowing guests to bring permitted, unloaded firearms for storage purposes only, and requiring that firearms remain locked in a firearms safe or container.With regard to the implementation of security checkpoints, some hotels may consider installing entryway deterrents, such as dog sniffs, metal detectors, X-ray machines and the like. However, despite having proven to be an effective method of deterring individuals from checking in at airlines with firearms, establishing a visible security presence at hotel entryways collides with the immense premium hotel guests place on their privacy. And, while replacing seemingly loose hotel security protocols with more robust security measures that target guest luggage may be an obvious solution for some, the fact remains that such deterrents often make guests feel less safe -- a concern that many in the hospitality sector can ill-afford to ignore.In short, any overhaul in hotel security practices would likely have to be at an industry level. Absent an industry-wide change in security practices, it is unlikely that hotels will undertake the expense of implementing state-of-the-art security measures. This is especially true if hotels fear a potential loss of business to competitors with less intrusive security measures. What is likely, however, is that the impact of the Las Vegas massacre will force those in the hospitality industry to take a closer look at their security measures and adapt accordingly.What does this mean for you? Before October 1, 2017, it may not have been reasonably foreseeable that a guest was going to check in to a hotel, arm himself, and use his room as a turret. Now, it very well may be. As a result, we suggest your hotel add this scenario to its list of considerations as it refines or develops a security program. At bare minimum, your hotel should ask itself (1) what measures are in place to prevent this type of tragedy; (2) if it occurred, what guidance is in place to ensure an appropriate and immediate response; and, (3) on a more mundane level, does the hotel's insurance policy provide or exclude coverage for such events?Hotel security will never be perfect, but hotels have a longstanding legal duty to protect their guests and other visitors. Let's all take a moment and reflect upon what else we may be able to do to ensure that safety remains a cornerstone of hospitality.
Article by David Lund

Hospitality Financial Leadership - Food Cost and the 80/20 Rule

The Hotel Financial Coach - 24 October 2017
We have all heard of the 80/20 rule. But I am willing to bet most of you have not heard it in conjunction with the words "food cost."A good friend of mine who was an executive chef explained it to me and I am going to share it with you.So first off, the 80/20 rule states that 80 percent of any result comes from 20 percent of the activity. In food cost, what Chef taught me is the 80 percent of the food cost comes from only 20 items. That's right--the top 20!What he explained was so simple and powerful. Identify the top 20 food items your hotel buys using the dollar value of those items. It takes a bit of work but once you have your list it is impressive. In the hotel we worked in, the gross food purchases were over $10 million.We did the test and we identified the top 20. Here is our list: Bacon, sausage, cream, butter, OJ, dinner rolls, beef tenderloin, shrimp 16-20, individual yogurt, tomatoes, eggs, ground beef, halibut, chicken breasts, French fries, smoked salmon, coffee, lettuce, rib eye and brie cheese. Sure enough the 80/20 rule was right. We had over $7 million worth of these items purchased in one year.His way of managing the costs of these items is magic. Each month on a rotating basis, everyone focuses on one of the top 20 items. The sous chefs, purchasing department, stores, catering, conference services, outlet managers and purchasing service all focus on that one item. When the entire team focuses on one food item and how to improve on buying it, storing it, cooking it and serving it, positive things almost always happen.So, every 20 months, he turns over the list. This keeps everyone on their toes, including the suppliers. When they get in on the game, they come up with new and innovative products. Everyone knows the food item of the month and it is like a mini competition to find savings. He sends our suppliers a note each month with the annual quantity of the "monthly focus item" we purchase with a request to have the suppliers look for a better product. Suppliers love to help and really respond, especially when they know other suppliers are receiving the same request.Some months ago he told me, with the changes he made one month, the hotel will save $100K next year.Once you see the volume of your top 20 and find ways to innovate, your savings are multiplied by huge volumes.Some of the ideas come from the strangest places. Catering suggested the tenderloin be tested. The director of catering bought AA at home and did not think the AAA was worth the difference. Would a grade less be just as good? They brought in samples and did a blind tasting and, Voila! 60,000 lbs. of tenderloin just went from $12.99 a pound to $10.69. You do the math.Another month it was orange juice. The idea was: Why can't we get it in a bigger portion that the 2-liter containers? Sure enough the supplier came back with a 4-liter container from the same supplier. The switch equated to savings of over $30K.Be careful not to make this a math exercise. A lower price is good but the quality and consistency needs to be there. Let the chef decide and also allow a higher priced product if they feel the product is superior and desirable.Your vendors need to work for youContinually ask them to seek out new and better items from their suppliers. That is their job to keep you happy and buying. Know your top 20 and pull your team together to innovate. Find out what your competitors are using. Pick up the phone and call three of your competitors. Have the chef call the other chefs. Ask them what coffee they are using for banquets. I bet you will find a better more cost-effective alternative. Call your supplier and have them send in samples. Do the blind taste test. Always be looking to your top 20.The other side of this is your vendors work in reverse. They know what you buy in volume, and they look to increase your spending not to decrease it. That is their game so be better at the game than they are. They know who has their ducks in a row.80/20 does not mean you ignore the 20 percent. You continually look for better pricing and quality. Just do not lose sight of where the big opportunities are.

Using Agile Marketing in 2018 to Maximize Results, While Minimizing Risk

Puzzle Partner Ltd. - 18 October 2017
It's no secret -- the process of building out your 2018 business plan and marketing strategy can, more often than not, feel like gambling. Are you going to wager all your chips (marketing dollars) on black or red, odd or even? Should you make a high bet, or an inside bet? What happens if your bet is a bust? Did you just gamble away the potential success of your business or product?What if we told you that you could minimize that perceived risk, while maximizing results? Typically, the missteps experienced in marketing strategies (especially those specific to content marketing) stem from the misunderstanding of preferred content streams and social platforms popularly used by the target consumer, their core values and their subsequent buying behaviors and motivation(s). The problem here is, if a critical misunderstanding exists, but a company goes full steam ahead on that misinformed idea using the bulk of their marketing budget, recovery isn't always a walk in the park. And no one is exempt from this experience; even industry giants such as Pepsi and Dove (to use recent examples) have felt the effects of poorly developed or executed, high budget marketing campaigns that promptly imploded on a very public scale, leaving their PR teams scrambling to pick up the pieces and re-strategize.Large-scale marketing campaigns can also take a great deal of time to develop, approve and implement -- leaving companies at the mercy of a marketing landscape that is, more often than not, rapidly shifting to align with evolving consumers. Basically, if you take too long to come to the table, there might be nothing left waiting for you. This is where the concept of Agile marketing comes into play. The Agile marketing methodology revolves around the efficient implementation of mini, micro-campaigns (or critical segments of a larger campaign) that are released in waves using a highly collaborative approach from your entire team. This allows companies to effectively test and gauge consumer response in smaller doses, without utilizing all (or the majority of) their marketing resources in one shot. With an increase in speed, transparency and adaptability of company process, team members can focus effectively on minimal increments of each project until they become suitable for release or testing amongst consumers. After all, it's frequently said that, within the realm of digital marketing, you need to be able to 'fail fast'. If what you're doing isn't working, you want to know now, not later. The Agile approach capitalizes on this understanding, and ensures you are never putting all your eggs in one basket, so to speak. Instead, you're setting yourself up to fail (and more importantly, learn) fast and adapt quicker than your competition, because you can discover an adjustment that needs to be made after a well implemented mini-campaign or test, almost immediately. Basically, to be agile within the marketing sphere, your business has to continuously leverage data and analytics to identify opportunities, roll-out mini campaigns and adjust existing campaigns or solve problems in real time. The entire approach is based on the traditional rugby 'scrum', where the ball is constantly being moved back into play while two teams are huddled together, pushing and crowding around the ball. In order to score, the ball has to be continuously passed backwards. Applying this format to Agile marketing, to be truly 'agile', a team has to be extremely collaborative at all times, with everyone playing their part in moving the ball (a strategy or campaign) forward to score (positive consumer response). A successful Agile marketing campaign requires everyone on the team to work towards a common goal, understanding that the process is, at it's core, entirely iterative and subject to continuous evolution. When a company is truly agile, they should be able to run hundreds of campaigns simultaneously, while constantly producing new ideas each week.The results speak for themselves. According to Mckinsey, "Even the most digitally savvy marketing organizations, where one typically sees limited room for improvement, have experienced revenue uplift of 20 to 40%. Agile also increases speed: marketing organizations that formerly took multiple weeks or even months to get a good idea translated into an offer fielded to customers find that after they adopt agile marketing practices, they can do it in less than two weeks." So, what does an Agile strategy actually look like?As a great case study example, the Extended Campuses of Northern Arizona University had always used a traditional marketing model, which consisted of annual budgets which fueled 50 or so marketing initiatives throughout the year. As the University become more aware of the rapid pace of the digital marketing realm, they realized they needed to change their process to adapt, remain efficient and relevant.That's when they discovered Agile marketing. Instead of relying on annual plans, they switched to shorter-term bursts of collective focus (one or two months ahead, versus an entire year). This shift in their marketing approach allowed them to be more responsive to their client needs, and move quickly to adopt necessary changes.Instead of assigning a project to a single individual, who then had to push the work through freelance graphic designers and wait through various approval/editing phases, they broke down big projects into smaller, prioritized segments. Within Agile marketing, this breakdown is called a "sprint". The segments were then assigned to individuals (chosen based on skills and availability) within the department, who were able to complete their contributions (creating the collective whole) with ease within two weeks. This not only minimized the time required to complete each project, but the University was able to reduce the amount of outsourced work, which helped to reduce costs. According to the reports, the University has been able to hire more full-time writers and part-time designers, and in 2013 the marketing department created more than 200 collateral pieces-- four times what it produced the previous year. The marketing team limits itself to one hour of meetings a week, with twice-weekly 15-minute "scrum" meetings which help team members to remain accountable and share information without wasting time. Their productivity is up 400%, and sprint tasks have a nearly 95% completion rate.Ask yourself, is your business in need of Agile marketing makeover?
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Time To Revise Your Crisis Communications Plan

Larry Mogelonsky - 18 October 2017
Hurricanes Harvey, Irma and Maria; the Mexico City earthquake; the tragedy in Las Vegas; the wildfires in Napa and Sonoma counties… all are constant reminders of our mortality as well as our responsibilities as hoteliers to safeguard our guests. Calamities on an epic scale are always hard to fully comprehend, especially in the immediate aftermath, when things are so often hard to control. My first thoughts go out to the families who are directly affected by these horrible events, but rather than refuse to believe that this can happen at your property, we must contemplate the inevitable and formulate a plan.

US revokes economic sanctions against Sudan: What it means for hospitality businesses

Jumia Travel - 18 October 2017
The sanctions relief comes as a go-ahead to tapping key trade and investment opportunities in Sudan, across industries such as finance, agriculture, mining and tourism; with companies such as Jumia Travel now planning to revive business with hotel partners in the country. "Like any other business, the sanctions had largely affected our business in the Sudan, perhaps even feeling the pinch more as we are in the travel industry. With an already promising growth in tourism, we are happy to explore the massive business potential that lies in the sector," says an ecstatic Cyrus Onyiego, Jumia Travel's Country Manager Kenya.According to the World Travel and Tourism Council's (WTTC) report on Travel & Tourism Global Economic Impact & Issues 2017, Sudan's tourism sector has registered impressive growth in the past 6 years, with an annual average growth of 49.8% in visitor exports. This, besides directly supporting 1.8% of total employment (193,000 jobs) in 2016, and an expected increase of the same by 5.7% in 2017.Onyiego further notes that reviving Sudan-bound bookings on the online platform will provide increased visibility of the properties, resulting to added growth in revenues. "We believe by so doing it will go a long way in contributing to the employment rate in Sudan, as well as to the growth of the country's economy which is on its road to recovery."Sudan's sanctions date back to the 1990's after the country was accused of hosting Osama Bin Laden, sympathizing with terrorists as well as supporting terrorism activities. The issuing of an executive order by Obama to lift the bans on a probational case during his last days in office paved the path to restoration which has finally culminated to the clearance. With a naturally endowed ecosystem, defined culture and heritage; presently spotting a list of five tentative World Heritage Site, Sudan has an abundance of tourist attractions and unadulterated experiences which if tapped will be an invaluable source of revenue to the country.
Article by Andrew Sanders

What to Look for When Budgeting for 2018

DataArt - 17 October 2017
The hotel industry is now entering "budget season" and making budget decisions this year may be quite an interesting process. There has been a dynamic shift related to the hotel operations landscape. A new type of hotel competitor has been gaining ground quickly, and now the guest is more in control of their stay than ever before. Having a comprehensive plan will increase the chance to garner a competitive advantage in such a vibrant environment.Fueled by new innovations, the hospitality market is evolving exceptionally quickly. Recently Oracle conducted a research initiative titled, "HOTEL 2025: Emerging Technologies Destined to Reshape Our Business". Among 150 hoteliers and 702 guests surveyed, it was revealed that more and more guests want to engage with hotels that offer the latest innovative technologies. The likelihood of this number continuing to increase is incredibly high as technology filters into every aspect of our work and personal lives. The challenge lies with hoteliers and their respective vendors determining the right combination of solutions that deliver either cost reductions or revenue gains as well as defining where to invest their CAPEX or OPEX dollars. We also mustn't forget about the guest. There are a plethora of technologies that are guest-facing - designed to help hotels build a better relationship with guests. Unfortunately, the exact ROI on these particular types of offerings is often hard to find. However, don't let that stop you from investing and implementing these technologies. People are always asking, "What is the ROI on the new engagement platforms?" We must then also ask ourselves, "What is the ROI on trust? What is the ROI on loyalty?"Some of the technology trends that are re-invigorating our industry and that should be considered for your 2018 budget:Mobile - BYOD (Bring Your Own Device) where people bring their mobile devices to watch (stream or cast) their own video content on the hotel TV.Digital Keys - "Keyless entry" allows guests to bypass the front desk, sends a notification to staff before guests arrive, and gives guests the option to book a variety of hotel amenities directly from the app.Data Analytics & Artificial Intelligence - Provides more personalized offerings such as suggesting services based on previous purchases or submitted preferences.Voice Activated Devices - Used as a channel of communication with the hotel (e.g., ordering room service or reporting issues with the room).Wi-Fi - This seems like nothing new, but bad Wi-Fi can sink a hotel's reputation.There is one glaring issue that often seems to be missed. This issue focuses on relevant expertise. As these new technologies are being adopted and implemented, the chance that you have on-property expertise and resources may be limited. Also, if you would like to expand the current offering and integrate it with other platforms such as analytics - you may not be able to perform these development initiatives in-house. Hotel companies need to fully understand the future development roadmap of the products they purchase and ensure that they meet their current and future needs. These new solutions will be part of the hotel technology ecosystem in short order, so you also need to prioritize your technology spend based upon your market segment and upon your typical guest profile. Some of these investments can be viewed as immediate requirement versus future needs. Ultimately, it is up to you, your marketing team, and your IT team to put together the tech budget that help you achieve your unique goals. You should also provision for consultancy and development services as the complexities of our business grow. The quality and speed of technology adoption are critical conditions in our highly competitive environment.Technology providers and solution design consultants, like DataArt, help hotel companies and IT vendors to partition the challenges. Further, they engage with optimized resources to help mitigate the risk related to the adoption of innovative and relevant solutions or platforms. The goal... to help hotels choose and integrate the technologies that will clearly reflect their values and aspirations back to the guest.

Protecting hotel assets before, after the storm

hotelnewsnow.com Featured Articles - 17 October 2017
The nature of natural disasters, like the hurricanes that struck Florida and Houston, is that they are unpredictable. But hoteliers can take steps to insulate their assets before, during and after the storms. This hurricane season—typically from 1 June to 30 November 30 each year, with peak season being from mid-August through mid-October—has been particularly active. For the first time in recorded history, the United States and its territories were hit with three back-to-back Category 4 hurricanes—Harvey, Irma and Maria. While it is still too early to tell, estimated damage associated with these storms could cost hundreds of billions of dollars and take many years to repair.

It's Budget Season. What are you doing about it?

JMBM - 16 October 2017
Importance of budgetsIt's hard to overstate the importance of a budget in the relationship between a hotel manager and owner. The budget is the way that a manager describes, in black and white, how it plans to operate the owner's property; it is the document that translates operating standards into action, and how the owner can expect to profit from the manager's efforts. It is also an important opportunity to be sure that the operator is giving due consideration to the owner's financial expectations and/or exit strategies.Many of the larger independent management companies present a budget with little opportunity for dialog. In significant part, they diminish the direct impact of asset and property management teams. This means people sitting in an office 3,000 miles away make key budget decisions for properties that they have not seen or on markets they have not visited, based on STR reports and raw data. Generally, one would think that the property-level asset management team would be the best to guide the budget process because of their hands-on knowledge - not the corporate budgeting team.Budget challenges owners faceUnless owners have a wealth of operating experience or hire experienced asset managers, they will likely be at a severe disadvantage when they review budgets. Consider typical challenges of the budget timing and process:Managers typically deliver budgets to owners in early- to mid-November, which leaves only 45 to 60 days before the beginning of the new fiscal year. While an owner may be able to analyze and comment on the budget and propose changes, the process itself is lengthy and makes it difficult to complete in a timely manner. Operators have scheduling conflicts during that busy period, and typically take two to three weeks, or more, to prepare a response for the owner's review. Managers work on budgets almost year-round, and larger management companies have staffs that are dedicated solely to creating budgets. They have developed expertise in creating a budget that owners can only match by expending the necessary time and expertise, which takes a commitment that many owners don't understand; after all, didn't they already engage a manager for its expertise?No matter the level of owner approval rights - which range from what might be complete control to very limited influence - managers run the budget process and establish the assumptions underlying the budget, making it difficult to make changes. Leveling the playing field requires owners to engage asset managers to conduct a "shadow" budgeting process.The budget for any single year will impact budgets for years to come. While budgets are generally "zero-based," a budget for any given year is more realistically derived from the budget for the prior year, and budgets ultimately contain a variety of "legacy" items. While the old budget should, reasonably, provide a setting for the new budget, a variety of factors should (but often don't) get adequate consideration, including new labor agreements or laws, renovations and their implications, new supply, addition of new product internally (such as restaurants or bars), and outside influences, such as changes in the convention market and other drivers for the hotel market.Operators rarely provide great detail on the most significant cost to owners - labor expenses - and therefore do not give owners the opportunity to identify potential savings. Similarly, operators often give greater weight to occupancy than rate, which may actually reduce the profitability of a hotel.Owners should be proactive in the budget processBecause budgets are provided so late in the year, and with so little time to review, owners should do more than simply wait for them to be delivered. Owners should take steps not only to be ready for to review and comment on the budget promptly, but to become more involved in the entire budget process.So what should the owner do? First, treat the budget process like the manager does - as a continuing, proactive process, not a reactive exercise. Start considering how the budget should be shaped long before the manager delivers its proposal. Owners should consider providing objectives to the operator at the start of budget process as a way of expediting the process. In others words, provide the operator with a standard that ownership will accept in advance.Some good questions for owners to askOwners should look at the hotel and its results for the current year , and consider some key issues:What worked at the hotel? Where did the hotel stand out, whether it be in occupancy, achieving a high room rate, managing expenses, food and beverage or meeting revenue, and so on? New operator policies on staffing, new brand standards that can add hundreds of thousands of dollars to hotel operating costs.Just as importantly - perhaps more importantly - what didn't work? Was occupancy unreasonably high? Was the hotel unable to compete with its peers on rate? Did the hotel derive meaningful revenue from its restaurants, spa or other facilities? Are there new marketable products that need to be added to the hotel, such as F&B outlets or conferences centers? Should some facilities be leased or operated by third parties, like parking and restaurant operations?Remember that revenue per available room, the most common yardstick for a hotel's profitability, only tells part of the story. Is the hotel catering to the right mix of clients in order to meet and exceed budgets and owners' financial expectations?Does the current budget actually reflect current operations - how closely did the budget's forecast expenditures and revenues match results? This simple question may lead an owner to give greater, or lesser, weight to a manager's assumptions. Asset managers often meet with owners and operators monthly to cover payroll, costs and revenue assumptions. Analyzing those trends currently gives owners an advantage over waiting until budget time to evaluate operator performance.Did the manager propose revisions to the current budget? Did the manager revise the budget without approval? Has the manager (or brand, if the hotel is under a franchise) proposed or implemented changes to its programs? Managers and brands regularly revise centralized services, shared services, marketing programs, personnel, compensation and benefit programs and so on. All of these changes will need to be incorporated into a budget, and an owner should consider their impact early. Owners should also question whether there are changes planned for the coming year to make sure the manager incorporates those into the budget.Are there changes that the owner wants to implement in the coming year? Should there be changes to staffing, revenue management, programming or operations?Having addressed these issues early, an owner is in a position to approach the manager early in the budget process to make the manager aware of the issues that need to be addressed in the budget or, at a minimum, to respond promptly and effectively to the manager's proposal.Finally, the owner should require the manager to meet with the owner and its representatives to discuss the budget. Simply submitting comments is unlikely to be enough to effect real change; there needs to be interaction between the owner and manager.ConclusionWhile some owners have the resources to take these steps, most owners do not, and should consider engaging advisors, including experienced asset managers, to assist in the process. In addition, while a manager's failure to meet budget projections is rarely a breach of a management agreement, the budget process is a key element to the manager's performance; where issues exist with a manager's performance, legal counsel should be consulted to ensure that all of the owner's alternatives are considered.At the same time, waiting until receiving the budget is a practice doomed to failure. Using a golf analogy, the reason that golfers keep score on every hole is so they can clearly understand their performance long before the game is finished and can make adjustments after every hole. Likewise and owner needs to evaluate his operator's performance weekly and monthly. They should not wait until budget time to see whether the operator has passed or failed.The JMBM Global Hospitality Group works hand in hand with owners and their asset managers and other advisors during the budget process. We work to craft management agreements that ensure that the budgets are meaningful in content and delivered in time to allow for true analysis. After the management agreement is completed, we assist in analyzing the performance and responsiveness of managers to protect owners on an ongoing basis.

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