hotelmatters - Issue 15 - Dec 2010

Welcome to the winter edition of our newsletter. We hope that the articles which follow  stimulate you and make you think – and maybe even make you change. Each article is inspired by a client assignment - assignments that stimulate us and help us change our thinking.

But before you click through to the articles, I’d like to introduce Sjannie Hulsman who has recently joined the network. Based in Germany, Sjannie brings several points of difference to the team including a specialism in medical tourism. However her consulting advice is not limited to this area, she also provides her hotel clients with strategic planning, cross cultural skills and hands-on project management. Read her full profile here on our website.

We hope that you find this autumn edition of our newsletter both interesting and thought provoking. We look forward to working with you when your hotel business needs a small consultancy with a big passion for hotels.

Best wishes

The team at Hotel Solutions Partnership

Sustainable mixed-use resorts

reality or ‘greenwash’?

Contributed by associate Miguel Ruano

Sustainable resorts

A truly sustainable mix-use resort must address the triple bottom line: economic, social, environmental – and always take into account the specificities of the development’s location.  Most development branded as ‘sustainable’ tends to focus on either the environmental aspects or the social ones (i.e, community-orientated).  Typically, no matter how good the intentions at the onset, there is no proper balance between the three components of sustainability.  And only private sector developers seem to be truly concerned about the economic sustainability of the development – as most projects supported by public funds tend to adopt a ‘prototypical’ character that does little to demonstrate how environmental and social sustainability principles can be introduced in projects while keeping, or even enhancing, their economic viability. 

Legislation versus commercial gain

Legislation (encouraged by media pressure which fuels and is itself fuelled by public concern) will be a key driver of environmental sustainability in the medium and the long term, particularly in the EU and in other developed economies (Japan, Australia and most likely, the USA).  However smart developers are already taking advantage of the market trend to use sustainability to differentiate their projects from their competitors –  thus gaining a commercial edge and often, also reaping a sales price premium. All these factors interplay in this continuously evolving scene and it all leads in the same direction: more and deeper environmental sustainability. 

The push for low carbon

Forthcoming legislation is likely to continue to focus on carbon reduction, with the ultimate aim of achieving  zero carbon developments. The ability to develop self-standing zero carbon mix-use resorts will depend on a number of factors; such as location, climate, available technology, population density, public transport and many others.  To make a resort into a zero carbon project is probably in itself a contradiction, as visitors will have to use some form of transport to get there –generating carbon dioxide in the process – unless all transport of people and goods is done via zero carbon transport or it is offset by other means (albeit some people claim that offsetting is ‘cheating’). Therefore, to achieve true carbon neutrality, the resort will actually have to be ‘carbon negative’ in order to compensate for the transport to and from.  And, even in such a hypothetical case, reliance on the national grid and on regional renewable energy sources is likely to be required to achieve total carbon neutrality.

The sustainability value chain

To build sustainably, developers face challenges from financial and technological, to practical (i.e, the lack of suitably skilled tradespeople).  The most important factor is probably the lack of a complete and well structured value chain that can put sustainable products in the market at a price the consumers can and will pay.  While the value chain for ‘conventional’ construction has been developed over centuries, even millennia, the new sustainable building value chain is still incipient, and in most countries no more than five years old.  A fully formed value chain includes not only all the ‘links’ (from research and development, education, design and production to delivery and usage), but also all components (from people and resources to technology and regulation). This includes, most crucially, an interested and willing consumer at the end of the chain.  All this takes time to develop, but it is happening fast, because pressure from legislators, media, public, and consumers is encouraging it to happen.

Rewards for entrepreneurs and consumers

Regardless of the external pressures, the rewards for forward thinking businesses are clear: if they get the product right, they will sell better, faster and at higher prices than competitors with non-sustainable products. At the other end, for users and consumers, the rewards typically come in the form of long-term energy savings (providing adequate energy policies are in place), healthier buildings, a better quality of life, a sense of community and hopefully a higher resale value.

Retrofitting versus new build

But the challenge is not only about new developments. The retrofitting of existing resorts is not only desirable – it is essential. Existing resorts will be in the majority for decades to come and the carbon cuts that are required will not be achieved unless retrofitting takes place.  Again, the problem is the current absence of a fully developed value chain that can provide these retrofitting services at a reasonable cost. However, many companies are already working on creating such value chains – to their commercial advantage. Legislation, regulation, fiscal and other incentives will also contribute strongly to this trend.

Eco-resorts, eco-tourism, eco-holidays – and consumers

In some countries, particularly in the west, consumers’ interest in eco-holidays is high and has been for years. Typically, these consumers have a higher education and a keen interest in quality of life and are looking for sensible alternatives to the fast, ‘use and dispose’, consumer society.  This segment is not easily fooled by ‘green-wash marketing’, as they are quite knowledgeable regarding the principles and practices of sustainability and their eco-conscience is very high.

Arguably, not all consumers are like these ‘enlightened minority’. However, it has been proven that most consumers are generally motivated to buy ‘sustainable’ products and if they were available for the same price as ‘normal’ products, most (possibly all)  would choose the ‘eco’ option. People want to feel good about how they live and what they purchase and social pressure is intensifying everywhere. This is no different for holiday decisions – nobody wants to feel guilty while on vacation.

Unfortunately, due to the absence of a fully functional value chain, the eco-products available on the market - whether homes, cars or produce - usually carry a price premium which makes them affordable only to a certain socio-economic strata. However as the market develops and more products and technologies become available, economies of scale will start to have an impact and the entire market will eventually tip over, following the same pattern of products in the past like the automobile, the computer or the cellular phone. Pioneer users start trends that eventually became mainstream, while providing essential funding for the development of mass-market products.

Ignore this at your peril!

Sales and marketing basics

Contributed by associate Alastair Stevenson

We are in an era where a great deal of sales and marketing effort is focused on the web and emerging social media.   Whilst this is understandable, there is a danger that some of the basics are being left by the wayside.  These are things that the successful hotels have always got right, but throughout a now long career in hotel sales and marketing, I continue to see far too many hotels failing to deliver.

Reliance on the web, social media and the new marketing tools cannot compensate for effectively addressing the basics.

Whilst there are many issues that could be addressed, I have highlighted three areas below where hotel companies and independent owners should be assuring themselves they are setting the best possible standards.

1.  Enquiry Handling

It has always been a maxim in the hotel industry that if we effectively convert enquiries then we will keep our beds full.   A bit simplistic of course, but how many hotels can truly say they are doing a perfect job when it comes to handling enquiries?

Earlier this year I made an availability/price enquiry for a group of garden enthusiasts (of which I was one) for a weekend stay in the autumn, a total booking worth in the region of £7,000-£10,000.   I sent the enquiry via the web to four UK country house hotels.  Two of the hotels never responded to me. No business can afford to ignore such an opportunity.

What might have happened?
• The technical system failed to deliver the enquiry
• There was no internal management system to track the enquiry and ensure it was actioned
• Even more concerning, the manager may not have been aware the opportunity was missed

Could this have happened to you? You cannot afford to say, “I’m not sure”.

2.  Sales Team Management

Senior sales staff are a costly resource. Are you getting value for money? We frequently find that senior management has insufficient information to effectively manage the sales and marketing department.  

If your hotel does not have a market segment based strategy, with clear volume and revenue targets, there is every chance that your sales and marketing activity lacks adequate focus.

For example, if your Sales Manager does not know the volume and value of conference business in your budget and most particularly, the amount of new business required to achieve budget, then (s)he cannot plan how much time and money to devote to the sector. Once their time and expenditure budget is clearly linked to the value of business being targeted, they are in a better position to prioritise their own actions and management can more effectively monitor their performance.

We have often worked with management teams to set up systems to implement effective market segmentation as a basis of overall business strategy and development of sales and marketing action planning. The result is fully focused activity that enables effective management of the sales and marketing function.

If you do not have a market segment based strategy with clear volume and revenue targets, you are unlikely to be in full control of your business.

3. Evaluating Campaigns

A great deal of marketing money is spent on campaigns of various sorts - short breaks, F&B promotions, pay-per-click, health club membership drives, etc. But how often have you sat at a Sales and Marketing review and been presented with a detailed analysis of what the business gained for the time and money spent?  All such investment needs to be carefully assessed so you know where you’ve received value for money and to identify actions that should or should not be repeated.

Whilst it is accepted that attracting new customers who could become regular buyers may require considerable investment, the cost must be reasonable. In too many cases the sums are not done and relatively unproductive activity is repeated year after year. Until someone like me comes along and questions it! My favourite is F&B promotions for Mother’s Day or Valentine’s dinners where the relationship between the promotional cost and the true contribution to departmental profit of the extra covers would make the FD’s hair stand on end.

Are you convinced you are getting value for money from your campaigns? You cannot afford not to know. Don’t ignore new marketing and sales opportunities, but be sure they balance and complement the basics.

Better than anyone else

how to lead the business

Contributed by associate Rosemary Jackson

It’s the time of the year when budgets for 2011 are being prepared, reviewed and approved around the world in hotels and hotel companies. I wonder how much executive and management time could be saved if businesses took a cold hard look at what they are all about.  I often see businesses being ‘led’ by leaders who have lost sight of the essence of their business. This gives rise to a waste of valuable time and energy throughout the company, not to mention the loss in actual value which results from resources being applied with a lack of focus.

Sustainable, superior returns accrue to hotels and hotel companies that focus on what they do best. The evidence is that simple and yet it’s incredibly hard to internalise and stick to. It is the rare hotel  that uses the “what we do better than anyone else in town” mantra in making every operating decision across every operating department. And even these companies will only really capitalise if they also align differentiating internal capabilities with the right external market position. Such companies are called ‘coherent’.

As consultants, we are often asked to assess or comment on a hotel’s relative market share (RGI). However valid such analysis is, it seems to me that it is looking at the problem from the wrong angle. If hotel managers and leaders focus on what that hotel or hotel company does well - indeed what it does better than anyone else - and continually makes it better; if they then work hard to find market segments (which may be as small as one person) and if, after all that, they promote, price and position these differentiators, success is almost certain to come. And not just success for one month or one year, but for the long term. And because those hotels/ hotel companies are doing what they naturally do best, that success is not only sustained, it’s sustainable.

In such a world, what would the budget process look like? Well for a start, it would involve the executive team identifying those four or five things that the hotel does really well (better than anyone else) and then allocating substantial resource to do it even better. This might involve improving the processes, improving the underpinning technologies, or training and developing the hotel team. It might require moving resource from non-core areas to core ones. Indeed there may even be a need to bring in new people, new technologies, or new processes. That would be one side of the budget process.

The other side would concern marketing. To put time and effort into the identification of markets – which may be many people, several intermediaries, or even individuals. It would be important to design relevant marketing tools to promote the hotel’s sustainable areas of excellence to a buying community.

So the budget review process would be two- fold:

(a) An examination of whether the hotel is clear about where it intends to be different from the market competition, which capabilities will deliver these differences and how the hotel will leverage those differences.
(b) Validation that the hotel is investing in the capabilities that really matter to making those differences and that it is doing so in a highly focused way that ensures all processes and technologies support the effort. Any performance management system should reinforce this focus.

Coherence around the essential capabilities not only shapes the leadership agenda; it enables leadership to happen everywhere, because it aligns the organization at every level to vision and mission, giving employees the tools to make the right decisions every day.

Inside out

building great general managers

Contributed by associate Ewa Kossakowska

As hotel consultants we work with hotel general managers all the time. After many years in the industry I still get a buzz from the people I work with; seeing their faces, their smiles,  serving them and being served by them, to see them happy and be happy with them.

Maybe such a positive feeling can also be found in a factory, or an office, on a ship or down a Chilean coal mine. But the longer I am a hotel consultant, the more I think it is quite difficult for a hotel manager to move back from a managerial position to rediscover him/herself as a person and a leader.

Today we all seem to be hemmed in – by the recession, bank refinancing, head office expectations, or by unemployment. It can all get a bit depressing and there is a real risk of losing our humanity.

For the hotel general manager, what’s the answer? Here is a four point plan based on my 25 years of experience:

Step One

Look at how you treat yourself.

Do you like the way you are living life? Are you satisfied with your private life? If you are dissatisfied, you’ll be unhappy, demotivated and full (or at least half full) of negative attitudes. How can you expect your hotel executive team and the other employees to become colleagues or friends? How can you expect your boss to respect you? Is it reasonable to expect your staff to trust your competencies all of the time?

I recommend that you look at life positively. You’ve got one chance at life. “Life is what happens to you while you're busy making other plans” – so wrote John Lennon.  Don’t waste any time with days feeling down and negative.

Step Two

Look at how you treat your colleagues.

Are you respected by your team and all employees? By your Board of Directors and the non-executives? Are there gaps that even you will admit to?

Well then, work on closing those gaps. Start by treating all your colleagues – more senior and less senior – as if they were guests that you’ve invited into your home. Practice. And practice again because practice makes perfect.

Step Three

Look at how you treat the team.

How are you developing the team? How are you communicating with the team? How is the team communicating with you? Have you got a long-term service orientated team in place or are you limiting yourselves by focusing on short term targets? Are you training the team or just the team members? Are you delegating enough, too much, or too little? Are you supportive of the team when difficult times come round?

You’ll succeed as a hotel general manager when the team around you, led by you, and of which you are a part, succeeds. Work hard at leading and being led; work hard at developing the team and being developed by the team.

Step Four

Look at how you treat the guest.

Do you go out of your way to understand the business from the outside in? What is the guest experience from the start of the journey (browsing) to the end of the journey (invoicing or posting a comment on TripAdvisor)? And where on that journey are the pain points that you and your team can address? Are your SOP’s current and relevant to the expectations of tomorrow’s guests? Are tonight’s in-house guests your best advertisement for tomorrow’s customers?

Everything you do to add value to the experience of each and every guest will repay itself; every guest that stays in your hotel and leaves without sensing that brand ownership represents a huge opportunity lost.

Conclusion

The hotel business is a people business. We work with people, we lead people, we are led by people and we serve people. Hotel managers that focus on themselves, on their role as team players and team members, on serving and being served, will be the general managers that excel.

Umami

Contributed by principal Ian Graham

At this time of year, I find myself thinking about the future, but also looking back over the past year. Do you?

Life is about the people that you surround yourself with. And of the many interesting conversations this year, one in particular stands out - when our associate Doug Fiedler explained umami to us.  Perhaps you haven’t heard of it, so please bear with me.  Doug seems to me to have F&B ingrained in all he does and thinks. He explained that when humans eat, we use all of our senses (sight, hearing, smell, touch and taste) to form general judgments about our food. But it is taste that is the most influential in determining how delicious a food is. Conventionally, it has been thought that our sense of taste is comprised of four basic, or ‘primary’ tastes: sweet, sour, salt and bitter. However, it is now known that there is actually a fifth primary taste: umami.

The argument goes that the difference between a good [hotel] restaurant and an outstanding experience can be put down to those elements of atmosphere, (mood etc.) that add ‘sparkle’, add umami to the underlying offer.

I liked this story when I heard it and have bought some umami paste from the local deli and it does seem to make a difference to my cooking. “Not difficult” did you say?.Try it yourself!

This got me thinking that actually umami is the element of consulting that I have seen delivered when this team of world-class consultants get together and take our client to a place that they couldn’t have imagined. Like any great team, we train together, push each other, challenge each other and together climb to new heights. And as a result our advice is wider, deeper, longer, and broader than it would have been had the team’s members not excelled individually. So what our clients get is much more robust advice and much more valuable.

The umami of consulting is bundled at no additional cost to our clients. Buy some now!

Plan B

Contributed by principal Ian Graham

We were going to stop the newsletter there, but before we go, we just want to remind you about Plan B.

Rosemary writes eloquently about the budget process that many are going through right now. However you go about it, you’ll be ending up with Plan A – something that Head Office, your team and your advisors all believe is the goal for your hotel for the next year, or the next five years. Well done on getting the beast to bed.

But before you congratulate yourselves too much, just remember that for the Chilean miners it wasn’t Plan A that worked – it was Plan B. And there was a Plan C too.

So in closing, I want you to ask yourself – what is your plan B?

See you next year!