Read more]]> In the past year, we have been engaged a number of times to “fix” hotels. Whether it is for one owner, a large institutional investor, a “Receiver” or a “Special Servicer”, the tasks and challenges are all very similar. Somehow and for some reason their hotel has “lost its way” and is not performing well.

During these engagements, when put to the task of improving performance of the asset, we have consistently found the basic “blocking and tackling” are missing.

Why?

Every owner begins a new hospitality venture with the best intent. Every hotel has a Business Plan developed complete with all the necessary components to bring the “vision” to reality.  Live the dream.

In each of the hotels I am referencing, people lost sight of the business fundamentals.

Let me give you an example.

We recently began managing a large historic hotel in one of the gateway cities in the USA. What we discovered was an asset stripped of its “personality” in a death spiral that was self-inflicted. For example, the rates being charged at the hotel were as much as $100 below market. The Hotel Trip Advisor scores were tragic, with no response from management. Guest rooms and many areas of the hotel were dirty. And the employees at the hotel, many of whom have been there more than 10 years, were hungry for change and leadership. The passionate desire they each had for the place they came to each day, every week, for so many years, was ignored.

Nothing I have cited above costs anything to fix. Everything I have cited above is avoidable. Yet time after time, this happens.

I met with the owner of this hotel last week. He asked me how we have been able to make changes so quickly. My response is….”We care. Nothing magical or mystical…we care”  We simply give the employees (we call them Team Members) the tools necessary to show the guest they care. As an owner ,or Manager, when your Team sees you care….everyone wins.

I would love to know how you show you care.

Every year in December, I take the time, as I am sure many of you do, to look at the past year to see what I can learn from it. I also look forward with great hope and anticipation in January to a time of new beginning, and to the future and what opportunities the New Year will bring.

For all t...

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Every year in December, I take the time, as I am sure many of you do, to look at the past year to see what I can learn from it. I also look forward with great hope and anticipation in January to a time of new beginning, and to the future and what opportunities the New Year will bring.

For all the years since we started our company, I have written my Performance Promise to our Team Members. Every year, the General Managers and other Team Members help me write my Promise. I also share that Promise with all of the owners I work with. This Promise is meant to help these constituents understand what I will do to help them be successful in achieving their goals in the year to come.

In developing my Performance Promise I ask myself what 2 or 3 things I can do as the Leader of the organization, to coach and support our Teams in achieving their success in the coming year. In doing so, I want them to hold me accountable for this Performance Promise.

Indications are this approach works. For example in 2012, here is how one component of my Performance Promise finished the year:

Promise: The Owner:                                                                                                                                                                          Coach, support and hold accountable, Team Members, to deliver the    Cash Flow/NOI/ROI that meets or exceeds owners’ expectations. 

            Measures:   

1.     Revenues: Revpar Budget & Budget Revenues   

2.     Year over Year Revpar Growth vs. Comp Set

3.     Owners NOI Goal met

            Goal:

·        Improve Occupancy from 95% to 100% on every night our hotels are forecasting 95% or higher. In 2011, the “fill ratio” was 63% on nights we forecasted a minimum of 95% Occupancy or more. In 2012, the “fill ratio” was 87% on nights we forecasted a minimum of 95%. 

            Results:

1.     Revpar 105% of Budget.

2.     Revpar Growth  12% year over year

3.     NOI Growth vs. Budget 107%

4.     NOI Growth vs. Last Year 116%

            How did we make it happen?  Really simple “stuff”. But it takes consistent focus and discipline. The execution really focused on daily interaction with our Revenue Managers and the hotel Teams. The hotels received support calls every 3-4 hours managing inventory. I recall one evening when a Revenue Manager called one hotel at 9pm wondering why they still had 3 vacant rooms after having called the competitive set only to hear they had no vacancies. And then every night a hotel had a perfect fill, I called the Hotel Team and Revenue Manager to say thanks. Then every quarter, the 3 hotels with highest “Fill Ratio” received a party box.

In my next few blogs, I would like to share more about my Performance Promise; what I have learned and how it has affected my ability to achieve the goals we have set.

What Promise have you made to your constituents? I would love to hear from you.

Six months ago, for two months in a row, he and his team missed their NOI forecas...

Read more]]> I was talking to one of our general managers recently about a sudden change (not a good change) in the ability to accurately forecast NOI for his hotel, only to find he had stopped doing what helped him be successful.

Six months ago, for two months in a row, he and his team missed their NOI forecast by more than 7%. After conducting a very thorough “autopsy” he discovered there were some daily steps he needed to add to his forecast accuracy daily regimen to return his hotels’ NOI to one meeting the owners’ expectations. With a return of his team’s daily detailed focus on cost management and revenue management, the hotels’ NOI once again returned to the “green” zone. Seems pretty fundamental.

Fast-forward four months. To my surprise, the GM called to tell me they were going to miss their NOI forecast by a whopping 12%. When I asked him what had changed, he indicated he and his team assumed they had “fixed” the problem and had stopped doing what had made them successful in recent months.

Pretty basic stuff, huh? What can we all learn from this story? Whether you are a lineman in football, a centerfielder in baseball or a hotel GM, consistent execution of fundamentals should be as regular as breathing.

How are your teams doing?

As I sat thru owners’ presentations this year, I learned some excuses ...

Read more]]> I am sure I’m not the only person who is happy the business planning season is now, for the most part, history. And as usual, there were excuses being used as a way of explaining past poor performance throughout the reviews.

As I sat thru owners’ presentations this year, I learned some excuses people use for poor performance that even I hadn’t heard in my 30 years of business plan reviews.

So, it occurred to me, there should be a different approach that might enable better performance. How? Focus on not accepting ANY excuses in ANY discussion I have with our teams relating to ANY poor financial performance or operational execution.

What was the result of this change?

It’s too early to tell. One thing I know for certain: This change has made for more brief and focused discussions on goal setting. No more excuses. Now only five questions are discussed that will help us return to acceptable performance:

1. Do you understand the goal?

2. Do you have the tools to get the job done?

3. Do you understand the timeframe?

4. How will you know when you have been successful?

5. Can you repeat back to me the goal so I will know you clearly understand the goal?

There is no excuse. I’ll let you know what happens. What do you think? I would love to hear from you.

E.L. James' popular erotic series, "50 Shades of Grey" has taken America by storm. So much so, it’s difficult to be in any social setting where the topic doesn’t arise. The book has sold 25 million copies, becoming the fastest-selling book ever, topping the accomplishment of...

Read more]]> Got your attention?

E.L. James' popular erotic series, "50 Shades of Grey" has taken America by storm. So much so, it’s difficult to be in any social setting where the topic doesn’t arise. The book has sold 25 million copies, becoming the fastest-selling book ever, topping the accomplishment of J.K. Rowling of “Harry Potter” fame.

But what could “Fifty Shades of Grey” possibly have in common with NOI? Let me connect the dots.

Barnes & Noble, due in large part to demand for E.L. James' racy book trilogy, improved profit by 28% year over year and posted a narrow operating profit — a turnaround from a loss a year earlier. However, as much as 65% of its book sales were digital. In a time when bookstores are being replaced by tablets and other electronic media, Barnes & Noble differentiated itself by partnering with Microsoft and embracing the change away from traditional book sales to electronic versions.

So here is the connection.

As in the book-selling business, our customer is buying differently today (no surprise). The shift from offline marketing to online presence to significantly increase connection to our customer continues. The need to increase revenues to improve NOI is tantamount to our success in achieving the goals set by our constituencies. Barnes & Noble shows us the way!

Here is commitment you should consider for your 2013 business plans:

I will shift my team’s focus from offline/traditional marketing, and engage the travel consumer via multi-channel marketing efforts to build not only my rooms revenue, but also to significantly improve other revenue potential.

In our beta test hotels, in fourth quarter 2011, we shifted away from traditional marketing to “SoLoMo” and multi-channel marketing. Our total revenues YTD have improved 17.9%, leading to 21.7% improvement in NOI.

Focus on targeting and reaching your Internet customer more effectively.

What do you think? I would love to hear from you.

Seems this process always results in a monumental tug of war between all involved constituencies. And as I look back over the countless years I have been an active...

Read more]]> It’s that time of year again when we face the seemingly never-ending process of business planning and budgeting. Joyful bliss, right?

Seems this process always results in a monumental tug of war between all involved constituencies. And as I look back over the countless years I have been an active participant in this struggle, I began to wonder if there was any logic in this process. What is logical about the process? What is logical about the outcome of the process? Does it really have to be so difficult?

In Googling “logic,” I found the origin of the word began with the studies of Aristotle. Aristotle's logical works contain the earliest formal study of logic that we have. It is therefore all the more remarkable that together they comprise a highly developed logical theory, one that was able to command immense respect for many centuries. The core of this definition is the notion of “resulting of necessity.”

So, what is it about our business planning and budgeting that is “resulting of necessity”? The necessity in this case relates to the goals we are attempting to establish as the first step of the business planning process. What is it that we must accomplish?

Here is the question we must answer:

Do you really know what the goal for your hotel needs to be in 2013 for the owner to accomplish his goal?

Look yourself in the mirror and answer that question with acute clarity.

It’s CASH … NOI … ROI. Right? Not RevPAR, house profit, blah, blah, blah.

What do you think? I would love to hear from you.

I attended my first HITEC this year, and OMG! Where to start? There were over 2,500 exhibitors each with a “must have” p...

Read more]]> As I have discussed in virtually all of the blogs I have written, I believe our industry can learn from other industries how to maximize the use of technology to improve NOI.

I attended my first HITEC this year, and OMG! Where to start? There were over 2,500 exhibitors each with a “must have” product and strategy focus. I continue to be excited about what I am learning from successful retailers. So how can I leverage that learning into an improved NOI?

Mobile technology: Local Access to your potential customer

“‘Hyperlocal search’ may be dying, but the phenomenon is evolving and becoming more mobile,” says Greg Sterling, senior analyst with San Francisco-based consultancy Opus Research. “SoLoMo is a more mobile-centric version of the same concept with greater local precision: It’s about getting nearby information on demand, wherever you may be.”

“If you ever had any doubt about whether you needed to worry about your mobile presence, chew on this: There are more people on this planet who own a cell phone than people who own a toothbrush. And not by a small margin either; 1.1 billion more people own a cell phone,” says John Elston, principal/founder of YoDog Marketing. “With 17% of the global population surfing the web via their mobile device, not having a mobile-optimized site isn't even an option! People traveling and on the go in a new area are looking to make a decision fast and searching via their mobile device for restaurants, accommodations and activities. So if you're in the travel industry, your mobile presence is imperative! Not to mention the conversion — 61% of people call the business after doing a local mobile search.”

Service companies ranging from Groupon, Yelp and Foursquare to retailers such as Starbucks have embraced SoLoMo (social, local and mobile) and geo-location tactics, primarily in the form of apps. For example, a shopper craving a cup of Starbucks coffee can search for the store closest to his location.

Here is just one digital marketing resolution your hotel company should consider adopting in 2013. In our test hotels where we adopted this strategy, RevPAR has improved 21% in markets with declining RevPAR, and NOI has improved 17%.

I will bring SoLoMo marketing initiatives to the forefront of my hotel digital marketing plan, enabling me to reach more customers.

The success of location-based social media such as Foursquare has shown us that rewards and recommendations are only the beginning. Hoteliers need to consider how to best utilize SoLoMo to engage their customers and generate incremental revenues. When you consider building your NOI, think about how much revenue potential there is in your “local” customer when added to your Internet based “guest room” consumer. Where will your SoLoMo puck be in 2013? I would love to hear from you.

Read more]]> I was talking recently to a friend and business owner. As usual, we were discussing business levels, challenges to growing our business and how to make "More Money" (a.k.a. NOI) in general. As the discussion moved from minutes to hours, I found we ended up discussing all the reasons we were not making More Money.

Today, in the cold light of day, I look back on those hours and wonder why I allowed myself the luxury of being "a victim." I suppose I could say it makes me feel good by having a very sound and rational reason why I didn't accomplish my goal. I suppose I could say using excuses as a way of rationalizing my poor performance is just human. Or, it was just a weak moment.

What am I doing or not doing that's causing me to not get More Money? I realized I need to hold myself accountable for my own performance and accept no excuses.

The reality is, I cannot afford myself the luxury of poor performance. The only way I can be more successful in this or any other business is to hold myself accountable for accomplishing the goals I have set. Seems simple, doesn’t it?

When was the last time you made an excuse for not accomplishing your goal?

I urge you to look in the mirror and ask yourself, "What am I doing or not doing that prevents me from getting More Money?"

Tell me what you are going to do, and tell me how it turns out. I'll swap my story for yours.

Let’s go make some money!

Read more]]> I’m pretty sure all of us, either as parents or as young teens, have experienced that uncomfortable situation when you had to discuss sex. As I’ve gotten into this blog “thing,” I’ve found myself doing more reading of blogs and news articles, and I think I’ve discovered the equivalent of “sex” for the hotel industry: NOI. It’s on everyone’s mind, but no one wants to talk about it.

I made this discovery in a roundabout way. At the ALIS conference in January I talked to a lot of folks and asked them what was the most important factor in running/owning a hotel. I got a lot of great answers, but none mentioned NOI.

That surprised me, so I asked some folks related to the hotel industry but who are not a part of the day-to-day business — lenders and special servicers — what was the most important aspect of a hotel to them? Literally to a person, the comments all revolved around NOI. Lenders consistently said, “I have hotel assets that need a profit improvement strategy attached to them.” Special servicers and receivers responded, “I need to position my hotel assets to maximize recovery for the lender.”

It would appear those of us in the industry have a problem talking about the most important aspect of our business — NOI — but the people who lend us the money don’t. That’s a real disconnect.

While I’m not sure I will ever be comfortable talking about sex with my kids, you can’t get me to stop talking about NOI with anyone who will listen. The reason is simple: NOI is king when it comes to the value of a hotel. It is the sole purpose for being in the hotel business.

Over the years, I’ve heard a lot of management companies talk about “thinking like an owner.” If you’re not thinking NOI — and only NOI — you’re not thinking like an owner.

There are hundreds of ways to get to your optimum NOI. Some are common sense, some are tried and true and some — especially those that harness technology — are cutting-edge.

What was a good NOI growth for you this past year? 10%? 20%? 30%? Is there a ceiling on NOI? I don’t think so. We have to constantly re-examine how we run our hotels.

I once did a study of approximately 40 hotels I oversaw to determine the profit improvement potential between 95% and 100% occupancy. On an annualized basis it was US$4 million.

Our teams at every hotel began focusing on the “fill” at our daily standups, looking at same-day reservation activity, arrivals, departures and the subsequent two days’ occupancy. Then the teams set out throughout the day to manage the fill. The entire team focused on the fill, including the 3-11 shift front office and the night auditors. In short order, our “fill score” had improved by 70%.

Achieving that result involved taking some risks, including possibly overbooking, being more aggressive in managing the remaining inventory and adjusting rate up or down throughout the day. We realized a few more occupied rooms wouldn’t put so much as a blip in the overhead, but selling those last few rooms delivered real profit direct to the NOI.

In the next blog, I will talk about how we improved a hotel’s NOI 36% last year, and we’ve only scratched the surface. 

What have you done to improve your NOI? I would love to hear from you.

However, you know the saying, “The more things change, the more they stay the same”? Recently, a general manager at one of th...

Read more]]> Most of my blogs thus far have been about using technology to improve NOI. The effective use of technology does make a difference, and I will continue to beat that drum.

However, you know the saying, “The more things change, the more they stay the same”? Recently, a general manager at one of the hotels we operate jumped back to the future with some oldie but goodie marketing endeavors that really paid off. It reminded me that in this complex world you can’t just rely on technology to market your hotel and reach more new guests any more than you can serve only beer in the lounge, or only take reservations over the phone. 

David Lewis is the GM at the Hampton Inn and Suites in Green River, Wyoming, a terrific property that routinely achieves SALT scores in the top 10% for the brand and more recently achieved “Top 5” status. David does an excellent job, but he had noticed that the marketing efforts just weren’t accomplishing the goals he had set for the hotel.

David and his team were working the social media, participating in brand marketing activities and paying close attention to effective pricing and experience packaging. Those plans just weren’t enough. The key was differentiation, but what could he and his team do to stand out to customers? He didn’t send another e-blast or deliver a logoed gift; he dressed up like cupid and made personal sales calls to local businesses on Valentine’s Day.

David won the hearts of 10 new customers thanks to his Valentine’s Day efforts. Why?  Because he remembered that hospitality is a people business, and we buy from people we like. If someone came to your office dressed up as the Easter Bunny (oops, tipped off his April plans), wouldn’t you tear yourself away from your email long enough to go say hello? And, if you were in the market for whatever that person was offering, wouldn’t you want to reward that person with your business just because you admired their chutzpah, their creativity? Would you think of them the next time you needed to, say, host a party for your best customers? 

Sure, David could have used his Facebook page, and given my enthusiasm for Internet marketing, it might have been a politically smart move on his part. But he decided, correctly so, that if he wanted to meet with the decision makers at area businesses, he needed to do something personal, something memorable. And who could ever forget this?

I’m pretty certain that Jaime Peterson from Exterran (left) told a few friends about what happened at work that day.

Marketing a hotel isn’t a matter of either/or — either you maximize the use of technology or you rely on face to face sales calls. It’s an AND/AND business. We use online booking channels AND a call center AND our own website AND e-blasts AND fam tours AND personal sales calls and social media marketing and … and … Add it all up, and you’ve got something special — like a GM willing to show his potential customers a little extra love.

There’s no limit to fun, creative ways to reach out to customers and put the personality into “personal service.” What’s going on at your hotels? How do you differentiate your experiences? How do you share the love?