Nine Keys to Hotel Turnarounds

1. Evaluate the Overall Market.

a. Frequently, a problem with a hotel is not isolated to that hotel itself. The overall market has been impacted.

b. We were evaluating a hotel that was new, in great condition, but had done only an 18% occupancy its first year of operation. When we looked at the market, we discovered that the number of hotel rooms had almost tripled over a three-year period. Federal tax credits after Hurricane Katrina had resulted in substantial overbuilding as compared to the real demand in that immediate area. As a result, we created a plan to operate that hotel with lower occupancy the first year of the turnaround, far below what had been predicted by the original ownership and lender.

2. Inspect the Physical.

a. The physical hotel is composed of all the components of the hotel (furniture, HVAC units, lighting, telephone equipment, carpeting, landscaping, paving). An itemized inventory and inspection of each and every component is vital with recommended actions, budgets and timetables for repair, upgrade or replacement.

b. This inspection requires the work of someone who can drill down to detail. When we are evaluating a hotel room-by-room, making notes of every item missing, needing repair or replacement or not working in every room. Depending on the size of the hotel, it can take several days of solid work to complete the inventory and evaluation.

3. Assess the Staff

a. The Owner or Professional Management cannot be on the property 24 hours a day. Yet, interactions with guests and vendors occur around the clock. The staff either breathes life into the day-to-day experience of the customer or kills off their ever coming back. Make sure you have the right staff to fulfill on the “guest experience” being fabulous. Each and every person counts.

b. Obviously, the General Manager sets the tone for the entire facility. The turnaround will not work if the Owner, Professional Management and/or General Manager is not online with the plans.

c. Don’t overlook the importance of the bookkeeper, sales staff, head housekeeper and chief maintenance officer. Each of these staff roles are key for a successful turnaround.

4. Create a Plan for immediate action.

a. In a hotel turnaround, immediate actions are required to demonstrate movement and commitment…as much to your staff as to the customers. The Japanese have a business saying: “Fire…Ready…Aim.” Paint a wall, deep clean a room, rearrange the lobby furniture…do something! And listen to the staff concerns, because they are looking to see if you are listening to them and will likely judge if they should trust you based on your short-term actions.

5. Create a long-term plan

a. Even though immediate action is required to break the inertia, a well-thought-out plan is equally necessary. Clarify where you want the property to go. What will it take in financial and human resources to make that vision real? In planning, be realistic about timetables, resources and results. Don’t fool yourself.

6. Make sure you have enough money.

a. Turnarounds take money. Plan ahead for financial surprises. The old saying about budgeting twice as much money and twice the time carries some real wisdom.

b. A detailed inventory and a detailed plan will give you good information to create a realistic budget. But don’t be fooled. Your budget is not infallible. Plan ahead.

7. Effectively Market and Sell to Customers

a. Marketing is constant…so are sales. And they are different. Marketing is getting your customers’ attention and interest; sales is having them buy. Marketing itself is insufficient to consummate the sale.

b. I looked at a property several years ago where the owner had created a detailed marketing plan focused around advertising, thinking that would bring real business in the door. But the marketing plan was not designed to actually have people buy. It did not set up the sale, and no actions were directed at closing the sale. Effective marketing and sales must be focused on how much revenue the marketing and sales generate.

8. Be Creative

a. Don’t let the obstacles cloud your vision and commitment. There will be plenty of “naysayers” who will advise you that your ideas won’t work, that they know better how to make it happen, or that “the sky is falling.” And there will be plenty of breakdowns and issues to deal with. Stay open to new ideas. And “keep your head up and your eyes open.”

9. Hire a Professional Manager

a. Einstein said: “We can’t solve problems by using the same kind of thinking we used when we created them.” This isn’t just about the turnaround of the hotel. It is about the turnaround of your thinking. It really takes something to turn your thinking around. Find someone you trust who has done this before and have them work with you.

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