GENERAL MANAGEMENT ISSUE

GENERAL MANAGEMENT ISSUE

Investing in hotel real-estate requires a lot of funds. We are talking about tens or hundreds of millions of dollars/euros. You need to ensure a proper ROI is generated with such a strategic investment. Moreover hotels are a multi-million dollar operation. In any other industry we would be looking for a well experienced CEO to manage such a company. Who would you trust to manage your hotel investment? 

Surprisingly enough we see many hotels being managed by former F&B or Front Desk managers with little true experience in finance or business strategies. The hospitality industry is known for its policy to promote from within. Putting an un-experienced or not sufficiently skilled manager in charge of your hotel operation without the proper support team, means you are taking a risk with the results of your investment

The typical career path of a general manager starts in operations, and he/she works him/herself up to the top over a span of 10 to 20 years. The prospect of growth opportunities of course is good from the perspective that it keeps staff eager to stay within the industry.

Unfortunately though, most knowledge and skills are acquired on the job over time. There is a lack of both in-company and external training. Career path development, except from in the large chains, is mostly unheard of in the international hotel industry.

In previous blog posts we have identified weaknesses of hotel sales managers and skills required for revenue managers. The General Manager in a hotel is another key position that should be reviewed. What knowledge, competences and experience should the chief of all managers of a hotel possess?

Of course we should not look the obvious trades of a hotel manager like leadership and motivational skills as well as hospitality experience. But it should not end there. The role of the General Manager in a hotel goes, or at least should, much further.

In terms of strategies, the typical General Manager, in a hotel, insists to have the final say and often overrules researched advise of his executive management team, based on his/her intuition or gut feeling. Ever too often do I hear a GM reverse strategic well-founded decisions based on his/her years of experience.

We see this with hotel website design, search engine optimization, social media marketing but also revenue management. Too many GMs tend to have an opinion on all matters and feel a need to influence all decisions by their team. They feel with the amount of years they have on under their belt in this industry, they are knowledgeable on all areas.

Instead a GM should acknowledge in which fields he has no experience, for example the technical aspect of internet marketing, and surround himself by experts in such field. He/she should not just rely on the opinion of his staff, which often also lack specialist and experience, but recruit or hire a team with suitable technical knowledge and experience.

The title says it ‘General’ Manager, it is a generalist position. We can hardly expect him/her to know all. It would be recommendable though for a GM to take advanced classes in revenue management and internet marketing strategies to be able to better understand his staff and providers.

One thing you should be wary of as an investor is a GM that tells you he knows it all. A GM that tells you he knows what a hotel website should look like, and can get a cheap deal is a potential liability to your ROI. Instead look for someone who has had good previous experience with an internet agency resulting in 40% to 50% direct sales.

Same goes for the overall strategy. To outperform the market and uncover hidden revenue potential of your hotel asset, look for a GM who has worked with the best revenue, marketing and sales managers and is convincing you to invest well in this area. Please don’t go for the one who tells you he can get it done with a junior team managed by him/her. A GM has many areas to overlook, and needs to be able to rely on his executive team to manage the different department.
Instead ask him to show his market benchmark results. Did he outperform his competition in MPI, ARI and RGI (learn more about hotel KPI). Have him show proof of his previous performance. Numbers are all that matter. Don’t fall for the beautiful stories hoteliers as true hospitality professionals are too well at to portray. It is in their nature to make people feel at ease. Look beyond this and obtain facts

Last but not least, a General Manager needs to have good financial business insight. An MBA for the hotel industry would not be out of order. It is very common in other industries for executives to enroll in a post-MBA program after a few years of work experience to broaden and deepen their knowledge and skills in terms of business administration and economic insight at large. This is something we think we really should start seeing more in the hotel industry as well.
Providing hotel asset management services and revenue management consulting for a wide range of hotels in Europe, USA and Asia, we feel there is a pressing need for more structural career path development for General Managers in the hotel industry.

A hotel is a multi-million dollar/euro business which requires a CEO type leader to generate a healthy return on investment. We hope our industry will develop into a more professional one in the next few years when it comes to strategic management. Hotels require both a well experienced and trained team internally and should also attract external specialists to bring in knowledge which is missing in the team.

Don't let the strategies run by just a hospitality professional! It takes more than pleasing guests to make money in hotel, get a real business manager on board

Challenges for a Hotel General Manager

Hotel general managers are the public faces of their businesses. As a result, the manager is expected to be cheerful and unflappable, regardless of the situation. While hotels strive to cultivate an accommodating environment, managers confront numerous stresses behind the scenes. Difficult customers, unconventional schedules and the pressure to turn a profit in a competitive industry are just some of the challenges hotel managers handle on a regular basis.

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Cost Containment

Hotel managers are expected to practice aggressive cost management to boost the bottom line. However, satisfying customer desires for round-the-clock amenities is a costly proposition. That's because the continual operation of heating, ventilation and air conditioning systems represents one of a hotel property's biggest budget items. HVAC accounted for more than 50 percent of the hospitality industry's energy costs, a 2006 IVA Communications analysis indicates. Managers must also consider the impact of taxes on the business, plus increases in construction, payroll and technology costs.

Customer-Staff Relations

Superior interpersonal skills are crucial for success, since managers handle all types of people and situations. Hotel managers must show grace under pressure in dealing with angry guests or emergency situations. Managers need similar qualities in leading and training employees -- especially in smaller hotels, where everyone is responsible for multiple tasks. A keen organizational sense is also required to deal with special events like conventions, large parties and celebrity guest arrivals.

Fewer Job Opportunities

The Bureau of Labor Statistics estimates an 8 percent growth in demand for hotel managers between 2010 and 2020 -- slower than the 14 percent average for all other occupations. One reason is a shift toward limited-service hotels and fewer full-service properties with separate departments. Larger operations have also reacted by reducing the number of managers. For example, many chain hotels now require a single manager to oversee multiple properties within a region. Overall, these trends mean fewer opportunities for managers.

Irregular Schedules

Unconventional schedules and work hours are the norm in the lodging industry, since service runs around the clock. Evening and weekend hours aren't unusual, and some managers may be on call on a 24-hour basis, the BLS notes. If you're not around to run the business yourself, you'll still need a different manager to cover the day-to-day tasks. Time-management skills are important, too, since even managers working a 9-to-5 schedule may be called to handle emergencies.

Safety and Security

Hotel managers must strike a balance between providing an open environment with providing one that ensures its guests' safety and security. A hotel taking this approach would require its security personnel to wear suits and ties, for example, instead of military or police uniforms. Managers must use similar discretion in barring non-guests and disorderly persons from the property. Managers also have to train staff in monitoring suspicious behavior and operating security devices without encroaching on guests' safety or comfort.

Hot and Cold

Amenities like a TV, coffeemaker, and radio were once a luxury in a hotel room, but now they are expected essentials. A white paper by IVA Communications estimates that hotel rooms are vacant an average of 12 hours a day and heating and cooling costs consume over half of a hotel's operating costs. The bottom line is that air conditioners, heaters, lights, and TVs left running in empty rooms result in a bill that the hotel must foot. General Managers are faced with the challenge of developing strategies to make amenity-usage sustainable.

24/7

An unpredictable schedule is the core of a General Manager's life. Whether a toilet overflows or a power outage occurs, a GM can expect to be summoned to the property at all hours. Hotel General Manager Brian Sparrow points out that having trustworthy and quick-witted night staff can prevent a manager from late-night hotel visits. In the end the, GM is the one in charge and the party who will be held responsible for any major faux pas.

Rate Fluctuations

In the era of Internet bookings prices vary from one Internet site to another. Whether it is a walk-in, advanced phone booking or an Internet booking, on any given day guests are paying different rates for essentially the same product. Revenue management and distribution expert Wilhelm K. Weber concludes that General Managers with fixed rates miss out on opportunities to raise prices during peak seasons, and lower rates to encourage occupancy during off-peak times. He recommends that GMs experiment with pricing in order to maintain a steady flow of guests and revenue.

Security

Maintaining a safe hospitality property is an increasingly complex duty. Hackers have discovered ways to pick some electronic door-lock systems requiring companies to return to the drawing board for their most basic form of security. Associate Professor Leong Choon Chiang explains that procedures must be in place for any safety concern ranging from fire to theft. He recommends having a surveillance system throughout the property as well as a door-locking system which can immediately change codes when a guest loses a door key.

No bathtub.
Who are these focus-group participants telling hotel executives that business travelers don't take baths? Air travel is more physically taxing than ever, and after pulling a Rollaboard through an airport, packing and unpacking my computer bag at security, lifting my suitcase (stuffed to the limit so I don't need to check anything) to the baggage compartment and then on and off the rental car shuttle, I relish a hot soak. But walk-in showers, once found only in wheelchair-accessible rooms, are replacing bathtubs with each new round of renovations.

And while we're on the topic of baths, could housekeeping please leave the shampoo in the shower or tub where I left it last night? Especially at service-obsessed high-end chains such as Ritz-Carlton, the protocol is to move amenities back to the sink so they look nice. And they do. But that's small consolation to me once I'm wet.

The demise of the clock radio.
Some hotels have a new generation of clocks that have done away with radio altogether. Sure, you can dock your iPod and listen to your tunes, but that won't give you the local news, a ballgame or the late-night drone of a call-in show (the best soporific I know).

And another thing: If housekeepers would check to make sure the alarm isn't set before proclaiming the room ready for occupancy, I'd have far fewer unwanted 5 a.m. wake-ups. I know I can check for myself before turning off the lights. But I shouldn't have to.

Not enough outlets.
Business travelers use outlets by the desk for charging a laptop, phone, iPad, iTouch--sometimes simultaneously. But at more than half the properties I visit, I find myself on my hands and knees hunting for plces to plug in, or relegating my phone to the bathroom overnight.

No local papers.
USA Today and The Wall Street Journal don't tell me the weather, sports events, TV channels and political gossip applicable to where I happen to be. Business hotels look alike, as do the office parks and malls that surround them. Give me a fighting chance to feel like I'm in an actual place with a local paper outside my door.

The high price of breakfast.
I don't care how much it costs a hotel to make an omelet. When you're charging $14, and the place across the street is making one just as good for $5, it can't help but make me feel I'm being ripped off.

There's more--internet for a price, dysfunctional parking-lot attendants, concierges who know less than I do and front-desk phones that ring and ring--but I'll stop here. And I'll gladly suffer through all these pet peeves rather than return to the days when workout rooms were the size of walk-in closets, HBO cost extra, Wi-Fi was a novelty and the average hotel bed had the topography of a mountain range. The business-hotel experience is, in general, terrific. But paying attention to details like these would make it even better.

Be friendly
Brian Moloney of the Wyndham Cleveland advises guests to be cordial to a front-desk employee--or, even better, a manager--when they check in. "Make eye contact, just like we would do with a guest," Moloney says. That way, if you have a problem and call downstairs to rectify it, you're more than a room number.

Go straight to the top
The chain of command is supposed to work, but issues often get lost in bureaucracy. "Go directly to the general manager," says James Horsman of The Madison, a 356-room independent property in Washington, D.C. "Ninety-nine percent of the time that something hits the general manager's desk, it will be expedited immediately." He suggests getting the GM's e-mail address. "I carry a BlackBerry that's on 24/7," he says.

Don't embellish
When stating your gripe, honesty is the best policy. "I can tell what time you got in, who you dealt with at the front desk, all of that, because I have video cameras everywhere," says Mark Sanders of the Sheraton New York Hotel. "So overstating what actually happened won't serve you well."

Make your feelings known
"So many guests leave and never tell us what went wrong, and we don't hear about it until we read the surveys," says Ulrich Samietz of the Hyatt Regency Vancouver. By stating your case face to face, you'll give the staff a chance to address the issue and, perhaps, compensate you for your trouble