I Am Reading More These Days

I find myself reading more articles on the economy and the hotel industry than I had in past years. Some of what I read has very little impact on my thoughts about how the region is running and others spark many thoughts. I wanted to share this article with you as it hits on cutting costs where the guest will not feel it and focusing our sales and marketing efforts where they make the largest impact for the dollar spent.

This article also hits on preventive maintenance a bit and we all know how hotels with a good preventive maintenance program are consistently under budget in the property maintenance lines.

I would encourage you all to read more about your industry and your markets in a time when the right ideas can make such a positive impact in how we perform. - Steve



The Invisible Cutback

So you need to reduce expenses somewhere, but just what should go? Here’s how some hotels are lowering expenses without guests even noticing.

Thursday, April 16, 2009

David Wilkening

Fresh-cut flowers in the lobby? Cut them, please.

Free coffee? Don’t perk it anymore, decaf or not.

In today’s perilous economic times, many hotels are ending some of their perks. But what should you eliminate? And what should be your priorities for cutbacks? What perks can you lose without impacting your customers?

Perhaps the best advice on what to do next is to consider what amenities might be least missed by your guests. “There are many good reasons why it’s a bad idea to cut dollars from your marketing budget this year, but if you absolutely must cut corners, prioritize before you do,” suggests Neil Salerno, a consultant and marketing coach. Some hoteliers are remaining adamant about cutting back for obvious reasons.

“Why would you cut an amenity now?” asks Glynn Knight, a Courtyard Marriott general manager in Chicago. “That would be shooting ourselves in the foot to do that. If anything, we’ll figure out a way we can add something.”

“We will not touch anything that would negatively affect our guest service level,” says Gretchen Spear, Hyatt Regency Chicago promotions manager. But there are areas to cut back. One example of that is to reduce print advertising. “Consistency is important to increasing direct sales, so to compensate for losses, we are spending less on print advertising and not cutting back on the services we offer,” says Bill Jordan, manager of communications and sales at the Omni Hotel in downtown Richmond, VA. One obvious area to cut costs without shortcutting guests is when an amenity is no longer required.

A good example is Marriott International, which says it is ending its free newspaper delivery at its 2,600 US hotels. “I visit more than 250 hotels a year, and more often than not I am stepping over unclaimed newspapers as I walk down the hallway,” says CEO J. W. Marriott Jr. in a statement. As of June 2, Marriott’s full service hotels will ask guests at check in if they want a complimentary newspaper. The chain cites a 25 percent decline in demand for newspapers. Other ways of cutting back without depriving guests:
The Wyndham chain is taking sewing kits, mouthwash and shower caps out of rooms. The products will be kept behind the front desk where guests can request them.
Some hotels and chains have stopped serving free coffee in the lobby. “We would make it, throw it away, make it, throw it away. You got one free cup but it costs me $22 from all the waste we had,” says Kim Daniel, general manager of The Courtyard by Marriott in Huntsville, AL.

The Ritz-Carlton is doing away with displays of fresh-cut flowers in hotels around the US. Instead, the chain is setting up apples or potted plants, which are cheaper and need less maintenance. “It isn’t anything that the guest is going to notice but yet it can cause considerable savings,” says Vivian Deuschl, vice president of public relations for the Ritz-Carlton.
Ritz-Carlton is also reducing operating hours for restaurants, spas and retail shops. The cutbacks allow the hotels to cut back staff as well lower bills for heating and cooling, says a spokesperson.

Other hotels have cut back spa hours by closing on Mondays. If guests want to use the spa, they are encouraged to book it during the other six days of the week. Hotel consultants say that is a common theme: cut back only those services that guests would not miss.

Bjorn Hanson, veteran industry analyst and researcher and clinical associate professor at the Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management at New York University’s School of Continuing and Professional Studies., says common place cuts include less expensive soap in bathrooms to switching from flat-priced breakfast buffets to a la cart meals. He says hotels want to save money but that guests also won’t miss some amenities. “There is a heightened consumer sensitivity to items of waste,” he says. “Travelers will want to know why hotels are putting these expensive things in the room and, in effect, charging for it. ”Some hotel experts say a low priority in cutbacks is personnel -- for the obvious reasons that service is what hoteliers are selling.

The same applies to pay cuts or reduced hours. “We have made no job cuts and are honoring our commitment not only to expansion but also to our employee bonuses and health care,” says P. C. Amin, founder of Shamin Hotels in Richmond. Some hotels have cut costs by firing employees or cutting their perks or bonuses. Some hotels are also offering unpaid leave. “It would be a pity to lose good workers to difficult market situations,” says Daniel Hajjar, CEO, Layia Hospitality.” So far, we did not have to take any such drastic measures but we did encourage staff to make use of their un-utilized leave.” Some hoteliers say they are reducing costs through energy savings, which is not impacting guests. “We have gone in for preventive maintenance to fix all bedrooms with energy saving bulbs,” Hajjar says. His chain is putting timers into less frequently used areas and started a drive to control air conditioning,

And what about marketing and sales? A no-no, if at all possible, experts say. “In the current economic climate, the temptation is to cut back on marketing and promotion,” says hospitality consultant Mark Forrester. “While this may seem like a sensible course of action, it has the potential to harm your business in the long term.” “Cutting sales dollars could be a big mistake,” suggests consultant Salerno. “The problem is that reducing marketing expenses could be a death sentence for hotels in this new competitive environment.”He urges hoteliers to utilize Web sites to enhance sales and to devote part of their ad budget to the internet.

Another consultant, David M. Brudney, says hotels should not continue to spend the same amount of sales and marketing dollars and in the same manner as they did back in the fall of 2008. But he urges carefully selecting print and electronic advertising. “Hotel sales and marketing should be the very last area for cuts and downsizing,” says Brudney, a veteran hospitality sales and marketing executive. “Operators that choose to do so risk facing even greater challenges when the market turns -- and we all know that day will come.”


David Wilkening Associate Editor Hotel Interactive, Inc.