Trying new things...

Sharing information throughout the region using a blog was an experiment in communication. We may resume this process in the future, but for now, we are taking a break from blogging and sticking to more traditional methods of communication.

High School Physics

Does anyone remember learning about a guy named Lord Kelvin? He was a Scottish mathematician who came up with the value of “absolute zero,” the temperature at which all motion stops. We may have a hard time applying this to hotels, unless we are looking at Sunday occupancies, but one aspect that we can apply from Lord Kelvin’s work is a quote I have heard dozens of times over the years.

“If you cannot measure it, you cannot improve it.” Lord Kelvin

This statement is the thinking behind guest satisfaction reports, lost revenue reports, suite shop profitability, website compliance reports and just about every other report that comes out of our corporate offices. I like to think that we have a lot of smart people working in our company who receive these valuable reports. If reports are used correctly, we can see where we are, where we need to be and how to get there. However, if we can’t get there on our own, there are resources within the company to help us. We just need to ask.

I hope that everyone takes the time to look at those reports and put actions in place to improve performance. Running hotels isn’t simple, but processes like this simply make sense.

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.

Can Do!

You don’t have to live in Fargo or near flood waters to be a victim of disaster. I have learned a lot about disaster and about people in this last week.

One kind of people I had the privilege of working with this last week are those with a “can do” attitude. If three million sandbags need to be filled, they “can do.” If twenty five miles of dikes need to be constructed, they “can do.” If we need to add another two feet to the base and foot to the top of every dike, they “can do.” If their cell phones ring at 3:00AM with an emergency call to action, they “can do.”

Unfortunately, although a small minority, there is a group of people that are comfortable with “somebody will do it.” When the call goes out for action, they don’t really worry because “somebody will do it.” When the radio announces that 30 people are needed to shore up levees at the end of their own block, they don’t worry because “somebody will do it.” When engineers and officials announce that levees and dikes look good, they are relieved that “somebody did it.”

I think that we all work with both of these kinds of people. Hopefully the “can do” people are in the great majority as well. When our disaster is the financial markets and declining hotel demand, we go into action. If desk shifts need to be worked to reduce hourly labor, we “can do.” If every call coming into the hotel needs to be converted to a sale, we “can do.” If every room needs to be cleaned a bit faster with the same high standards to reduce spending, we “can do.” If maintenance tasks normally hired out need to be handled internally to save money, we “can do.” If all of these things and more need to happen to ensure the survival of our company, we “can do.”

Imagine if everyone in our company was a “can do” person. What if every person you and I work with considered it their personal responsibility to do whatever it takes to meet the demands of the guests, our teams and our company? Those are the kinds of people we should choose to work with. Those are the kinds of people that make us better.

I hope that when we all look at ourselves we know that either we “have done” or we “will do” because we are “can do” people.

Please view: http://www.youtube.com/watch?v=bcMZ_0guIgE


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I Love A Good Quote

The Area Directors in our group already know that I love a good quote. Many profound statements have been made over the years, and it would be irresponsible to ignore the wisdom they hold. I get daily quotes from a couple of websites and often find that they spark ideas and inspire action. I received the following quote on Monday:

“Peak performers start with potential. We all do. Yet history is littered with the bones of people who never converted potential into achievement. Inherent talents turn useful only when you cultivate them. Training can be dull, tedious, and onerous when it is simply tacked onto your everyday routine. But when it serves a passion and follows a mission, it becomes a practice as pleasurable and full of promise as refining a golf swing or making a successful investment. Top performers do not leave training to chance. Regardless of past accomplishments – which in many cases are formidable – they know they use but a small fraction of their capacities and have a long way to go.” - Anon

Sure this quote is a little long, but its message is essential. It acknowledges that when we hire good people, they all have the potential to be great. However, we need to give them the tools and motivation to convert that potential into great actions.

Our first ever blog entry reflects the first step in this process. We have to hire good people to fill the positions we have open and replace those we have on staff who refuse to convert their potential into great action.

I invite everyone to go back to the first-ever posting to this blog and read it again. I would also like everyone to click on the following link and share the video with your management staff. http://www.eagleschoolmovie.com/

Hire… Train… Inspire… Succeed!

The Value of Good People

It is turning out to be a busy week in Fargo. Much of my time is being spent focusing on markets with declining demand, sliding revenues and that are sure to run short on profit for first quarter. The current situation with the economy and the travel industry weighs heavy on the thoughts and actions of the entire regional team.

Our General Managers are working hard to minimize expenses while maximizing sales efforts. They are, in a sense, being pulled from both ends. At the same time, they are expected to provide unprecedented levels of guest satisfaction to ensure every guest is a possible repeat guest. I appreciate the efforts of all those who continue to step up to the plate and give it their all. It is in times like these that we see what we are all made of.

I just spent a little time with our Senior VP of Operations and saw firsthand how he too is having to make difficult decisions in this tough economic environment. He is working day and night to help ensure we all have that right balance that makes the most of our jobs, our hotels and our futures. What I am working to do with 28 hotels right now, he is focused on for over 200 hotels, as well as the support structure of our corporate staff. He celebrates 25 years with Tharaldson tomorrow, and I would hate to think where we would be without him.

All positions across the company carry a value, and the value of each position is greater today than it ever has been. Let’s not forget the value of the position and focus on what it really is. It’s the value of our people. Every person across the company needs to give 110% today in hopes of providing the same kind of results that a 90% effort would have gotten us in 2007.

Never has the value of good people been greater. Thank you to all who continue to give 110%!

Advice From My Father

I look at the growing number of unemployed people in the U.S. and it makes me sad as an American and optimistic as an employer. The number of recently unemployed Americans in January was in the neighborhood of 3.7 million. We have to assume that at least 25% of those laid off were good at their jobs and simply victims of the economy. With this assumption, we have 925,000 good employees out there looking for work. Maybe 10% of those employees would be interested in working in the hotel industry. So, we have 92,500 good workers out there who would love to work in our hotels.

Our company currently operates 222 hotels. If we figure that the average hotel has 20 employees then we employ about 4,440 people. I would like to think that 9 out of 10 people we choose to employ are great at their job. This means we may have about 444 employees across the company that aren't in that top 90%.

I grew up in a house where my father owned and ran his own business. As kids, my brothers, sisters and I learned a lot about the time and effort it takes to run a successful business. We also learned a lot about how to find and treat good employees. I recall a time when my father was discussing his decision to hire someone even though he did not have a position open for him. He simply said, "If you have the opportunity to hire a great employee, do it and then make room." His thought was that if someone walked in the door who was better than the weakest link on staff, it's time to replace that weakest link. Maybe the silver lining in this cloud is that we have an opportunity to strengthen our hotel staffs?

With the quick math outlined above, we could have 92,500 good employees out there interested in working harder than 444 people we have on staff in our hotels. Maybe it is time to look at who we employ and make sure we get closer to 10 out of 10 great employees?