We have good news but it sure is sprinkled with some tough stuff as well.
Reports have predicted around a 30% decline in NOI.
Companies are generally slower to cut costs at the onset of a slowdown and slow to add expenses back on when we’re on the upswing. The result is better NOI on a rising market, worse on the decline.
What can we do to ensure you maintain margins as best possible?
1. Avoid compromising on your marketing budgets. However, you must demand more accountability and returns on your marketing expenditures. Many ways to do this.
a. Track the performance of your sales team – for those who do not, you are missing out on the most powerful tool to manage your sales effort. It does not require fancy software or dedicated time from scarce human resources: USE YOUR NIGHT AUDITOR to track and manage who is in your hotels, the companies they represent and if your sales team has a communications trail with that organization.
b. Monitor the return on your marketing programs – your Front Desk can/should already be asking all guests the reason for their visit – add how they heard of you and record the responses. Also, add calls to action on your marketing programs that will make it easier to recognize/track the source of the guest visit.
2. Labor, labor, labor – mucho bucks here. Set your budgets to identify fixed vs. variable labor – Housekeeping, restaurant, catering, housemen, etc, are all examples where significant portions are variable. Identify the variable component, educate the department head of the relationship and then hold them accountable to maintain this relationship between revenue and labor-weekly, not monthly.
a. Reward success in maintaining this relationship of variable costs to revenue. It will force accountability and you will come out ahead, every time.
3. Cross training – this is a great time to make this mantra a reality. Front Desk cross-trained with housemen, Housekeeping, restaurant and catering, amongst many. More variety for the individual thereby making them more valuable team members while causing the performance bar on what it takes to be a long term player to rise exponentially.
4. Communications – everyone is mindful and aware of the situation. Let them know your challenges and engage them in solutions which they will be so well versed in identifying. Keep this ongoing, share results, successes and frustrations. Make sure you define what success looks like so they recognize it when they get to it. Simple but often overlooked.
5. Tighten reporting intervals. Check labor performance weekly (actual vs. projected on a proportional basis - % against catering revenues, $ POR for HK, etc). This can be done for almost all departments and will allow you to track progress towards achieving your labor goal.
6. Utility costs. There are very economical energy management systems that require minimal installation, minimal purchases and yet deliver stellar results. You can achieve recovery within a year or so. Huge savings possible.
7. Most of all, INSPECT WHAT YOU EXPECT. When results are expected, and you look for them, you will get them. Expecting without inspecting will always leave you wanting (I can be poetic too!)
Feel free to call if you wish to share thoughts on your approach or if you want to bounce off any ideas on process or strategies to manage the areas mentioned.
Call if you want to learn of the Trends for hotels in your regions.
Also remember, pontificating is easy, doing is tough. It never comes easy – but it has to come.
Thank you and take care.
Nagib
Nagib Lakhani
RevMax Hospitality Consulting Services
O: (425)677-7866 C: (425)445-7750 F: (866)508-7866
nagib@RevenueMaxConsulting.com
4313 245th Avenue SE
Issaquah, WA 98029
