The travel and hospitality industry is experiencing an unprecedented expansion globally. Hotels, resorts, destinations with attractions and amusement parks, cruise ships, everything that has to do with vacation, entertainment, relaxation and travel & exploration is undergoing growth.
I've learned firsthand how remarkable it is that some of the worst mistakes placing entire hotel projects on red ink for months after opening are just plain defiance of common sense. These mishaps transcend cultures, countries and corporations.
Here below is a list of my top 10 by experience, from mildest to wildest along with recommendations on how to avoid being stuck in such situations.
10. Get the culinary experience right from day one
Although extremely important, I have it listed as my mildest because it can be always improved after opening, so there is room for rectification. There is nothing more memorable on a vacation than a bad oyster or a dry and hard piece of steak. Bad food sticks in people’s memory more than good food oftentimes. Hence, when you are going through your kitchen team’s hiring, you need many good soldiers in your ranks (best hotel kitchens are modern-times dictatorships and passionate cooks understand and accept this fact). But then for your top two, your Executive/Head Chef and your Sous-Chef or #2, you need the classical combination of the creative visionary and the pragmatic leader, or the person who will think out of the box, be unique, colorful, tasteful and then your army leader type who will put that vision into action. It is very difficult to find those two traits in one person and this is well reflected on many organizations in various industries. Either the job gest done across the board, but might be a crappy job, or is great food and does not leave the kitchen consistently.
If you want your first guests to be your ambassadors and to keep coming back and bringing others, get the food right from the start. Boils down to kitchen team structure and the creativity you allow them to have.
9. Get temperature control and water pressure designed user-friendly
Have you ever slept in hotels where the air conditioning temperature and air flow control is a joke, outside is 35 degrees, you are melting in your bed and is not romance?
This might be a large investment, but temperature control and water pressure in showers are among the top items guests remember as these affect comfort and sense of relaxation significantly. Although we are in the new era of environmentally and socially responsible tourism, you are much better off by investing in renewable energy sources (i.e. solar panels) and in proper wastewater treatment than having your guests take half-hour showers with the “water-saving” showerheads and then step into a hot room. I am a strong advocate for energy and water savings and environmentally friendly operations, however, hotels are places where you go relax and have a good time, not to suffer beyond reason, so a minimum of comfort standards need to be provided at the front-end while at the back-end you install the right mechanisms to combat waste.
Get your temperature and water pressure right or prepare to deal with hotheaded guests
8. Match your linen and your laundry service
You need to match your services, supplies, furniture, fixtures, looks, design, service providers, etc., all in one sort of concert-hall harmony. Let me put this into plain terminology. If you want to run a family-style restaurant in your hotel, you need baby chairs and bright lighting, not candlelight. If you are planning to be a 3 or 4 star hotel, your design, amenities and linen can be at par with or just slightly higher in some points. What you need to avoid at all cost is to have wild mismatches, such as top-of-the-line, 5-star fancy and expensive linen while you wash it in your 3-star laundry facility. This kills the life cycle of your linen even within your first year, having to spend significantly on more of it. And while your guests are loving the feeling, you are paying the price. There are plenty of choices in the linen world to match your quality and design orientation, all while not breaking your bank on restocking.
Get your linen supplier, your laundry services and your staff together to discuss and agree, or you will be throwing linen out the window not down the chute.
7. Make beauty functional
When hotels are about to open, construction crews, designers, hotel pre-opening teams, everyone is so burned out that pre-opening inspections often miss functional details that will come back to hijack your bank account sooner than later. Give you an example, in a hotel I checked, the interior designer tried to teach some physics to the washroom door installers on where the handles of the double-doors should be placed. He insisted that due to the door’s design and looks, these should be placed a bit higher than the vertical mid-point of the door, a place where it doesn’t make center-of-mass sense, preventing both handles to be pulled in or out in tandem to enable the pulleys at the top to act together. The result? The brand new property spends regularly on having to fix pulleys and placing rooms out of order due to dislodged doors.
The pre-opening team needs to make a very comprehensive list on all little functional details and keep testing them during the stages of construction, or you will be buying doorstoppers at the wholesale market all year long.
6. Service elevators
Some hotels owners have left this “little” detail to their designers whom sometimes are experienced in other types of buildings and overlook hotel industry essentials. No matter how tight of a land space to build your hotel you have and seemingly impossible it might look to fit enough service elevators for your staff, they deal with room service trolleys, laundry carts, linen carriages, large amounts of garbage and recycling, and the many other things guests should not be squished with in the guests elevators.
Housekeeping teams in particular, under the pressure of having a short window of time to get rooms ready for check-ins, are in top need for a good set of service elevators, spacious and reliable.
Omit service elevators and you will be turned into an office building one day
5. Staff offices and rest areas
Point #6 and #5 are related hence I kept them together on purpose, because many hotel designs fail to understand that staff are people too and they need to be fairly comfortable if they are to be able to deliver service, quality and timeliness to guests. Like anyone else, your staff is no less human than your guests are and as such, they need as much sunlight, clean washrooms, proper airflow and proper meals during work hours.
I’ve seen plenty of hotels allocate staff offices to the deepest basement caves they can include in their drawings, with improper air circulation and insufficient washroom capacity for expected team sizes, less desk space than anticipated at maximum staffing and all under the excuse that every inch of the building that gathers any kind of sunlight must be utilized as guest area in some way or another.
Such hotel designers fail to understand the most basic of human factors. What performance do you expect from staff confined to zero sunlit office spaces for nine plus hours a day, low air quality and washrooms nobody in their right minds want to use?
If you design your hotel with your staff last in mind, not only will you forever have a hard time attracting and keeping employees, your guests as well will not respect your business. Well-treated and cared-for staff are a top driver of guests’ satisfaction and returning guests.
4. The KPI Jungle
Welcome to the Key Performance Indicators party, where we focus on everything and achieve nothing. New hotel owners are often led to obsess over low-impact KPIs at the beginning. Let me explain.
Occupancies, average room rates, revenue per available room, average check per customer, average covers per day, net promoter score, rate parity score, staff satisfaction survey score, earnings before interests and taxes, staff turnover rate... I could fill a page on all the KPIs the hotel industry has and keeps coming up with. I don’t dispute these measure things we want to keep track of and improve on, so they are of good use and help keep teams and departments in check and focused. However, every new hotel owner faces the same reality at the end of every month, basically, showing up at the bank with only one of two things: a request to borrow more money, or cash to deposit.
That said, when you start visiting your bank with a bag full of occupancies, average room rates and average checks per cover, the teller will laugh and send you back. Banks take cash, period. For the longevity and success of your hotel endeavor, the topmost important of all your KPIs needs and must be your Operating Profit. You can convince your guests you are the best hotel they've ever visited and they will give you a top score on your survey, you can beef up your menu prices and the few guests taking it will help your average check look great. No long-term meaning. Bottom line is king, everything else can and will fall into place, provided you have a solid team, when the focus is on the only KPI that will primarily further your business. Anyone who hypnotizes you into anything else is steering you away from real facts and figures. Hotels with amazing occupancies or neat ADRs or great scores on anything that does not directly make them profits do not survive in the long run.
Focus your team on what matters first. With margin under a good trend, all other KPIs can be worked on with better chances of succeeding at them too.
3. Your first price positioning
Price positioning of a hotel is a delicate game. Price too low at start and you will fill up but have a hard time increasing from there and you may end up in a negative-sum game for a long time, this is a reality I have seen in many new hotels. They were blinded by the occupancy idea, now they run full and lose money every month, how can that be justifiable I wonder. On the other hand, hotels misled by the highest-ADR-in-town delusion are running great rates and largely empty hotels, making no profits.
Focus on what really matters first, your operating profits, let occupancy and ADR be driven by the best combination your market can accept rather than becoming obsessed with one or the other at the cost of your profits not coming early enough in your hotel business.
2. Sales, Marketing and PR team hires
Tied to the point above, here comes one of the worst mistakes new hotels make, often the result of a penny-pinching strategy which is driven by panic before opening date, and often due to the many unexpected expenses piling up.
When pre-opening fear sets in with owners who are bleeding cash before they can see the first signs of revenue, the most common reaction is to start pinching dollars in the wrong corners, specially hiring. Many push to hire as late as possible, and with so many openings delayed from original target dates, there is always a growing fear that hiring early can be costly. True.
However, nothing far more expensive than hiring late. A stitch in time saves nine, or, in hotel pre-opening terms, do not hire today, pay double tomorrow.
Especially the case with Sales, Marketing and PR. It takes good sales teams several months to get a property on the map, have systems up and running, get travel agencies interested and booking groups, not to mention capturing corporate accounts, one of the most profitable segments and most difficult to enter. These processes can take 6 months or longer at the start. Such timings are good indicators of when you need a solid, complete, well-paid and well-equipped sales and marketing team on the ground. Every day you delay that, is a day you delay your hotel’s revenue, it is that simple. There aren’t any hires more easily tied to a return on investment calculation than sales people. Entering a market does not have short cuts and there are no magic sales people in the hotel industry. It takes hard work, assertivity and time. The time element is not negotiable.
No client in the industry will sign up faster and stay with you sooner just because you think you have the nicest hotel in town. Hire your sales force early.
1. Star-Ratings preparations
The mother of all mistakes with hotel pre-openings, not planning for your star-rating process when you have the ability to make timely changes and adaptations for it. Unless you have hired highly experienced hotel designers fully knowledgeable on the local regulations overseeing the hotel industry, you will find yourself arguing and playing every trick on the book with your governmental organization in charge of rating your hotel when the time comes, and the odds are that you will lose the game.
Oftentimes hotel designers and owners believe adamantly that their hotel should be rated much higher than it ends up being the case, and the only reason they give you firmly is that, it is their hotel and that nothing compares to the astonishing design and decor of their ideas. Star-ratings are based squarely on service capability and functionality. Any beautiful piece of furniture you pay dearly to place on your lobby is just that, furniture.
While design, creativity, decor, are all-great specially to attract a new market, this is icing on the cake when it comes to star-ratings.
Things to pay attention to if you want to be a 4-5 star are size and functionality of your closets and of desks in guestrooms, ability to operate your main kitchen 24h for room service, proper service elevators, waste management system, ratio of parking spots per room, a swimming pool that can operate year round, and many other structural pieces.
There are hundreds of items in these rating evaluations, many that can be solved on the go like type and number of amenities in the rooms, hair dryers, etc., but the ones I just mentioned can only be solved, reasonably and while minimizing expenses, during construction. So why wait until well after opening to obtain star-rating regulations, a thing that is freely available to any hotel, instead of procuring these during the design phase?
Get your star-rating guidelines well before construction is finished or you will end up with plenty of beautiful yet dysfunctional areas hacking away at your marketability.
GM with a major hotel group and country rep. of Corporate Social Responsibility