How Hotel Owners and GMs can Change ‘The Top 10 Reasons Why Hotels Underperform – Part 1

By. Tom Costello 20th May 2012

 I solicited responses from hospitality professionals to weigh in on what they felt were the Top 10 Reasons Why Hotels Underperform and decided to share some ideas that can help hotel owners and their GMs reverse these trends and become a more profitable and productive hotel.

 #1 — Poor hiring practices

Christine Lagorio in her article “How to Improve Your Hiring Practices“, suggests that the best way to plot out hiring a new employee starts with a well crafted, future-oriented job description, which can be the single step that begins the hiring process – and makes it simpler, from start to finish.

Jane Plank with Ross, Brittain, & Schonberg Co., L.P.A says “Hiring the wrong person not only causes morale problems, decreases productivity and wastes time, it costs a lot of money.  The average cost per hire in the United States ranges from $2,546 to $6,943.  Contained in these costs are productivity and vacancy rate costs, lost time for employees who conduct the search and screen and interview the client, the cost for advertising for employees, materials costs, and downtime for two employees during the orientation and training period”.

In a survey of 2,696 employers, conducted by Careerbuilder, the following are just some of the examples that employers experienced from bad hires:

     – 41% – Less productive

     – 40% – Lost time to recruit and train another worker

     – 37% – Cost to recruit and train another worker

     – 36% – Employee morale negatively affected

     – 22% – Negative impact on client solutions

Contrary to popular belief, money isn’t the only thing that motivates people, the 9 keys to motivating them are:

 1- Culture – how candidates feel they will fit in

 2- Reputation – how you are perceived as an employer

 3- Stability – how long established is the organization

 4- Flexibility – work/life balance issues

 5- Money – a pay raise or bonus

 6- Development – training and opportunities to learn

 7- Challenge – new role, more responsibility

 8- Team – similar outlook and age

 9- Technology – more up-to-date systems, exposure to better technology

If and when you’re ready to hire but not in the position to offer top-tier salaries, consider what else your hotel has to offer and which sorts of candidates can benefit.  Do play up anything that makes your hotel and your corporate culture stand out, and make it known in the job listing.

#2 — Lack of training

We all are aware that hotel budgets have been trimmed to the bone and one of the first things that gets cut is training. Unfortunately, trained and energized employees are just what a hotel needs to stimulate growth and solve problems in the lean times. Training clarifies job performance expectations, establishes goal measurements, creates consistency among the team’s execution, and increases productivity.

Employees are interested in performing their jobs well, feel a sense of pride for a job well done, and to advance to higher positions. When there is little to no training, employees do not understand how to do their jobs and none of these goals are possible. This leads to low morale among workers, which results in employee turnover. A hotel with a reputation for high employee turnover is also unattractive to potential job candidates.

Untrained employees lack adequate knowledge and skills to provide satisfactory customer service and this will ultimately result in a dissatisfied guest. The hotel will expose itself to declining sales if dissatisfied guests choose competitors who can provide better service.

Lack of training is a sure fire way to provide a quick exit strategy for the under trained employee.  It is estimated that it costs $7,00.00 to replace one $30,000.00 a year employee when all costs — recruiting, interviewing, hiring, training, reduced productivity, et cetera, were considered. SHRM’s estimate was the lowest of 17 nationally respected companies who calculate this cost!

#3 —  Little to no regard for the customer and their complaints

At one time or another you or your staff will have to handle a guest complaint on property.  Your challenge is to take care of the situation in a way that leaves the guest thinking that you genuinely care about him but in order to do this successfully, you’ll need to have a “Complaint Management Strategy” in place.

Without a complaint strategy in place, your more apt to mishandle the complaint and there’s a good chance that guest will let others know, online and offline, about their experience at your hotel (TripAdvisor is a great case in point).  Let’s assume for a minute that guest tells 10 friends about his experience.  If you know the estimated annual value of one guest, then multiply it by 10 in order to arrive at the potential loss in revenue to your hotel.  Now multiply that potential loss of revenue by three to represent the cost to replace the real and potential guest.

#4 — Management unwilling to empower staff with problem resolution

In his keynote speech to the Stanford Graduate School of Business Entrepreneurship Conference, Isadore Sharp, the founder, chairman, and CEO of Four Seasons Hotels and Resorts said that when the company expanded about 30 years ago, it made its credo more explicit: Workers should treat others the way they would like to be treated.

That meant firing senior managers who weren’t following the credo. “If we’re seen showing greater concern for power, prestige, and costs than for the customer and the values we profess, then we forfeit belief and trust along with our goal of trying to be the best.”

If you want all of your guests to be satisfied, it has to be left to the people interacting with them to decide how that is done. And that means empowering them to be able to make real decisions.

#5 —  Hotels don’t understand how to market themselves across all channels

According to Vanessa Horwell, Founder and Chief Visibility Officer, ThinkInk & Travelink’d, “There are several ways to market your hotel for future success without compromising the pressing needs of today. In many cases, these tactics don’t even involve large financial investments, but rather rely upon a focus on multiyear aims; good analysis of markets, customers, strengths and weaknesses; the utilization of emerging technologies; and a strong brand identity”.

A- Define your audience, segment it in terms of demographics, and target them with relevant messaging.

B- Social media and the mobile web have become crucial standalone marketing channels in their own right.

C- The trick for hotel marketers is to find the value inherent to the property’s operation and to then define the property’s value proposition succinctly.

D- Unilateral communication, the fundamental milieu of mass media, has given way to a more interactive, multilateral ecosystem, the most visible example of which is social media.

The irony — and beauty — of Twitter is that it is incredibly straightforward and incredibly complex.

– Unlike space-limited tweets or interactive social media sites, blogs offer a way for hotel marketers to deliver their messages without the interference of customer interaction.

– Search engine optimization must be a key component of a long-term marketing strategy (the implementation of which will certainly have a positive short-term effect as well), and maintaining positive consumer reviews should be the most prominent objective of all facets of a hotel’s operation (not just the marketing efforts).

– Opening a dialogue with existing guests, either through social media, loyalty programs, or other touchpoints, will open the doors to a wealth of usable information on which to base an effective marketing push.

Have I missed anything that you think should be included in these five solutions?  Feel free to share your thoughts!

About Tom Costello

Tom Costello, Senior Vice President at Newman Kelly Real Estate Investment Services, and he represent clients who own commercial real estate assets located throughout Texas. Tom began his  career as an industrial properties broker in 1984 and have worked for Daum Business Properties, Scher-Voit Commercial, Southern Real Estate, and Marcus & Millichap, before joining Newman Kelly. In

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