“Management by Walking (or Wandering) Around” has been the focus of my last two messages and at the end of each I issued a challenge… to every manager who is responsible for 5 or more people: measure your in and out of the office time and at the end of the week, see how much time you spent ACTIVELY INTERACTING with your team.
I suggested the goal should be 70% of the time out of the office and asked managers to privately evaluate how they did and what they would do the following week. Reader feedback strongly endorsed the 7 practical steps on improving their staff interaction listed in the last article, yet I had an internal pesky feeling I had missed one observation. This morning, I realized what it was relating to MBWA and everything that managers do – it was the need for “time out.”
Each one of us probably remembers on our own or possibly with our children times when we or others become over-stimulated and edgy. The potential to say inappropriate things or to over-extend becomes very real. I recall working for a major international company and was at the grocery with my bride shopping on a Sunday. She realized she had gone a row ahead of me and turned around to see me doing what many of us have fallen prey to becoming: CRACKBERRIES. Despite my working 10+ hours daily, on this my day off, I found myself feeling “obligated” to answer emails and “keep in touch.”
I believe the goal of 70% out of the office is a valid one with considerable merit and value for all parties. In order to MBWA, the manager must delegate some tasks and responsibilities to others.
In addition to giving others a chance to grow, this delegation also gives the manager a “time-out” to develop other thought patterns and options.
Here are some ways a manager might utilize their TIME OUT to develop those other thought patterns, while maintaining the commitment to MBWA.
1.Set certain rules on the use of your I-phone and Blackberry or Smart-Phone. Give your mind a breather.
2.Set aside time each day for short meditation breaks.
3.Take the team once in awhile to an afternoon ball game or activity where there can be discussion on things in addition to business. These are solid team building events.
4.Embrace the positive side of travel. We are in the hospitality business and taking a vacation helps us get into a relaxed mind-set where we are not so inclined to respond to emails and calls.
5.Find or expand a non-business related hobby as a distraction and a mental refreshing exercise.
I attended a program earlier this year that included former New York Mayor Rudy Giuliani as a keynote speaker. The messages included the expected references to 911, his sincere pride of New Yorkers and the police/fire departments, as well as his political past and future aspirations. He made one unexpected appeal to the large crowd in attendance. He urged every participant to challenge their thinking, embrace rather than fear technology, and to read two books weekly. He said his growth and ongoing education came from reading two books per week – one that was for personal enjoyment on whatever hit his fancy at the time and the other was for personal learning and development on a topic he was not an authority on. His point on this need for balance made sense to me and triggered my recognition of a manager’s time out as an opportunity to attain that balance in the workplace.
Keys to Success Hospitality Tip of the Week:
Focus on Personal Development This week, change your schedule to include one new activity of your choice that will assist in your personal development. (This will likely also help your professional growth). Track your progress over the next four weeks and measure what positive changes you can observe.
Wednesday, September 22, 2010
Monday, September 20, 2010
Using stock market principles for optimum hotel revenue management
Cost, inflation, supply and demand are all basic economic principles that have been used in business for many years, but unfortunately, they aren’t often underlying principles for many properties’ pricing strategies. Unlike other industries, the hotel industry has developed its own set of revenue management principles that rely greatly on ad-hoc strategies, particularly when it comes to dealing with the constantly changing nature of their business. As technology continues to progress and as consumers’ buying habits change accordingly, traditional hotel revenue strategies are proving less effective when challenged by emerging online sales channels and quickly fluctuating prices.
But this isn’t a new problem. There is another industry that has faced these same challenges (and triumphed) - the stock market.
The hotel business and the stock market have much more in common than what it appears at first glance. Both are greatly influenced by external factors and depend greatly on the actions of consumers. They also routinely face uncertainty through the course of normal operations, are subjected by forces of supply and demand and react to competition.
Where the stock market differs from the hotel market is in how it has reacted to these challenges. The stock market embraced technology to manage ever-changing prices and allow for shares to be traded more quickly and for the highest profit possible. The hotel industry, on the other hand, has continued at the status quo, expecting yesterday’s pricing strategies will continue to be effective today, even though the market has completely changed.
Which industry has it right? What tactics should hoteliers be adopting in their revenue management strategies?
To properly illustrate the differences between the two industry’s responses to similar challenges, let’s examine how the use of traditional hotel revenue management tactics would be detrimental to today’s stock market, in order to show how pricing hotel room rates like stocks can actually prove to have many benefits for hoteliers.
Market Driven Pricing
Unfortunately for public companies, they don’t have a great deal of control over how much their shares are worth. They can increase the value of their shares becoming more profitable as a business, but in the grand scheme of things, the share prices are controlled by the market and by consumers who dictate what the product is worth.
The same goes for hotels. With the increase in transparency that online bookings offers, consumers are able to make their room choice based on price, ensuring that hotels offer competitive pricing. Of course, hotels will always have the option to reject the prices dictated by consumers; however, most likely this will mean that the hotel will lose out on the sale because they aren’t pricing themselves competitively. Like public companies, hotels can also have some degree of control over their rates by working to increase their star rating and customer reviews, two key factors in moving a property into a higher comp set.
Historical Pricing
One of the most common revenue tactics in the hotel industry is that of historical pricing. While this can often give good insight to hotel activity during holidays, events, and seasons in general, it only covers one aspect of a comprehensive pricing plan and shouldn’t be the only factor upon which room rates are based.
In the stock market, multiple pricing strategies are used, such as studying current supply and demand, available inventory, and the availability of multiple sales channels—particularly online. These are all factors that can – and should be – factored into a property’s revenue management strategy as well, especially when it comes to technology and the online channel. In 2009, 60% of leisure travel and 40% of business travel were booked online, which showcases the tremendous impact that technology has on the industry as a whole, and the impact that it should be having on hotels’ pricing and revenue management strategies.
If the stock market continued to use only historical pricing as the basis for all of their calculations, there would be no way for traders to receive accurate information on the current demand for their products, nor would they have an idea as to what sales channels were being utilized for trading. Without this extra information, there’s no way to determine accurate pricing for stocks, which would be damaging for success of the market.
Buying 24/7
When it comes to the stock market, even those who work in the industry know that trades continue to be made even after the official close of a day because of electronic trading. Because travel is a truly global industry, potential travelers can book their hotel with an OTA at any time of day or night depending on their time zone. From a hotel revenue standpoint, a great deal of money could be earned if only revenue management staff could work 24 hours a day, 7 days a week since on evenings and weekends, rates aren’t being adjusted to reflect the changing rates of the competition within a destination in real-time.
Just as technology has enabled stock traders to get up-to-the-minute information, hotel revenue management technology is available and can enable revenue managers to manage their inventory and pricing through the same type of sophisticated automated systems. These revenue management systems analyze data, make real-time pricing changes, update each online distribution channel automatically, adjust inventory and place the property in the ideal OTA page position to ensure the highest number of bookings at the highest rate possible. These systems work 24/7 to make sure that a property never leaves money on the table, and to ensure that the revenue manager can do what he (or she) does best – making strategic, proactive pricing decisions and working with the marketing, reservations and sales teams to make the hotel run as profitably and successfully as possible.
But what if the stock market still used old-school methods and ignored the revenues being lost overnight and on weekends, when the stock market wasn’t officially open?
Sales profits would be inaccurate, as would the number of sales. Traders would constantly be working with past and possibly irrelevant information, which is not profitable in any business.
Optimal, Dynamic Pricing
Another familiar tactic of financial experts, particularly those who work with commodities, is optimal pricing. For hotels it’s a more unfamiliar concept, but that doesn’t mean it cannot be applied to hotel revenue management. From a financial perspective, the hotel room—much like a gallon of milk or a loaf of bread—is a relatively uniform product with high perishibility. But as financial markets determine prices by factors such as current market conditions, hotels often assign a rack rate—or base rate—and tweak it for potential customers from there, lacking a range when it comes to strategy. With sophisticated hotel revenue management systems, optimal pricing can be determined using a combination of traditional hotel and financial strategies and that rate can be continually updated in real-time.
If stock traders didn’t use optimal pricing, they simply wouldn’t ever be able to make maximum profit from trades. If a certain good or service is in high-demand and a trader doesn’t know this, they may sell a stock for significantly less than what it’s worth. On the other hand, if there is little or no demand, a trader might lose opportunities for profit by pursuing the wrong trades.
Creating a Multi-Dimensional System
The stock market highly relies on a sophisticated system of algorithms, channel management, and analysis of market and historical conditions to ensure all bases of optimal revenue management are covered. The combination of the four ensures that our markets continue to thrive, painting a very clear picture for hoteliers and revenue managers: the hotel industry can benefit from the adoption of stock market principles in the area of revenue management, especially in today’s world that relies so greatly on fast-paced technology updates.
By ignoring the importance of technology and real-time pricing updates in a hotel’s pricing strategies, a hotel is leaving money on the table.
So if the stock market can do it, why aren’t you?
But this isn’t a new problem. There is another industry that has faced these same challenges (and triumphed) - the stock market.
The hotel business and the stock market have much more in common than what it appears at first glance. Both are greatly influenced by external factors and depend greatly on the actions of consumers. They also routinely face uncertainty through the course of normal operations, are subjected by forces of supply and demand and react to competition.
Where the stock market differs from the hotel market is in how it has reacted to these challenges. The stock market embraced technology to manage ever-changing prices and allow for shares to be traded more quickly and for the highest profit possible. The hotel industry, on the other hand, has continued at the status quo, expecting yesterday’s pricing strategies will continue to be effective today, even though the market has completely changed.
Which industry has it right? What tactics should hoteliers be adopting in their revenue management strategies?
To properly illustrate the differences between the two industry’s responses to similar challenges, let’s examine how the use of traditional hotel revenue management tactics would be detrimental to today’s stock market, in order to show how pricing hotel room rates like stocks can actually prove to have many benefits for hoteliers.
Market Driven Pricing
Unfortunately for public companies, they don’t have a great deal of control over how much their shares are worth. They can increase the value of their shares becoming more profitable as a business, but in the grand scheme of things, the share prices are controlled by the market and by consumers who dictate what the product is worth.
The same goes for hotels. With the increase in transparency that online bookings offers, consumers are able to make their room choice based on price, ensuring that hotels offer competitive pricing. Of course, hotels will always have the option to reject the prices dictated by consumers; however, most likely this will mean that the hotel will lose out on the sale because they aren’t pricing themselves competitively. Like public companies, hotels can also have some degree of control over their rates by working to increase their star rating and customer reviews, two key factors in moving a property into a higher comp set.
Historical Pricing
One of the most common revenue tactics in the hotel industry is that of historical pricing. While this can often give good insight to hotel activity during holidays, events, and seasons in general, it only covers one aspect of a comprehensive pricing plan and shouldn’t be the only factor upon which room rates are based.
In the stock market, multiple pricing strategies are used, such as studying current supply and demand, available inventory, and the availability of multiple sales channels—particularly online. These are all factors that can – and should be – factored into a property’s revenue management strategy as well, especially when it comes to technology and the online channel. In 2009, 60% of leisure travel and 40% of business travel were booked online, which showcases the tremendous impact that technology has on the industry as a whole, and the impact that it should be having on hotels’ pricing and revenue management strategies.
If the stock market continued to use only historical pricing as the basis for all of their calculations, there would be no way for traders to receive accurate information on the current demand for their products, nor would they have an idea as to what sales channels were being utilized for trading. Without this extra information, there’s no way to determine accurate pricing for stocks, which would be damaging for success of the market.
Buying 24/7
When it comes to the stock market, even those who work in the industry know that trades continue to be made even after the official close of a day because of electronic trading. Because travel is a truly global industry, potential travelers can book their hotel with an OTA at any time of day or night depending on their time zone. From a hotel revenue standpoint, a great deal of money could be earned if only revenue management staff could work 24 hours a day, 7 days a week since on evenings and weekends, rates aren’t being adjusted to reflect the changing rates of the competition within a destination in real-time.
Just as technology has enabled stock traders to get up-to-the-minute information, hotel revenue management technology is available and can enable revenue managers to manage their inventory and pricing through the same type of sophisticated automated systems. These revenue management systems analyze data, make real-time pricing changes, update each online distribution channel automatically, adjust inventory and place the property in the ideal OTA page position to ensure the highest number of bookings at the highest rate possible. These systems work 24/7 to make sure that a property never leaves money on the table, and to ensure that the revenue manager can do what he (or she) does best – making strategic, proactive pricing decisions and working with the marketing, reservations and sales teams to make the hotel run as profitably and successfully as possible.
But what if the stock market still used old-school methods and ignored the revenues being lost overnight and on weekends, when the stock market wasn’t officially open?
Sales profits would be inaccurate, as would the number of sales. Traders would constantly be working with past and possibly irrelevant information, which is not profitable in any business.
Optimal, Dynamic Pricing
Another familiar tactic of financial experts, particularly those who work with commodities, is optimal pricing. For hotels it’s a more unfamiliar concept, but that doesn’t mean it cannot be applied to hotel revenue management. From a financial perspective, the hotel room—much like a gallon of milk or a loaf of bread—is a relatively uniform product with high perishibility. But as financial markets determine prices by factors such as current market conditions, hotels often assign a rack rate—or base rate—and tweak it for potential customers from there, lacking a range when it comes to strategy. With sophisticated hotel revenue management systems, optimal pricing can be determined using a combination of traditional hotel and financial strategies and that rate can be continually updated in real-time.
If stock traders didn’t use optimal pricing, they simply wouldn’t ever be able to make maximum profit from trades. If a certain good or service is in high-demand and a trader doesn’t know this, they may sell a stock for significantly less than what it’s worth. On the other hand, if there is little or no demand, a trader might lose opportunities for profit by pursuing the wrong trades.
Creating a Multi-Dimensional System
The stock market highly relies on a sophisticated system of algorithms, channel management, and analysis of market and historical conditions to ensure all bases of optimal revenue management are covered. The combination of the four ensures that our markets continue to thrive, painting a very clear picture for hoteliers and revenue managers: the hotel industry can benefit from the adoption of stock market principles in the area of revenue management, especially in today’s world that relies so greatly on fast-paced technology updates.
By ignoring the importance of technology and real-time pricing updates in a hotel’s pricing strategies, a hotel is leaving money on the table.
So if the stock market can do it, why aren’t you?
Friday, September 17, 2010
Hotel Common Sense – 7 Practical Steps on MBWA
(John has some great points, which expound what I previously posted about MBWA, He has some great insight and was a great instructor of mine)
My last article used one of Tom Peters and Robert Waterman’s fundamentals from their groundbreaking book on changing the ways we do business. IN SEARCH OF EXCELLENCE introduced a formal name for what the more successful hospitality managers already knew about motivating their staff. The phrase “Management by Walking Around” was based on Hewlett-Packard’s commitment to their staff with interaction – not micromanagement, but ongoing listening and responding to staff ideas.
Hotel Common Sense - Philosophy #2 , Or, why the Open Door policy no longer works… article outlined how today’s workforce wants and needs to be considered as individuals who can contribute to the success of their organization.
Reader feedback showed the growing awareness to that need for additional management and leadership “active listening” and this follow-up message on MBWA offers some concrete ways to notch up that effort of positive involvement.
•Allow your staff to share complete stories and messages. Many hospitality companies are trying to improve their customer care programs, yet how often do leaders and managers actually ask an hourly staff member to share a story about either an unhappy or very satisfied guest? Listening to the entire story could provide best practices that might be substantially more effective and less expensive than hiring a consultant.
•Avoid the tendency to interrupt. General Managers are results oriented people who are looking for the bottom line. I know from personal experience the tendency to “hurry” people along is there, but allowing people to share the entire experience will encourage them to be more open.
•Remember eye contact in conversations. One of my first mentors taught me a great deal about hospitality, but his habit of looking over my shoulder when we were talking always made me feel I was missing something. Give confidence to people with your eyes.
•Collect and communicate these stories of success (and failures). Sharing these stories (appropriately) at meetings of all staff, at training sessions, in newsletters and more provides an incentive to people to want to contribute because they have learned that you really do care. I have seen some outstanding examples of “you tube” like testimonials from a number of hospitality companies of all sizes.
•Remember this is not a game of “one-up.” As General Managers, we have likely been in the business longer or heard more stories and it is important to recognize that we should not try to offer one “better” story than the one we are hearing. Remember, MBWA is about “active listening.”
•Credit the source. When we add a new resource, form or best practice to our hospitality membership site, we obtain permission first and then always make certain we credit them fully. Each of us has unique approaches, messages and talents and sharing the credit with our associates and guests is essential to moving forward.
•Build trust by honestly listening. Some (correction, many) of the best suggestions I have ever heard as a manager or executive came from the people who are performing the job. I learned more about laundry sorting, washing pots and up-selling from people who were proud to be successful at what they were doing. Some of those suggestions needed clarification and some were not told as quickly as I might have preferred, but building teams means using all the team members’ strengths.
I normally update the Hospitality Tip of the Week, but as this is an immediate follow-up message, I am going to maintain it, as I believe the point needs to repeated until it becomes a habit.
--------------------------------------------------------------------------------
Keys to Success Hospitality Tip of the Week: Focus on MBWA
A challenge to every manager who is responsible for 5 or more people: measure your in and out of the office time and at the end of the week, see how much time you spent ACTIVELY INTERACTING with your team.
The goal is 70% of your time out of the office - how did you do? What will you do next week?
My last article used one of Tom Peters and Robert Waterman’s fundamentals from their groundbreaking book on changing the ways we do business. IN SEARCH OF EXCELLENCE introduced a formal name for what the more successful hospitality managers already knew about motivating their staff. The phrase “Management by Walking Around” was based on Hewlett-Packard’s commitment to their staff with interaction – not micromanagement, but ongoing listening and responding to staff ideas.
Hotel Common Sense - Philosophy #2 , Or, why the Open Door policy no longer works… article outlined how today’s workforce wants and needs to be considered as individuals who can contribute to the success of their organization.
Reader feedback showed the growing awareness to that need for additional management and leadership “active listening” and this follow-up message on MBWA offers some concrete ways to notch up that effort of positive involvement.
•Allow your staff to share complete stories and messages. Many hospitality companies are trying to improve their customer care programs, yet how often do leaders and managers actually ask an hourly staff member to share a story about either an unhappy or very satisfied guest? Listening to the entire story could provide best practices that might be substantially more effective and less expensive than hiring a consultant.
•Avoid the tendency to interrupt. General Managers are results oriented people who are looking for the bottom line. I know from personal experience the tendency to “hurry” people along is there, but allowing people to share the entire experience will encourage them to be more open.
•Remember eye contact in conversations. One of my first mentors taught me a great deal about hospitality, but his habit of looking over my shoulder when we were talking always made me feel I was missing something. Give confidence to people with your eyes.
•Collect and communicate these stories of success (and failures). Sharing these stories (appropriately) at meetings of all staff, at training sessions, in newsletters and more provides an incentive to people to want to contribute because they have learned that you really do care. I have seen some outstanding examples of “you tube” like testimonials from a number of hospitality companies of all sizes.
•Remember this is not a game of “one-up.” As General Managers, we have likely been in the business longer or heard more stories and it is important to recognize that we should not try to offer one “better” story than the one we are hearing. Remember, MBWA is about “active listening.”
•Credit the source. When we add a new resource, form or best practice to our hospitality membership site, we obtain permission first and then always make certain we credit them fully. Each of us has unique approaches, messages and talents and sharing the credit with our associates and guests is essential to moving forward.
•Build trust by honestly listening. Some (correction, many) of the best suggestions I have ever heard as a manager or executive came from the people who are performing the job. I learned more about laundry sorting, washing pots and up-selling from people who were proud to be successful at what they were doing. Some of those suggestions needed clarification and some were not told as quickly as I might have preferred, but building teams means using all the team members’ strengths.
I normally update the Hospitality Tip of the Week, but as this is an immediate follow-up message, I am going to maintain it, as I believe the point needs to repeated until it becomes a habit.
--------------------------------------------------------------------------------
Keys to Success Hospitality Tip of the Week: Focus on MBWA
A challenge to every manager who is responsible for 5 or more people: measure your in and out of the office time and at the end of the week, see how much time you spent ACTIVELY INTERACTING with your team.
The goal is 70% of your time out of the office - how did you do? What will you do next week?
Wednesday, September 8, 2010
Keys To Success | Professional Development for You Means Lending a Hand to Someone Else Along the Way
John Hogan writes some good points, and he is a great source.
The title of this column says it all – working to help others succeed will help us as individuals to move forward on our own professional development.
Each of us has our own goals and dreams. Some of us have done better at visualizing what Stephen Covey called “the end in mind”, and most of us have identified at least some specific goals in our career. These goals could include a specific title, a position in a certain organization, a financial target or any combination thereof. Over the years in our career, we have likely achieved some of those goals but we often have failed to continue updating the plan and we become distracted by daily incidentals that have minor and temporary value.
Tom Peters and Robert Waterman more than 25 years ago identified a proven way to motivate both managers and their teams. In Search of Excellence offered many ideas but one in particular had a major impact on me. I championed that idea as a manager and executive in my operational and consulting career. I can assure you that if you follow this action step in a positive and professional way, your organization will lower staff mistakes, reduce overall turnover, see a boost in staff morale and an increase in staff suggestions and engagement in their delivery of service.
Public companies communicate regularly with their shareholders in a variety of formats and frequency, but they ALL provide quarterly updates of revenues, profitability and other results. Monthly would be too often and not meaningful and semi-annually is too infrequent, allowing too much time to pass without a snapshot of results, Public company reports are delivered quarterly because there is enough time to see trends, take continuing or corrective action and address the important issues.
In hospitality, successful organizations recognize that it is the overall experience of the guest that builds loyalty, ahead of earned points, free rooms or a complimentary glass of wine. The main ingredient in delivering that experience is a topic I have covered the last six weeks – it is the commitment to service by the front line staff at your hotel, restaurant or other hospitality business.
I am (again) recommending this action step to every hotel and restaurant general manager and hospitality corporate executive, because I have seen the results when used properly.
1.Meet with all of your department heads tomorrow and advise them of a new communication process designed to assist them meet their department goals and this will not require any more work for them
2.Within 12 hours of this meeting with the department heads, announce in a positive manner to all staff that performance reviews will now be conducted for everyone on a regular, quarterly basis. In this announcement, it needs to be identified that this is a positive step aimed at improving the overall success of every individual on staff, as well as the business.
3.Beginning no later than 7 days after the meeting with the department heads, the reviews should begin within a planned cycle.
I have heard some of the hesitations to embrace this before and I have found them to be inaccurate and an excuse by many to avoid change. Listed below are some of those voiced hesitations, with my rebuttal:
*This activity creates much more work for department heads.
Fact: this does not create more work for department heads, the GM or corporate executives because this new practice is only formalizing discussion and making it more personal with the one-on-one interactions.
•This will cost the company a lot of money that we don’t have.
Fact: The quarterly discussions do not need to change any of the financial arrangements or practices currently in use, unless you want or find you need to change them. Annual financial adjustments can remain in place if that is a solid business decision, but what you will find is more honest discussion and the uncovering of problem areas that can often be addressed quickly when known by all.
•This will take too much time away from our other responsibilities.
Fact: Hospitality is about service and the guest experience and that is everyone’s responsibility. If department heads and managers are not interacting with their staff, there is a major problem.
•This will confuse the staff because we have never done it that way before.
Fact: The first discussion may seem unusual because it represents a change from what was the norm, but our staffs today are well versed in trends in the workforce and have probably heard of more frequent evaluations before. When the real reason is explained that these quarterly discussions are designed to help everyone beginning now, the apprehension of meeting “with the boss” dissipates quickly and seldom returns.
I first embraced this action step as general manager at a 300-room business class hotel. The property was showing its age and its off-center location did not provide an automatic referral center. I can share with you that this action step of improving communication built trust among many long-time staff (with their new general manager) and helped the entire business to outperform the market for two years, even with the property’s physical limitations.
“No matter what the situation, (the great manager’s) first response is always to think about the individual concerned and how things can be arranged to help that individual experience success.”
Marcus Buckingham,
The One Thing You Need to Know
The problems you are facing today are yours, but the solutions and the means to tackle those problems do not have to be yours alone.
What are you going to do, beginning tomorrow?
The title of this column says it all – working to help others succeed will help us as individuals to move forward on our own professional development.
Each of us has our own goals and dreams. Some of us have done better at visualizing what Stephen Covey called “the end in mind”, and most of us have identified at least some specific goals in our career. These goals could include a specific title, a position in a certain organization, a financial target or any combination thereof. Over the years in our career, we have likely achieved some of those goals but we often have failed to continue updating the plan and we become distracted by daily incidentals that have minor and temporary value.
Tom Peters and Robert Waterman more than 25 years ago identified a proven way to motivate both managers and their teams. In Search of Excellence offered many ideas but one in particular had a major impact on me. I championed that idea as a manager and executive in my operational and consulting career. I can assure you that if you follow this action step in a positive and professional way, your organization will lower staff mistakes, reduce overall turnover, see a boost in staff morale and an increase in staff suggestions and engagement in their delivery of service.
Public companies communicate regularly with their shareholders in a variety of formats and frequency, but they ALL provide quarterly updates of revenues, profitability and other results. Monthly would be too often and not meaningful and semi-annually is too infrequent, allowing too much time to pass without a snapshot of results, Public company reports are delivered quarterly because there is enough time to see trends, take continuing or corrective action and address the important issues.
In hospitality, successful organizations recognize that it is the overall experience of the guest that builds loyalty, ahead of earned points, free rooms or a complimentary glass of wine. The main ingredient in delivering that experience is a topic I have covered the last six weeks – it is the commitment to service by the front line staff at your hotel, restaurant or other hospitality business.
I am (again) recommending this action step to every hotel and restaurant general manager and hospitality corporate executive, because I have seen the results when used properly.
1.Meet with all of your department heads tomorrow and advise them of a new communication process designed to assist them meet their department goals and this will not require any more work for them
2.Within 12 hours of this meeting with the department heads, announce in a positive manner to all staff that performance reviews will now be conducted for everyone on a regular, quarterly basis. In this announcement, it needs to be identified that this is a positive step aimed at improving the overall success of every individual on staff, as well as the business.
3.Beginning no later than 7 days after the meeting with the department heads, the reviews should begin within a planned cycle.
I have heard some of the hesitations to embrace this before and I have found them to be inaccurate and an excuse by many to avoid change. Listed below are some of those voiced hesitations, with my rebuttal:
*This activity creates much more work for department heads.
Fact: this does not create more work for department heads, the GM or corporate executives because this new practice is only formalizing discussion and making it more personal with the one-on-one interactions.
•This will cost the company a lot of money that we don’t have.
Fact: The quarterly discussions do not need to change any of the financial arrangements or practices currently in use, unless you want or find you need to change them. Annual financial adjustments can remain in place if that is a solid business decision, but what you will find is more honest discussion and the uncovering of problem areas that can often be addressed quickly when known by all.
•This will take too much time away from our other responsibilities.
Fact: Hospitality is about service and the guest experience and that is everyone’s responsibility. If department heads and managers are not interacting with their staff, there is a major problem.
•This will confuse the staff because we have never done it that way before.
Fact: The first discussion may seem unusual because it represents a change from what was the norm, but our staffs today are well versed in trends in the workforce and have probably heard of more frequent evaluations before. When the real reason is explained that these quarterly discussions are designed to help everyone beginning now, the apprehension of meeting “with the boss” dissipates quickly and seldom returns.
I first embraced this action step as general manager at a 300-room business class hotel. The property was showing its age and its off-center location did not provide an automatic referral center. I can share with you that this action step of improving communication built trust among many long-time staff (with their new general manager) and helped the entire business to outperform the market for two years, even with the property’s physical limitations.
“No matter what the situation, (the great manager’s) first response is always to think about the individual concerned and how things can be arranged to help that individual experience success.”
Marcus Buckingham,
The One Thing You Need to Know
The problems you are facing today are yours, but the solutions and the means to tackle those problems do not have to be yours alone.
What are you going to do, beginning tomorrow?
Monday, September 6, 2010
3rd Down and Goal..
Football season is underway. The hoopla, tailgating, rabblerousing good times are here.
Hotels and restaurants are like football teams; to be successful you need to have the right in the right positions, and suitable back up personnel, and a game plan. Coaches today you see them on the sidelines with a color-coded excel spreadsheet that has been laminated. They script the first 10 plays.
With every position they have assignments and plans just like checking in a guest, to cleaning a room, and taking care of a guest in an outlet. Everyone has a job, when it works well and is executed well the result is a satisfied guest. And a memorable stay which results in a touchdown. In some cases there are fumbles and interceptions, a hotel is no different it is how you recover that is key. A fruit basket, a bottle wine, comp the dessert, comp the meal, drinks at the bar, comp the stay. The easiest gesture will go along way in getting the guest to return.
The essential point is the return to the basics with training, and goals and objectives, and standards. Similar to the basics of Block and Tackle, don’t miss an assignment or get a penalty, just follow the plan and success will come. Successful teams don’t go for the bomb, they throw short passes, Brian Piccolo once said, “Coach, I might not get you 60, but I can get you ten (10) sixs….Diligently, Chip away at it, Move the chains….
Hotels and restaurants are like football teams; to be successful you need to have the right in the right positions, and suitable back up personnel, and a game plan. Coaches today you see them on the sidelines with a color-coded excel spreadsheet that has been laminated. They script the first 10 plays.
With every position they have assignments and plans just like checking in a guest, to cleaning a room, and taking care of a guest in an outlet. Everyone has a job, when it works well and is executed well the result is a satisfied guest. And a memorable stay which results in a touchdown. In some cases there are fumbles and interceptions, a hotel is no different it is how you recover that is key. A fruit basket, a bottle wine, comp the dessert, comp the meal, drinks at the bar, comp the stay. The easiest gesture will go along way in getting the guest to return.
The essential point is the return to the basics with training, and goals and objectives, and standards. Similar to the basics of Block and Tackle, don’t miss an assignment or get a penalty, just follow the plan and success will come. Successful teams don’t go for the bomb, they throw short passes, Brian Piccolo once said, “Coach, I might not get you 60, but I can get you ten (10) sixs….Diligently, Chip away at it, Move the chains….
Best Practices in Revenue Management, Part 3 | Automation, Channel Management and Decision Making
Pat 3 in a series..Good information about Revenue Management.
This article is the third and final in a series addressing best practices in the area of hotel revenue management.
For the past while, we have been discussing integral areas of revenue management and aspects of revenue management systems that give hotels the best possible competitive edge. In previous columns, these have ranged from general attitudes and approaches to revenue management to more specific, actionable components of the practice like strategic pricing and rate discipline. Most of the best practices we have already identified are applicable to both traditional revenue management structures- wherein a revenue manager and their staff perform tasks manually- and to those that rely on comprehensive revenue management systems. The best practices we examine today, focus more tightly on the RMS side, as this is where we believe the industry as a whole is trending, and the style of revenue management that we believe gives hotels and hoteliers the best opportunity to consistently grow both RevPAR and bottom line profits.
While channel management and decision making- two aspects we are exploring today- are certainly aspects of the revenue management process that can be performed by flesh-and-blood revenue managers, a third- automation- is, by definition, not. Yet automation is often the single most important aspect of revenue management systems, the crucial component that bestows competitive advantage on those hotels employing it. As such, we will take a look at this aspect first.
Automation
This is perhaps the most visible advantage RMS systems hold over the traditional approach to revenue management, yet few systems leverage automation to its fullest potential. Most RMS systems, in fact, leave the most time consuming tasks- like rate adjustments- to be performed manually, under the rationale that they are too important not to be under the total control of human hands. This is flawed reasoning, as achieving optimal results in the performance of these tasks- rate adjustment in particular, which directly influences both RevPAR and occupancy- requires a speed and response ability that a person cannot attain.
In truth, automation is integral to making the sort of moment-to-moment, demand-based adjustments in pricing that can yield substantial increase in RevPAR. An automated system can recognize when demand is too low for a room at a particular price and drop the rate to encourage more buyers. Conversely, an automated system can also raise prices at the right time, sensing high demand and thus a tolerance for a higher rate, which allows a hotel to avoid leaving money on the table in the form of a room sold at a rate lower than a guest would ultimately be willing to pay.
And although many systems claim that they are automated, most RMS usually only adjust once a day. A truly automated system will make many adjustments an hour, across multiple sales channels, earning a property significant increases in operating dollars from these changes.
Channel Management
The channel management systems available on the market today are great tools to save time for revenue managers, but none are automated or integrated into a property’s pricing. They still require manual input, manual intervention and manual pricing decision to operate. Channel management is an increasingly important practice as OTAs and third-party booking sites continue to proliferate. Though often a task is labeled as too important to delegate to a system or software, we contend that the only way to optimally manage the dizzying array of sales channels is with the help of a comprehensive revenue management system that integrates in real-time the automated distribution, allocation, pricing and yielding while benchmarking against all competing hotels in a destination.
In a sales environment that features more online channels than ever, the ability to manage rates across all OTAs is paramount. Moreover, the ability to change rates and inventory allocation to various third-party booking sites individually is crucial, as each sales channel may exhibit different demand levels. The challenge of identifying demand levels on any one of perhaps a hundred online portals where a hotel has inventory posted, then adjusting that rate or inventory allocation to maximize the revenue earned on the set of transactions that may occur within that channel is virtually impossible for even a talented team’s worth of personnel. But it is readily achievable by a real-time RMS system that has fully-integrated channel management capabilities.
“Smart” Computing
The third area of revenue management to be examined today is decision making, something nobody but science fiction writers typically assign to computer systems. Yet this is precisely what the most sophisticated RMS systems do; accurate and reliable decision making is what enables these systems to generate and adjust rates, execute rate strategy, interpret competitors’ data and allocate inventory effectively.
Those capabilities are informed by the system’s ability to make good decisions. Decision making, though it’s often thought of as synonymous with self-aware intelligence, is actually a central component of any computer system. What sets the most comprehensive systems apart are the formulas and algorithms underlying those decisions and the amount of data a system incorporates into those decision making processes. A more powerful system will collect and use much more data than a less capable system; using the largest amount of data is the best practice in this area. Another hallmark of a good decision-making system is redundancy. Parallel programs that correct and analyze the decisions made by the other are state-of-the-art, and also reflect one of the best practices in revenue management.
All three of these practices are crucially important to the field of revenue management, particularly with respect to the use of comprehensive revenue management systems. Automation is the catalyst for many of the benefits of a revenue management system can offer, channel management is one of its most visible and important tasks and effective decision making is the engine that makes all of it run.
We firmly believe that the widespread use of revenue management systems that can effectively execute these practices is the future of the industry- a future, it should be noted, that has largely arrived for many forward-thinking hotels and hotel chains- and therefore these characteristics in particular deserve extra attention. There’s a practical aspect to all of this examination as well: any revenue management system being implemented or considered by a hotel ought to feature all of these capabilities or else they are losing out on bookings and giving away money to the competition.
So is your property one of these forward-thinking hotels? If not, will you be?
About REVPAR GURU
REVPAR GURU provides hotels around the world with an alternative revenue management software solution, to manage RevPAR intelligently and effectively, and deliver maximum profits. REVPAR GURU’s custom-designed Yield Dynamic Price Engine meets the rapidly changing needs of hotels in a demanding business environment – dynamic rate optimization, real-time pricing, integrated internet and extranet yield channel management, and GDS sales distribution, to increase a hotel’s RevPAR while maintaining rate integrity and automated rate parity. It is the only revenue management solution that automatically optimizes and updates hotel rates across all major consumer travel websites, based on all market variables and in real time, and provides a strategic room inventory control. Once deployed, hotels can boost their occupancy rates and cut their distribution costs dramatically. Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500 begin_of_the_skype_highlighting +1.786.478.3500 end_of_the_skype_highlighting.
RELATED NEWS
Best Practices in Revenue Management, Part 1 & 2
By Jean Francois Mourier
Friday 13 August 2010
This article is the third and final in a series addressing best practices in the area of hotel revenue management.
For the past while, we have been discussing integral areas of revenue management and aspects of revenue management systems that give hotels the best possible competitive edge. In previous columns, these have ranged from general attitudes and approaches to revenue management to more specific, actionable components of the practice like strategic pricing and rate discipline. Most of the best practices we have already identified are applicable to both traditional revenue management structures- wherein a revenue manager and their staff perform tasks manually- and to those that rely on comprehensive revenue management systems. The best practices we examine today, focus more tightly on the RMS side, as this is where we believe the industry as a whole is trending, and the style of revenue management that we believe gives hotels and hoteliers the best opportunity to consistently grow both RevPAR and bottom line profits.
While channel management and decision making- two aspects we are exploring today- are certainly aspects of the revenue management process that can be performed by flesh-and-blood revenue managers, a third- automation- is, by definition, not. Yet automation is often the single most important aspect of revenue management systems, the crucial component that bestows competitive advantage on those hotels employing it. As such, we will take a look at this aspect first.
Automation
This is perhaps the most visible advantage RMS systems hold over the traditional approach to revenue management, yet few systems leverage automation to its fullest potential. Most RMS systems, in fact, leave the most time consuming tasks- like rate adjustments- to be performed manually, under the rationale that they are too important not to be under the total control of human hands. This is flawed reasoning, as achieving optimal results in the performance of these tasks- rate adjustment in particular, which directly influences both RevPAR and occupancy- requires a speed and response ability that a person cannot attain.
In truth, automation is integral to making the sort of moment-to-moment, demand-based adjustments in pricing that can yield substantial increase in RevPAR. An automated system can recognize when demand is too low for a room at a particular price and drop the rate to encourage more buyers. Conversely, an automated system can also raise prices at the right time, sensing high demand and thus a tolerance for a higher rate, which allows a hotel to avoid leaving money on the table in the form of a room sold at a rate lower than a guest would ultimately be willing to pay.
And although many systems claim that they are automated, most RMS usually only adjust once a day. A truly automated system will make many adjustments an hour, across multiple sales channels, earning a property significant increases in operating dollars from these changes.
Channel Management
The channel management systems available on the market today are great tools to save time for revenue managers, but none are automated or integrated into a property’s pricing. They still require manual input, manual intervention and manual pricing decision to operate. Channel management is an increasingly important practice as OTAs and third-party booking sites continue to proliferate. Though often a task is labeled as too important to delegate to a system or software, we contend that the only way to optimally manage the dizzying array of sales channels is with the help of a comprehensive revenue management system that integrates in real-time the automated distribution, allocation, pricing and yielding while benchmarking against all competing hotels in a destination.
In a sales environment that features more online channels than ever, the ability to manage rates across all OTAs is paramount. Moreover, the ability to change rates and inventory allocation to various third-party booking sites individually is crucial, as each sales channel may exhibit different demand levels. The challenge of identifying demand levels on any one of perhaps a hundred online portals where a hotel has inventory posted, then adjusting that rate or inventory allocation to maximize the revenue earned on the set of transactions that may occur within that channel is virtually impossible for even a talented team’s worth of personnel. But it is readily achievable by a real-time RMS system that has fully-integrated channel management capabilities.
“Smart” Computing
The third area of revenue management to be examined today is decision making, something nobody but science fiction writers typically assign to computer systems. Yet this is precisely what the most sophisticated RMS systems do; accurate and reliable decision making is what enables these systems to generate and adjust rates, execute rate strategy, interpret competitors’ data and allocate inventory effectively.
Those capabilities are informed by the system’s ability to make good decisions. Decision making, though it’s often thought of as synonymous with self-aware intelligence, is actually a central component of any computer system. What sets the most comprehensive systems apart are the formulas and algorithms underlying those decisions and the amount of data a system incorporates into those decision making processes. A more powerful system will collect and use much more data than a less capable system; using the largest amount of data is the best practice in this area. Another hallmark of a good decision-making system is redundancy. Parallel programs that correct and analyze the decisions made by the other are state-of-the-art, and also reflect one of the best practices in revenue management.
All three of these practices are crucially important to the field of revenue management, particularly with respect to the use of comprehensive revenue management systems. Automation is the catalyst for many of the benefits of a revenue management system can offer, channel management is one of its most visible and important tasks and effective decision making is the engine that makes all of it run.
We firmly believe that the widespread use of revenue management systems that can effectively execute these practices is the future of the industry- a future, it should be noted, that has largely arrived for many forward-thinking hotels and hotel chains- and therefore these characteristics in particular deserve extra attention. There’s a practical aspect to all of this examination as well: any revenue management system being implemented or considered by a hotel ought to feature all of these capabilities or else they are losing out on bookings and giving away money to the competition.
So is your property one of these forward-thinking hotels? If not, will you be?
About REVPAR GURU
REVPAR GURU provides hotels around the world with an alternative revenue management software solution, to manage RevPAR intelligently and effectively, and deliver maximum profits. REVPAR GURU’s custom-designed Yield Dynamic Price Engine meets the rapidly changing needs of hotels in a demanding business environment – dynamic rate optimization, real-time pricing, integrated internet and extranet yield channel management, and GDS sales distribution, to increase a hotel’s RevPAR while maintaining rate integrity and automated rate parity. It is the only revenue management solution that automatically optimizes and updates hotel rates across all major consumer travel websites, based on all market variables and in real time, and provides a strategic room inventory control. Once deployed, hotels can boost their occupancy rates and cut their distribution costs dramatically. Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500 begin_of_the_skype_highlighting +1.786.478.3500 end_of_the_skype_highlighting.
RELATED NEWS
Best Practices in Revenue Management, Part 1 & 2
By Jean Francois Mourier
Friday 13 August 2010
Friday, September 3, 2010
Streak Free
I was watching a window washer clean a storefront at the mall and it brought back memories of cleaning windows back in my Housekeeping days. He had a plan and the proper tools, solution in a bucket, the telescoping pole, the brush to apply the solution, the squeegee, and rags and towels, and the precise movements of the squeegee so he had a streak free finish. And he cleans and wipes up so there is no trace that he was there…
The same can be applied to all aspects of service, from the staff that makes the property appealing to stay at, the “Curb Appeal” and the service staff who do their jobs flawlessly because they were furnished with the correct procedures, training, standards, and goals so that it makes you go “Wow”. The Wow appeal. There are a lot of components to make that appeal happen to ensure that your visit is “Streak Free”. So I ask you. As you look at your operation from the outside looking in…. Is yours “Streak free”?
The same can be applied to all aspects of service, from the staff that makes the property appealing to stay at, the “Curb Appeal” and the service staff who do their jobs flawlessly because they were furnished with the correct procedures, training, standards, and goals so that it makes you go “Wow”. The Wow appeal. There are a lot of components to make that appeal happen to ensure that your visit is “Streak Free”. So I ask you. As you look at your operation from the outside looking in…. Is yours “Streak free”?
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