Comment: Caroline Cooper on how to turn around an underperforming hotel
08 September 2010
How to turn around an underperforming hotel
When you are involved in a business that is performing badly it can sometimes be difficult to remain objective, but before aimlessly throwing more resources to turning the business around, or reaching desperation point, here are some steps to take.
Take Stock
Start by reviewing what areas need your attention. It might be useful to conduct an audit of all the following areas.
Quality
Take the customer journey and take a look at all aspects of the hotel as the guest would see it. Review each of the following areas:
-The cleanliness of the outside, public areas, bedrooms, bathroom, etc; are all spotlessly clean?
-The fabric and condition of the building. When was the last time it saw a lick of paint? Which areas are looking shabby, unkempt or in need of modernisation?
-How practical is the layout of the hotel and bedrooms. For example, if your guests are predominately corporate, is the room user friendly for guests to work? Can they sit comfortably at the desk, with good light and have sufficient (and accessible) power sockets for their laptop and phone charger? Can you plug in the hair dryer and still see in the mirror, and plug in the kettle without having to place it on the floor?
-Do you offer value for money? Compare what guest get for breakfast, the overall quality in relation to your own pricing and that of your competition.
-Sleep in your own beds and check you can get a good night's sleep. This includes a comfy bed, peace and quiet, and feeling secure.
-Review the quality of service in all areas.
Involve others in your team too to review departments other than those they work in e.g. kitchen staff to look at bedrooms from a guest's perspective, housekeeping to eat in the restaurant, etc. They may see things that you've become oblivious to.
Cost Control
Look at all your costs and check your margins in all areas.
-Review menu costs and the gross profit margin based on actual consumption and actual sales. These must be based on current prices - a dish which may have been making a healthy profit two months ago now may be making a loss.
-Check what is going in the bin, and ask if this is over ordering, over production, giving guests too big a portion, or guests leaving food from poor quality.
-Check the cost to you each time you let a room - servicing, linen, toiletries, utilities, and compare this with your average room rate. Are there times when you are cutting your rate so low that you are making a loss?
-Look at your labour costs and compare their productivity with the norm for your type of hotel. Do your staffing levels reflect your occupancy levels?
Marketing
-Know your customers and what they expect from you.
-Where else can they get the same thing? Your competition may not be obvious e.g if you are aiming to attract the corporate market you might be competing with hotels in other locations near major transport hubs, or serviced offices; if appealing to families for their annual holiday you may be competing with hotels in other resorts, or local independent hotels.
-What differentiates you from the competition? How well are you promoting your point of differentiation?
-What makes you stand out (or lets you down) from your guests' perspective? Listen to their feedback, read your TripAdvisor reviews, and learn from them.
-Review what marketing you are already doing and track the conversion rates. Do each of your campaigns bring in a return on their investment?
-Check your Google analytics to see if your website is earning its keep.
-Check your visibility both on line and off line. If you Google a description of your hotel (e.g. child friendly hotel in York) what comes up? Ask yourself how else people can find you.
-Ask your existing guests how they heard of you.
Be honest with yourself about the findings. You may discover some things that are difficult to accept. It is all too easy to make excuses why some of these are as they are, but if they are not helping you to achieve business performance you may need to be ruthless in addressing them.
