Hotel Cost Controls in an Uncertain Market continued
Property Staffing
This is a very critical area, as labor is the largest single cost
component for running a hotel. Here we simply need to
compare staffing with actual business volumes at the time
service is rendered. It is necessary to review each department
and each individual to determine whether you are getting the
maximum productivity for the money you’re spending.
Usually, hospitality organizations can save a tremendous amount
of money just by re-scheduling staffing and thereby cutting
payroll dollars while maintaining the same standard of service.
Inventory
At many hotel properties, inventorying storerooms usually
produces excess furniture, televisions and a variety of supplies
that could be sold to free up storeroom space as well as
put money back into the hotel. By gaining strict control of all
housekeeping, office, linen, and food and beverage inventory
items, a tremendous amount
of money can be saved by
using what you have and
selling off excess inventory.
Physical Condition
In today’s competitive environment
it’s more important
than ever to maintain the
physical condition of your
properties. There are not
only franchise requirements
to do so, but guests are very
sensitive about a property’s
condition. If there is a
reserve for furniture, fixtures
and equipment replacement,
it should be used to keep the property in first-class condition
which will lead to better guest relations and, as a result, produce
higher average rates.
Mortgage Payments and Other Debts
Finally, be transparent about your financial obligations. If a
property is falling behind in payments, it is wise to let your
lender or creditor know in advance so that they can help you
with a strategic plan. Lenders do not want to foreclose on
hotels. They would rather work out a program that will keep
the property alive until the economic outlook improves.
Conclusion
The fact of the matter is that many hospitality and resort
operators have repeatedly not only weathered economic
downturns but have thrived. During my 50 years in this
business, I’ve seen the hotel cycles rise and fall, along with
markets and trends that come and go. This span of experience
has given me the understanding of the necessary balance
between innovative ideas and the power of good fundamentals
that is needed for a hotel to perform at its peak.
However, even if your operations start going south, it’s
not too late to make a course correction. With the right
kind of expertise, the average turnaround time on hotels in
operational distress is approximately 17 months. The return
to profitability is validation that these hotels were poorly
managed and marketed. If
hotel operators review the
seven items as outlined
above, it is possible that
they can effectively redirect
their property to profitability
before disaster strikes.
Morris E. Lasky is the founder and
chief executive officer of Lodging
Unlimited, Inc., with a career in the
hospitality industry than spans more
than 50 years. Mr. Lasky is also
chairman and co-founder of The
Lodging Conference in Phoenix,
Arizona, now in its 14th successful
year, and co-founder and producer
of the 6th annual International
Hotel Conference in Rome, Italy.
Lodging Unlimited, Inc. has been the management company or consultant
on over $7 billion in hospitality real estate. With more than 300
hospitality clients in the U.S.A., Canada, Caribbean and Europe, Lodging
Unlimited, with offices in Chicago, Phoenix and Philadelphia, has provided
the services needed to maximize profits across all sector types and in
all economic cycles. Founded in 1970, Lodging Unlimited, Inc. has
been a qualified source for sound operational solutions for 38 years.
For more information about Lodging Unlimited, please go to www.lodgingunlimited.com
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