Challenges and Opportunities in Today’s
Market Environment

By Mark Heymann

In this edition of FocusED, we have interviewed some managers to get first-hand knowledge of what they are doing to cope, address, and try to deal with the many challenges in our present market conditions. And the realities of each market show differing trends and issues that need to be addressed. While you will read in this edition about some of the more strategic things that are being done and even some “big picture” items, I am going to focus my remarks on some of the specific tactical items that can have a direct impact now but may be slipping through the cracks. I have broken them down into a few categories in order to clarify the impact of these corrective actions.

Capital Shortage

This is not news to anyone. Here are a few things that can be done to give a property greater access to precious capital without wasting it.

1. Revise your par levels to ensure you are maximizing your inventory turns. There is no point of having your “cash” sit on your shelves.
2. Reduce your inventory levels; e.g., linen par ideally is 3.5 to 4 but when your occupancy is 60%, a 2.5 par looks like a 4 par.
3. Spread payments for key capital equipment purchases over time to reduce impact on cash flow.
4. Minimize your accruals for the big 4 items and involve your staff in better use controls.

Cost Reductions

1. Don’t just cut staffing levels as volumes soften; revise the work content for greater impact. As an example, in 4-star properties, reduce hall carpet vacuuming to three times a week or even every third day if volume is down under 60%, while making sure the housekeepers pick up hall trash and spot vacuum.
2. Implement a better system for separating the room linen that the guest doesn’t want replaced from the clean linen, especially towels. I can’t tell you how often I am in a hotel and hang my towel over the shower curtain rod (showing I will use it again) yet when I return, there are four towels all folded in the same position as if I had checked in to the room that day. Simply keep items that will be reused separate from your fresh, clean items.
3. Review your energy saving procedures and laundry standards (for those properties that have laundries) to ensure your production reflects the specified reduction in use.
4. Turn your dish machines off and only run them when dishes are stacked. It’s a little like turning the water off when you brush your teeth and only turning it on when it’s time to rinse.
5. Check the temperatures on the dish machine to ensure they are correct in all cycles and clean the screens frequently to reduce soap usage.
6. Condense your walk-in refrigerator with the reduction in volumes and therefore par level stock needs. This enables you to shut off the empty ones (electricity reduction) and lowers the steward’s work load in cleaning the boxes. It will also reduce waste.
7. If you are doing something weekly, see if you can extend the process or purchase to every 10 days. It doesn’t seem like much, but you just reduced the cost of these purchases and/or activities by a third; e.g., flowers in the lobby every ten days, cut the public grass areas every 10 days instead of weekly (every 10 days is 36 per year, every week is 52).
8. Better determine when your breakfast buffet vs. ala carte service makes sense by looking at food cost compared to labor cost.
9. Look for volume purchasing deals and understand the total volume of product your company purchases.
10. Adjust the frequency of your weekly cleaning activities to reduce labor needs without impacting the guest.
11. See what tasks you can take in house to use open capacity from staff that needs to be available for peak time services.

Simply evaluate all costs, not just from the impact on the customer, but also in light of what the property can afford based on rate and occupancy. Where you make reductions, frequently it can be done without any negative perception from your guests.

Revenue Opportunities

1. Even if you can’t up-sell a guest, if the room is available, upgrade your frequent customers. This creates additional loyalty and strengthens your long term position in the market.
2. Put your average check competitions into place and push revenue for the customers you have.
3. Turn all front of house staff into sales people. Make sure they all know about your packages and specials. When a bellman says hi to a guest, train them to promote something if the opportunity is there.
4. Promote your packages / promotions to cab drivers and have them “sell” the property.

While this list is surely not exhaustive, it is designed to give you a few ideas that directly and indirectly will impact your bottom line. Some of you may be saying, “Who cares about shutting off a dishwasher for 25 minutes?” since the savings are not that great. However, what these tactics help you do is create and promote a culture of optimization that will also further engage your teams in the successful outcomes of the business. In our view, if you can implement processes, activities and systems that enhance engagement, you can’t help but be successful, even in these challenging times.

Until next time,
Mark Heymann, ISHC
UniFocus Chairman & CEO