When the going gets tough, the smart keep spending
It is a common reaction to stop spending when markets are softening, business forecasts are on the decline and gloom seems to be the industry standard.
Unfortunately, this can often lead to a negative impact not only to the bottom line, but also to business operations in general.
It is understood that when business becomes tougher, certain decisions need to be made to maintain market share, competitiveness, and stakeholder interest. Often these decisions require decreasing accommodation rates, which are in turn countered by reducing operational costs such as housekeeping and maintenance. This is where the problem lies.
The aim in such markets needs to be to maintain market share, while being competitive, and while upholding the service and rooms standard that was always put forward. In fact, an increase in the standard may be what you need to create a point of difference for guests to enjoy their stay and maintain a following. In my many years of experience as a senior finance executive with leading hospitality providers, I often had to explain that ‘spending’ can be better than ‘not spending’ on items that maintain or enhance the overall experience for a guest.
Take for example a property that is in need of replacing carpets, lounges and beds. In a softening market many would put a hold on such replacement, justifying the lack of expenditure on the decreased revenue. But what if these items were upgraded? Would the property maintain or generate more revenue as guest appeal and satisfaction has been met?
True hospitality is about guest satisfaction and third-party websites such as TripAdvisor make it known to the traveller where to stay and what to look out for! If there is no perceived comfort from these two essential furniture items, business will remain on the downward trajectory, however by spending to upgrade these items a hotel should be able to maintain it’s current market position (or increase it) based on guest satisfaction.
There are many options available when hotels are considering upgrades but the key is to avoid stretching your budget as far as possible. It is imperative to maintain quality in all aspects of a refurbishment so that the ultimate goal of guest satisfaction is achieved, as well as the operational objective of reducing maintenance time and costs.
First create an appropriate specification for a complete refurbishment package (based on star rating, geographic location, demographic usage and a few other critical factors). If the overall cost exceeds the client’s funds currently available, then the project can be broken down into affordable stages, without changing the specification. While determining the project works, it is also critical to look at any aspects of the existing property that can possibly be maintained. For example, a kitchen makeover rather than complete removal, re-using any appliances, painting walls rather without ceilings. It may also be that the common area is in more need of repair than the actual rooms.
Guest satisfaction begins from the moment a guest walks through the front door. If the reception desk, lobby, lifts, and hallways are in a bad state, then often a nice room will fall below standard from the guest perspective.
As a further example of hotel errors, we have been asked by a property that replaced its hallway carpets twelve months ago, to submit a quotation for new carpets… Reason was simple – they selected the ‘cheapest’ option, which has only lasted a very short while. Although the correct carpet is double the price, it will last significantly longer and not have to be cleaned as often. From a financial perspective, it would have been much better to get the appropriate quality the first time round.
In summary, ensure your ultimate objective has three elements – guest satisfaction, decreased maintenance costs, longevity of refurbished items – and remember that spending on the right products, is better than saving for an inferior finish.
