5 operations tips for independent hotels
12 SEPTEMBER 2014 8:19 AM
A panel of independent hoteliers share ideas on maximizing opportunities and minimizing challenges in operations.
REPORT FROM THE U.S.—Independent hotel operators enjoy many freedoms, but the job also presents unique operations, marketing and ownership challenges, sources said.
“Being independent allows local management to be flexible and attend to individual guest needs and not be restricted by brand standards or procedures,” said David Benton, GM of the Hotel Providence in Rhode Island. “Typical hard-brand corporate protocol on topics such as revenue management, menu offerings and standard room amenities often limit creativity and adaptability to meet guest needs.
“An independent hotel can take full advantage of making the rules, and breaking the rules, to ensure guests have a memorable experience,” he said.
Benton is one of a group of executives participating in a series of virtual roundtables conducted by Hotel News Now via email. The executives were speakers at last year’s Independent Lodging Congress, which this year will be held 29-30 September at The Rittenhouse in Philadelphia. This discussion focuses on operational challenges for independent owners and operators. In previous stories, the group discussed financing and marketing issues.
Independent hotel operation presents hurdles, which the panelists addressed in the email roundtable:
1. Creating memorable experiences
Many guests choose independent properties over branded hotels for the unique and memorable experiences they hope to receive. Operators need to spend time formulating strategies to make it happen, panelists said.
“Storytelling has been a driving force for our teams to be inspired to deliver exceptional service,” said Alex Cabañas, president and CEO of Benchmark Hospitality International. “I often say, ‘We make memories for a living.’ Our customers don’t leave with anything in their hands physically. They leave with a memory in their head and/or a feeling in their heart. That’s what this business is about: If we create one or both of those ‘products’ we’ve done something great.”
Typically it’s the line-level employees who must deliver guest experience, which is a function of training and corporate culture, Benton said. “It’s important to empower staff to act appropriately to any situation involving a guest.”
He cited the example of a guest who arrived at the hotel in full military uniform. He told the front-desk clerk he was going to propose to his girlfriend before he shipped out again overseas. The clerk booked the guest into a larger suite and sent up amenities to ensure a memorable stay.
2. Solving operational challenges
Technology can be a challenge for many independent hotels, said Greg Champion, COO of Benchmark Hospitality. He said it’s important to be on “the solid edge of technology, rather than the leading edge.”
“There are so many changes and upgrades and cloud-based options; we as an organization need to be well-educated and interested every day in learning more but not necessarily changing immediately,” he said.
Champion also mentioned employee health care and the effects of the Affordable Care Act as an issue that has yet to be finalized.
“It might take another year or two to be resolved,” he said. “The anticipated control of costs has not materialized and that has significant impact at the bottom line gains in (revenue per available room). We have been aggressive in managing our program and offerings, yet we still have large year-over-year increases in cost.”
3. Attracting and retaining talented GMs
Independent hotels can provide a strong career path for GMs seeking autonomy and creativity in their work experience, Benton said.
“Creative GMs might feel frustrated by working in a branded hotel company as the ideas they want to implement can be rejected as not fitting into the corporate culture, or the expense of implementation across the board can be vetoed,” he said. “GMs working in independent hotels have much more freedom to be creative and flexible in dealing with guests and market condition. Hotel owners can offer GMs either significant bonuses or equity in the hotel to attract and retain them.”
4. Allocating franchise fee savings
One obvious reason hotel owners consider going independent is to save on franchise and management fees charged by hotel brands. It’s important for owners and operators to allocate this dividend for maximum effectiveness.
“Independents aren’t really saving; rather the question should be framed as how should the marketing and distribution budget be spent,” said Jan deRoos, associate professor in the School of Hotel Administration at Cornell University. He said operators should consider using the funds to bolster the revenue management function, make investments in long-term relationships with key customers and launch social media marketing for the right concepts.
Cabañas of Benchmark said direct sales and marketing should be the emphasis.
“When you don’t have the encumbrance and cost of a franchise you can spend 100% of your sales and marketing dollars on specific targeted sales and marketing,” he said. “Mass marketing is becoming less and less valuable in today’s society. Our attention spans are shortening by the minute so we must be able to capture the attention of the consumer through targeted messaging, or they will scan right past it and never look back.”
5. Effectively employing social media
Independent hotel operators need to view the value of social media on an emotional level, said Ted Davis, chief sales and marketing officer for Benchmark. He said social media is less transactional and more of a branding conversation and an expression of a hotel’s values and personality.
“The marketing leverage (of social media) is in the distribution developed with your community over time by increasing the number of interactions with your followers,” he said. “While its value is primarily in branding rather than direct revenue, if a campaign is carefully crafted and integrated with your commercial marketing initiatives social media can stimulate many direct revenue opportunities.”
The other side of social media is reputation management, which Davis said requires an investment in time and resources by hotel staff and management. He said each hotel should have a central point of social media management because of the skill and expertise involved in the process.
Benton of Hotel Providence said reputation management should be a daily task at every independent hotel.
“Online reviews need to be answered immediately and specifically because reviews answered generically or days and weeks after the review is received might as well not be written,” he said. “The guest wants the hotel to recognize their compliments or concerns. It takes no more than one minute to answer a review, which if answered properly can turn a disgruntled guest around.”