Why operations should be your #1 priority now

To be successful in hospitality today, you need to focus on operations first and foremost: sales, marketing, design, technology, or revenue management.

Excellence in hotel operations means happier guests, better staff and more profits for your investors.

My career has given me a 360-degree perspective on what makes hospitality successful worldwide, on the front line, in marketing, in operations, in revenue management and with investors:

  • I started my career working the front desk of a small property on the California coast.
  • During that time, I created a hotel marketing website that over 70,000 hoteliers used monthly to learn how to increase demand for their properties.
  • From there, I helped build what became one of the largest hotel operations technology companies in the world, providing over 60,000 hotels with tools to listen, understand and serve guests.
  • After that, I joined a revenue management company co-founded by the former CTO of Salesforce, and learned how big data and machine learning can be used to maximize revenue through smart pricing.
  • Most recently, I have spent the past few years supporting hotel owners and hotel real estate investors on an investment management platform used to manage over $2 trillion in assets.

Each of these experiences showed me something again and again:

Operations are the highest point of leverage for hotels today

A successful hospitality business demands so much:

  • A great location
  • Differentiated design
  • Enabling Technology
  • Attention-grabbing marketing
  • Revenue Strategy
  • ….and many other things

But I’ve seen how operations are the highest leverage point for driving results in a hospitality business.

Let’s look at the reasons why.

Operations attract talent

“The magic of hospitality is having the right staff,” says former investment banker turned hotelier Philippe Zrihen. Now Chief Operating Officer at Ennismore, he believes that “we are only good if we can recruit, and we recruit with an operating philosophy that says we all try to provide a fun, non-stuffy lifestyle in our hotels.” That’s a big statement from the head of a company renowned for stellar design hotels.

Large operators see the opportunity to build a culture that attracts and retains talent. The catering teams have been among the most difficult to recruit, but Richard Garciafirst vice president at Hotels in Remington, takes up this challenge by creating an inspiring vision of the functioning of its teams. “It creates a strong sense of community and belonging within our company. Rigorous standards of excellence give our team goals they can work towards. This has been a big part of our success in recruiting.

Jamie Holmes LEDs The Nantucket Hotel & Resort at #1 in the United States on TripAdvisor making it clear to all new hires that they are here to build a world-class operating team. “It makes a difference when you come to work every day knowing you’re part of a winning team. This is crucial for attracting and retaining the right talent. Job satisfaction comes from feeling appreciated and respected, creatively expressed, and challenged to reach one’s full potential. Our team has fun doing this.

Excel in hotel operations and you will find that your hotel business becomes a magnet for the right people.

Operations are the best form of marketing

Delight your guests and they will get better results than any marketing campaign.

Adele Gutman led sales, marketing and revenue management at The library collection, and achieved the extraordinary: its four properties earned top four spots on TripAdvisor in the hyper-competitive New York market. “Your reputation is the foundation of everything you do in marketing, and it’s impossible to be successful in marketing without cultivating that reputation,” she observed. In his experience, “Acting in a way that earns you ‘super fans’ will reduce your marketing costs and make your life a whole lot better, whether you’re attracting more customers, more staff, or opening more stores. hotels.

Excel in hotel operations and your customers will do your marketing for you.

Operations give you pricing power

Teacher Chris Anderson studied this at Cornell University and found that a 1% increase in a hotel’s overall rating indexMT is linked to a 0.99% increase in RevPAR.

It held up on the ground. I remember sitting down with corporate client executives and adjusting compensation for hotels that were outperforming in guest satisfaction and could charge higher rates.

Dominique Longo was one of the leaders I worked with. Drawing on his experience as an operator with increasing responsibilities, he has built systems from A to Z to Red Lion Hotels (now Sonesta) which gave the hundreds of hotels it oversaw greater pricing power. “Operating in a way that improved our customer review scores improved our revenue,” he told me.

Excel in hotel operations and you’ll escape commoditization, competitive-based pricing and earn reservations at higher rates than ever before.

Operations drive brand value

Think of an iconic brand like Ritz-Carlton Hotel. Brand Finance estimates the value of its brand only over a billion dollars. With $3 billion in annual revenue, superior pricing power, and customer loyalty, it’s probably a bit higher. And that value is the sum of every interaction each customer has with their brand. For decades.

The power of operational excellence at work.

Your reputation precedes you, and careful experience management through operations means you can be picky about the developers and owners you work with, creating a virtuous cycle of investment to expand your presence and brand. .

As a brand positioning guru Al Ries we learned, your brand is what consumers say it is, not what you want it to be.

Excel in hotel operations and you will increase your brand value.

Operations generate real estate value

While working at Juniper Square, I saw how investors were drawn to hotel real estate because of the unique opportunity to unlock value and outsized returns. “Hotels run businesses, which creates the opportunity for higher returns,” Jake WurzakCEO of a real estate investment company dovehill said. According to him, the management company he also runs gives him a “great competitive advantageas an investor.

I have spent years working with JLL and hotel property investors who would comb through guest reviews in the underwriting process and use them to develop a business plan for new acquisitions. Or look for ways to increase your profits in preparation for a sale. In all cases, the value was created in operations.

That is why Tyler Henritze at black stone said investors should focus more on operations at the NYU Hospitality Investment Conference earlier this year. “Where we’ve really had success is where we not only own the real estate, but also the operations behind it.”

Excel in hotel operations and you will increase the value of your property.

Whether you’re the general manager of a hotel, an operations manager at a management company, or an investment manager managing capital, operations are the key to unlocking potential – and profits.

If you would like to receive new case studies every week on how to achieve operational excellence in your business, I invite you to join me by subscribing to the hotel operator‘s weekly newsletter here.

Josiah Mackenzie
hoteloperations.com

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