ATLANTA — When it comes to successfully operating a full-service hotel there is no silver bullet for achieving success, but there are some smart steps owners and operators should take, say industry experts who spoke at the 28th annual Hunter Hotel Conference.
The three-day event at the Marriott Marquis drew 1,300 attendees, up 8 percent from a year ago, according to conference organizers.
In a panel titled “The Evolution of Full-Service Hotels,” professionals from Horwath HTL, GF Management, Davidson Hotels and Resorts, Legacy Ventures and Hyatt Hotel Corp. emphasized time and again that full-service hotels are in no way dying. They are simply evolving, and owners and operators must also evolve if they have hopes of being successful.
“It’s still a street corner business,” said Thom Geshay, senior vice president of business development for Davidson Hotels and Resorts. “You have to look at the market you’re in, you have to define and profile your customer and give them what they need.”
1. Get Creative in Controlling Costs — Full-service hotels have a slew of amenities, and each amenity presents a new place to create revenues. “Our job is to find something that is broken or not maximized in some way and create value,” said Geshay.
Paul Breslin, managing director of Horwath HTL, stated that every full-service hotel should have 20 to 30 sources of revenue, which requires some creativity. Typical amenities such as parking, restaurants, dry-cleaning services and spas are important for generating capital, but it is vital to think outside the box.
“You need to think about revenue per square foot,” said Breslin. Placing FedEx mailing slips inside suites is one innovative source of revenue that Breslin has observed.
Jeff Kolessar, senior vice president of development and acquisitions for GF Management, urged hotel owners to be cognizant when making renovations.
Kolessar noted that many older hotel properties include space formerly used as clubs or discos that can be transformed into meeting and banquet space on a dime. This approach can be cheaper than implementing other amenities in the same space.
2. Welcome Technological Advancements — While all panelists agreed that hotel operators should be careful that robots aren’t doing everything, utilizing technology can be a great way to control costs.
Apps can provide automated check-ins, serve as a room key and even let poolside guests order another drink. The apps help reduce labor costs as well.
David Tarr, senior vice president of real estate and development for the Americas with the Hyatt Hotel Corp., said that implementing new technology in rooms can also help save space. With flat screen TVs the norm today, many hotels have the option of getting rid of clunky furniture and decrease the size of rooms.
3. Understand Your Market — Panelists also agreed that understanding your guests is key to running a successful hotel. “We have so much data out there to help us get it right,” said Geshay.
Room service is one facet of full-service hotels that has changed drastically based on the market, according to Tarr. What used to be a white tablecloth presentation is now about meal availability, and some markets might not require that service.
“If there are tons of offerings 24 hours a day, it’s just not something that guests have to have,” said Geshay. “In other markets someone may be coming in on a late flight and need something to eat at 1 a.m., and you have to provide that for them.”
Operators need to be aware that repeat customers may have very different needs depending on the type of trip they are taking. Room service may be necessary for an anniversary trip, but the same guest wouldn’t need or want room service for a family or business trip.
Tarr advised that operators of hotels that cater to conventions should critically examine their suites to determine where they can cut costs. After all, the typical guest spends more time in the ancillary areas rather than inside the suite.
“Our business is always changing. You have to respond to those changes and profile the guest,” said Geshay.
The emergence of millennials as customers has been a difficult change to manage, said Tarr. “They’re disruptive in how we think about buying behavior. We’re used to people buying things, and they aren’t interested in things. They’re interested in authentic experiences,” he explained.
4. Get the Food and Beverage Right — When it comes to food and beverage offerings, it is critical to provide an authentic experience. Restaurants inside of hotels have the capability to provide much more than simply the revenues they generate.
A good food and beverage option can create buzz for the entire hotel operation. Not only can this attract outsiders to dine within the hotel, it also allows operators to raise prices if guests are willing to pay more to stay at a place where they are provided an experience.
“People want to take a picture of the bar they’re sitting in and tweet it out and say, ‘I’m at the coolest place in Atlanta right now,’” said Tarr. “If we ignore that, we’re speaking in our peril.”
Geshay seconded the notion of providing spaces that are “tweet-worthy.” “Everyone is looking for an experience. If you do the f&b right, what you are doing is creating a destination,” he said.
Some panelists suggested bringing in third-party operators to help execute food and beverage offerings. Having a good, recognizable brand as a restaurant can help create a sense of place for a hotel.
“You need to really execute exceptionally well on a limited menu rather than try to be all things to all people,” said Tarr. If done right, restaurants not only can be a huge source of revenue, but can also cut out what is oftentimes the most labor-inefficient part of a full-service hotel.
Kolessar said The Westin Chicago Northwest is a prime example of what a good restaurant can do for a hotel.
“Anyone who has ever seen that hotel knows that it is built like a bunker, but we (GF Management) saw opportunity in that hotel,” he said. Approximately 40 percent of the hotel’s revenue comes from the Don Shula Steakhouse, which generated $10 million in revenue even during the recession in 2008, according to Kolessar.
“With the average check that it brings in and the kind of business that occurs there, it is truly an amenity to the hotel,” said Kolessar.
5. Hire the Right People — The staff has a lot to do with the authenticity that the hotel provides to guests. Long gone are the days of strictly mandating the appearance of the hotel staff. Instead of focusing on piercings and brightly colored hair, the management team should hire employees that understand human behavior, the panel suggested.
“You not only have to have a winning concept, but you have to have a winning team,” said David Marvin, founder and president of Legacy Ventures, which plans and develops hotels and restaurants. Breslin agreed that the hotels that win are the ones that are the most innovative in hiring talented people.
One way to still obtain top talent while simultaneously cutting costs is to partner with local hospitality schools on internship programs, said Kolessar.
Tarr said that hotel staffing should correspond to the ebbs and flows of the daily business. If operators are willing to hire third-party specialists to help them determine how many workers to hire, it can result in huge savings. Hotel staffing on any particular shift should match anticipated consumer demand. The system for scheduling workers can then be applied across an entire portfolio.
“At the end of the day it’s all about providing good service,” said Tarr. “We are trying to look at everything at Hyatt though the lens of how we provide care for our guests and for each other, and making that be the focal point of everything we do.”
“We won’t be marginalized and we won’t be commoditized because at the end of the day we’re still in an industry build on hospitality and care,” emphasized Tarr, “so it’s important to not lose sight of that.”
– By Christina Cannon