Today's Profitability Equation:
How-To Guide

1. Consider Implementing an employee referral program. Leverage your recruiting reach by turning existing employees into recruiters for your business. Many employers report using employee referral incentives.  One reported incentive example includes tying incentives to a minimum time with the company, for example, incentives are paid after the employee achieves 90 days with the hotel.
2. Advertise openings in a variety of distribution channels. Much like your hotel’s inventory is distributed through a multitude of different channels, you can maximize your exposure to possible job candidates by utilizing as many mediums as possible. Employee referrals, Indeed, Monster.com, LinkedIn, Craigs List, colleges and university job boards, Employment Security Office, social media (Facebook, Twitter), etc. Don’t forget to advertise on local bulletin boards at grocery stores, laundromats, and public bus stations. This may attract prospective employees who may not utilize electronic job search methods.
3. Identifying your hotel’s employment needs to evaluate whether you are competitive with industries looking for same skill set. The skill sets that make someone qualified to work in your hotel also make them qualified to work in a variety of different businesses and industries. Thus, you may want to factor this in when you are determining what you will offer in terms of pay, benefits, etc. to attract new employees. Speaking of determining your employment offers, consider conducting a wage and benefit survey so that you have a good understanding of what is competitive in the market.
4. Understand the impact of base compensation vs. incentives on employee recruitment and retention. Potential employees will weigh pay, benefits, work schedule, etc. when considering employment opportunities.  Incentives are also considered in their decision making and can contribute to retention.
5. Leverage what motivates your team to drive employee retention. One of the most common mistakes employers make is assuming that all employees care about is monetary rewards and incentives. Recognition, development opportunities, education, mentoring, time off, volunteering opportunities, etc. are just a few items that employees say are important to them. So be sure to talk with and listen to your existing staff and potential hires so you can find out what is most important to them.
6. Measure for a proper fit before extending an offer. When hotel management teams are under pressure due to a lack of staffing, it can be very tempting to hire quickly so that the hotel’s immediate need is covered. However, when hiring decisions are rushed due to time constraints, fit may not be measured, and may lead to higher turnover and consequently increased hiring needs.
7. A business’ culture can impact employee retention. Culture is the way employees feel about the work, their values and leadership’s ability to reach a shared vision. Every business has a culture, and that culture reflects the leadership style of the team in charge. How you lead your team and what your leadership team values contribute to the culture of the business.
8. Establish a well-defined onboarding and employee training program for all new hires. Operators may overlook the importance of a thoughtful new hire orientation and training program. Too often new hotel employees’ onboarding is limited to a couple of hours of video training, and completing some initial paperwork, before starting in their position. Sometimes they are provided the opportunity to “shadow” another employee for a couple days, but if they have experience, the job shadowing may not even occur.  Lack of training can add to the new hire’s stress and may cause a strain on the existing team members. While it may take longer to get a team member up-to-speed by following an orientation and training process, the time spent training the new hire to your hotel’s standards can have a positive impact, which may include lower problem incidences and happier team members all around.
9. Outline development/advancement opportunities for your staff. Many of a hotel’s positions are entry level positions, but the hotel industry does have quite a lot to offer in terms of career prospects. Hotel operators can provide their employees with cross training, development opportunities, and educational opportunities. By providing your employees these opportunities you demonstrate that you are investing in them, their development, and their success. Discuss your cross-training needs, with prospective employees to see whether they are open and able to perform other duties as needed.
10. The importance of appropriate tools and equipment in employee satisfaction and retention. Many of a hotel’s jobs can be made more efficient if employees have the right tools and equipment to do their job. Employees of your hotel will truly appreciate having the right tools and equipment to complete their job enabling them to meet your hotel’s standards in a timely and efficient way.
11. Offer flexibility and think outside the norms of scheduling.  Offering flexible schedules and being open to different shift start times at the front desk can be appealing to people that are looking for part-time work or need flexibility in start times.  (Example:  instead of 7am-3pm, move to 8am-4pm)  In the housekeeping department, shifting the start time for all of the team or some of the team can make the job more appealing for those that have obligations in the early morning. This later start or staggered approach may even benefit you from a business perspective, so it’s worth evaluating when your guests are checking out for an efficient use of labor hours.
12. Offer part-time employment.  Consider if part-time positions can help to fill your needs.

Reducing Hidden Costs from Hotel Operations

1. You cannot manage that which you don’t measure. Establish an operational budget (goals) for your hotel and utilize a monthly P&L to measure results against the budget. Establishing an operational budget will force the hotel operator to consider what the business’ income and expenses will be. It provides a profit benchmark and finally requires the operator to plan out the steps they will take to achieve both the top and bottom line results. Utilizing a P&L will help the hotel operator identify variances to their goals each month and allows for the operator to make mid-course corrections as needed.
2. Share your operational goals with your team. How can your team help you achieve your results if they don’t know what results are expected?  You wouldn’t ask someone for directions without telling them your destination. Engagement is key. Everyone in your hotel has a role to play in terms of managing expenses and driving revenue.
3. Benchmarking your expenses to identify profit leakage. Labor can be one of, if not the largest variable expense in a hotel operation. However, in addition to labor, there are many other expenses which are significant to a hotel’s operation. Comparing your hotel’s actual expenses vs. expense data from hotels in your industry segment and/or other hotels in your immediate area can help a hotel operator identify areas that they may be overspending. Once identified, the hotel operator can adjust those expenses to align with their budget.
4. Shopping all service contracts and insurance policies on a regular basis. One expense area that often gets overlooked is ongoing service and maintenance contracts. Pricing on these services can vary widely and new competition can help reduce your hotel’s overall costs for these services.
5. Review your property tax valuation to potentially reduce property taxes. There are organizations that will help hoteliers to evaluate their property tax as real estate valuations differ. Given the drop in business you may have experienced due to the pandemic, now may be a good time to consider having another look at your property tax valuation.
6. Instituting a time of use energy plan with your energy supplier. Certain cities and utility companies offer time of use plans which values evening energy usage different than day-time energy usage. This pricing can help reduce overall energy costs.
7. Get an energy audit on your hotel. Most energy companies have programs (may include a cost) in place where they will come out to the location and perform an energy audit.  This often includes a review of all utilities’ current use and suggestions on how to reduce their consumption.
8. Implementing and investing in green initiatives/programs that reduce overall energy usage. As a hotel operator, if you can invest in equipment like LED lights, thermostat-controlled HVAC systems, or initiatives like towel reuse programs, etc. you could potentially reduce your overall energy and water expenses significantly, while possibly reducing the burden on your team.
9. Conduct monthly (at minimum) inventories to reduce/eliminate shrinkage. Hotel operators must purchase a variety of supplies and equipment to operate. Some examples of supplies and equipment that should be inventoried include linen, terry, guest supplies, maintenance tools, housekeeping equipment, cleaning and laundry supplies, food and beverage items, china, glass, and silverware, etc.
10. Understanding how appropriate tools and working, well maintained equipment impact profitability. By leveraging proper supplies and equipment, a hotel operator can leverage effective and efficient processes to help reduce overall labor costs while also extending the life of the supplies and equipment. For example:
    • Linen and terry PAR levels. If you have at least 2.5 turns of linen and terry, a hotel operator can institute night laundry and have the laundry attendant stock housekeeping carts the night before while laundry is being washed and dried. This significantly reduces housekeeping stocking time in the morning and eliminates the need to make multiple trips to replenish linen and inventory throughout the day.
    • Housekeeping carts. Housekeeping carts that can fully accommodate a room attendant’s daily need of linen, terry, guest supplies, all while carrying all cleaning supplies significantly reduces the number of trips to replenish supplies.
    • Cleaning supplies. Adequate commercial grade cleaning supply chemicals at the right concentration levels helps reduce the time spent cleaning and minimizes waste of cleaning supplies. Supplemental to cleaning, additional items like “sticky rollers” can significantly reduce room attendant time in removing hair and debris from floors, tubs, and showers.
    • Housekeeping equipment. Having working, well maintained equipment is essential to effectiveness. For example, ensuring that the room attendants’ vacuum cleaners still have proper suction reduces the overall amount of time spent vacuuming carpets.
    • Technology. Leveraging all the features of Property management systems, point of sale systems, mobile operations programs, etc. can reduce front desk service time and also reduce training time for new hires. Furthermore, with the right technology, management staff can properly support hotel staff members, even if they are not physically at the property.
11. Evaluate all hotel processes so that they are as efficient as possible. As a hotel operator it pays to take a step back and evaluate how each department in your hotel performs its essential functions. Determine if there are things that you can do to eliminate steps in each process or whether you can have one person perform a specific function to reduce the impact across multiple team members. For example, instead of having room attendants drop off soiled linen and terry to the laundry room, could one team member collect all linen and terry and take it to the laundry room, freeing up time from the remaining housekeeping team.

12. Utilize outsourcing and/or pay for performance agreements to provide specific operations and sales functions. Often companies that provide valuable services such as sales, revenue management, etc. may be able to perform these functions for your hotel for less when compared to the time and cost associated with having to hire, train, and keep full-time staff employed. Additionally, because they are focused in one key function, they are typically experts in their field. Several functions could lend themselves to outsourcing including, but not limited to:
    • Fielding Reservation Calls
    • Revenue Management
    • Local Sales & Marketing
13. Leverage flexible hotel policies to limit hotel services without impacting the guest experience. While occupancy is starting to recover and guest expectations are increasing again to match previous expectations, there are still ways to take advantage of the changes in guest expectations from a hotel experience. While you should always review applicable law relating to the amenities your hotel offers, hotels can find savings through some of the following flexible hotel services:
    • Evaluate appropriate food and beverage
    • On-demand housekeeping or limited to no stayover housekeeping service
    • Adjusted hours of operation for restaurants, bars, and other services
14. Problem prevention can cost less than problem rectification. An ounce of prevention is worth a pound of cure is a common phrase which still rings true today. Not only does preventing problems save hotel operators upfront, but also working to eliminate problems in the hotel, can provide a positive guest experience.  Positive guest experience drives repeat business which in turn helps to drive revenue. To support positive guest satisfaction, hotel operators should plan to have 2 sets of eyes review each room daily and have a well-documented and well executed preventive maintenance process.

Maximizing Revenue

1. Inventory distribution is a key to maximum exposure. To be as efficient and effective as possible in terms of generating revenue opportunities, hotel operators should evaluate their strategy and participate in offers and to take advantage of as many distribution channels when possible This allows the hotel operator to expand their sales efforts, reaching as many potential guests as possible. Distribution channels include:
   • Web
   • Mobile
   • OTAs (Online Travel Agents)
   • Wholesalers
   • Traditional Travel Agents
   • Corporate Travel Agents and Electronic Corporate Booking Platforms
   • Regional Business Accounts
   • National Business Accounts
   • International Business Accounts
   • Group and Meeting Planners
   • Property Direct – Transient and Group
2. Instituting a rate and revenue management strategy. To convert sales on all the different distribution channels a hotel is listed on, a hotel operator should assess to see if the hotel is priced correctly.  Use promotions to target your local market and its forecasted demand.
3. Driving rate through the property direct channel. For many hotels, especially hotels in the economy and mid-scale chain scales, a significant amount of reservations is still booked directly by the property direct. Therefore, to truly maximize total revenue, hotel operators should ensure that front desk associates are well trained in fielding reservation calls. This training should be focused on maximizing reservation conversion while ensuring they are utilizing an effective BAR strategy.
4. Leverage your past guests to sell to your future ones. A healthy online reputation fueled by numerous positive reviews from real guests is critical to booking future stays through online channels.  Not responding or ignoring your guests’ feedback is simply not an option in today’s social-media driven world. Listening to your guests and ensuring that they report a positive experience at your hotel is critical to generating new bookings as well as repeat stays.
5. Leveraging loyalty programs to drive repeat guests. At Wyndham, Wyndham Rewards is a key channel for driving reservations.  A valuable loyalty program can create stickiness with guests—whether through free night redemptions or brand partnerships—and can therefore be helpful in driving repeat business. That’s essential to any service business with a highly perishable inventory. Maximizing the use of loyalty programs helps ensure that your brand or hotel’s messaging is top of mind when the guest’s next travel occasion arises.
6. Implementing a direct sales effort with maximum reach. Hotels, like other business, run on sales. To ensure that your hotel’s sales efforts are as effective and efficient as possible, hotel operators should do the following:
   • Create a sales action plan that identifies your current customers, their segments, and how you can help to increase sales in those segments. Your plan should identify the specific actions that will be taken to obtain these customers. Action plans can include specific tactics, who will be responsible for executing them, when these specific tactics will be completed, what (if anything) these tactics will cost, and how the results of these actions will be measured.
   • Review your sales action plan details to target corporate transient business at the local, regional, national, and international level appropriate for your hotel’s chain scale and location.
   • Review your budget for all local marketing and sales expenditures as part of the sales action plan. Decide what an acceptable ROI should be for each expenditure, based on your hotel’s operational budget.
   • Remember the adage, manage behavior, track results. Leverage a customer relationship management (CRM) or other technology to track specific salesperson activity in accordance with the sales action plan.
   • Adjust your sales action plan as conditions change. Remember to be flexible and if things change in your market, or a specific tactic is not working, adjust as necessary, measure and repeat.

7. Connect with your local Chamber of Commerce, CVB and Hotel Association if available. This keeps the property connected to the community and these organizations are more likely to refer business to you. Joining one or all three of these organizations goes a long way in cultivating a relationship!