Hotels are Our Business and Business is Good: New Money Pours into the Hotel Business
BAHARA, Cagayan de Oro Hotel And Restaurant Association, COHARA,
Q: What is the most interesting trend you see in hospitality?
George: In South East Asia? Lots of new entrants. Many of our new clients are already successful in other ventures. They see the hotel industry booming. And they want one of their own. Some, a chain of their own.
Q: What unique challenges are they facing?
George: As I see it, many of the biggest challenges—and mistakes—revolve around the issue of Best Practice. That is, Best Practice for the hotel business. Put another way, being aware your venture into the hospitality industry may need to be approached differently than business as usual in other arenas.
Q: What mistakes do new entrants make?
George: For those coming from public companies or via private equity: Valuing shareholders above hotel guests. Some new players try to run their hotels with a Quarter-to-Quarter “where’s the share-price” mind-set. In some instances this comes complete with variations on window dressing my Operations Chief used to see on the exchange trading floor. A certain multi-national bought one of the most magnificent properties I've ever seen in the Philippines, but they went through the Mergers & Acquisition mill 3 times during our implementation. The 3rd set of management we met wasn’t even sure who owned the place. Maybe the shareholders were happy. But the guests? Peak season the place was empty. Maybe they’ll flip the place before the next earnings report.
Q: What’s the biggest mistake you see concerning Best Practice?
George: For new entrants? Non-awareness of Best Practice. Off the top of my head:
• Non-awareness of best-practice for Purchasing so as to uncover sweetheart-deals and/or kick-back arrangements which have tied up your purchasers with less than top-notch suppliers.
• Non-awareness of human resource best-practice in how to reward and incentivize hotel management.
• Non-awareness of best practice for managing restaurant, bar, and housekeeping stock so as to ensure someone's not selling inventory out of the back door.
• Non-awareness of best practice for optimizing sales & overseas target-group marketing so as to average at 80-90%+ occupancy year-round in a high-demand tourist location.
• Non-awareness of best practice for conducting departmental audits so you don’t have to wonder whether the reported numbers are real.
No point reinventing the wheel. This information is widely available or can be picked up from seasoned hoteliers.
Q: How would you advise a new entrant in the hotel business?
George: To invest whatever time and energy is needed to put in place the processes, systems, and mechanisms necessary to implement Best Practice relative to your property type and market tier. Study the masters of the field—e.g., Marriot, Hilton—hoteliers known for disciplined organizational consistency wherever you find them. Don’t be too prideful to learn from the most successful hoteliers of the past century. Internalize and adapt what works for your organization. Make it your own. And then make it original.
Q: You mentioned growing number of new entrants in the Philippines hotel business. Who is the most interesting newcomer you’ve heard about?
George: George Yang of Golden Arches. If he takes a run at the hotel business the way he handles McDonalds, he will certainly be a force to be reckoned with. Simply by leveraging his mastery of processes and procedures—and who wouldn’t admit McDonald’s dominion over processes and procedures?—Yang may be the next J.W. Marriott.
, Cagayan de Oro Hotel And Restaurant Association
, Hotel and Restaurant Association of the Philippines
, Hotel Resort & Restaurant Association of Cebu
, Hotel Show Philippines
, International Food Exhibition 2013
, Philippine Hotel Federation