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The Pathway To Profitability

BITAC® Owners Panel Puts Focus On The Bottom Line Of Hoteliers

Thursday, November 08, 2018
Dennis Nessler
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Profitability remains one of, if not the most important, metrics for many hoteliers and as such several executives discussed some of the more critical factors currently driving bottom-line results at the BITAC® Owners event earlier this week in Cancun, Mexico.

The panel discussion, “The Pathway to Profitability For Hoteliers” focused on the importance of driving rate, investing in properties through renovations, a targeted sales and marketing approach as well as the impact of disruptors.

Chris Green, chief commercial officer, Chesapeake Hospitality, LLC, urged hoteliers to push the rate envelope. “I keep encouraging everybody we’re at all-time highs. There’s a little leveling off in RevPAR but we’re at all-time high occupancies industry-wide. This is still the time to leverage ADR, there’s still runway to go. Demand is still high, occupancy is still high. Now is the time because very soon it won’t be that high,” he said.

Elliott Estes, principal, Woodmont Lodging, agreed. “It’s all about courage. Obviously the conversation is market specific, but when you see your ADR index and your occupancy index out of whack and you see ADR lagging your occupancy push that rate,” he noted.

Several panelists agreed that spending regularly on your properties through renovations remains a worthwhile investment.

David Gould, President, hospitality division, Moody National Companies, noted his company has a number of renovations going on. “You have to do the renovation right where you can get the best bang for your buck. It’s how to spend it wisely to make sure you have the highest guest impact, because if you’re going to hang onto the rates then you have to have a good product. You have to get the basics right,” he said, specifically citing the importance of “a good bed and feel to the room, furnishings in good shape and public areas when you first arrive.”

Green suggested a sense of urgency. “If you haven’t done it since 2010 when times have been so good you better hurry because debt was low and that was the time to get it all done. Nothing is a better defense for a slow marketplace than a great hotel. You want to be the best, not one who’s dragging your [competitive] set when times are tough,” he commented.

Meanwhile, Raj Singh, CEO & Co-founder, Go Moment, talked about disruptors with regards to technology and how the industry is evolving. “How the business used to be run is not how it’s going to be run in the future. We’re seeing a pretty massive disruption happening in terms of what the guest expectation actually looks like. They [expectations] used to be set by the hotel down the street, now they’re being set by Uber, Facebook, and Airbnb. Those are the kind of experienced competitors that we now have in the hotel industry. We see that messaging with guests is almost table stakes at this point,” he said.

Of course, the role of sales and marketing can be a great contributor to profitability for hotels as well. The panelists shared their respective approaches.

According to Gould, a targeted approach is critical as opposed to going after a multitude of different businesses. “Which ones are really going to make a difference at your hotel? Don’t be spending your time going after a company that’s going to give Tuesday/Wednesday business; two nights once a month. Make sure that your sales team is really focused on what’s important and what’s going to make a difference at that hotel,” he noted.

“We’re reinvesting in hand-to-hand selling, because that’s a lost art. On the group side—which is growing year-over-year significantly—nothing is better than knowing who you’re doing business with,” said Green.

He was asked to further explain the hand-to-hand approach. “It’s about getting actual meetings where you can explain the features and benefits of your hotel instead of an email. Email is how everybody communicates, but people want to do business with people they know and like,” maintained Green.

Singh agreed and reinforced the point. “We’re seeing that landscape evolve very quickly. Knowing your customer today is more important than ever before because if you’re not investing in that from an organic technology standpoint as far as your labor force then your competitors will. If they know the customer better, if they’re getting in front of them more often certainly that’s the decision that’s going to be made,” he said.

Singh further added, “the best way you can possibly market today is to have great product and a great experience. That is one that resonates the most with millennials and growing segments of the market.”

The group offered some commentary on what they see ahead in 2019 and beyond.

Estes noted, “we launched our company three years ago when everyone was anticipating a downturn. We launched understanding that potential challenge and we hope to be in a position to take advantage of some opportunities. As a company it’s important to know what we are,” he said.

Gould was decidedly cautious moving forward but remains optimistic about long-term prospects. “We’re always on a roller coaster in this industry. We might be near the top of the roller coaster, but we’ve been on the other side before. Most of us in this room have gone through the 2009 funk but we made it through. It helps just knowing that we’ve been through it and my general managers have been through it. You just prepare and hold on to your rates as long as you can, but you have to provide the service and provide facilities to equal the rate. Guests are going to come back,” he said.

Singh offered a longer term perspective while citing the impact of companies like Airbnb. “What I think is on everyone’s mind at this moment is probably disruption. We’re seeing this accelerated pace of technology…We all have a huge opportunity to actually disrupt ourselves and be the beneficiaries of that in our industry. I think that hospitality in 20 years won’t look anything like it does today,” he concluded.



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Dennis Nessler    Dennis Nessler
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