Top performers on this year’s list show innovation, perseverance and responsiveness
Sometimes success is a question of innovation and fancy footwork, says Brian Stanford, director of Hospitality at PKF Consulting. Other times, it’s simply a matter of keeping the beat and working hard on your dance steps.
He cites 2010 as a stellar example of the latter while looking back on a year that was almost entirely a response to the one that preceded it.
Last year was certainly an improvement over 2009, but it was full of constant reminders that the numbers were “all relative” to a particularly dreadful year and a powerful and continuing dedication to further improvement. Rounding into the latter half of 2011, Stanford recommends more of the same. “Keep working hard,” he says. “It really is about going back to the basics. Do a good job getting the guests there, and do a good job servicing the ones you have already.”
The tumble began in the fall of 2008, a pullback that was barely noticed inside of the wildly successful run the industry had been enjoying to that point. But 2009 was a different story. From a top- and bottom line perspective, hotels took a serious hit in the last year of the century’s first decade. And so, while 2010’s top-line RevPAR and profits were up about six per cent and seven per cent respectively over 2009, it’s critical to reflect on the fact that 2009 was down 30 per cent over the year before. “We still have a long way to go,” says Stanford, who points out that, were it not for the Olympics in Vancouver, the G20 in Toronto and the return of the Grand Prix to Montreal, last year would have played out even worse than it did. As it is, 2010 closed at about 60-per-cent occupancy in Canada overall, up approximately two points from 2009. Rates, similarly, had moved nationally from about $125 to $128, though not as much in Atlantic Canada and slightly more in the West.
Wherever their provenance, the vast majority of hoteliers regard 2010 as a “recovery year,” notable only for the return it saw to an appreciation of industry fundamentals. Knocking on doors, working to re-establish relationships with major client groups and augmenting those value-added services that enhance the guest experience were popular practices in 2010. Companies that came through the economic downturn in a reasonably comfortable position “worked hard and were smart,” says Stanford.
“I would say great joy has permeated our company, its franchisees and owners [now] that the proverbial worm has turned,” says Eric Danziger, president and CEO of the Wyndham Hotel Group, a company that added four new brands in 2010 and inked plans for a 2011 Canadian expansion that’ll see 75 new Microtels added to its crop of 460 properties in the country. Still, 2010 hit the company hard, and it responded with the same force. “We changed in every way,” says Danziger. “When you’re confronted with a different and very drastic [revolution] of geopolitics, economics, and so on, your obligation to employees, customers, owners and shareholders is to find new ways to do business, rather than accept that you’re going to go backwards.”
It’s why Wyndham management revisited every aspect of operations last year, focusing on innovation and improvement, rather than invention. For example, its web-based reservation system was revitalized to better capitalize on cross-selling. Now, guests who might be told there are no vacancies at the Ramada Ottawa, for instance, will be invited to consider lodging at another of Wyndham’s 15 brands with rooms in the same city. The company enacted a similar revision to its purchasing efforts, scaling back dramatically on the number of vendors with whom its 7,200 hotels deal and enjoying the price breaks such group purchases facilitate.
Also in 2010, Wyndham held its first Global Wyndham Hotel Brand Conference. More than 6,000 Wyndhamites descended on Las Vegas’ Mandalay Bay to listen to Diana Ross, play some slots and learn a few tricks from their far-flung peers. This time the team gathered as a single unit, rather than in disparate dozens as they had in the past. “Each brand still has its own uniqueness, training, et cetera,” says Danziger, “but we came together as a significant force of people who could benefit from each other.
They’re all examples of how we went into 2010 saying, ‘There’s nothing we can do about the fact that things are tough, but how can we improve on the things that we can control?’”
At Realstar Hospitality, a hotel franchisor for the Days Inn, Motel 6 and Studio 6 brands in Canada, management also devoted the last calendar year to those issues over which it could have some influence. And, while the company’s Days Inn division slipped slightly in terms of revenue, down approximately four per cent year-over-year to $144.3 million in revenue, its Motel 6 division saw revenue jump 27 per cent to $15.5 million. “We couldn’t control a lot of the economic things that were going on in the world,” says Irwin Prince, Realstar’s president and COO, “but at a property level, we could certainly control the quality of service, the friendliness of our staff and our interaction with our guests.”
And so the understanding among Realstar operators during the recovery year that was 2010 — some of whom, says Prince, administer properties that didn’t even feel the recession, while others “were challenged by lower occupancy”— was to increase their focus on customer touch points. Among other initiatives, managers or sales managers began a practice of making personal visits or calls to longtime customers to thank them for their business and to ask for its continuance. “The downward pressure on rates wasn’t necessarily enough to induce trial,” says Prince, whose company oversees 92 Days Inns and 18 Motel 6s in the country. “We had to make sure our customers knew we appreciated their business and looked forward to more. We didn’t take anything for granted. Just because a customer is a customer for today doesn’t necessarily mean they’re a customer for life.”
Maintaining leaner, smarter operations was the objective of Starwood Hotels & Resorts as it turned the calendar pages into 2010. “We approached last year aggressively and were quick to take a look at our operations in 2008 and 2009 to understand our cost basis,” says Stephen Foster, Starwood’s senior vice-president of Operations, Canada. To start, various back-of-the-house expenses that were invisible to the guest were cut, applying cost analysis and productivity metrics to each department to ensure attendance of the right — and the right number of — personnel. In one initiative, Starwood consolidated those HR efforts that had previously strung across four or five different hotels into a single one. The company also stripped its revenue management functions into a cluster group that now performs the task for multiple properties. All the while, guest satisfaction scores climbed — an indication, says Foster, that there weren’t any negative implications to customer service. And the top and bottom line has seen some pretty dramatic growth.
More than that, the company has capitalized on the reputation for innovation it cultivated with the advent of the W Hotel chain in the late 1990s. Newly renovated guestrooms celebrate sustainability with a green choice program that invites guests to keep a sensitive housekeeping schedule. It also massaged some of its most loyal guests with special Starwood Preferred Guests promotions that grew occupancies — if not rates— over 2010. And, staring down the reality of reduced corporate business, management turned its sights onto leisure business, aggressively targeting a different market segment than it had in the past. Lemons meet lemonade.
Through it all the company uniquely branded each of its nine corporate interests. “Brands today need to have personality, purpose and personalization,” Foster says. “It’s important that the associates within each of our brands clearly understand the brand promise and can clearly deliver on the expectation.” It’s this kind of mindfulness that prompted Starwood to close some of its properties, even as it was opening and renovating others. Such a housecleaning, Foster contends, contributes to the company’s consistency and ability to deliver on the brand promise.
Looking forward, 2010 is long gone, tucked into memory and replaced by anticipation for the year ahead. Stanford predicts a further four-per-cent increase in RevPAR and a six-per-cent increase in profitability for fiscal 2011, pointing to rebounds in economic activity, travel, conferences and meetings as proof. But not everyone stands to profit from this turn of fortunes, he intones. “Anyone who just sat back and waited for demand to return has not performed as well as those who took advantage of the opportunities; [those are] the companies that understood the importance of returning to their roots and really put their shoulders into it.”