Being honest and upfront with market dynamics is essential to successfully pitching a budget to an owner, according to general managers.
CHICAGO—Hotel News Now’s editorial director Jeff Higley sat down with five general managers of hotels managed by Hostmark Hospitality Group to tackle five topics affecting GMs everywhere. Each day this week, we’ll feature excerpts from the discussion.
What advice do you give other GMs when it comes to developing a budget and getting one that is mutually acceptable between you and your boss?
Brian Cooney, general manager, Holiday Inn Chicago Mart Plaza
“Be honest and realistic. I have a philosophy: I under-promise and over-deliver. … I try to introduce that quite frequently to my boss. … It’s always easier to explain to owners why you went over budget than why you’re missing budget. I’d rather set the expectations very realistic and then charge the team up to really do as best we can and blow it away if possible. I had an owner at one hotel I was managing years ago that kind of taught me that lesson.”
Dwight Miyakawa, general manager, Hampton Inn & Suites and Homewood Suites-West Loop (Chicago)
“Brian is really dead-on. We are expected to provide accurate information on our performance, and we do try to set aggressive goals, but the reality is there’s no reason to present something that is not a goal that’s based on good knowledge and good information. We’ve all been there where we’ve had very successful years and we eventually had to go back to the budget meeting and say, ‘these are the trends we can see, this is the supply coming in, these are the demand generators that have shifted.’ In some cases, like Brian, we have had to say, ‘it’s been a great run for the past five, six years, but you need to understand that these are changing dynamics.’ People aren’t comfortable getting that type of news, but it’s our responsibility to do it.”
Dennis Law, general manager, Holiday Inn Surfside Beach (South Carolina)
“My ownership wants a budget that’s reasonable, and they want to know for forecasting. It’s not their only asset, it’s a piece of what they do on their cash flows, and certainly bad news doesn’t get better with age. So they’d rather face that up front … give them some accurate and challenging news to work for. For motivating a team, there’s nothing like chasing a flag that you can never get to. It’s very hard to motivate people who are either driven by incentives, or whatever, to climb that mountain if they’re never going to make it to the top of it. … If you lose a big piece of business—maybe a convention left town—a lot of the owners I find would rather know that that business is gone and you’re going to fish in a different pool to replace some of it.”
Mimi Varchi, general manager, Holiday Inn Cape Cod-Falmouth (Massachusetts)
“They have hit it right on the nose. We’re all in the same boat when it comes to … being realistic. I have ownership that is investors and, they’re all about the numbers. Trying to present something that’s not going to be achievable is not something that they want to see.”
Jacque Raffaele, general manager, Sheraton Milwaukee Brookfield
“It’s important to also find out what is your owner’s intention with the property. A lot of owners build pro formas to get their lending. If they’re expecting, or the banks are expecting, a specific (in Year 5) result because of a pro forma that was written four years ago, and it’s unrealistic based on the market conditions that have changed since the original surveys of the asset, I think it’s important to know that and have that conversation up front to find out what’s the endgame here. That’s another thing to make sure you keep in the back of your mind, and then you need to obviously make sure you have all the data you need to build and justify your position.”