The keys to a healthy owner-manager relationship
 
The keys to a healthy owner-manager relationship
04 APRIL 2019 7:54 AM

Hotel managers who align with their owners’ vision, build their company culture and innovate their revenue-generation strategy can better position themselves for success.

ATLANTA—A successful hotel management company must be aligned with the owner’s vision and build a workforce culture that attracts committed employees, all the while finding new ways to increase revenue and cut costs.

But the hotel management company shouldn’t just be seen as cutting into an owner’s bottom line. If that’s the case, that owner-manager relationship isn’t built to last, according to Brad Rahinsky, president and CEO of Hotel Equities.

“If that operator, that management company, is seen as a cost or an expense, keep going with the search because that’s not the right partner for you,” Rahinsky said on the “Today’s hotel management: Issues and opportunities” panel at the Hunter Hotel Conference. “They should provide an immediate and significant value and upside for you as the developer or owner. Make sure you take time to flesh that out. Take the time to make sure you’re aligned at the front end to ensure that the marriage is going to be a healthy one, because if you do it right, it will be a marriage—not nine times out of 10, but 10 times out of 10, that time investment will pay off.”

Carmen Almos, SVP at Investra Capital, agreed with Rahinsky that hotel owners and managers working together is like a marriage.

“Make sure your operator has buy-in to what your values are as an owner,” Almos said. “Because if they don’t buy in to your values, they can’t execute your business plan. So if you want to be a successful owner and have a successful relationship, get the buy-in and there’s no limit to the success you will have.”

The labor pinch
Beau Benton, president of LBA Hospitality, said that in today’s labor environment the “No. 1 risk” is finding the right employees.

“We’re a company that really believes in culture and how we treat our people, so of course we’d rather have our own people,” Benton said, “and our challenge has always been to our recruiters and our GMs, if the staffing company can find them, why can’t we find them? We’d much rather hire them ourselves, train them, treat them right and keep them around for the long term.”

Nelson Knight, EVP and chief investment officer for Apple Hospitality REIT, agreed that culture is of paramount importance.

“It’s so important as you’re building out your management companies to create a culture that (employees) want to stay in, because turnover is expensive and it’s beyond wages and salary, which is just a portion of it,” Knight said.

Your company’s culture can be the difference in a tight labor market, which Rahinsky described as “the war on talent—we’re at a sub-4% market in unemployment, and if you’re not working today it’s either because you don’t want to or because you can’t.”

“What you want to do in an ethical way is make your work environment have that lead in front of you, as healthy as possible, so that when you’re opening up a hotel in that particular market, or you’re coming in to manage a hotel in that market, your reputation precedes you getting into that market, and people want to be a part of that,” he said. “It’s not something that happens overnight. Every organization whether they realize it or not has a culture. It breaks down ultimately to it’s either a healthy one or an unhealthy one. That takes a lot of intentionality and a lot of commitment and focus, and it’s something that continually has to be fed if it’s going to be healthy.”

Innovation in revenue generation
Streamlining the operating model by cutting costs and driving additional revenue is a manager’s path right to the hearts of owners.

One initiative that the panel agreed has been successful is offering guests the ability to opt out of having their room cleaned daily.

“We’ve seen good results with that where you offer a certain amount of points to do that,” Benton said. “The points are cheaper than cleaning the room. And you find out with most guests they don’t need four fresh towels and a made bed. Especially if you’re at a conference center-type hotel, you might be going back and forth to your room during the day. The one time you get an hour break and you want to go sit down for a few minutes and return phone calls, you go up and of course the room attendant is in your room.

“I think just like with technology, it’s letting guests have it the way they want it. The more we’re able to do that in select service, the better.”

Rahinsky said it’s one way hotel managers don’t need to micromanage their employees and can instead focus more on guests.

“I could take my leadership at the property and not have them focused on whether or not there’s 17 rooms on the board for that housekeeper, but now instead focused on that guest who’s bringing in a group in two weeks and looking for a hotel,” he said. “There’s a real multiplication of the value that that creates, so there’s all kinds of potential direct and indirect revenue opportunities that will come off of that.

“What you’re going to see moving forward because of the early success of this program is other concepts and ideas like that will start to get (tested) out there, and I think as we go forward and labor continues to be the biggest chunk of our expense, you’ll see more and more creative initiatives from some of the alpha brands and using some of the great operators like Beau’s group to go ahead and sort of test those out to get the feedback. But there’s no question that that will be happening more and more frequently going forward.”

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