Real-Time Property Performance Data
December 19, 2003 - When Kent Oliver and George Hovland, co-founders O.H. Hospitality, started their company they wanted to develop hotels in key ‘crossover’ destinations desirable to both meeting planners and vacationing families. Their goal was to operate in markets where the two segments met, and leverage the markets to multiply room nights and occupancy while softening each segment ’s fluctuations. In 1997 they found the perfect area at the western tip of Lake Superior in Duluth, Minnesota. Known as “The San Francisco of the Northeast,” adjacent to one of the most beautiful harbors in the country, Duluth, Minnesota, has more leisure attractions per capita than any other similar metropolitan area, with the bonus of being home to hundreds of businesses nearby.
Thanks to a string of solid business decisions O.H. Hospitality has grown over 100 percent per year since its incorporation. It now operates seven properties carrying a variety of flags with four more in development, including one on the Florida coast. “We created a formula that is working for our company and its investors; we are expanding our business into new markets and experimenting with concepts we never tried before,” said George Hovland, O.H. Hospitality’s Managing Member for the past six years. “This spring we break ground in Minneapolis on a 200-room full-service Radisson, with a waterpark, attached to the Earl Brown Conference Center. The Minneapolis-St. Paul area is a great metro business market that also pulls vacationing families from a large surrounding region. We see it as an excellent investment opportunity.” Bringing different investor groups together for new projects and staffing properties with first-class professional management teams is a core competency for O.H. Hospitality.
Internet Business Practices Aid Investors
In the past three years O.H. Hospitality learned valuable lessons at the hands of market forces and the economy, but the company’s expansion never slowed. “Our industry is constantly changing and we are evolving with the environment. What we are seeing now is a trend toward Internet business practices, both in hospitality marketing and in financial services and investor communication,” said O.H.’s George Hovland. “To accommodate guests’ increasing Internet usage we developed a new website that provides online booking and enhances the appeal of each property by focusing on the nearby attractions. We also moved our accounting, financial analysis, and investor reporting processes online as a foundation for future growth. We are uploading property operating information to headquarters daily with an Internet-based application called Webvue from Aptech Computer Systems, Inc., and we centralized accounting for all our hotels on Aptech’s Profitvue enterprise back office application. The savings in FedEx fees alone will be $10,000 to $12,000 per year, but the real benefit is our investors’ ability to access their property financial performance numbers online anytime from any location. Our company wanted to gain more control of its financial product and we are applying technology as a force multiplier.”
Until recently O.H. Hospitality was outsourcing its accounting work, but by generating and centralizing its own operating statistics, occupancy, ADR and other performance measures in-house each day for its properties, O.H. Hospitality is able to build P&Ls for each hotel and its investors real-time. Hovland continued, “Now that we have automated and control our own central accounting process we can look at each property’s profit and loss statement anytime we want. We can evaluate where they are expense-wise, and based on this we can recommend courses of action to our managers. In the past we had to wait two to three weeks after month-end close to get P&Ls to our investors; our new system shows us revenue and expense performance at will because property information is uploaded to us nightly.”
Performance Measurement Reporting Attracts Investors
Each of O.H. Hospitality’s properties is different, and each has a separate mix of investors. For several years the company used its own internal chart of accounts that did not follow the customary accounting practices for hospitality but worked for the company’s unique structure. With their new accounting systems, one of the first things O.H. did was create a chart of accounts for its properties that is consistent with hospitality industry accounting standards. “All our hotels have separate joint venture ownership, with the unifying financial factor being Kent Oliver, a co-founder of the company and partner in all of our properties,” said Hovland. “Kent built partnerships that include bankers, real estate developers, and private individuals. As we grew we knew we would have to upgrade our accounting and financial reporting to keep our investors happy and allow us to add properties. The Web-based accounting solutions we are adding will streamline our operation and give us the ability to attract new ownership groups and assets as we move forward.”
Focused corporate management practices and market positioning are foundational to O.H. Hospitality’s success and expansion. The Duluth-Superior area has a huge leisure market from June through October because of its urban attractions and the area’s abundant natural resources and outdoor sports. The company built its flagship hotel, the 107-room Hawthorn Suites, within the walls of the historic Marshall Wells warehouse in Duluth, at one time one of the largest hardware distribution centers in the US. The property’s conference rooms and indoor pool have contributed to making it a favorite with corporate travelers. Among its other hotels O.H. Hospitality also owns and operates Barkers Island Inn and Conference Center on the shores of Lake Superior, and The Suites at Waterfront Plaza, also located within the Marshall Wells warehouse, which includes a business center and conference rooms to serve its growing corporate segment.
About O.H. Hospitality
O.H. Hospitality, LLC. is a mid-sized regional hotel management company located in Duluth Minnesota. Established in 1997 by Kent. A. Oliver and George Hovland III, O.H. Hospitality, LLC. has over 75-years of experience in motel development and operations and 30-years of commercial development expertise. O.H. Hospitality operates motels in both Minnesota and Wisconsin including limited service, full-service, franchised and independent motels. Both national and international franchise companies have recognized O.H. Hospitality motels, and its managers, for numerous awards. Some of which including Quality of Excellence Award by Holiday Inn Express & Suites (Intercontinental Hotel Group), Most Improved Hotel and Sales Growth Awards by Country Inn & Suites (Carlson Company) Quality of Excellence Awards by Hawthorn Suites (U.S. Franchise Services), and General Manager of the Year by Hawthorn Suites (U.S. Franchise Services).
Aptech Computer Systems, Inc. is known for valuing human relationships and evolving technology offerings as the market dictates, a commitment that has earned the company 100% customer loyalty of its 700 users over the last three decades.
George Hovland, Managing Member
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