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The Guest vs. Profit

By Alan E. Young, Vice President, Global Marketing, Infor-SoftBrands
December 2010

In a tumultuous economic environment, the hotel industry must be aware of all facets of the business. We need to ensure that we keep guests coming through the door, which is our bread and butter, and yet try to maximize our profits. These two areas can at times appear to be in conflict with one another.

Let’s focus on the two areas independently.

With a constant flow of guests into our hotels, we can stay in business.. It’s the number of these guests and the ebb and flow of their attraction to our properties that dictates what, where, and how we can spend the revenues we acquire from these guests. Do we focus the money solely on the day-to-day operations of the hotel, or do we look at more strategic initiatives that, in the long run, will help us grow revenues even more effectively?

These are some of the questions that hotel operators and companies have to deal with every day. As occupancy and average daily rate (ADR) fall or rise in the cyclical nature of our business, so do the decisions related to where we spend the revenues that come in through the front door.

It’s increasingly important to ensure that our guests are well taken care of, that they feel special, and that we actually know who they are. The convergence of the hotel landscape into a commodity and the offerings to our guests make it incredibly important to react to their needs. Solutions that enable hotels to be “guest-centric” will always be at the forefront; however, we can’t lose sight of profitability.

Profitability can be a double-edged sword. Sometimes, to maintain or even increase profitability, hotels are stuck between a rock and a hard place. Do hotels decrease staff count to increase profits? Do they decrease overall maintenance schedules on the properties? Do they cut back on technology spend? These are all questions that executives in the hotel industry have to deal with every day.

Strategic spend on technology initiatives can increase profitability without cannibalizing your guest satisfaction.

One area to focus on is the tightening of the budgeting and forecasting procedures within your hotels and hotel companies. You can use tools to analyze data rather than just compile it to ensure that you proactively spend time  on areas of the business that will increase profitability. Integration with your financial systems to give you immediate access to information along with pertinent informational dashboards helps hotels to react to areas of concern. This ultimately impacts profitability. You need to understand what happens within your property or within a broader enterprise to make better decisions.

Asset management is another area where hotels can proactively impact their profitability. You need to fully understand the maintenance schedule for your hotel property along with timely incident reporting and resolution to ensure that you’re on top of things within your hotel. This will ultimately enhance guest satisfaction while cutting your operational costs. Hotels have to be sure that the systems in place for effectively managing all of their assets are not only reactive, but strategic,  giving the hotelier a better opportunity to deal with managing their total property.

There will always be a pull between guest satisfaction and profitability. But you can use systems that enhance both areas today and tomorrow. Look for solution providers that fulfill all areas of your business. They’ll be your partners in the long run.
 
About the Author:
Alan Young began his hospitality/travel technology focused career 25 years ago when he began working in an operational capacity with Four Seasons Hotels based in Toronto, Ontario. During this time his interest in the technology aspect of the hospitality industry intensified and he began to work towards moving from operations into the tech side of the business.

Alan then transitioned his love of the hotel industry to technology when asked to head up the sales effort of Micros/Fidelio in the Caribbean for a Micros partner. Returning to Canada in 1997, Alan was the Industry Sales and Marketing Manager for Sweda Canada concentrating on providing technology solutions to the hotel, gaming and restaurant industries.

Alan has held executive level positions with Newtrade Technologies (Expedia), Hotel Information Systems (Softbrands), Hotel Booking Solutions and IBS Software focused on marketing and selling software applications to the global hospitality industry.

Most recently, Alan held the position of partner at Apical Resources Group, the leader in hospitality technology recruiting services. Alan still sits on the board of Apical.

Alan is past Chair of The Board of Directors of The OpenTravel Alliance, a global hospitality/travel industry technology standards association. Alan has also been very involved with other industry associations most notably AHLA, HEDNA and HTNG. Alan has been a guest speaker at World Travel Mart, HITEC, HEDNA, The HOT Conference and a number of other industry events.

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Contact:

Alan E. Young
Vice President, Global Marketing
Infor SoftBrands
Alan.young@infor.com
+1.705.739.7056

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