Work on your business not in it

2. Work on your business not in it “Show me a company where everyone is trying their hardest and I’ll show you an organization destined to fail.” W Edwards Deming

3. Work on your business not in it “It is not enough to do your best; you must know what to do, and then do your best.” W Edwards Deming

4. How do they do that? GOP does notconsider expense from: Management Fees Rent Expense Taxes Interest Expense Depreciation Amortization Replacement Reserves

5. High Profit Hotels Go Clockwise It’s rarely one thing, and even if it is, everything in the cycle will still be affected. Profit Loss

6. Market Dynamics How does this impact profit? Total Rooms Sold in Market 100,000 Rooms What segments are they 10,000 family 50,000 leisure 40,000 business How much do you get 1,000 family 10,000 leisure 9,000 business Client closing -200 How will you retain Where do the rest stay 9,000family 40,000 leisure 31,000 business 360 rms new company Is there new demand Now 20,000 rms @100.00 Want 20,952 rms @102.00 More Revenue How will you get more? Need 1,152 rms IF 360 rms Steal 792 rms

7. Market Dynamics Become an expert on guests in your market • Why are guests visiting your market • What are the main sources of demand • How do people book hotels in your market • What experience are they looking for • What do your competitors offer that you don’t

8. Market Dynamics Hourly Employees • For every guest: ask what brings them to the hotel, track Market Segment, if it’s Business get Company Name • Ask walk ins and non repeat guests where else have they stayed in the area • Do daily call arounds to area hotels Management • Complete a formal review of supply and demand in the market annually • Train hourly employees on their role • Monitor the businesses of your top demand generators Owners and Management Companies • Require monthly market segment data • Do an ROI on wage increases and other spending initiatives • Require action plans for increases in revenue

9. Competitive Position A report card tells us what happened, not how to fix it WHy?

10. Competitive Position How does this impact profit? What business is our competition getting that we’re not? Offshore workers needing 1 night when heading to and from the rig Pharmaceutical Account They require transportation and a meeting room Need breakfast ready at 6 am and direct bill Why do they choose them over me? This is business I am well suited for Am I suited for that business, and do I want it I do not have a van nor meeting room Will offer a rate $5.00 below competitor Could use breakfast room, would need van and driver How do we get them to choose us

11. Competitive Position Be a Predator NOT a Victim

12. Competitive Position Hourly Employees • Get information from your employees who worked for your competition • Make sure they understand the goals for the property • Keep them informed of demand sources you are looking to add Management • Determine what segments you are best suited for, and which ones are booking most frequently • Do monthly or quarterly visits to local demand generators • Set goals for where you want your indexes to be • Establish specific actions to accomplish those goals • Position your revenue management settings to drive your index goals Ownership • Purchase additional STR reports • Consider additional services and reporting

13. Staffing & Amenities How does this impact profit Staffing & Amenities What will bring more room and rate Grow Revenue What do we get and what don’t we Competitive Position Market Dynamic How much business is there

14. Staffing & Amenities Are you providing a competitive experience From www.trustyou.com When travelers were asked which attributes were “Extremely Important” to them in deciding to book a hotel, they responded as indicated. These scores also reflect the impact that negative reviews in these areas will have on your booking power.

15. Staffing & Amenities Are you providing a competitive experience • AM Maintenance • Weekend Security • No Driver • 1 Breakfast Attendant • No Sales Person • Rm Attendants $8.50/hr • No Housekeeping Mgr • AM & PM Maintenance • Security • Van Driver • 2 Breakfast Attendants • Sales Person • Rm Attendant $10.00/hr • Housekeeping Manager Your Hotel Competition

16. Staffing & Amenities Are you providing a competitive experience • Standard Breakfast • Standard Amenities • Exercise Facility • Swimming Pool • No Transportation • In Room Coffee • Regional Specialty Item • Custom Amenity • No Exercise Facility • No Swimming Pool • Airport Transportation • No In Room Coffee Your Hotel Competition

17. Staffing and Amenities Hourly Employees • Cleanliness • Service Management • Comfort • Amenities • Breakfast Ownership • Comfort • WiFi • Wellness Center

18. Staffing & Amenities Hourly Employees • Note any recurring request • Note what items are used the most • What gets thrown away or left behind the most Management • Determine what additional positions or amenities could improve revenue and profit • Form a committee of long term hourly employees as advisors • What unique services or amenities can you offer to travelers? • Complete a wage and benefit survey once a year • Actively recruit employees Owners • Judge suggested changes in staffing and amenities by GOPAR impact • Consider paying for your GM to experience the competition

19. Guest Experience ? Positive Guest Feedback How does this impact profit Grow Revenue Staffing & Amenities What will bring more room and rate Negative Guest Feedback Competitive Position What do we get and what don’t we Market Dynamic How much business is there

20. Guest Experience How does this impact profits Cornell University Study Online hotel reviews impact room demand and appear to be responsible for rate swings of more than 10% A one-point swing on Travelocity’s five-point rating scale, on average,sways room rates by 11%. Factoring in multiple review sites, a 1% increase in the hotel’s “online reputation score” was found to boost RevPAR by almost 1%. http://www.hotel-online.com/News/PR2008_2nd/Jun08_FollowUp.html

21. Guest Experience You may be right, but what it is costing you • When you respond don’t: • Talk to the person who complained • Insult the person posting • Repeat the problems in your response • Argue back and forth • Ask the person to contact you directly • Address the validity of the claim, no one cares but you • Cherry Pick, commenting on positives and avoiding negatives • When you respond do: • Make future guests believe it won’t happen to them • Offer realistic, detailed, solutions and explanations • Be to the point • Make sure you fix the problem or make sure expectations are adjusted • Make sure that guest who have a positive experience are posting

22. Guest Experience Hourly Employees • Provide the best service possible • Encourage all guests to provide online feedback • Make sure management is aware of all complaints and concerns • Show reasonable care Management • Do not over promise, ensure that online descriptions are current and correct • Invest in training • Limit turnover • Reward employees for telling you about issues • Prepare accurate forecasts that ensure you have proper staffing, amenities, and supplies on hand

23. Guest Experience Management • Make budgets and forecasts that target segments that line up well with your product • Remember that replies are speaking to future guests, not the person writing the review • Read your competition’s comments as well as your own • Follow the response rules Ownership • Consider a service to handle online reputation • Provide resources to fix recurring complaints • Understand the true cost of turnover when considering wages

24. Rate Placement How does this impact profits $113,381 $95,974

25. Rate Placement http://www.jolynphoto.com/blue-swallow-motel.html www.trivago.com

26. Rate Placement Market Segment Day of Week Pattern Booking Channel

27. Rate Placement Hourly Employees • Understand how to use the PMS fully, to access and enter rates • Be aware of the lowest rate available, but don’t start at that rate • Be aware of the ALL the rates they are authorized to sell Management • Have rate plan that is not purely based on reservation volume • Use a detailed budget and forecast to set rates in advance • Use your knowledge of the market and your goals to set the revenue management system appropriately Ownership • Understand Revenue Management does not replace knowledge of the market, and managers decisions • Consider the ROI on Sales and Revenue Management positions • Consider the ROI of hiring outside sales and revenue management services

28. Rooms Sales How does this impact profit? Not all rooms occupied are the same Labor and Expense are not a pure curve Forecasting Different segments produce different profits There are points in occupancy that are more profitable Allows you to see upcoming problems in time to affect them

29. Rooms Sales All Room Nights were not created equal Rates vary by Segment Cost vary by Segment Profit varies by Segment

30. Rooms Sales Expense is not a perfect curve

31. Rooms Sales Affect the Future, Don’t try to Predict it Have you ever.... Sent employees home early or told them not to come in tomorrow Had to call employees in unexpectedly Run out of breakfast items Not been able to pay property taxes because of cash flow Had a sold out night with an average rate below your highest levels Had financial performance behind last year, and wondered why Been surprised by a level of business Posted losses for a year or quarter

32. Rooms Sales Hourly • Understand the goals of the hotel • Completely understand the impact of selling a room Management • Have a plan as to how you will fill rooms, that allows for understanding failure • Become knowledgeable about segmentation and booking channels, and manage both for profit • Accuracy in projections means both higher profits and better guest experience Ownership • Change your reviews and questions to be detailed. Ask how will we get that increase? Why are we targeting that business? • Find the most profitable Occupancy ranges and Mixes of Business

33. Service Levels and Expenses How does this impact profit? Revenue Expense Expense Expense Revenue Revenue

34. Service Levels and Expenses Know your numbers Awareness is Efficiency Efficiency is Margin Margin is Profit Profit is Money Money is Loyalty

35. Service Levels and Expenses Compare to similar hotels

36. Service Levels and Expenses Compare to your own performance

37. Service Levels and Expenses Are you doing better? Flex/Flow

38. Service Levels and Amenities Management • Build accurate projections that allow you to have a good grasp on Cash Flow • Accuracy in projections build needed credibility • Use the 11th Edition of the Uniform System of Accounts for the Lodging Industry • Create and monitor Labor Standards to help create accurate schedules and projections • Manage expenses off an adjustable forecast, not out of a checkbook • Use forecasting to help determine purchasing needs • Maintain inventory • Track Cost and Staffing metrics per guest and per room Ownership • Balance short term cash needs with a long term plan • Put in place processes and reports to ensure standards • Accurate projections provide for better cash flow management and planning

39. Planning Benefits Ownership • Balance short term cash needs with a long term plan that promotes growth and continued success • Accurate projections provide for better cash flow management and planning • Avoid not having enough cash flow to pay property taxes, insurance, and other large expenses • Demonstrate to lenders your knowledge of your business and your ability to manage financial results

40. Hotel Operating Profit Evaluation Financial data from over hundreds of hotels Property-based profile Free to owners Provides a STR report style report for expenses and profits www.ciahope.com

41. Thank You for Attending For more information about this presentation, or to find out how CIA can help you with theses issues for as little as $2500 a year. Visit us at www.ciasoft.com or email sales@ciasoft.com