We have recently had a few distressed hotels approach us, looking for a magic wand to sort out their hotel management problems. At face value or within a day or two it is very easy to pick up why so many hotels fall into difficulty. What we most often come across is an inexperienced hotel owner who is of the opinion that managing and owning a hotel is much like any other business. I have so many times heard very successful business people utter words similar to “I have stayed in hotels all over the world; hotel management is not rocket science.” These exceptional business minds fail to realise that for a small fee an experienced, professional hospitality company can manage their hotel which, in fact, calls for specialised expertise.
The correct thinking is that a hotel requires a top-performing hotel manager – that’s a given. Problems arise when an owner will make the grave mistake of appointing an inexperienced hotel manager, but what is even worse - and we have come across this lately - is that an owner appoints a very impressive hotel manager at a large fee whose primary goal is to use the property for his own benefit or as his playground. Owners are often suckered into paying exorbitant salaries for - well, frankly, “con-artist-style” management. Owners are hoodwinked into believing that all sorts of expenses are required and often pay for unnecessary travel costs, fabricated sales expenses, ‘client’ entertainment or (a favourite): expensive international travel trade shows or sales excursions across the globe that produce little or no result at all.
Within some time or once an experienced set of eyes evaluates the business, many shady dealings by these managers are often exposed, one of the most common being supporting their own network of kick-back ‘suppliers’ by means of their cleverly selected procurement systems. Moreover, we have seen owners giving in to demands for expensive, unnecessary refurbishments when clearly the asset can be sweated and funds could be put to much better use elsewhere. An inexperienced manager will not wait for a budget review or available capital expenditure for “nice-to-haves”, resulting in dangerous financial decision-making.
Hotel owners can be guilty of extravagance… let’s be honest, the hospitality industry is notorious for it. But there is no extravagance as big as that of not recognising the value of honest, value-driven hotel management expertise.