Small hotels reject consultancy benefits
by Nigel Bartlett
Owners of small hotels believe consultants are over-rated, expensive and unsuitable for their needs, according to a survey by researchers at a university business school.
However, a second study by the researchers indicates those same hoteliers stand to benefit from using consultants.
In a report summarising the findings of the two studies, Alan Hankinson, head of the research team at Portsmouth University, concludes that hoteliers would be well advised to break down their "endemic resistance" to consultants.
The first study started in 1986, involving face-to-face interviews with owners or managers of 33 south coast hotels with no more than 25 bedrooms. Some 20 had fewer than 10 bedrooms. Follow-up interviews have taken place at least once every two years since then.
The study looked at three areas: investment, marketing and pricing. It found none of those questioned had considered using consultants, despite poorer than expected results. Nearly three-quarters failed to reach the targets they had set themselves.
However, rather than consider what they could do to improve their situation, most of the hoteliers put the blame entirely on factors beyond their control, such as the recession, the banks, interest rates and Government policy. Some also blamed managerial problems, including high overheads and labour difficulties.
Eight of the hotels had expected a return on capital invested of more than 25%, but only four achieved it. The majority (25 hotels) expected an annual rate of return of 20%-24%, but only eight achieved it.
And while none of the sample had anticipated a return of less than 10%, 11 hotels failed to reach even that level, and six made a loss.
On pricing and marketing, the study found few of the hoteliers had taken any initiatives to attract more customers. For example, 23 had not carried out market research and 27 used what the report calls the "crude" cost-plus system for pricing.
Just seven of the hotels had used consultants - five for marketing and two for advice on investment in areas such as refurbishment. None had used them to look at pricing.
Of the 26 who had not used consultants, most were critical of them. One said "we would certainly avoid any degree of external interference", while another said "they could conceivably invent problems".
But Dr Hankinson said the second study, which started in 1990, appeared to refute these criticisms. The researchers talked to 17 small hoteliers in Dorset, Hampshire and Wiltshire, all of whom had used consultants. Nearly three-quarters (12 hotels) were well satisfied with the consultants, and three expressed partial satisfaction.
Two hotels expressed dissatisfaction, but all those in the study said they would use consultants again. In 15 hotels, more than half the recommendations had been implemented, with the total fees recouped largely in the first or second year of operation.
Dr Hankinson told Caterer most small hoteliers saw consultants as a cost rather than an investment. He recommended small hoteliers seek local consultants, who tended to charge attractive fees on a results-gained basis.
- A summary of the reports, The Small Hotel: Why No Consultancy? and Small Hotels and Consultants: Satisfied Customers, is available from Dr Alan Hankinson, Leader of the Small Business Research Group, University of Portsmouth Business School, Locksway Road, Milton, Southsea, Hampshire, PO4 8JF.
