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How do I turn my economic future around and start making good profits?

01 December 2005
How do I turn my economic future around and start making good profits?
I find myself in a dilemma: I don't want to sell my hotel business, but it just isn't going anywhere financially. How do I turn my economic future around and start making good profits?

The solutions

Carl May, Catered4 This is probably one of the most commonly asked questions.

Do not be ashamed of seeking help. There is no stigma in calling in a business development company to help fill the skill gaps and pinpoint additional profit-boosting opportunities.

  • Know your costs. What are your operating percentages? Can you buy better? Do you have the right suppliers for all your commodities, and are you charging the right prices? Obtain three new quotes for all your purchases and compare them with current prices.
  • Sales mix. Make sure you know the proportions of sale items that make up your total revenue. Your biggest seller may be your worst profit-maker. Make sure your top sales come from products with the greatest returns. Itemised tills can be a great help in this process.
  • Be consistent. This is the easiest thing to say and the hardest to do, but great reputations are only built on consistency. Set yourself periodic development goals and achieve them. Strive to take the next step up the success ladder. Set production standards - this will create consistency and stabilise costs.
  • Train your staff. This is the most important way of driving your business forward. You can see a huge turnaround in profits as a direct result of a well-informed and well-trained workforce. Wastage drops, and upselling becomes a motivational force. A general awareness of the needs of the business will help your staff realise how important it is to everyone to run a profitable operation.

www.catered4.co.uk

Ian Graham, Hotel Solutions Partnership The good news is that if you don't want to sell the business, the likelihood is that over time it will appreciate in value. So, assuming "hold" is the investment strategy, how can you make good profits and go somewhere interesting financially?

You should start by better understanding your markets and customers. Determine your actual and potential customer needs and wants. Find ways to capture and assess customer feedback, and learn how to predict customer purchasing behaviour. Work hard at monitoring customer satisfaction with not only the products (rooms, wedding packages, health club memberships) but also the service levels, and then with problem resolution and communication. Look out from your own business and monitor changes in the market or customer expectations. Once you have a better understanding of your customers, understand your competitors. Monitor them and continually better their offerings.

Once this process is improved, attention should switch to developing a new vision and strategy. Start by identifying and understanding economic, political and regulatory trends. Make an assessment of technological innovations and identify key social and cultural changes.

Questions to ask include: What are the relevant markets for the business from tomorrow onwards? What is the long-term vision?

This understanding will facilitate an assessment of the organisation needed to deliver the vision and strategy, what is core to the business and what should be outsourced. Also consider the role of the brand, and whether you need to form any key alliances.

All investments need TLC to blossom; hotels are no different.

www.hotelsolutionspartnership.com

David Russell, the Russell Partnership
A hotel is a microcosm of the business world. Its components require a working knowledge of property, food service, marketing, accounting, mechanics and human relations. You would be a rare individual to possess all these skills, so don't be afraid to ask a specialist.

Successful hotels are orientated towards service, people and productivity. Sector research shows that success is derived from above-average performance in either operating efficiency, marketing, product specification or service delivery.

A hotel that operates efficiently always appears to have a culture of team involvement and management commitment. If you empower your team, you will enhance service quality to the guest.

Review your cost-control techniques, and benchmark your purchasing.

Markets are constantly changing, and your marketing efforts need to change in response. The marketing cycle includes research, competitor analysis, product analysis, pricing strategy and selling. Re-evaluate each of the elements.

Re-examine how you attract and optimise your market. Do you have a link to a global distribution system? Are you maximising your yield - selling the rooms for the highest rate possible at a given time?

Reassess your product specification. Customers do not buy products or services; they buy expectations.

Remember: don't stand still - customers' expectations are rising constantly.

www.russellpartnership.com

Our experts answer your questions

Do you have a business issue you want to put before Caterer's panel of experts, drawn from all areas of the hospitality industry? E-mail: benjamin.walker@rbi.co.uk

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