The finances of your hotel should be as important as guest service and colleague engagement. You are probably thinking that’s pretty obvious, right? The financial performance is equally, or most would argue, even more important than service or colleague engagement.
What I am about to tell you is simple on one hand, but not well understood. As you know, if you are involved in running a branded managed hotel, the hotel brand mandates the standards and the hotel owners pay to have these in place. That’s the basic fundamental manager and owner arrangement.
Owners and asset managers often question these “branded programs” that seem to promise little substance and they cost an arm and a leg. Let’s look at this relationship and how we can strengthen it.
When it comes to service, brands are always coming up with new and innovative programs and tools to help create and maintain great guest service. Whether it’s service culture training, customer loyalty programs, or in-room amenities, there is a long list of mandated programs that help the hotel and brand create and maintain great guest service. The owner pays 100 percent of the tab for all of these programs.
With colleague engagement, it’s the same deal. Colleague relation surveys, employee recognition programs, long service awards, holiday parties, and ethics hotlines are on the long list of mandated programs that the brand has, and the owner pays for every single dollar.
Now let’s look at the money. The brand mandates financial audits, maybe a certain system to process data, and perhaps even a fee for some central accounting function. But what about training and leading the department managers and assistants on how to effectively run and manage their financials? Hands down, brands don’t do this much training for their leaders. Why?
Well, there are three main reasons.
One, brands still largely live in the owner-operator mindset. Look after the guests, and leave the finances to the general manager or director of finances. Two, brands often do not lead their non-financial managers on the business of running their department. The numbers are a mystery to most people, so better off left alone or worse, that’s the finance department’s problem. Three, brands have not evolved operational financial leadership yet. Brands tend to look at driving the top line, which equals more management fees, but then the owner needs to face the bottom line.
If brands developed, mandated, and delivered financial leadership training, there is a very good chance that their hotels would be more profitable. Having a team in place that knows their numbers and how to forecast, track, adjust, and write good executive commentary on their numbers is incredibly valuable.
Making the numbers matter and managing them as part of their brand’s culture is important. Who would pay for all of this? The owner, just like they do for guest service and colleague engagement. In doing this, the owner and the brand benefit big time. A brand with an effective financial leadership model would build great financial bench strength inside its leaders and hotels, making it very desirable.
Most department managers and assistants inside a typical hotel didn’t start out in this business to be managing a budget or forecast. They are artists, college students that stayed on, etc. These leaders want a system to follow and some basic training on the numbers. They are yearning for this knowledge and most of them are confused, disconnected, and frustrated without it. It’s not difficult to create financial leadership inside a hotel; the sooner leaders recognize this and know that their brand has a plan to train, the sooner they will get into the financial game.
So owners, it’s up to you: Ask you brand what programs they have in the 2017 budget to lead your hotels financially.
About the Author
David Lund ‘The Hotel Financial Coach’ teaches advanced leadership training that guarantees your financial success and increased profits. Get a free copy of his new guidebook “7 Secrets to Grow Your Hotel Profits Fast’ at www.HotelFinancialCoach.com