What brands don’t know is they have the ability to create great financial bench strength in their hotels and their owners will pay 100 percent of the cost. Brands also don’t know that they can create this bench strength with resources that are readily available. Lastly, brands don’t know that their non-financial managers are dying to get these financial skills and abilities now and they want to apply them.
Brands need to evolve. Brands need to stand still long enough to realize they sell one thing to owners: expertise in running and managing hotels. Brands sell expertise for all aspects of running and managing a hotel. Not just more RevPAR, guest service competency, and colleague engagement, but yes, the money too—the bottom line. A brand with a leg up on how to create and maintain financial leadership would be very valuable in the eyes of an owner.
One of my clients taught me an important secret that I will share with you. I had just finished a daylong financial leadership workshop with 40 leaders in a larger hotel in Vancouver. The general manager stood up and thanked me, and asked his team if they got a lot out of the workshop. The group was very excited and I received some great feedback for my work. He then said something I will never forget. He said, “I would like all of you to make an agreement with me.” He then raised his hand and like an army, every single hand in the room went up. He then said, “in order to pay for David’s fee, I’m asking each one of you to find $200 in savings this month inside your department, can all of you do that?” He then put his hand up and every single hand in the room went up. “One last request: can all of you do that every month this year?” He then again held his hand up, and every leader in the room did the same.
There are two important leadership styles he masterfully demonstrated. He asked his leaders to make an agreement. He didn’t tell them what to do. Agreements are a powerful way to lead and they are much more effective than directives or expectations. If someone fails to live up to their agreement you can start by saying, “I thought we had an agreement.” That’s a much better lead-in than, “You didn’t do what I told you to do.” The second leadership style he demonstrated was what I call transactional leadership. Our business is about high volume transactions and knowing there in no magic solution to better profitability. In a hotel, there are a million ways to save money and generate more revenue, and the opposite is equally true—there are a million ways to waste money. The difference is whether a hotelier has a team that’s engaged in finding the savings.
Let’s look a little closer at this $200. Forty leaders all save $200 this month, that’s $8,000 in GOP this month and $96,000 in new GOP this year. Using a capitalization rate of eight, that equates to a $1.2 million increase in asset value. Not bad for a $200 start.
Financial leadership is not complicated. But it does require leadership and putting the needs of your team first. With financial leadership, you accomplish this by educating your leaders on the hotel finances. They will see it’s not so complicated, and they will also have new insight their impact. The final piece is that the leaders clearly see that these financial leadership skills are incredibly valuable career skills.
When you lead your team this way, they see how invested you are in their growth and how much you care about them, ultimately resulting in higher returns.
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