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The Number Friendly Hotel Manager


03 Oct 2012

The other day I was compiling profile of general manager for a luxury hotel owned by one of my clients. I thought of searching on the net to find out what others are looking for as essential qualities for this person. I surfed and surfed and found that if I was to base my search for a good and efficient hotel manager I might land up with someone who treats his people as his extended family, takes regular rounds of the property, greets his guests,  has knowledge of internet  and understands sales functions.

 

This left me a bit disappointed, until I saw the term 3P’s, I jumped because the P’s are my favorites too, so I read it further only to find that these “Three Pees” meant – people, price and property. The most important P was missing, I am sure you all have guessed it by now, yes I mean “Profit”. For me the most basic and primary role of a hotel manager or for that matter, any manager is to generate profits for the enterprise he is heading.

 

This experience prompted me to pen down my thoughts on what traits and qualities should a successful hotel manager have. I am sharing these thoughts through this short article. I know many of you would have different views on the subject.

 

In my experience I found that in addition to the knowledge of hotel operations like the food & beverages, front office, housekeeping, engineering, a present day manager has to have an in-depth knowledge and hands on experience of hospitality marketing and above all he has to be a “number savvy” manager who believes that numbers are his best friends. He should have the ability to talk to the numbers to understand and interpret them. I have met so many managers who would fumble to respond to a question like “ so Bob, what will be your closing number this month” or say “what is your deficit this year”..and so on. This happens because “Bob” simply reads the reports as a newspaper without the due analytical approach it deserves.  By the foregoing, I am by no means propagating that the manager should have a finance specialization, but he must have a thorough understanding, appreciation and interpreting skill of financial results and documents.

 

I have observed that a good hotel manager focuses on a few numbers only. He does not get bogged down by the rows and columns of numbers stuffed in a financial report. His approach is focused. It is not very difficult to understand and separate those important numbers for any one, but one must have the basic understanding of those. Let’s walk together to understand these.

 

Most of us focus on the top line and the bottom line. But we have to focus on the elements that the top line is made up of and what are the components of the bottom line.  We all understand that the top line or the revenue or sales whatever you may call it, is a product of price and volume, in other words Revenue equals price multiplied with volume sold. The task of the manager therefore is to play with these two factors to maximize the value of revenue. Here he has to keep in mind that his total available volume, if not utilized perishes by the hour and vanishes at midnight. Therefore he has to apply a dynamic and reactive marketing strategy for any given period, be it the year, the month, the week or the day and even for the day for forenoon, the afternoon and the evening. All these are possible only if the manager has his numbers and they are on his fingertips.

 

Let us also go to the second set of numbers that are important to improve the bottom line. The bottom line spells out the profits or the surplus of revenue over expenses. In other words, profit equals revenue minus expenses.  Expenses are basically to two types, fixed irrespective of the amount of revenues and variable expenses which keep increasing with each unit of sales. A good manager concentrates on variable and semi variable expenses, line by line in search of ways and means to economies.  I would discuss an interesting example here. Let’s take electricity cost. It is made up of number of units consumed and unit price. Now, the hotel does not fix the unit price of electricity, it is the utility company, who does it, what you could do is to control the consumption. But the question is does your report contain the unit consumed numbers, if it doesn’t, how do you control it, you cannot. Now this is what I mean by a number friendly manager, he will seek the numbers that will help him improve the results.

 

A successful hotel manager concentrates on revenue (price and volumes) of all products and sub products and all controllable costs embedded in 3M’s - Manpower, Material and Marketing. In all these revenue and cost heads he controls both variables that are the numbers and the price. This gives him greater leverage to maneuver, control or economize improving the efficiency of bottom line.  In addition, if he is able to operate the hotel, that will be an added advantage. So here is the profile of a successful general manager of an upscale luxury hotel… A dynamic, profit oriented, experienced hotel manager with strong marketing skills. Should be able to lead a team of professionals, motivating them ….

 

 Ram Gupta is a professional hotelier with over four decades of experience in India, Far East, Middle East and Europe. A Member of Institute of Hospitality, U.K., he is also a Certified Hotel Administrator from U.S.A. He has worked for some of the best hotel chains and was associated with over two dozen hotel projects in varying capacities. He has served on a number of trade bodies and boards of various companies. He is now an independent consultant in the Industry. His web site can be viewed at www.bcgglobal.com and can be contacted at ramgupta@bcgglobal.com