Strategies for turning around a sinking hotel pdf
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Strategies for turning around a sinking hotel pdf



While economic slowdown has generally brought gloom over the business environment, it has also bestowed an opportunity for those who know their job and know how to carve out a successful turnabout ...

While economic slowdown has generally brought gloom over the business environment, it has also bestowed an opportunity for those who know their job and know how to carve out a successful turnabout strategy in times of distress. In these testing times only the fittest will survive. Here are a few tips on how to remain afloat.



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Strategies for turning around a sinking hotel pdf Strategies for turning around a sinking hotel pdf Document Transcript

  • Strategies forTurningAround a Sinking HotelBY: RAM GUPTAMore than anything else, therecent economic crises has leftmany industries crippled.Hospitality is no exception.With companies tightening their
  • purses, corporate travel hassuffered a major reduction. Thescenario on leisure travel isworst since the spendablesurplus income with individualshas shrunk drastically. Luxuryhas taken a back seat inindividual and family lives. Thebuzz word seems to be savingsand hedging your capital asmuch as you can.The overall negativeenvironment has left manyindependent as well as branded
  • hotels in red. Unable to paytheir debt or even meet theirdaily expenses, the hotels aredesperately looking for expertconsultants and advisors to helpthem remain afloat. Thesituation is really grim for thosewho have already slipped downthe line.Here are a few tips that youcould follow to make aturnaround for your hotel.While these tips have helpedmany, you have to evaluate
  • them to find which of these willbe applicable to youroperations. Since theprofitability of the hotel isdependent on factorsinfluencing sales and costs,these strategies are mainlydirected towards efficiencies inthese two areas.Revenue Improvementand Customer RetentionNeedless to say that the salesin a hotel is generated when a
  • guest checks in, when peoplevisit the restaurants, whenconferences and events takeplace, when your health clubgets membership and so on. Thefinal thing being that when youget foot falls in the hotel yourcash machine gets active. Thebiggest issue therefore is to findhow to get customers and get anever increasing number of them.The first thing that attractsyour customers to you is yourbrand image in the local and
  • destination market. Hotels haveto spend money and efforts tocreate a positive brand image inthe market. For an effectiveturnaround strategy the hotelhas to focus its efforts toestablish an image that is notonly positive but also better andpreferred than that of acompetitive hotel.In creating its brand image,today the hotel can not only usethe conventional methods butalso include the latest
  • technological tools which arenot only more effective but alsohave a very vast reach, veryfast.It is a known fact that hotelprices get revised each year tomeet the cost escalation due toinflationary pressures on thematerial costs. In other words, italso means that the hotelbecomes out of reach for thosewho cannot afford it due to theirbudget constraints. It istherefore important that the
  • hotel adds on new customers toits user list to make good thisloss. It is like a pyramid. If theheight of the peak increases,you have to add balancingwidth to the base to maintainthe equilibrium. In a slowingeconomy however, this effortassumes far greater importanceas both the height and the baseof the pyramid shrink due toextraneous factors over whichthe hotel has no control. Themarketing team has to come outwith such innovative ideas,
  • schemes and packages that willin the first instance insulate thehotel clientele from gettinginfluenced with these factorsbut in the ultimate analysis,ensure a continuous growth inthe capacity utilization.The above can be successfullyachieved by hotel if it utilizesthe various marketing toolsavailable to it including but notlimited to competitive offers,packages, on line marketing,
  • loyalty schemes, special eventsand many more.Cost RationalizationThe most important aspect ofoperating economies in distresstimes is absolute control over itsoperating costs. If a hotel allowsthe costs to slip, the bottom linewill also slip away. The issuethat most hotels and especially,the independent hotels face isthe quality of their MIS. Youcan control your costs only if
  • you know what your actualcosts are and how do theycompare with the industry normor with your competitive sethotels. If you managementinformation system does notgenerate true numbers, youwould fail in your cost controlefforts.Let us assume that you have aperfect system. You have yourmonth end report with you. For
  • effective cost control my adviceto my industry colleagues is togo line by line, check each cost,and check its behavior overmonths in absolute as well aspercentage to sales terms. Lookfor any abnormal increase oreven decrease; analyze thereasons for variances unless youare totally satisfied with thenumbers.
  • Ultimately it all boils down toa simple equation and that isthat Profits equal to revenueminus costs. Have a control over these two factors and you will be able to chalk out a turnaround strategy for yourhotel. From the point of view ofpure financial survival, factorsinfluencing sales and costeconomies play the mostimportant in the revival of a
  • financially sinking enterprise,the importance of people,product quality and delivery oftop rate service cannot beignored. All have to go hand inhand.While everyone can boost ofoperating a hotel profitably innormal market environmentonly those with provenmanagement skills, strongdetermination and complete
  • dedication can turn a distressedhotel into a profitable venture.Ram Gupta is a professional hotelier with overfour decades of experience in India, Far East,Middle East and Europe. A Member of Instituteof Hospitality, U.K., he is also a Certified HotelAdministrator from U.S.A. He has worked forsome of the best hotel chains and wasassociated with over two dozen hotel projects invarying capacities. He has served on a numberof trade bodies and boards of variouscompanies. He is now an independentconsultant in the Industry. His web site can beviewed at and can becontacted at OCTOBER, 2012 © BUSINESS CONSULTING GROUP GLOBAL