When Charles Darwin wrote ‘It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change’, he wasn’t of course talking about the hotel industry. Yet, his words should resonate with all hoteliers today. An ability to adapt to a radically changed competitive landscape will not only determine which hotels make it through the current recession, but will also influence long term survival.

Clearly, the immediate concern for many operators is simply to stay afloat, so the focus has to be on the short term to some degree. Yet, in one of the great paradoxes of business life, now more than ever, defining and pursuing a long term strategy for the business is going to be vital to future success. One of the stark lessons from this present crisis must surely be that short term planning which is only concerned with next month’s numbers isn’t going to cut it any longer.

Over the past decade, many hotel operators fell in love with the here and now; as long as the wider economy continued its upward trajectory, all seemed well with the world. Growth was the only strategy in town and, as the good times rolled, the industry became a magnet for individuals who thought that hotels were as easy to run as they were to build. For these ‘hoteliers’, a preoccupation with short term returns - usually driven by the need to service debt - meant that profitability (which is not a dirty word of course), or monthly cash flows became the primary concern; mostly at the expense of quality. The global downturn has exposed the folly of this short-termism. Despite all the talk about the rules of the game having changed, return on investment in the hotel industry remains dependent upon taking a long term view of business development. The past eighteen months have also provided a sharp, and painful, reminder for some that issues such as location, viability, and quality actually do still matter in the hotel industry.

Economic cycles may come and go, but whatever the future brings, the era of thinking only about today and not tomorrow is gone, for the foreseeable future at least. Although the paradigm might be new, the rules governing success or failure will, however, be familiar. Sound business practices are coming back into vogue; defining clear direction for the business, creating measurable strategic goals and implementing effective planning processes will once again be seen as central drivers of success. Of course, true hoteliers never forgot this, but many of the new entrants seemed to believe that the old rules didn’t apply to them. To rise above the norm in future, all hoteliers will therefore need a ‘strategic map’ for their operations where future growth prospects are based on facts, not outlandish assumptions and business plans are written to guide the hotel’s activities, not to con the bank or investors.

Yet, many hoteliers, particularly those in the independent sector or in small and medium enterprises struggle with this idea of developing a strategic map. In the first instance, it can at times seem a very convoluted process; google the topic and prepare to be bamboozled by terms like vision, mission, strategic options, goals, strategy, programs and plans. That’s enough right there to put anyone off. A second problem is that planning for the future can seem somewhat of a luxury when faced with the day to day pressures of operating a hotel. One owner explained this concern well when she said to me “What’s the point in having a strategic map when we have no control or influence anyway over what happens in the operating environment? We just need to be good at reacting, and reacting fast.” An understandable perspective perhaps, except that having a strategic map does not mean having control. Nobody has control over what happens out there in the general business environment, regardless of size. But it is possible to have direction and as a result of that to be in a stronger position to anticipate future changes, or at the very least to better navigate through periods of uncertainty.

Strip away all the jargon and hyperbole surrounding strategy formulation and creating a strategic map becomes a less daunting prospect. It actually begins with having the right mindset. Some operators, particularly those drawn to the industry in recent times, view their business from the wrong perspective, believing that because they have a hotel, they have stakeholders such as owners/investors, customers and employees. Thinking more strategically means taking a different approach and involves seeing these key stakeholders as being an integral part of the business, not external to it, or a result from it. It is about recognising that without these stakeholders, there is not, in fact, a viable business. Think of it this way: employees’ need to feel valued and respected. If that need is not fulfilled, this will affect their ability to offer excellent service to customers, which in turn will sooner or later impact on profitability, which eventually directly affects the owners and managers. It is this recognition of the inter-connectivity of stakeholder needs which underpins a strategic map.

Creating a strategic map therefore requires total stakeholder focus and involves placing them at the heart of all business decisions taken. Armed with the right mindset, building the strategic map then requires reflection, analysis, action and evaluation guided by four age-old questions:

The first thing to highlight is that a strategic map includes having a strategy, but is not limited to it. Strategy tends to get most of the attention, but any strategy is only as good as the information upon which it is based and the resulting measures put in place to realise it. Developing a strategic map is therefore broader in scope and represents a continuous, progressive activity which becomes ever more specific and detailed; it is an activity which is at all times focused on the needs of key stakeholders.

There will be no magic pill for surviving in a changed hotel industry but one thing for certain is that relying only on short term planning is a proven recipe for disaster. When the dust settles on this crisis, only the better hotels are going to emerge on the other side. That’s no bad thing either. In future, average or inconsistent offerings, no matter how cheaply priced, simply won’t suffice; consumers are short of money but not common sense. But to compete in this environment, being good will no longer be good enough either; real competitive advantage will come from delivering excellence across all business activities. Only by having a clear strategic map can that goal be realised.

About the Author | Enda Larkin has over 25 years experience in the hotel industry having held a number of senior management positions in Ireland, UK and the US. In 1994 he founded HTC Consulting, a Geneva based firm, which specialises in working with enterprises in hospitality and tourism. Since that time, he has led numerous consulting projects for public and private sector clients throughout Europe and the Middle East. He is author of Ready to Lead? (Pearson/Prentice Hall) and How to Run a Great Hotel (How to Books) which expands on the themes highlighted in this article. He may be contacted via or at [email protected]

Enda BSc, MBA Larkin
+ 41 78 618 1241
HTC Consulting