What Hotel Brands Dont Know: The Secret to Creating Great Financial Expertise In Your Hotel
By David Lund, The Hotel Financial Coach
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 hot el. 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.
When brands mandate training programs in their hotels, the owner pays 100% of the cost. For service training or colleague engagement, brands regularly do this and it's good business that they do. Everyone benefits, owner, brand, colleague, and the guest. So, lets look at a financial leadership training program, who would pay and who would benefit? Well if a brand mandated a financial leadership training program the owner would pay. In turn, the beneficiaries are; the hotel owner gets a better financial result, the brand builds financial bench strength and expertise, the leaders and managers benefit because they now have career financial skills that are extremely valuable, everyone wins!
One of my clients taught me an important secret that I will share with you. How to create a guaranteed return on investment for your hotel from financial leadership training.
I had just finished a day-long financial leadership workshop with 40 leaders in a larger hotel in Vancouver, British Columbia. 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 the army every single hand in the room went up, this was very cool. He then said, to pay for Davids fee Im 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! Thank you all, your awesome, he said. 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. Agreements. He asked his leaders to make an agreement. Notice he didnt 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 with, I thought we had an agreement thats a much better lead-in than you didnt 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, it's sprinkled everywhere. 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, do you have a team thats engaged in finding the savings and the efficiencies or do you have a team thats asleep.
So, lets look a little closer at this $200. Forty leaders all save $200 this month, thats $8,000 in GOP this month and $96,000 in new GOP this year. Using a capitalization rate of 8 that equates to a 1.2M 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. Not your needs first but their needs. With financial leadership, you accomplish this by educating your leaders on the hotel finances. They will see its not so complicated, they will also see that they have a new insight to the impact they have. Every one of your leaders wants to have more impact, its a basic human need. The final piece is the leaders clearly see that this financial leadership skill is an incredibly valuable career skill. Talents that now unlock promotions and greater personal opportunities for their lives. When you lead your team this way they see how invested you are in their growth and how much you care about them. The result is they care more about their role and that automatically means a better financial result.
The Hotel Financial Coach