Hotel sales program strategies

The quickest way to have occupancy and net profit improve dramatically within a short period of time is by the General Manager getting as involved as they should be in the hotel sales program and general team efforts.

Traveling around and talking to some hotel owners recently some very basic advice seems to be appropriate. This relates to GM’s just not doing their jobs frankly.

Resorts and those properties in the city are somewhat different but in the comments below you can get the gist of  what should be happening.

  • Given your General Manager is the CEO of your hotel every local organization from the chamber of commerce, to the board of each important local community organization, every single tourism authority, and the Tourism Minister should be well acquainted with the GM. Involvement and relationship building needs to be ongoing. Is there a plan in place for this relationship building?
  • A General Manager who is effective in Sales (lets just ignore the operational aspects) will take advantage of the daily peak operating periods to pour some coffee at the breakfast table and pour water at the luncheon table and yes, shake hands. How often do you see that?
  • The GM should meet and greet on arrival all the top 10 key accounts and either follow-up with a call during their stay or speak with them on check out, while ensuring you have great business relationships with the person who actually makes the bookings at these top accounts (the secretary to the CEO?) Who could be better candidates, at no cost, for repeat business or positive word of mouth.
  • He/she should have two on site business lunches per week at a minimum. Look after your key accounts. Look after your high spending resort guests.
  • Your General Manager should be making a minimum of 15 calls a week to new and potential account leads in support of the sales team, who should be met during the daily sales briefing after 5pm to give encouragement and support.
  • Does the GM meet or call each guest who informs the management that something went wrong? These most valued guests, who have taken the time to comment are too often looked upon as someone to avoid. You not only have an opportunity to win them over and ensure whatever went wrong does not happen in the future, but these guests will more likely recommend you to others if you appease them.
  • And most importantly the General Manager needs to instill a sales focused attitude in their team. This can be developed in many ways, but at least get the message across that a smile and acknowledgement from everyone  to all guests  at all times is a must in the hospitality industry.

Trouble is this basic level of management is just not happening sufficiently in real life.

Costly sales programs do not come before the basics, for advice on winning business plans that get all the basics in place before $ is spent, contact Mark, someone who has actually been the GM/Director of sales for a resort and put one on the world map.

Sweet dream or nightmare? Buying a small hotel in Costa Rica

What challenges are involved in buying a small resort lodge in Costs Rica? First off the mark is having to deal with Real Estate agents.

Day after day one comes across realtors in Costa Rica marketing small hotels and resorts for sale, with asking prices that are frankly criminal. I would define criminal as promoting a hotels value at a figure picked out of the air, the bare land price,  the cost to build, add some on for revenue generated, near what he bought it for down the road for last week!! No doubt ask them and they would blame the sellers for asking for such prices.

Is it the same as buying a resort vacation home? No. Is the value of the property calculated as one would a vacation home or residential property, that is on emotion? No.

The price you buy at should be based as far as you are concerned around the forward calculation of what cash flow you as an operator can generate from the business over the coming years at today $. It’s based on cash flow! and only that.

Not what $ a seller has invested in it. If a seller has invested 150K in improvements and the cash flow improvement have netted 10K in cash flow, then that’s 10K towards the valuation, not 150K plus “on potential”.

It’s present valuation based on what actual net cash flow from operations the property is achieving to date. The yield % to calculate this valuation based on the quality standard of the buildings and its location.

Let’s use a most simplistic calculation, ignoring numerous aspects of how a calculation of a commercial hotel business should be done.

Take a 10 bedroom lodge with a average occupancy of 60%, that’s 85% for 7 months and 25% for 5 during the wet and low seasons, way above average for small hotel operators in Costa Rica by the way, at an average rate of $60. That’s generating about 131K in revenue.

Costs of marketing, utilities, your sales efforts and affiliations, transport related,  maintenance, cleaning, laundry, linen, communications, grounds upkeep, insurances, local taxes, taxes, add some salaries to help you clean 6 rooms a day, supplies, you will be very lucky to generate a 65%  operating profit before a management salary.

For 365 days a year of pure graft and effort to manage the business, deduct a modest 40K for your efforts, which leaves about 45K cash flow. 10% yield on the net cash flow generated values this property at 450K, if a buyer is happy with a 40K salary! That’s before a capital plan for replacements of major building items, and achieving a 65% OP is questionable.

At 60% occupancy. Scary. Unless you like working for nothing that is.

Yes, on the market for $1m++ no doubt. !!!! Do the math, 500K down, 500K at 8% with 40K interest only payments, 5K to spare. Or 500K yielding 6% and you sit on the beach with your 30K.

40K to go gradually broke, forced to sell out at a loss, with health issues, or 30K for being a beach bum!

For advice on purchasing your commercial hotel business, do your homework and contact mark@turnerlodgingco.com.

 

 

 

Why so many underperforming hotels in Costa Rica?

One would have thought that in a country that has tourism at the top of its agenda that the industry would be a roaring success with world-class quality services all over the place with properties that have and are achieving their operating potential.

Sadly this is far from the case, and now more than ever, with a declining tourist base and an oversupply of inventory we see hotels in stress mode.

Why? Some reasons are as follow.

Lack of investment in people and education during the good times.

Poorly thought out project in the first place.

Non trained management with no eye for detail and no creative flair, same old boring offerings led by that antiquated menu.

Poor quality service, friendly generally yes, but you often get the same service at the local soda as you get in expensive restaurants.

The food offering sucks, the lack of creative flair coming out of the kitchens here in general is a real problem

Lack of investment back into the business over the years, a lack of an ongoing financial and ongoing investment plan that is pivotal to the ongoing success of the business.

No training budget, no training period.

Lack of market understanding, no idea on who the market is and what the customer base require.

Ownership and management that do not have the skills to reposition the property and adjust to different trading conditions.

Lack of awareness of how the industry world-wide has developed, how the expectations of the travelling public have changed.

Lack of value in the product offering, poor pricing strategies.

If you require a review of your hotel and advice on how to implement quality hotel management strategies and services, send an inquiry to mark@turnerlodgingco.com.