On-property Sales, Branded Luxury Hotel
Our client, the COO of a luxury hotel group, discovered that one hotel in the portfolio was forecasting a shortfall against its year-end revenue budget with the rooms department being the biggest culprit. There was downward pressure on key performance indices throughout the market due to new supply coming online. However, the hotel was also underperforming compared to its competitors. The COO turned to the on-property team to gain an understanding of what was happening. Despite being provided with many reports from the on-property team, in addition to some insight from other senior people, it was still difficult to get a clear picture about why the hotel was underperforming.
Carpedia Hospitality was engaged to provide a third-party opinion about why the sales team was not going to reach budget. As a first step, our management consultants conducted a deep dive of the processes, systems and behaviors within the on-property sales team. We wanted to make sure all stakeholders could gain full visibility into the current state of the business and gain foresight into any future revenue shortages so the hotel could react proactively.
The investigation uncovered that it was necessary to enhance the hotel’s organizational objectives, operational processes and management operating systems. The overall organizational objectives and those of the sales team required alignment. The processes in which the objectives were shared, communicated and measured were identified as opportunities to gain visibility and implement more accountability. Furthermore, although the customer relationship management software was producing robust data, the reporting tools were not optimized. This lack of management information was the source of the limited visibility that was being felt throughout the organization.
Carpedia Hospitality recalibrated the hotel’s existing technologies to align with business objectives and optimize performance. A customized interface was developed to enhance the visibility of the current and future state of the operation and data was presented in a more meaningful way to all users. The interface included:
- a structure and reporting system used to review lead volume
- reports that highlighted budgeted, actualized production metrics and a revenue on the books pace report
- an automated forecasting tool based on the current sales funnel, time of year, booking cycles and historical conversion rates
- a quarterly targeting and goal setting program that was used to provide incentives and remunerate the sales team
- reporting that outlined progress made to reaching targets used in one-to-one meeting’s, weekly revenue meetings and monthly review meetings
The interface strengthened visibility into the short, medium and longer-term financial position of the business and replaced qualitative methods that had been used to set goals. The team gained a clear picture of the amount of base business required before a rate growth strategy could be deployed. This information supported the hotel’s distribution channel strategy and ultimately paved the way for strong revenue growth. The alignment of the organizational objectives from the corporate office with the goals and targets set for the sales team also had a positive impact on performance compared to budget. Beyond the P&L, the new processes were implemented resulted in clear expectations throughout the organization while the new interface of reports resulted in enhanced communication and focused attention to core sales operations metrics.