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Most people think that money alone is enough to ‘start’ a hotel. They fail to realise that they need more than that. Unsurprisingly, the ‘ending’ often turns out to be disappointing and an unhappy one at that! Such people may have a subjective, emotional or personal reason for wanting to be in the hospitality industry (e.g. it’s your hometown, it’s where you want to ‘get away’ when you want to take a ‘break’ from making money, all the hotels you’ve seen are utterly useless and anyone with access to adequate capital can do better, your friends are constantly reminding you to build a hotel, etc.). There’s nothing wrong with that, and if you’re willing to accept a lower or no return, that’s okay – but go in the understanding that that’s the choice you’re making. You could probably do better investing your money elsewhere.

Around 65 percent to 70 percent of the motor cars on the Sri Lankan roads will fail the ‘crash test’. A crash test is a form of destructive testing usually performed in order to ensure safe design standards in crashworthiness, in which a car hits a barrier with the front driver’s side corner at 40 miles per hour. It simulates clipping another car head-on or hitting a tree or pole.

The test establishes how strong the occupant compartment is to resist intrusion from a frontal crash, safety belts that prevent a driver from pitching too far forward, side curtain airbags to cushion a head at risk of hitting the dashboard or window frame and measures how well vehicle designs prevent injuries to feet and lower legs. It has been proved that the smallest cars on the road carry the biggest injury risk in a common and deadly type of crash.
In a test carried out in January 2014, only one of 11 small/minicars (which incidentally did not include any of India’s small cars), passed the US Insurance Institute for Highway Safety’s ‘small front overlap crash test’. Indeed, something to really worry about!

A Sunday newspaper recently published details of hotels under construction in Sri Lanka. As at June 6, 2014, a total 106 new hotel projects are at various stages of construction. Of the total new hotels being built, 64 percent are below the 50-room capacity level, whilst another 20 percent are between the 50 – 100 rooms range. To summarise, 84 percent of the total new hotel projects can be catagorised as ‘small’. Of these 79 new hotels on the pipeline, how many of them do you think will pass the ‘crash test’? Let’s check it out.

Don’t create marketing campaigns that get read but cannot be acted upon!

Location and opportunity

Every one of you must feel that there is opportunity linked to the location where your particular property is being built. Each owner is convinced of the location and believes the new hotel will thrive, because:

•     Even though there are other hotels and even in the absence of reliable data, you have  a ‘gut feeling’ that there will be business for everyone since ‘arrivals’ to Sri Lanka are expected to dramatically increase annually and this will somehow drive ‘visitors’ to the location.
•     The existing competitor hotels are either not geared to or are not fulfilling all ‘guest’ needs.

Remember, great locations attract competitors and even in the most beautiful locations, heavy competition from existing hotels will ensure that success may come only much later or not at all!
Again, if the neighbourhood in which you are building your property has any undesirable elements that negates ease of travel, you will find it difficult to price the rooms low enough to encourage travellers to stay at your hotel – however close it is to any key attractions. Have you considered the impact on operations should tourism take a ‘tumble’? How would you minimise the shocks of unpredictable events?

Strategy

I am assuming that all of you who are building new hotels have ‘debated’ the key question ‘why did you choose my hotel?’ to find out customers answers. This is the defining phase of identifying ‘who is my guest?’ How will I adapt and style my services to meet the needs of the type of guests I want to attract. Will my hotel appeal to couples on romantic holidays, families with kids, corporate travellers or foreign tourists.
Then, have you given thought to the combination of facilities, amenities, ambiance and services that will fulfil your guests’ expectations. Most of you will try to be everything to everyone and struggle! Remember, strategy includes making trade-offs – and the ability to avoid the temptation to go after every customer target market. Concentrating on making your service offering perfect for your most desired customer market will save you costs, better your profits and probably give you less headaches!

Planning

Starting a hotel as a business can be a challenging undertaking. Whether you’re envisioning no-frills accommodation for business travellers, high-end boutiques or a comfortable bed-and-breakfast, you will need to spend ample time researching and planning before taking the plunge because there’s plenty of competition. You will therefore draw up a business plan.

A business plan is akin to a beam of light from a powerful torch when treading in the dark! Most hotel businesses seek initial external financial backing. However, even if you do not require outside financial investment it is a good platform to state clearly what you intend offering, market analysis, outline of the operating procedures, long-term objectives.

Additionally, a summary on how your services will coincide or differ with the competitor hotels strategies for room amenities, food and beverage services (some hotel chains actively look at their F&B part of the business as an independent business unit with a separate business plan of its own) or any specialised offerings will reaffirm your commitment to build and operate the hotel. Really, there is no excuse for not having a business plan – for without one you will find it hard to prove the sceptics, (forget the bank or lending institution) that your hotel will operate successfully.

Hospitality mindset

Do you have an ingrained sense of how you want your guests to be looked after so that you can inspire your management team to, in turn teach this to your staff? Guests demand the attention to their needs and if they find staying in your property either stressful or uncomfortable or both – they will not hesitate to complain both loudly and publicly.

A TripAdvisor comment recently posted about a hotel in Brazil is what no hotel manager likes to read. Captioned: ‘Lack of hospitality mindset’, it goes on to inform the readers. “The hotel is a modern 36 storied building on the seafront in Boa Viagem. All its suites have a breathless sea view and are very comfortable. It was enough to make it a good hotel, however service is also paramount. In this topic Hotel xxx is a disaster. Room service took over one hour to deliver a food order, air-conditioning could not be put on because there were no batteries in the remote control and maintenance took another hour to replace batteries. No conveniences to shop at hotel or nearby, huge delay on check out and much more....”

Remember that basic law of business? – If you give people what they want, they will give you money. Today, if you take their money and don’t give them what they want, they will tell the entire world what you did or rather what you did not do!!

Market effectively

The marketplace is in constant motion, with customer buying patterns and preferences ebbing and flowing in an unpredictable manner. This could lead you to push marketing campaigns with poor aim or ones that are aimed to mislead. A constant goal should be to make the right offer in front of the correctly targeted customer at the right price and the right time.

Don’t create marketing campaigns that get read but cannot be acted upon! AirAsia, the budget airline, ran a half page advertisement in the newspaper promoting special fares under the banner ‘Buy 1 return Free’. Upon checking their website I discovered that it was not updated with any mention of the latest promo. On calling the Colombo office I was informed by a member of staff, who answered the phone after eight rings, that they had no information on the promo and could only provide me the normal applicable rates. He went on to tell me that the advertisement had been placed directly by the airline’s head office in KL - bypassing Colombo.

When I wished to speak to the manager, I was put on-hold for a couple of minutes and then informed that he was at a meeting and I was advised to go on the Internet (?). AirAsia sent me in circles and chased me to a competitor budget airline where I received a better offer for my upcoming family trip to Australia.

Yes, ‘everyone one can fly’ - not necessarily with AirAsia! The message here is: Don’t create marketing campaigns that get read but cannot be acted upon - both by the customer and by your staff.

So, those of you who are building new hotels, how would you rate yourself in the above ‘crash test’? I hope you all did well – especially because you believe that right now is a good time to build. No one in the industry can foretell how long the current cycle of buoyancy will last … another four, five years or perhaps more? Nevertheless, the distance between the value line and the cost line is shrinking and you simply can’t afford to crash!

Remember that basic law of business? – If you give people what they want, they will give you money

(Shafeek Wahab has an extensive background in hospitality management spanning over 30 years. He has held key managerial responsibilities in internationally renowned hotel chains, both locally and abroad. Now focusing on corporate education, training, consulting and coaching, he can be contacted at [email protected]. Website: www.in2ition.biz)