CRE Midwest

Five Steps to Growing a Hotel Brand

By Bill Morrissey, President of Morrissey Hospitality Companies, Inc.

Often times when things are not quite right in a hotel business model, management is the first to come under scrutiny, as owners and lenders seek to verify and validate their investment. Whether the property is a franchise or independent is immaterial to this discussion, although the strategies might vary slightly.

Let us first understand that management means either the property manager and/or the management company. In the eyes of the owner, it is the same situation. A trusting and fiduciary relationship has been established to help the owner achieve their investment expectations in the hotel real estate and hotel business operations. Putting aside any obvious external or internal influences, such as outdated facilities, inadequate size for the marketplace, inappropriate brand positioning or significant need for renovation, management needs to be accountable for and responsive to developing the full business potential on behalf of the owner.

So often the manager puts too much emphasis on measuring “what is” (i.e. market share, market position, yield indices, etc.). These are critical factors and important to gaining an understanding of where the performance of the property is in relationship to overall market performance, but it is often a rearview mirror view of performance. One can take some comfort in knowing that similar properties face the same conditions, but it does little to ease the burden of possibility of additional investment or of the need to identify the right combination of answers to meet the owner’s objectives.

At Morrissey Hospitality Companies, Inc., we believe the biggest and most common mistake of management is overlooking the need to grow the depth and the full potential of the brand and building an uncompromising customer loyalty and desire. This can only be measured by unrealized capacity. Capacity is the guestrooms and the seats in a restaurant, bar and catering spaces that go unsold, regardless of market share or what occurred last year. This unrealized capacity represents real revenue and growth opportunity. When a brand is the best in class and is constantly building customer loyalty and desire, real and sustainable growth will be seen in market share, market position and the yield indices against the competitive set.

The inability to grow the brand and make gains on unrealized capacity often is the failure of the manager to understand and implement a meaningful and measureable process of growing the business long term.

1.    This process has to begin with an IDEA - how is my property better or different? What physical and emotional benefits can I deliver to potential customers that others aren’t? Think big, don’t be constrained, talk to customers and staff and gain their perspective.

2.    Then move on to IMAGINING what the idea can look, feel, sound, smell and taste like…use all five senses and visualize from a customer point of view. See and imagine it! Get excited about the possibilities!

3.    Through the imagination process DREAMS will form and will create the best source of energy and desire to begin the real work. From improving RevPAR or total revenue, creating a new restaurant and bar or a spa, or whatever the imagination spurs, the dream will become a belief that you start to work toward in building a business model to support it. Perform the financial analysis, the market analysis, and the feasibility – all the quantitative tests – and the dream will become reality strengthened by the belief.

4.    The next important step is achieving an UNYIELDING FAITH in the dream. Doubters, restrictions of an independent or franchise hotel brand, both human and capital resources and of course time will create challenge.

5.    Having unyielding faith will create PASSION, and the passion will fuel a strong work ethic to turn the dream into reality. This is unavoidable and is where many managers limit their potential and consequently the business potential. This is where others will observe and be inspired by the accomplishment. This is where average people do extraordinary things. This is what is not taught in schools and overlooked by many corporate training programs. This is not a formula for the average or those looking to “do their job” or “fulfill the contract”. This is professional leadership, entrepreneurship and a winning attitude.

The mistake of most managers is not knowing or trusting the process, giving it sufficient nurturing and passion and too easily giving up of what is the right and the strategic thing to do for the hotel. If management cannot see a better day or a different future, the property will never realize one. The job of a manager on behalf of the ownership interest and all the associates dependent upon the success of that hotel is to create visionary leadership for all segments of the hotel’s business to be the best in class and to build long term brand loyalty.

This ability to grow through the unrealized capacity can only be achieved in a partnership with the owner, the manager and staff. Defining what roles and resources each will require will be the beginning. History is fixed; the future is able to influenced. Work towards influencing and creating a different future for the property regardless of what the competitors do. Those that embrace a vision and who have the will, the belief and the passion to see it through to the end are the individuals that will create real value.

MHC recommends to our clients that they get involved early in the annual planning process and involve strategic visioning as part of that process with the management team and/or management company. This process will assure the IDEA built on IMAGINATION and a DREAM is communicated. The BELIEF will be built and the UNYIELDING FAITH and PASSION will create the real growth and opportunity in the investment.