CRE Midwest

Looking at the Box . . . From Inside and Out

I’ve done a fair bit of traveling in 2014, including national industry trade shows, and it’s clear that while the hotel and restaurant industries seem to be, thankfully, in a better position than a few years ago, there’s still a huge level of uncertainty.

How strong will the recovery be and how long will it last? How will continuing uncertainties in economic and financial markets impact the bottom lines of hotel owners and operators in the short term and intermediate term? Will we ever understand health care reform?

We cannot know the answers to these questions with any certainty. But what is clear is that everyone – owners, operators, suppliers and lenders – are looking for an edge that produces optimum profitability in each and every component of a business. That means looking at a hotel in new and different ways, maximizing revenue, resources and expenditures at every turn.

Doing so requires different perspectives and sometimes looking at the box from angles you have never considered before. Here are a few examples to spur some thought.

Stepping Outside the Box

It always amazed me that most hotel owners never consider the fact that at least half of the customers who enter an upscale or luxury hotel never sleep there. They probably never will.

Consider your daily foot traffic – meetings conducted over meals at your restaurants; business and leisure guests who get together to chat in the lobby or bar; local events that utilize your meeting space.

Few of these guests stay overnight, but it is clear that each one forms an opinion of your hotel – its physical features, staff and service. Those opinions build on themselves, become the prevailing marketplace opinion. Before you know it, they quickly become your reputation or your brand in the local marketplace.

It goes without saying that brand reputation has a huge impact on long-term revenues from overnight stays, meetings and events, etc. Here is a suggestion: Look at your hotel’s public spaces as a retail operation. How do you like to be greeted when you walk into a high end department store or restaurant? Make sure your bellmen, front desk clerks and valets are trained to greet all guests, even those just passing though, in the same way.

What kinds of feelings or emotions induce you to frequent a retail establishment, make a purchase or become a fan of the retail brand? The design and décor in your lobby should aim for many of the same ends.

The location, style and positioning of your restaurant should be an inducement for guests to enter off the sidewalk and sample something special, something new and different – not a bland representation of what some in the industry woefully describe as a “three meal restaurant.” Could there be a less exciting or interesting way to describe a venue that is supposed to provide diners with memorable experiences?

The point is that to really interest guests in your brand and to provide them with an experience that makes them loyal, owners and operators need to look at the hotel through the consumer’s eyes. This means stepping outside one’s comfort zone – separating oneself from Hotel 101 and re-introducing yourself to the basics of consumer marketing.

Production Without Process

On the restaurant side, I am often surprised at how little structured process guides the content, preparation, plating, delivery and clean up.

Can anything consistently be produced without specifications, linear process, quality control, planned cost of goods and labor factors? Why should there be any less detail to every aspect of preparing and serving a meal at a restaurant – which is an inherently more complex, interactive, variable and difficult process.

At MHC, we have a training manual that literally runs into the thousands of pages, presenting detailed processes for everything from steps involved in preparing and presenting silverware, to the proper grooming and requisite personal presentation of wait staff, to the location and positioning of food on the table itself. Since demand and consumption are spontaneous, the need for measurable process is even more critical as there are few final checks before the customer begins rating their satisfaction. Details, discipline and measurement are absolute needs in highly variable processes. Failure rates are difficult to monitor after the guest leaves and begins your marketing opportunity or nightmare known as word of mouth. Your staff is your means of production and must be well maintained and monitored if you want your success rate in the 90% or better range. Would you visit a dentist who advertises or accepts that 80% of their treatments are accurate?

The logic is straightforward. Along with rooms and meeting space, a luxury hotel depends on its restaurant to deliver a superior guest experience and to drive revenue. Often, a lack of preparation and process, create a loss leader in what should be a hotel profit center.

Bringing “Outside the Box” Back to the Inside

We often encourage our kids – as I’ve encouraged mine – to get a diversity of experiences in their younger years, studying different subjects in school, traveling to different places and generally widening their comfort zone.

One could make the same sort of recommendation to hotel owners and operators. For example, on the strength of our hotel and restaurant management experience in Minneapolis and Saint Paul, a few years ago we were approached to manage premium catering operations for the new Xcel Energy Center, home of the NHL’s Minnesota Wild.

We jumped at the chance and quickly became the catering manager of the operation. More importantly, we developed skills sets and outside perspectives, which we have translated into the hotel and F&B contexts to our and the guest’s benefit. We learned our four walls are confining; grow your business outside them.

The same kinds of perspectives and skills can be developed in myriad ways; hotel operators, managers and personnel at all levels should be alert to every one of them, and ready to seize opportunities when and where they present themselves.

So go ahead, step outside the box.

You’ll find the atmosphere refreshing – and profitable.

Bill Morrissey is the CEO of Morrissey Hospitality Companies, Inc., based in Saint Paul, Minnesota. Among other ventures, MHC manages The Saint Paul Hotel, as well as a dozen restaurants in the Upper Midwest. MHC also manages the catering for some of the Midwest’s finest sports and entertainment venues, including the 250,000 square-foot Saint Paul RiverCentre, Bunker Hills Golf Club and Hillcrest Golf Club.