SHOOTING EVERYONE IN THE FOOT

THE TOP TEN REASONS WHY HOTEL OWNERS FAIL

Or why do they insist on telling you what they want and exactly how to do it. I thought that was what wives' did !! 

Hotel owners have come a long way since I started in this business some years ago. Back in those days, owners believed that the managers would take care of their interests and ostensibly left them alone, and by and large, managers did protect their interests and were left alone.

In the last two to three decades, the dynamics have changed and many managers are no longer devoted exclusively to protecting the interests of the owners, they are now focused on doing what the owner or his representative tells them to do, albeit shooting everyone in the foot. 

What we are all faced with is a combination of unrealistic expectations, stupid promises, enforced deadlines, unqualified managers, in-experienced owners, student asset managers and wild swings in business patterns. Of course these situations have always existed and will always continue, as long as there are choices and options.

Owners have choices and options; Managers have choices & options; Employees have choices and options; Clients have choices and options and Lenders have choices and options.

Add in the influences that contribute to our dynamic industry such as the economy, the weather, politics, terrorism, sports results and unemployment ratios and it is surprising that we can get up in the morning on the right side of the bed!!

Here however is a quick list of the Top Ten Reasons that hotel owners fail.

1. Short time horizons. Strategies need no longer than a week to implement and gain maximum profit. No long term planning, no trial and error, only 'trial and success' permitted and budgeted.
2. Absence of Trust. All managers and employees are to be totally distrusted. All are on the make and profit from my property. No strategies allowed unless I approve personally.
3. Squeezed capital. All requests for investment are reduced or eliminated. Milk the asset to the extreme. Cut out all the fun and creativity. 
4. My way or the Highway. All strategies from Management stink. My methods will be employed or else. 
5. Over leveraged. Too much debt and no re-investment. No room for a downswing ever. No red ink anticipated ever.
6. Just a Flip. Exit just beyond the Entry. My Exit Strategy is to get my money out shortly after I buy the thing.
7. Renovation & Re-position. Branding today is organic. Positioning changes with the wind. A major renovation must be accompanied by a change in brand.
8. Too much heart. I know I should have listened to those guys that did the Market Study but I really wanted to do this deal.
9. My tastes rule. Don't confuse me with that nonsense that I am not the customer. I know what I want and my tastes rule. This business comes to me naturally, I have stayed in hotels all my life.
10. Bad luck. Things changed and we were not prepared.

However, let's be clear about one thing. Owners come in different shapes, sizes and models so it is important to know which make and model you are up against.

• Model A. Self-made entrepreneurs, brash, young, explosive, well-dressed but no tie, no eye-contact ........favours 1-4 and 6 above. Starbucks please. 
• Model B. Rotund, rosy complexion, old money, stylish, formal, patient, family money........ only a few left and all are doing very well.
• Model C. Asset Manager, experienced accountant, all theoretical micro-managers, all statistics, multiple reports..........Favor 3 and 5. Mistrusts marketing and disbelieves everything from the sales department. The hotel's financial controller becomes his personal friend.
• Model D. An institution run by young MBAs none of whom have run anything, including their own bath.........favour 1, 2 and 3 and Grey Goose on the Rocks with a side of San Pelegrino.

Perhaps relevant to this analysis is the definition of 'failure' or in fact the definition more importantly of 'success'. Is there always a clear definition of what constitutes success in the eyes of the Owner. Has he or the Management Company clearly defined where this asset is supposed to go for the Owner. I am too often becoming aware that many of the Owners with whom I have contact have no clue where this asset fits in their future or what are their specific, clearly enunciated expectations and their timeline.

For any interpretations of your chances of success as an Owner or if you are having difficulty with your hotel, contact [email protected]