The US hotel industry makes more than $200 billion per year – and with international tourists and Americans alike now traveling more than in any previous generation, it’s clear that this is an industry that is going places. But running a chain of hotels is still not easy: staff turnover is high, for example, while it’s not always easy to secure the prime real estate that is needed to attract guests looking for convenience.
How can chains in this industry survive the inevitable ups and downs of hospitality? How can those in the hotel industry ensure that they manage to stay afloat even if their customer base is finding that they have less and less disposable income – and how can staffing problems be addressed? These complex questions don’t have easy answers. But by looking at the experiences of some major hotel chains and drawing inspiration from them, it’s possible to start to answer.
From an outsider’s perspective, the main challenge that a hotelier might appear to face lies in paying for the physical buildings required for a hotel chain to succeed. However, those who have been involved in the hotel business for a long time know that there may be more options available than first meet the eye. Of course, it’s possible to buy a hotel building outright – but for a large construction in an area prime enough to attract enough guests, paying it all up front may not make financial sense.
Instead, mortgaging and using debt could be a more sensible way: this is believed to be one of the ways in which current President Donald Trump managed to build his property empire, and it’s the way that many entrepreneurs who require prime real estate in order to create businesses inside of them decide to go.
Undoubtedly, one of the main reasons why hotel empires rise or fall is leadership. Without strong bosses who are able to take clear and at times risky decisions, it’s unlikely that a chain will be able to grow and survive in the current climate. Take Pinnacle Group, for example: its founder, Bharat Lall, studied a completely unrelated degree in another country, but showed a willingness for innovation and risk-taking by leaving his profession and setting up the chain.
Without willingness to take these kinds of decisions, it’s almost impossible to break into an industry that is highly competitive and at times tough.
Invest In Staff
The hospitality business in the U.S. and indeed across the western world is not the most stable of working environments, and there is a relatively high degree of staff turnover here. Cleaners and receptionists, for example, do not often take jobs in hotels on the basis that they intend to stay there for decades or “climb the ladder”, as it is known. They may, for example, be working in the country temporarily, or they may be students with other long-term career plans.
As a hotel owner, you can’t prevent your staff from leaving. But what you can do is invest in them appropriately and then reap the rewards. While it is likely that some will still leave if it suits their personal circumstances, others may think twice if they experience attention from managers, opportunities to give feedback and even higher wages. For the hotel chain, this is great news, as it means a whole set of recruitment costs are saved.
Attention To Detail
In some sectors, it’s possible to allow attention to detail to slide a little if times become tough. But in a hotel environment, detail is what matters. The most successful hotel chains are often those that have those little touches designed to transform the experience, such as particularly comfortable mattresses on the beds or luxury toiletries in the bathroom. Often, these seem like such small expenses in the grand scheme of things that hotels may decide that they are the first to be cut if finances become difficult. But the absence of these sorts of items are often the first things that customers notice – and hotel owners who cut them may find that without them, they end up losing much more in revenue than if they’d left them well alone!
The hotel industry is a popular one for entrepreneurs. But it’s also not an easy one to break into: costs of upkeep get higher and higher, while staffing is also a problem. By focusing on strong leadership, investigating alternative methods of financing and ensuring that staff always show clear attention to detail, it’s possible for hotel industry leaders to ensure that they run a sustainable and profitable business.