The problem with general managers in hotels
Investing in hotel real estate requires a lot of funds. We are talking about tens or hundreds of millions of Dollars or Euros.
You obviously need to ensure a proper return on investment is generated with such a strategic investment. Moreover hotels are a multi-million dollar operation.
In any other industry we would be looking for a well experienced CEO to manage such a company.
But who would you trust to manage your hotel investment?
The GM problem
Surprisingly, we see many hotels being managed by former food and beverage or front desk managers with little experience in finance or business strategy.
The hospitality industry is known for its policy of promoting from within. But putting an inexperienced or not sufficiently skilled manager in charge of a hotel operation, without the proper support team, means hoteliers are taking a risk with the results of your investment.
The typical career path of a general manager starts in operations, and he/she works him/herself up to the top over a span of ten to 20 years. The prospect of growth opportunities are good from the perspective that it keeps staff eager to stay within the industry.
Unfortunately, however, although most skills are acquired on the job over time, but there is a lack of both in-company and external training. Career path development, except from in the large chains, is mostly unheard of in the international hotel industry.
As a result, we have continually identified the weaknesses of hotel sales managers, many of them missing the skills required for revenue managers.
The general manager in a hotel is a key position that should be scrutinised, including what knowledge, competences and experience should the boss of a hotel’s individual managers possess?
Of course, any hotel manager should have solid skills in leadership and motivational skills, as well as hospitality experience. But it should not end there. The role of the general manager goes much further.
In terms of strategy, the typical general manager in a hotel, often insists on having the final say and frequently overrules the advice of the executive management team, based on intuition or gut feeling. Disappointingly, I often hear a GM reverse such decisions, based on his/her years of experience.
Core skills/general skills
We see this also with hotel website design, search engine optimization and social media marketing.
Too many GMs tend to have an opinion on all matters and feel a need to influence all decisions made by their team. They feel with the amount of years they have on under their belt in the industry, they are knowledgeable on all areas.
Instead a GM should acknowledge in which fields they have no experience – for example, the technical aspect of internet marketing – and surround themselves by experts in such field.
The title says it all: “general” manager – it is, let’s face it, a generalist position. We can hardly expect them to know it all.
One thing investors should always be wary of is a GM that tells you they know it all. For example, a GM who tells you they know what a hotel website should look like, and can get a cheap deal to create one, is a potential liability to the eventual ROI.
Instead, look for someone who has good experience with an internet agency resulting in 40% to 50% direct sales.
Same goes for overall strategy. To outperform the market and uncover hidden revenue potential of your hotel asset, look for a GM who has worked with the best revenue, marketing and sales managers and is convincing you to invest in this particular area.
Please don’t go for the one who tells you he can get it done with a junior team managed by him/her. A GM has many areas to overlook, and needs to be able to rely on his executive team to manage the different department.
Instead ask them to show their market benchmark results. Did they outperform the competition in MPI, ARI and RGI (learn more about hotel KPI)?
Have them show proof of their previous performance. Numbers matter. Don’t fall for the beautiful stories hoteliers are none very well to use. It is in their nature to make people feel at ease. Look beyond this and obtain facts.
Last but not least, a GM needs to have good financial business insight. An MBA for the hotel industry would not be out of order.
It is very common in other industries for executives to enroll in a post-MBA program after a few years of work experience to broaden and deepen their knowledge and skills in terms of business administration and economic insight. This is something we think we really should start seeing more of in the hotel industry.
Providing hotel asset management services and revenue management consulting for a wide range of hotels in Europe, USA and Asia, we feel there is a pressing need for more structural career path development for GMs in the hotel industry.
A hotel is a multi-million Dollar or Euro business which requires a CEO-type leader to generate a healthy ROI. We hope our industry will develop into a more professional one in the next few years when it comes to strategic management.
Don’t let the strategy be run just a hospitality professional! It takes more than pleasing guests to make money in hotel, so get a real business manager on board…
NB: More hotel management tips from Xotels.
NB2: Hotel manager image via Shutterstock.
Patrick Landman is a contributing Node to Tnooz and founder and CEO of Xotels. This hotel management group assists independent hotels with revenue management, online marketing and internet distribution strategies.
They offer outsourcing services, coaching, consulting and training. In his blog, Patrick challenges hoteliers to think out of the box and not to accept the established order.
Through a passionate drive for growth and improvement he brings creative tips, ideas and best practices to the table that can help hotels drive up their bottom line.
In previous roles he has helped to develop businesses like RateTiger and Hotels.com into industry leaders.