GLOBAL UPDATE : OPERATIONS
NEWS 05 / 2012 ! and go through all salaried employees . “ During the depths of the downturn we don ’ t need all these people ,” he says . “ Getting back to stabilized times , less than half of these salaried employees come back . Presently , we are down 4 % in occupied rooms , but our management full-time equivalents are still down 22 %, and we expect that to continue forward .”
Geller adds that some hotels have executive committees with 12 members , whereas a typical hotel executive committee might have six members . “ The average cost of an executive committee member fully loaded is US $ 250,000 . If I get two out that is US $ 500,000 ,” Geller explains . “ Put a cap rate of 5 on it , and I get US $ 10 million that is gone forever . No one is talking about it , but this is the reality . We take it to the extreme , and we are on the leading edge .”
Next , Geller wants to attack the marketing budgets . “ We are spending between 8 % and 12 % to acquire a guest , which is a lot of money ,” Geller says . “ I refuse to believe 10 % cost is maximum productivity with a system that calls for having a sales staff at the hotel , placing ads and the corporation doing all they do . And they never take a program away .”
Geller has challenged his team to get a further 200 basis points out of marketing costs , or to get more productivity for the same amount . “ We have put a task force together for social media . I am prepared to experiment and take giant risks ,” he adds . “ If it were me , I would stop all but direct sales and tech-oriented marketing . Everything is consumer marketing , and there are two ways of doing it : knocking on doors for groups and acquiring the most impressions in the world . Because this is such a big chunk of money , it is the last frontier .”
The challenge of managing this reengineered management approach is avoiding letting things sneak back into budgets when the economy improves . “ We have systems to make sure it doesn ’ t happen ,” Britt says . “ We prepare key metrics each month and send them to GMs and regional GMs . Everything that is bad is highlighted in red . They know what we are looking at , which makes it a collaborative way to stay on track .”
There is friction , Britt admits , but Strategic doesn ’ t want confrontation at the unit level . That will come at the regional or corporate levels . “ It is collaborative ,” Britt says . “ We are acting as consultants and auditors in many ways , but it is never going to be ‘ your costs are too high .’ You have to tell them the problem and how to solve it .” In fairness , Geller adds , having only 17 hotels does allow Strategic to spend a lot more time on each hotel to unearth system issues . “ Some owners and operators have 100 hotels or more , so they can ’ t — or won ’ t ,” he says . “ It is a philosophical issue .”
Philosophical or not , the chains are competing for growth , and there are now two dozen mega-owners driving revenue . “ They know it is collaborative from here on ,” Geller adds . “ Four Seasons and Ritz-Carlton have been great , especially with its new leadership . The industry has totally changed in five years , and I am old enough to have seen both sides . This is a different world .”
„ Solid “
Cloches made of glass
Ritz-Carlton Half Moon Bay , California www . zieher . com www . facebook . com / ZieherGermany