I tend to talk a lot about our company’s culture and how it differentiates us from our competitors. In truth, nothing makes me happier than when one of my colleagues asks me about it, or someone refers us to an owner because of it.
Hotels with a strong culture have a distinct vibe, a soul, that you can feel the minute you walk in the door. It’s hard to put your finger on it, but you know it when you feel it.
There are some in our industry who scoff that culture is too ‘soft’ and doesn’t contribute to the bottom line, or the long-term appreciation of the asset. I beg to differ. As sure as we’ll discuss RevPAR tomorrow, they’re leaving money on the table.
Those intangibles play a significant role in both the short and long-term financial health of the hotel. A strong culture connects the dots between overall success and the contribution of every stakeholder; investors, management, property supervision, associates, and guests. Culture keeps the scorecard balanced.
Here’s a simple scenario that is all too easy to imagine.
A select service hotel practically oozes the company culture. The general manager, a long-term associate, not only lives the company ethos but thoroughly embraces his brand’s messaging. The staff is engaged and empowered, the customer feedback is tremendous and the hotel ranks at the top of every brand customer satisfaction metric. Even the small bar contributes considerable revenue.
The property is running so well that when an opportunity arises for the GM to make a career move, a new GM is promoted from within the hotel’s ranks. Everyone feels great because they are confident that the hotel will continue to run smoothly and two deserving associates are getting career opportunities. The story is made for TV (or at least the company newsletter) until family issues cause the new GM to relocate and an experienced, technically savvy manager who is familiar with the brand, is hired to take over the reins.
Brand standards, rules, reports, operating policies, and procedures are well in hand, but in a few months’ time, the balanced scorecard is tilting. The ratings slip, revenues slide, even the bar dries up. The location was the same, the rooms and amenities untouched, but the associates were so bound by rules and SOPs that they didn’t feel free to serve, make a judgment call, or do anything outside of the play book. Same hotel. Same rooms and amenities. All the boxes checked, but the staff has checked out.
A successful GM with a balance of technical skills and soft skills is soon found and in short order morale, ratings and yes, revenues return. The cash is flowing better and the lost asset value is restored, which is important, even though the property isn’t for sale.
A company’s culture is like a beautiful buffet table. There’s abundance everywhere; a little something for everyone. But the trays need constant replenishment, or they begin to look picked over, and soon the most popular items are depleted and someone’s getting celery sticks instead of crab cakes.
This morning I asked one of our long-term GMs what the company could do for him. He told me that he needed nothing. He said that the company always provided what he needed; resources, extra help, expertise to run his business. He also said he’d recently been recruited by another management company and that he told them that if he was interested in something else, he’d call them, but that New Castle’s culture of mutual respect and empowerment provided everything he needed to be successful.
To those in our industry who proclaim that they are in the “asset value enhancement business” and dismiss the hospitality business as somehow inferior, or too soft, I’d like to suggest that culture enhances property value and requires the contributions of engaged, positive, professionally trained hospitality associates to accrue the maximum value to the asset.