The Magic of Metamorphosis: Organizational Change and Inspirational Leadership

They say that our security can only be found in our ability to adapt and he who rejects change designs his nemesis. Corporate culture has undergone radical change, and the need to align business models with these changes has proved a challenge if the right channels of implementation are not used. In the contemporary business environment, challenges have had a new twist due to technological advancements, globalization as well as competition. In such a world, it is not the biggest and most endowed who can thrive but those who will strongly embrace transformation. It is, however, important to remember that people are the stakeholders of change and without the right perceptions, organizational change cannot be effective.

ow to avoid driving away top talent

Imagine the typical home-buying process… but riddled with unexpected gaps in communication, unanswered questions and a sneaking suspicion that the seller is hiding something from you. What if the realtor is hesitant to have a phone call or meeting to talk through issues, but gives you endless rounds of paperwork and questions to complete before you are even ready to consider putting in a bid?

Reasonable buyers would not tolerate this for a decision as important as buying a house. Why do companies think they can get away with perpetrating similar red flags when trying to recruit top talent to their firm? The fact is, they can’t.

As an Executive Search Consultant, I have witnessed firsthand how companies fail to consider how their actions (or inaction) reflects on the reputation of their entire organization and brand. These red flags run the gamut from not answering questions in a timely manner, deflecting hard questions that may reveal weaknesses, unexplained or unreasonable changes in the timeline and wildly inadequate compensation packages that are not aligned with current market surveys.

A-players are quickly turned off by such issues, leaving the company with only B-level candidates at best, or desperate individuals at worst. If a company appears misaligned or disorganized during the recruitment process, candidates can easily infer that the company is likewise disorganized in its decision-making process, and worse still, probably disorganized throughout its daily business and people practices.

Organizations can substantially mitigate the risk of driving away A-players by focusing on three, interrelated issues: setting expectations, transparency and responsiveness.

Setting expectations involves clearly outlining the timeline for the recruiting process, the steps along the way, reporting relationship, exactly what the job entails and the framework for compensation. Of course, it is realistic and natural that some of these details will be “moving targets,” especially for a newly created position. For example, I have filled several positions where a client was willing to pay market or above-market value for potential candidates and extended the time line for the search to allow time for us to research the market rate and prepare recommendations on compensation.
The topic of managing expectations dovetails nicely into transparency. Companies should be clear, candid and comprehensive about the short- and long-term challenges associated with the position in question. Additional clarity should be given about where this individual fits into the organizational chart and the success metrics for the role. If changes are necessary to the timeline, hiring process or scope of the position, organizations must be straightforward about the rationale behind those changes and communicate everything in a timely manner.
Responsiveness is incredibly important throughout the process. Indeed, any perceived apathy or lethargy on the part of the hiring company can derail, if not outright sabotage, recruitment success. As a new recruiter, I tended to be inefficient in the process, and admittedly clumsy with communication at times. However, I focused on being extremely responsive to candidates and clients alike to make up for these limitations. To be sure, it was critical that everyone knew I was diligent in the hard work that defines executive search. Likewise, A-players want to feel like they have a partner in the process — whether that is an internal recruiter, contract recruiter or the hiring manager. Simply put, nothing raises red flags quicker than candidates having to wait an inordinate amount of time for answers to pertinent questions regarding the company, role, process or timeline.
The best thing organizations can do is (i) to ensure that recruiters are armed with enough information to have meaningful conversations with potential candidates and (ii) to empower the hiring managers to have sway in the process. Candidates should not feel like the recruitment process is a series of transactional hoops, but instead feel that the process is about a two-way conversation and vetting.

While technology is certainly changing the way recruitment is performed, technology alone cannot put potential candidates at ease and cajole A-players to accept offers. Indeed, recruiters are partners in finding talent solutions versus resume harvesters. Therefore, recruiting and the hiring process is still accomplished most effectively through personal communication and genuine relationship-building… and those are ultimately grounded in Setting Expectations, Transparency and Responsiveness.

How to Write a Persuasive Hotel Business Plan: Convincing Lenders to Invest in your Hotel

OK, so you have decided to realize your dream and open your own hotel. You have thought out an amazing concept delivering unparalleled guest service. The next step would be to write a hotel business plan. It’s like a road map to the opening. However this is where most entrepreneurs get stuck.

Why? Many do not have the time, don’t know what to write or how to do the financials. But until you finish your business plan, you will not be able to get the financing either. So you end up with ideas sitting in your head not realizing your dream.

Really it is not that difficult to make a good hotel business plan. It is merely a structured summary of your idea. Most people try to include everything about their hotel concept in the plan. This leads to an indigestible super novel like bookwork, aka a mess.

They key is, knowing what to include, and what not to include in your hotel business plan. Create a clear road map for success. Excite investors rather than bore them to death like most business plans full of redundant information do. And you need to lead readers down the exact path you want.

One of the main challenges for example is that after reading the first page most business I often don’t fully understand what the hotel is all about. For investors and lenders it is crucial they can quickly comprehend your plan, without reading the whole document.

We have put together a guideline / template with 10 critical points you must include in your hotel business plan;

1. Executive Summary
This exists of two parts:

Mission Statement: Intro: a 1 line company description only the essence of your hotel (not 2 lines or a paragraph). It explains why you are in business or or which huge need you are solving, that currently is not being met. For example in the case of Qbic Hotels ‘Moving modular hotels into under-utilized real-estate to reduce build-out cost and time.’
Objectives: What do you hope to accomplish? I.e.”Reach an annual occupancy of 90%.”
2. Company Analysis
More detailed information on the USPs (unique selling points) of your hotel concept.

3. Industry Analysis
Information on the current industry trends and the current state of the market and how this will impact your hotel. This is needed as investors want to be sure you really understand the hotel industry.

4. Customer Analysis
In-depth information on your target market, including geographic, demographic, socio-economic, psycho-graphic, behavioral segmentation details. Which are the types of guests who will mostly stay at your hotel? Explain how your hotel will meet the needs of these main segments in terms of location, amenities and services. Basically, how will consumers answer this question ‘Why my hotel?’

5. Competitive Analysis
A study of your local competition or global concept competitors, with each of their strengths, weaknesses, occupancy rates and market share (SWOT analysis). And don’t forget the most important part; what differentiates you from them. What makes you stand-out?

6. Strategic Plan
This exists of 3 parts:

Marketing: How exactly will you attract customers / guests? How will you position yourself? What will your message be to the different segments of your business mix? How will your direct marketing work? What will is the plan for your hotel website, SEO, SEM and SMM? Will you do offline promotion?
Distribution: Which 3rd party channels will you use and how will you manage availability? What technology will you need?
Revenue Management: What pricing and yield techniques will you use? What will your payment and cancellation policies be?
7. Operations Plan
How will you run the hotel? How much staff and supervisors will you need? What are their job descriptions / responsibilities? What background and experience should they have? When should they start? What are your service standards? Will you develop manuals? Which supplier will you use? How will you manage inventory?

8. Management Team
Include the bios of your team. Focus on what uniquely qualifies you to make your hotel such a success.

9. Financial Plan
Provide the start-up costs of the hotel (capital investment), the ingoing business costs, operational expenses and revenue projections for the next five years. Include KPI like expected occupancy, ADR (average daily rate) and REVPAR (revenue per available room).

If you are raising money, outline how much funding will be needed and when. Explain how you will generate a return on investment for investors, or when lenders will be paid back.

10. Key Milestones
These are the most important achievement which once they have been completed, will make your hotel more likely to succeed. Think off:

Location selection
Permits & Licenses
Build-out / Construction of the Hotel
Staffing and Training
Opening
GOP Break-even
NOI Break-even
10% Ebitda
Each time one of the key milestones is achieved, the risk of lenders or investor decreases. And once your last key milestone is reached, chance of success is more or less guaranteed.

11. Appendix
Provide any other relevant information here. Don’t clutter the main sections of your hotel business plan with too many details. Rather support them with attachments in this part.

Many people have great business ideas. But that really doesn’t matter. The difference between dreamers and entrepreneurs is the action mindset. Are you ready to ship your idea to the market?

The first step is to put your ideas on paper. I hope this free sample will help you write a persuasive hotel business plan. Because no investor or lender will be interested if you cannot present a clear plan.

What kind of a Leader are you – a Maker or a Breaker?

The dominant traits of the top most leader in any organization, unarguably, define the shape and personality of the organization as a whole. So whether the top dog is fair, biased, aggressive, assimilative, open-minded and inclusive or clique and coterie centered, insecure or confident, the organization tends to take on similar features and harbour the climate that screams of the same defining set of behavioural facets.

Hospitality industry needs to “plan for the worst” on staff shortages

The hospitality industry needs to “plan for the worst” regarding an imminent labour shortage according to George Vezza, Managing Director, Nestlé Professional UK and Ireland. During a panel discussion at the British Hospitality Association Hospitality Summit 2017, Mr Vezza asked five hospitality professionals how they plan to inspire the future workforce.

He said that the current staff shortage is like “standing on the track knowing that the train is coming” quoting a recent study by KPMG that predicted a 65,000 job shortage per year if the industry didn’t have an EU workforce available.

“Before Brexit staffing was an issue, but now it is going to get a hell of a lot worse,” he said. “Some 75 percent of waiting staff are EU migrants.”

Natalie Cramp, Chief Operating Officer, Careers Enterprise Company said that brands need to open their doors to volunteers. “People volunteer because they want to see what you can offer them and the pathways,” she said.

Ms Cramp also encouraged businesses to “tell their stories better” by going into schools and showcasing the industry. She said: “Get role models into schools and start changing perceptions. Bring someone in who started on the shop floor and worked their way up to the top. I think we have got more of those stories of progression than any other industry.”

Nikki Kelly, Employment and Skills Manager, Tottenham Hotspur Foundation shared Ms Cramp’s enthusiasm for volunteering. The operation recently took on a catering stand in the northern section of the stadium where 12 volunteers can work on match days. “It does better than any other kiosk in the grounds because it supports young people and has become a great employment mechanism.”

Oliver Crofton, founder and CEO of staffing agency Flexy, said that businesses need to appeal to millennials by offering flexible working. “Gig Economy is a temporary, task-based work,” he said. “It’s often given a bad rep because of the few companies that are exploiting it, however, it offers work on a casual basis and that’s what the modern workforce want.”

Andrew Parkinson, Operations Director, Liverpool Football Club said they also rely on flexibility and regularly visit colleges and schools to celebrate the industry. “We recently went out to colleges and assessment centres and spoke to 5,000 people about the club, how they can get involved and start them thinking about entering the industry and starting a career with us,” he said. “One of the most important things is that we offer millennials flexibility and recognise their needs. We have done our best to make jobs available to a widest spectrum as possible.”

Sophie Kilic, Senior Vice-President, Talent and Culture, hotel services UK and Ireland for AccorHotels highlighted an importance in employing a diverse workforce. “If you want to grow as an industry you need to tap into a diverse workforce. For the first time we have promoted as many female general managers as men which is huge for us,” she said.

AccorHotels aim to achieve a total of 35 percent female senior positions across the brand.

Source: http://ehotelier.com/global/2017/06/08/hospitality-industry-uk-staff-shortages/

Getting Your SWOT Analyses Right

Most of us have probably taken part in a whole boatload of SWOT analyses. Certainly, in my time, companies and staff have shared numerous SWOT analyses with me. They all seem rather basic, Marketing 101 kind of stuff. Yet, just because SWOT analyses are basic does not mean that most companies carry them out well, or that they even get them right.

Just How Unique Are Luxury Hotel Guests? – By Marissa Rasmussen

Our latest hotel report, From Search Engine to Booking Engine, in collaboration with Google, garners a view of the hotel guest’s journey over the entire path to booking. However, not every guest and their pre-booking behaviors are alike. Here we highlight our findings on the luxury hotel guest and offer ways hoteliers can influence these guests on their path to booking:

1. On average, luxury hotel guests conduct more searches than more economical segments.

A luxury hotel booking is usually a more expensive purchase, and these travelers want to make sure they are making the best decision. Ensure you are staying top of mind during these extra searches by creating ads that reassure them that your luxury hotel will create the most enjoyable experience for them.

For example, Solage Calistoga does a great job showcasing their luxury property through their ads while reassuring guests that their vacation will be a getaway.

2. Luxury hotel guests start their hotel planning much further in advance than other segments.

60+ days out, luxury travelers perform more searches than other segments. Consider how your hotel segment impacts the path to purchase so you can increase your brand’s presence at moments when travelers are likely to be influenced. For example, if you know your luxury guest will begin searching 60+ days before arrival, start impressing them with ads while they are at the top of the funnel, and continue to nurture them throughout their entire path to book.

Loews Hotels “Room You Need” campaign did a great job of reaching travelers at each stage in the funnel by using certain Instagram photos taken by guests as the basis for its print and digital ads. It was a way of showcasing real-life images of authentic guest experiences at Loews, and that’s the perspective that a potential guest wants to see.

3. Luxury hotels see lower shares of mobile searches, averaging 45% of all searches, but mobile queries are growing rapidly with 23% YOY growth.

It may not be surprising that mobile searches are on the rise since smartphones have enabled us to have information at our fingertips no matter where we are. According to Skift, 40% of global travelers use mobile devices to shop for travel. To capture these luxury travelers early on in their planning and dreaming phases, implement a multi-platform strategy: prospect and retarget users with display, mobile, YouTube, Facebook, native ads, and more.

The New Norm in Global HR Competencies

PAST:

The competency profile of professionals in Human Resources (HR) roles has always been a moving target, consider the various names the function has taken over the decades – staffing, personnel, human resources, and more recently, more creative monikers like ‘people and culture’ to ‘human capital managers’ and ‘talent resources’.

These changing names typically reflect the changing market or business conditions impacting organizations.

For example, unions formed in the mid-19th century in response to social and economic effects of the industrial revolution, which subsequently motivated businesses to think and act beyond simply hiring and firing in order to consider the broader and more complex issues of managing both labour pipeline and relations.

As the “war for talent” blossomed in the 1980s and became fierce from the 1990s onward, companies often faced a job-seekers’ market and found themselves needing to “sell” themselves and the opportunities they offered to the marketplace of workers.

As a result, many forward-thinking organizations invested in specialists to help build engagement via learning and development programs, as well as working with organizational leadership to maximize effectiveness.

PRESENT:

Despite the occasional advances, HR has been traditionally perceived and treated as an administrative cost centre versus a strategic profit centre – sadly a trend that has continued in recent times. Indeed, even Wikipedia defines a human resources department in this day and age as, “overseeing various aspects of employment, such as compliance with labour law and employment standards, administration of employee benefits, and some aspects of recruitment and dismissal.”

Up to about five years ago that characterization, at least in the hospitality industry, was perhaps justified by independent psychometric profiling of HR pros across their Execution, People, and Cognitive skills.

In particular, AETHOS’ prior global testing of HR leaders (conducted 2011, n = 1,000) using the 20|20 Skills™ assessment showed that most profiled as “Motivators” – those especially effective in general people skills and motivating team work with a focus on producing tangible outcomes.

Of course, missing from that equation was the Cognitive skills element, given that often HR often did not exhibit or rely on its own decision-making but rather conformed to the directives, rules, and regulations set by senior management or government requirements.

Of course, that prior equation is changing too. Organizations are facing increased consolidation and culture merges, competency issues, as well as evolving employee expectations. HR pros are increasingly becoming to be seen as subject matter experts in the care and feeding of organizational culture and as a result their job descriptions have graduated from administrative levels to strategic ones to include responsibilities such as:

• Competency modelling, bench-strength, organizational structure and retention
• Proactive talent pipeline and succession planning for leadership roles
• Team member engagement and culture branding to external audiences
• Learning, development, mentorship, coaching programs within and across functions
• Facilitation of IT and other technology to streamline all of the above

Current psychometric studies support the idea that today’s HR leaders need to function less as “Motivators” and more as “Achievers” – those endowed with strong Cognitive ability along with Execution and People skills. Cognitive ability is more than being “book smart” and involves the ability to reason, plan, solve problems, think abstractly, comprehend complex ideas and learn quickly). It is a competency that all modern leaders (notably C-suite) exhibit, and its especially pertinent in today’s market which is dominated by dynamically changing variables and substantial ambiguity.

AETHOS has recently profiled more than a 1,200 HR leaders from around the world. Figure I gives their scores (scaled 0-100, mean of 75) across ten core competencies that independent studies validate as significant predictors of performance in the service-hospitality industry.

The graph surprisingly indicates that modern HR pros look increasingly like CEOs and decreasingly like their peer set from five years ago. In particular, 20|20 Skills psychometric testing reveals that today’s HR industry leaders are adept generalists across Execution, People and Cognitive skills, with particular strengths in Cognitive ability and process-orientation.

Indeed, HR leaders have become – or perhaps finally have freedom to act as – balanced and independent thinkers and problem-solvers. Rather than administrative tacticians, this is the profile of organized, measured, confident leaders with the mental acumen to contribute meaningfully to strategic business discussions.

FUTURE:

As long as business conditions remain in constant flux, involve lingering ambiguities and present new complexities that require right- and left- brain thinking from HR, it seems unlikely the new competency profile for HR pros presented here will change dramatically.

If anything, we predict that both the Problem-Solving and Creativity aspects of Cognitive skills will only increase in order to meet the challenges and opportunities yet to hit the industry.

Therefore, we strongly recommend that organizations screen and select candidates for HR leadership roles, in part, with tools or processes that test for balanced and effective competencies in critical-analytical thinking and strategic-big-picture orientation. The idea is to identify individuals who are effective general problem-solvers, as opposed to merely subject matter experts.

This all ties to the foremost topic that seems to dominate conversations and presentations at industry conferences, i.e., the idea of trying to identify the most likely industry disruptors coming to the industry and how businesses should best prepare to navigate them from business and leadership perspectives.

Since it is impossible to predict confidently specific changes or challenges, it is more important to identify and add to an organization’s talent base those individuals who can effectively and efficiently deal with dynamic and uncertain variables and forces, regardless of origin. This translates to high levels of tolerance of ambiguity, grit-resilience, emotional intelligence, behavioural integrity, and as shown in the graph, both balanced and high levels of general cognitive ability.

Perhaps this new norm in global HR competencies is not so surprisingly after all. Ultimately, organizations need HR leaders who think and act like business owners and apply their subject matter expertise systemically or cross-functionally, as the behind-the-scenes dynamics and corporate cultures are more open, transparent, and indeed public in a social media sense than ever before (think Glassdoor, LinkedIn, Facebook, etc.).

HR expertise offers significant value to inform other functions from sales and marketing/PR to Boards of Directors and the senior-most leadership who set strategic direction for the company. The new competency norm understandably follows from new business norms.

Who knows what new names for HR will be introduced in the decades ahead, but given the changes we have seen, HR leaders in our view fundamentally add enterprise value by serving individuals and teams within organizations as “cultural strategists”.

Source: http://www.4hoteliers.com/features/article/10018

Hostel market in America: Potential for growth

What is a Hostel?

Hostels offer low-priced accommodations with a unique social component, guests rent a bed rather than a room, sharing the space with up to five other guests, some hostels include private bathrooms and kitchens in every room, though most hostels have a common bathroom area with no kitchen facilities.

More than 4,500 hostels are spread throughout Europe, with the highest concentration in the densely populated destination cities.

The first hostel originated in 1912 in Germany, and that country boasts the highest number of hostels today.

Success in the European Market

Historically, the European hostel market consisted of small owner-operated assets, with backpacking leisure travelers forming the bulk of demand. Over the past two decades, the flow of private capital coupled with the operational experience of larger lodging companies has improved the quality and service levels of hostels throughout Europe.

The corporate-run hostels are referred to as “upscale” or “boutique” hostels. These properties are managed and operated by large companies that bring in operational structures, brand standards, and efficiencies akin to those of a major hotel brand. Some of the “upscale hostels” comprise more than 500 beds—much larger than the standard 75 to 150 beds at a traditional hostel.

The move to more upscale hostel accommodations has expanded the sources of demand from backpackers to corporate travelers who seek extensive food and beverage outlets and a social atmosphere not available in the limited- and select-service hotel space.

Since the mid-1990s, brand-managed hostels have been successfully developed in London, Paris, Barcelona, Berlin, Amsterdam, Rome, Prague, and Venice. Development of these properties has grown exponentially over the last two decades, with future development expected to come at an even faster pace.

Hostel Metrics

Hostel performance metrics for occupancy and average rate are expressed “per bed,” versus “per room” for traditional hotels. Hence, operators and analysts look at RevPAB (Revenue per Available Bed) versus the industry standard RevPAR. Hostel appraisals also consider market value estimates based on a “per bed” metric, which is comparable to the “per room” metric for hotels.

Hostel occupancy levels generally mirror those for limited-service hotels, though occupancy decreases at hostels as the average number of beds per room increases. However, average room rate (which equals the average rate per bed multiplied by the average number of beds per room) for a hostel is higher than the average room rate for a hotel.

Therefore, RevPAB will exceed the comparable RevPAR when considering a single room/unit. This results in a greater revenue stream for hostel assets versus hotel assets, which is a key factor in their development and popularity with developers and investors.

International Hostel Brands

A majority of the well-known hostel brands are headquartered in Germany and England. The accompanying chart presents hostel brands with presence in multiple countries (the Hip Hop brand, which does not have a presence outside of Paris, is not represented).

Nearly all of the major cities in Germany feature hostels, but the hostel market is underserved in virtually every other European country, where hostels exist in only one or two major cities.

Major Hostel Brands in Europe

Note: Tick marks indicate the number of hostels in each city

Proposed Hostels

This illustration, which shows a relative lack of hostel operations in major markets across Europe, illustrates the potential for the hostel market, with development expected to expand over the next decade.

Hostel Booking

Online travel agencies (OTAs) represent the majority of all hostel bookings. The OTA Hostelworld, which currently has the highest market share for hostel bookings, has drawn fury from smaller owner-operated hostels for raising commission rates for bookings. Until hostel brands gain worldwide market recognition, however, OTAs hold the cards and will remain the chief source of bookings. Other OTAs include Hostelbookers, HostelsClub, and Booking.com, as well as HI Hostels, which is a global network of hostels.

Europe’s Famous Hostels is an association of individually owned independent hostels. Similar to Preferred Hotels & Resorts and Leading Hotels of the World, Famous Hostels represents high-rated assets that feature prominent locations in major European cities. The association was founded in 1995 with five hostels and its portfolio has expanded to more than 50.

Hostelz works similarly to Kayak, displaying results from Hostelbookers, Hostelworld, and some other booking sites, and directing the user to the hostel with the cheapest rates. Hostelz currently has a database of nearly 44,000 hostels in the U.S. and Europe.

Ingredients of a Successful Hostel

A successful hostel development must include the following elements to entice demand:

In addition to the above, most boutique hostels provide flexible room types, including (1) separate rooms for male and female travelers, (2) dorm rooms that can accommodate up to six beds per room, (3) private rooms for up to three travelers, (4) single rooms, (5) en-suite rooms, which include a private bathroom, (6) twin rooms, which offer one bunk bed, and (7) double rooms, which offer one double bed.

This product flexibility is critical to the success of a hostel operation. Hostel guests may travel individually, as couples, or in groups of six or more. The availability of everything from en-suite individual rooms to larger dorm rooms provides guests with plenty of options based on their requirements.

An American Brand of Hostel

The NYAH (Not Your Average Hotel), located in Key West, Florida, and managed by SMS Lodging, is a hybrid product between a hotel and a hostel. The owners of this asset and the NYAH brand, Mr. Jesper Arnoldsson, CEO and Mr. Gustaf Arnoldsson, CFO, created the model to appeal to group travelers who were looking to pay less per person without sacrificing the experience of staying in a traditional hotel.

The NYAH features custom beds, designed and manufactured in Europe, which can be converted into bunk beds, couches, or single kings. NYAH also features characteristics akin to boutique hostels, including group-friendly accommodations, communal spaces, a pool, and beverage services.

Current Hostel Market in America

The current hostel market in America is limited to owner-operated properties, youth hostels, and not-for-profit hostels. Traditionally, the youth hostel represented an inexpensive, basic accommodation provided to enable people less than 18 years of age to travel in groups to rural or countryside destinations. Youth hostels and owner-operated hostels comprise dormitory rooms with between four and six beds and do not include private rooms or twin/double rooms.

While American travelers may readily stay in hostels in Europe, the default option when traveling within America is to stay at a motel or a budget hotel. Mr. Jesper Arnoldsson recognizes that meeting, socializing, and sharing experiences with new people propels the hostel culture in Europe. This culture, he says, has to be fostered by hostel developments in the U.S. that include communal spaces and provide a vibrant social atmosphere for guests. Currently, there are no high-end boutique hostels in America (with the exception of Freehand, featured below) and the lower-end U.S. hostels do not have such socially charged communal spaces.

Some elements of the European model, however, simply aren’t replicated in America. The long distances between major U.S. cities and the lack of efficient, inexpensive public transportation options (such as the Euro Rail) create a scarcity in the backpacking demographic—a cornerstone of hostel demand.

Hostel Development Potential in America

Issues of geography and transportation infrastructure aside, there is considerable pent-up demand for hostels in many major U.S. cities. Mr. Paul Harries, CFO of Generator Hostels, claims a boutique hostel development would be a game changer in certain cities in America.

These include New York, Boston, San Francisco, Los Angeles, the District of Columbia, Miami Beach, San Diego, and Austin, and to a lesser extent in New Orleans, Seattle, and Portland, Oregon. Mr. Harries also indicated that the American customer has to be imbued with a sense of the benefits and experiences of hostels and their distinction from traditional hotels.

One considerable obstacle to the hostel market’s growth in New York City is a law that prohibits more than three unrelated people sharing purchased accommodations. This law was enacted during the mid-20th century to prevent overcrowding and irresponsible landlord behavior, as well as to encourage the conversion of boarding houses to family homes.

The law, which forms an impediment to new hostel development, can be amended only by the local city council. However, sentiment seems to be moving in this direction. Hostels in New York City, home to the nation’s highest rents and a population of more than 8 million—many of them millennials—would benefit.

Corporate/branded hostel development could also be profitable in major markets of Canada, where the hostel landscape is dominated by currently smaller owner-operated properties.

Europe presents continued opportunities for growth, especially with an increased focus on density and economies of scale within and near the existing footprint of hostels. Meanwhile, the U.S. represents a vast market with virtually no competition in the shared accommodation space, though with some infrastructural and legal hurdles possibly impeding growth.

Freehand and Generator Hostels: Heating Up Miami Beach

The success of the Sydell Group’s Freehand Miami property, which Condé Nast Traveler referred to as the “upscale hostel,” demonstrates the expanding demand and potential in the U.S. hostel market. Occupancy at the Freehand Miami averages over 80%, with average rate per bed commensurate with that of Europe’s top boutique hostels.

The hostel opened in December 2012 and was designed by Roman & Williams, the team behind New York’s trendy Ace Hotel. In line with the elements of a successful hostel outlined above, the Freehand Miami offers food and beverage options, a swimming pool, a variety of shared rooms, and space for social gatherings, all at an affordable price in the heart of Miami Beach.

Freehand Miami’s popular Broken Shaker has ranked among the world’s best bars since 2014. The Broken Shaker has also been referred to as the “Best American Hotel Bar” and was twice a semifinalist for the James Beard award. This level of recognition, which might be expected of the world’s top five-star hotel properties, is remarkable for a relatively inexpensive hostel accommodation.

After the success of the Freehand Miami, the Sydell Group opened the Freehand Chicago in June 2015, with the Freehand Los Angeles slated to open in December this year. Freehand is the only true boutique hostel company in America that has followed the operating model of some of the corporate-owned hostels in Europe.

London-based Generator Hostels, which operates a portfolio of luxury-boutique hostels in Europe, is in the process of converting a condominium building to a 406-bed hostel on Collins Avenue in Miami Beach. Generator opened its first hostel in London in 1995/96 and currently operates 12 hostel properties, including a 550-bed hostel in Madrid. The Generator Miami will be the company’s first hostel in North America.

The Generator Miami will be positioned as an upscale boutique hostel on par with the Freehand Miami, representing the upper end of the hostel segment in the U.S. The Generator Miami is expected to achieve an occupancy rate of 75% and command an average bed rate in excess of $50.

According to Mr. Paul Harries, CFO of Generator Hostels, Miami Beach was chosen as the initial destination in North America due to its widely famed leisure, nightlife, and entertainment attractions; its popularity with European travelers; and high hotel average room rates, which can exceed $200 for limited-service hotels during the peak winter season. The hotel is expected to offer an average of four beds per room, with an inventory made up of 30% private rooms and 70% dormitory rooms. The property’s private rooms are aimed at American travelers, who tend to travel in groups versus their European counterparts, who more frequently travel alone.

Notably, while the Generator Hostels brand does not target the corporate traveler, the Generator Miami is anticipated to cater to some corporate tastes with its private room options and upscale amenities. Families with two children normally require two standard hotel rooms, whereas a private hostel room with two bunk beds should be sufficient to accommodate a family and also cost considerably less.

Currently, Miami Beach has seven traditional hostels totaling 1,140 beds, resulting in an average bed count of 163. However, these hostels do not approach the quality level of the upscale boutique hostel brands; they also lack the depth of amenities available in the Freehand Miami and the proposed Generator Miami, giving these properties an advantage with more upscale segments of demand.

Financial Benchmarks of Hostels versus Budget Hotels
Upscale boutique hostels offer accommodations on a level superior to most budget and midscale limited-service hotels and will compete heavily for the leisure segment of demand. The Freehand and St. Christopher Inn brands derive approximately 50% of their revenues from food and beverage sales. As profit margins are high with beverages, a greater proportion of total revenues flow to the bottom line.

The higher number of guests capable of occupying a hostel versus a traditional budget or midscale hotel brings potential food and beverage revenue even higher and increases other ancillary revenue streams. Hence, hostels can produce higher revenues and net income streams versus traditional budget or midscale hotels constructed on a similar footprint.

Conclusion

Upscale hostels bridge a gap between traditional hostels and lifestyle hotels. For one, the upscale hostel provides relatively inexpensive accommodations along with amenities expected at branded lifestyle hotels, including Wi-Fi access, swimming pools, and trendy décor. Secondly, first-rate hostels like the Freehand Miami offer a variety of room accommodations and communal spaces aimed at drawing demand from solo millennials, families, and corporate travelers alike.

Because of their increased profile in U.S. travel markets such as Miami Beach and Chicago, private investors, including Patron Capital, have taken notice of hostel developments and formed partnerships with international hostel brands. Factors such as the attractiveness of upscale hostel assets like the Generator Miami and the lack of competitive supply are likely to lure more investors looking to obtain attractive returns.

Source: http://www.4hoteliers.com/news/story/16544

Keys to Success: Employee Satisfaction.

Without a satisfied hotel staff we have no foundation upon which to build.

At the recent Marriott owners meeting I attended in December, when asked what will make Marriott hotels successful, Bill Marriott said that the key to success at a hotel is to take care of our employees because employees will in turn take care of our guests and our guests will come back.  I could not agree more so here are some thoughts on how we should walk that talk.

Leadership
Strong leadership is one of the areas we focus on within our hotels to promote a positive environment. Attitude starts from the top and trickles down to everyone else. Good managers/supervisors with a hands-on approach can build teams up and help grow individuals. When employees have someone to lean on, learn from, and that listens to them, they are much more satisfied and their quality of work significantly increases.

As an example, our front desk staff has some of the most challenging work on property as they interact with our guests more than anyone else. This makes their jobs extremely important to the success of our hotels and as such, their satisfaction in the workplace is paramount. Whether it is assisting with a guest issue or covering the front desk while an employee is on break, it is the littlest things that can make the biggest difference.

As most of us know, employee satisfaction extends well beyond front desk agents to housekeepers, maintenance staff, and all other employees be they managers, supervisors, or line level employees.  What could be perceived as the smallest interaction between an employee and a guest could create a lifetime of memories translating into a loyal guest, referral business, or an excellent TripAdvisor review.

The phrase “that’s not my job” is a killer for a hotel, restaurant or frankly any service business. Likewise, a title does not limit one’s ability to assist in other departments. Seeing a General Manager cover the front desk or a Director of Sales helping room service clear trays may not seem significant on the surface, but it sends a unifying message to the entire team that we have each other’s backs. Teamwork breeds satisfaction.

Recognizing the team for doing a good job is equally important in overall employee satisfaction. Individual accolades are always nice for a positive guest comment or a job well done. Setting goals for the team as a whole creates key performance indicators (KPIs). Whether these goals are for perfect sells in a given period or reaching a certain TripAdvisor ranking, these KPIs give the team something to strive for that can then be celebrated together as a team once the milestones are achieved.  An ice cream social or bringing in lunch is not that expensive and will pay dividends in terms of increased revenue well above and beyond the cost of these functions.

As was discussed in Ken Blanchard’s One Minute Manager, leadership behavior that acknowledges someone for having done something right will stimulate the team as a whole. Unfortunately, many managers see their role as correcting behavior only when it is wrong. We have all worked for the manager that was always on our case when we made a mistake, was slow to give praise for having done something right and rarely said, “good job.” Good Leadership is always noticing when someone does something right and makes mention of it. Blanchard also promoted “management by walking around” which in our business refers to checking restaurant service in process, inspecting rooms and working “in the trenches.”

In Service America by Karl Albrecht and Ron Eke, “moments of truth” was a phrase coined by Jan Carlzon, then president of Scandinavian Airlines, to reflect moments of customer service interaction. As such, every service encounter that a team member will make and every expectation that leadership has must be communicated and reinforced. When a team member has clear expectations from leadership, job satisfaction greatly increases and service scores soar.

Labor Costs
Fiscal health is another leadership responsibility item that requires guiding the organization toward profitability. Line managers and department heads sometimes lose sight of the fact that their decisions have financial impacts on the business. Leadership must always be caring and compassionate but today’s worker compensation costs, insurance costs, energy costs and labor costs may cause a business to fail. If that occurs, human conditions like layoffs, bankruptcy, foreclosure or hostile takeover will be much worse than the stress of dealing with and reigning in expenses.

One of the easiest ways to add stress to the team is by understaffing the hotel. Labor is one of our biggest costs as hoteliers and while we need to be diligent in managing labor levels, cutting hours only to save a few dollars leaves a heavy burden on the team and may actually be detrimental to the hotel’s financial performance in the long run. A stressed out team is not only bad for internal morale but also noticeable to guests. Alternatively, an adequately staffed hotel with satisfied employees is not only evident to our guests but tends to be acknowledged via social media platforms that provide terrific exposure for the hotel.

We are in the service industry. This means that despite the cost of labor and benefits, we need to provide good service to our employees as well as our guests. Employees who are satisfied at work, show up with a positive attitude, receive strong guidance, have clear expectations and are recognized for their efforts convey these attributes to our guests and provide a substantially better service experience.

After all, employees want to feel valued, cared for and respected.  Give them that and they will go above and beyond every time.  By ensuring that our service is top-notch, we are setting our hotels up for success not only in 2016, but for years to come.

Source:http://www.4hoteliers.com/features/article/9572