Select-service hotel GMs have many mouths to feed—and not just the hungry guests that bombard the breakfast bar in the morning hours.
These GMs serve numerous people and entities. Let’s name just a few: Employees, guests, bosses, peers, owners, vendors, asset managers, brand revenue managers, brand training representatives, brand quality assurance reps, local health, building and fire inspectors, management company HR staff, revenue managers, training managers, accounting managers, payroll managers. Each one of these people needs something from the select-service GM, and sometimes all at once.
Jacks and Jills of all trades
They must write, edit and negotiate a group rooms contract, set and execute the hotel’s rate strategy, manage the hotel’s search engine optimization online and forecast revenues, expenses and profit for the week, month and year. They have to be abreast of every new federal, state, county and city law that is created, such as the new Americans with Disabilities Act “pool lift” requirement.
Then, in preparation for the owner’s meeting the next morning, they must dissect and explain each line item in the most recent profit and loss statement. But wait, there’s no banquet department, so they have to help the housekeeping department set up the tables and chairs for the owner’s meeting, which will finish just before the brand quality-assurance representative arrives unannounced for an inspection the next day! Then the night auditor calls in sick.
The select-service GM must have a powerful support team on property, because he doesn’t do it all himself. Although, what some people forget is that these GMs must be able to “step in” at any given moment, in any department, at any time of day when needed. They must do all of the above while accomplishing the “day-to-day” operating functions such as paying the bills, watching the accounts receivable aging reports, reviewing audit reports, reviewing payroll numbers, making the schedules, etc. There is no accounting department on property, no separate HR department, no administrative assistants, no catering sales department and no banquet department—yet, all of these functions still exist at a select-service hotel. These properties’ GMs lead all of these functions, all of which exist to maintain or improve the value of the hotel property.
Boosting property value
In regards to the valuation of select-service hotels, many reports have come out these past several months about the optimism of the hotel industry in 2012. At the Americas Lodging Investment Summit, people were quoted saying “Now is the time to buy,” “Now is the time to hold,” “Now is the time to refinance,” “Now is the time to restructure your commercial mortgage-backed securities loan.” In Phoenix last September at The Lodging Conference, we all discussed the “deals” that were out there. We discussed “discount to replacement costs” and the “cap rate on the trailing 12 month net operating income or earnings before interest, taxes, depreciation and amortization.”
Today, when a property is presented as a possible acquisition opportunity, we discuss the need for “operational efficiencies” as a way to increase property value. Real-estate dealmakers and power brokers ask, “What’s the story about this property?” When asking about the “story,” the answers they are looking for are usually about the “lift” in NOI the property can achieve by renovating it, restructuring the loan, adding rooms or riding the wave of high demand growth and low supply (competition) growth. These “lifts” are calculated on spreadsheets, sometimes without a visit to the property itself. Rarely does the select-service GM or other property staff get mentioned in the “story,” even though they are the main characters.
Yet, a new, talented and committed select-service GM can provide lift on day one. I’ve seen firsthand, numerous times, what one person can do to the levels of employee engagement, expense control, cleanliness, guest satisfaction scores and guest’s intent to return, problems experienced, top-line revenues and NOI. Day one. No renovation, no refi, no “reduction in force,” no strictly enforced new policies or procedures. Just good, solid leadership. These leaders exist at the convenience of their team. Leaders like this will fight for their guests and serve their employees. These leaders don’t think twice when asked to pitch in and help cook breakfast or unclog a guestroom sink drain. This change can happen on day one when those leaders walk through that door. It may be the same select-service GM that has been there for years. Most likely, all that GM needs is wings.
My unsolicited advice: Give them the wings, get out of their way and let them fly. They’ll make you proud and that “lift” will set the foundation for further lift. The rest is icing on the cake.
Adam Zembruski is the president of Pharos Hospitality, a Charlotte, NC-based hotel investment platform explicitly designed to acquire, own and operate franchised upscale select service hotels. Adam oversees all operating entities at Pharos, including Property Assessments and Takeover, Sales and Marketing, Revenue Management, Human Resources and Culture Development, System Implementation, Financial Analysis, and Talent/Performance Tracking. Adam can be reached at 704-333-1818, ext. 12, or via email at azembruski@pharoshospitality.com
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