Category: Human Resources
By John Murtha
I was on temporary assignment recently at another hotel in our company that was between general managers. This historic property had joined us less than a year before I arrived and one thing that immediately impressed me was how quickly the associates had bought into our way of doing business. They operated like they’d been part of the “family” for a long time.
While still on that assignment, I came across a Harvard Business Review blog posting titled “Your Company Is Not a Family”. It caused me to wonder if using the term “family” about our business was inaccurate and that, as asserted on the blog, we function more like a “team”.
This blog posting maintains that successful teams assemble talented individuals into high performance groups with the intent to win games and championships. Team members may come and go over time but the identity and commitment of the team is consistent. There is no assurance of guaranteed employment, yet trust is bred in an atmosphere of “team success” over “individual glory”. And, even when team members move on, their alumni status is honored.
In this model, one thing that’s found is continuity of senior leadership, represented by the team’s owner, managers, coaches and certain players. Robert Kraft and Bill Belichick of the New England Patriots exemplify this theory. So do David Ortiz and Tom Brady. Between 2001 and 2017, their teams won three and five world championships, respectively, even though in both cases they were the only players left from the first championship season. Every other player changed but winning continued.
Conversely, families are expected to maintain a “lifetime relationship with a sense of belonging”. While this “sense of belonging” certainly describes what I’ve experienced in some of the hotels in which I’ve worked over the years, there were times when change was needed and I’ve had to dismiss people for non-performance. Would I dismiss a family member? I don’t think so. Would I want a family member to leave to join another family that offered them more opportunity? No!
When I initially wrote about this topic on my HOTELSmag.com blog, I received 8 reader responses. Two agreed with the “team” concept, two said it could be both family and team, and four said it was “neither” or something in the middle. No one came down firmly on the “family” side of the debate.
Taking my research a bit further, I found lots of opinions posted on-line about this topic. Edward Kim, co-founder of Gusto, wrote a response that disagreed with the “Your Company is not a Family” blog, stating “unlike a team, which must always optimize decisions that will result in the shortest path to their goal, we’ll often optimize decisions to do the right thing for our family.”
In contrast, a rather blunt statement from Reed Hastings, CEO of Netflix, reads: “We’re a team, not a family. We’re like a pro sports team, not a kid’s recreational team. Coaches’ job at every level of Netflix [is] to hire, develop and cut smartly, so we have stars in every position.” This perspective is reinforced by another Hastings quote: “At most companies, average performers get an average raise. At Netflix, they get a generous severance package”.
Stacy French Reynolds of business consulting firm Anchor Advisors believes that you should “treat your team like staff, not family”. This requires building and maintaining a corporate culture that incorporates many of the “positive aspects of a family” such as caring for one another, but “without incorporating the negative aspects” like prioritizing individuals above the health of the enterprise. Your company’s culture should be based on a set of values that have been identified as essential to success. Integrity, excellence and creativity are examples of corporate values.
In my company, we place great emphasis on responsible financial management, creating memorable experiences for guests and treating each associate as a valuable contributor. These and other qualities are known as our Core Values; they have existed for a very long time and drive everything we do. So, when we interview candidates for positions within our company, we talk about these values. All new associates learn more about them during orientation. Annual performance reviews measure how well each one of us model and promote the Core Values. And, people are rewarded for living them out each day.
Successful companies seem to have an enduring culture with a documented set of values that’s extremely well communicated throughout the organization and put into practice every day by all associates. In such an environment, people may come and go, but they’ll always feel cared for and appreciated while the company continues to thrive.
Omni Hotels & Resorts Core Values
Marriott International Core Values
When I wrote the HOTELSmag.com blog in 2014, it was titled simply “Family, or Team?” Having since had the benefit of learning the opinions of industry colleagues, doing further research and assessing my own experience, I now recognize that “either/or” isn’t enough. It’s really about having a solid culture that incorporates positive aspects of families and teams around a central set of core values.
John D. Murtha, CHA, is a 37-year veteran of the hospitality industry. He is currently General Manager of the Omni Parker House Hotel in Boston, the longest continuously-operating hotel in America. He has been an adjunct lecturer in the School of Hospitality Administration at Boston University since 2001. He was recently inducted into the Hall of Fame by the Massachusetts Lodging Association. John graduated from the Hotel Administration program at the University of New Hampshire, where he is currently a member of the Hospitality Leadership Council and Advisory Board.
By Joseph Khairallah and Andrea Foster
To investors, hotels are real estate. At the end of the day, why do investors put their money in hotels vs. other types of real estate? For the prospect of superior investment returns – the current operating cash flow and the reversionary value upon exit (sale) in excess of acquisition price. Among other factors, the underwriting of hotel investment considers a reasonable – or at times, aggressive – net operating income (or EBITDA), an appropriate capitalization (cap) rate applied to that net operating income to determine an asset’s valuation, and various equity and debt alternatives to determine an equity multiple and rate of return satisfactory to the investor.
It is like a real-life game of Monopoly. Do you want to build a hotel on Connecticut Avenue, or buy one on Park Place?
But what is sometimes overlooked is the game of “Operation” that supports the game of “Monopoly” in hotels, e.g. the physical appearance and condition of the property (the “bones”), the operational systems, the people, the expertise, the round-the-clock attention to details, and the personal service. After all, it is this combination that generates the NOI that factors so heavily into a hotel real estate investment.
Perhaps one might call it the “softer side” of the hard numbers, but operations are by no means “soft”. Unlike other commercial real estate, hotels are 24-hours-a-day, 365-days-a-year living, breathing operations that require an exceptionally experienced, highly skilled, and effective management team to be successful in the games of both Operation and Monopoly.
When it comes to hotel operations, the approach can often be categorized in two ways: one that drives long-term value, and one that drives short-term – and as a result, unsustainable – value. Using an analogy from the game of Operation, this short-term approach could be like removing organs in an effort to lose weight and as a result, dropping dead, compared to living an active, healthy lifestyle daily to achieve optimal wellbeing (long-term). There are certainly operators that take a short-term approach to try to build investment value and, for example, could drive a short-term profit result by eliminating staff and services, but also compromising a quality guest experience as a result. Our focus herein is on driving long-term value in hotel investment.
The widely-discussed “3 Ps” of business success are: People, Product, and Profit. Use your People and Product to increase revenues and decrease expenses and to create an increase in Profits. Correct? Well, true. But it is not so simple.
One of our best-practice approaches to effective hotel operations is to make significant investments to drive quality, engagement, satisfaction, and loyalty – of our guests, of our associates, of our investment partners. Here are a few specific examples of the types of investments that pay off in the game of Operation, and also, ultimately, in the game of Monopoly.
Invest in attracting People with high personal standards. As part of focusing on quality throughout an organization, bringing together a team of passionate hospitality professionals with high personal standards is a recipe for ultimate success. High standards among individuals results in high standards within a team, and is demonstrated with exceptional service, positive guest reviews, achievement of awards, which all translate to higher revenues.
In the hotel business (operations), the differentiation is service and the product is people. The business of hotels (investment) cannot exist without this combination as a foundation.
Invest in your People. As former Apple CEO Steve Jobs famously said, “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do”. After smart, high-caliber professionals and associates have been hired, the investment remains a continuous process. For example, it is of critical importance to take great care of associates, who will then take great care of our guests, as their overall high job satisfaction leads to improved performance. An industry colleague once said, “You sweep with your heart“. Hospitality comes from the inside-out. It is not about the task you do, it is how you do that task. By being personally invested, one reaps intrinsic value in addition to economic value from their work.
Frequent and consistent training is another critical aspect of investing in associates. People cannot be expected to do a job well if they do not have the proper tools and training to complete their job to a standard that has been clearly outlined. Training from the corporate and property levels, especially to staff who interact most frequently with guests, is an important factor in ensuring the operational success of a hotel.
There is also the investment in associates’ wellbeing. For example, turning associate dining rooms into “Family Rooms” to create a warm, welcoming and beautiful space offering healthy food and helpful resources for associates where they can refuel, rest, reconnect, reenergize, and ready themselves to continue to create the best possible experiences for guests.
Invest time to ensure understanding. Long-term relationships and resulting loyalty require a clear understanding of what is expected of and by each party. From our People to our guests in our hotels each and every day to our investment partners, taking the time to understand the unique goals and desired experience of each is critical to meeting – and exceeding – expectations.
Invest in team collaboration. A hotel management company and its on-property leadership is comprised of a team of subject matter experts and their internal (and sometimes, external) resources – from sales to revenue management to food and beverage to recreation to accounting to information technology to engineering to strategic operational oversight to project management. By harnessing these valuable resources and working in teams – where egos are checked at the door and the result of the whole is greater than the sum of its parts – communication is enhanced, more creative solutions are reached, implementation is more expertly executed, and desired results are achieved in a smoother process.
Invest in quality, with a focus on value. It is not about seeking the least expensive solution to value-engineer expenses – the cheapest lightbulb, the lowest-price food ingredients, the lowest-cost service provider – it is about value. In company-wide procurement from FF&E, to operating supplies, to amenities, to ingredients, we find that investing in quality for effectiveness and lasting performance generates the greatest return on investment.
Invest in the physical Product. As investors in addition to operators, we think like owners. From a meticulously planned and executed renovation to the care taken in everyday maintenance and cleanliness, taking pride in showcasing a quality property is the foundation of operational excellence. Exceptional service can overcome some physical shortcomings in a property for an unsustainable period of time, but then excellence is always an uphill battle. Investing and reinvesting to ensure the physical product is in sync with the service experience, and vice versa, is another driver of long-term success and value.
Invest time in the details. The difference between ordinary and extraordinary lies in that something extra: the details. Whether it is the extra personal hospitality extended to a guest based on truly understanding their needs and delivering the service accordingly, or paying careful attention to the details in a contract for supplies to service the hotel and its guests, or any number of other examples, attending to the details is a set up for success.
Invest in measurement, as you can only manage what you can measure. Investing in systems and processes that measure the effectiveness of your actions results in a “win”. Whatever the result of a measurement , it either reports that the system or process is producing the desired result, or provides feedback for improvement.
As labor is the greatest expense in a hotel, our investment in evaluating and adjusting human processes, systems and associate behaviors to establish the greatest efficiencies has been highly valuable, resulting in sustainable improvements in profitability within our hotels and departments. Coupling these measurable efficiencies with a teamwork approach to evaluating suggested process improvements leads to even better performance and operating results.
Investing in attracting and developing people, understanding, teamwork, quality, value, details, measurement, and the hotel’s physical asset pays off in associate satisfaction scores, guest satisfaction scores, property reviews, and perception, which together drive occupancy, revenues, and ultimately, profitability and asset value.
“When the tide goes out, you see who is swimming naked“. Thank you to Warren Buffett for this great quote. By focusing on sustainable long-term success by way of exceptional operations, hotels are best able to ride the wave of the industry’s cycle – economic fluctuations, supply and demand balances and imbalances, growth and retrenchment, and changing consumer expectations – and drive asset value in the process.
By winning at the game of Operation, owners and investors can also win at the game of Monopoly.
Joseph S. Khairallah is the Chief Operating Officer and divisional leader of Marcus Hotels & Resorts. He oversees all business operations for the hotel division. Khairallah joined the company in 2013 following a 30-year career with Hyatt Hotels and Resorts where he gained extensive experience managing business operations across six continents and 44 countries. Prior to his current position, he served as Vice President of Rooms, Spa and Security for the Hyatt Americas Group where he supported 383 hotels, oversaw 155 properties and 30 spas. Khairallah’s approach to hospitality operations focuses on engaging employees, improving profitability and providing exceptional customer experiences. Since taking the leadership role of Marcus Hotels, he has successfully aligned the company’s efforts on customer-impacting initiatives and has garnered support for large investments in infrastructure and new technology deployments. Khairallah grew up in Lebanon where he acquired a hotel management degree from the prestigious Institut Haulot in Brussels He speaks five languages and believes that languages can be instrumental in bridging cultural barriers in the workplace and society as a whole. He is passionate about education and frequently takes time to share his industry knowledge and experience with students across several universities that specialize in hospitality studies. He is a board member of Visit Milwaukee and Oklahoma State University.
Andrea Foster is the Senior Vice President, Development for Marcus Hotels & Resorts. Foster, a 20-year hospitality veteran and lodging industry expert, is responsible for marketing the company’s hotel management capabilities and identifying and securing potential acquisition, joint venture and third-party management opportunities for the company. Foster began working with PKF Consulting|CBRE Hotels in Los Angeles in 2002 where she was responsible for hospitality real estate valuations and feasibility analysis. She returned to PKF|CBRE in 2011 running the New England Practice, based in Boston, as Managing Director. During her tenure, Foster has worked on a variety of assignments involving market positioning and repositioning, feasibility analysis, appraisals, operational analysis, sales and marketing analysis, spa studies, impact studies and tourism studies. From 2006 to 2011, she served as Vice President, Marketing and Business Development for Miraval Holdings, a top-rated destination spa resort and healthy lifestyle brand. Her career also includes operations management positions with boutique-size branded and independent hotel properties on the East and West coasts. Foster has become a key voice at hotel investment conferences and was the publisher of PKF’s Trends® in the Hotel Spa Industry report. She is president emeritus of the Cornell Hotel Society New England Chapter, industry advisor to Cornell University Spa Association, scholarship chair for ISPA (International Spa Association), an immediate past active member of the NEREJ (New England Real Estate Journal) Hotel Advisory Board and CREW (Commercial Real Estate Women) Boston, and is a regular guest lecturer at the hospitality schools at Cornell and Boston University. Foster, originally from Maine, is a graduate of Cornell University’s School of Hotel Administration with a concentration in real estate finance and operations.
By Amir Shani
There is a growing recognition worldwide that the “war on drugs”—the sets of domestic and international policies that are intended to fight the illegal drug trade and discourage the production and consumption of psychoactive drugs—has been an utter failure. The Global Commission on Drug Policy (a panel of 22 world leaders including a former Secretary-General of the United Nations, a former US Secretary of State, and former presidents of Brazil, Columbia, Chile, Poland, Portugal, and Mexico) issued a detailed report (2014) concluding that the war on drugs has resulted in devastating consequences for both individuals and communities and that it should be “replaced by more humane and effective policies shaped by scientific evidence, public health principles and human rights standards” (p. 6). Specifically, the commission calls on governments to “stop criminalizing people for drug use and possession—and stop imposing ‘compulsory treatment’ on people whose only offense is drug use or possession” (p. 8).
But change is in the air. Today, most Americans support full legalization of marijuana (Gallup, 2015), and so far 23 US states have legalized cannabis in some form (mostly for medical purposes), with four states and the District of Columbia also passing legalization of marijuana for recreational use. Other forms of legalization, decriminalization, and less restrictive policy regimes have also been implemented in other countries with impressive results. Prominent European countries have chosen to reform their regulations concerning illegal drugs, abolishing custodial sanctions for the possession of cannabis or for illicit substances in general. Despite pessimistic warnings, this liberalization concerning enforcement has not resulted in an increasing prevalence of marijuana consumption or any other significant negative outcome (Raschzok, 2015). Focusing on the Netherlands, MacCoun (2011) found that the coffeeshop system does not appear to encourage escalation to the use of hard or dangerous illicit drugs (e.g., cocaine and amphetamines), thus refuting the “gateway drug theory.” Studies in the US have also consistently demonstrated that cannabis consumption is not associated with an increased probability of getting into a car accident (e.g., Compton & Berning, 2015).
Despite such reassuring evidence, alarmism about the use of illicit drugs continues in many circles, including the workplace. Tourism scholars and researchers have not delayed to jump on the alarmist bandwagon, enthusiastically endorsing the “war on drugs” rationale and rhetoric. For example, according to Kitterlin et al. (2015), in a recent study published in the International Journal of Contemporary Hospitality Management, employee substance use is a matter of serious concern for the hospitality workplace. Similarly, in two editorials published in the International Journal of Hospitality Management, Pizam (2010, 2012) expressed his deep concern regarding “the unhealthy lifestyle of hospitality employees” (2012, p. 631), as manifested in excessive alcohol consumption and in the use of illicit recreational drugs. Indeed, surveys conducted in Australia and the USA indicate that hospitality employees, particularly those in the food service sector, have an exceptionally high rate of substance use in comparison with both the general population and other occupational groups (ASCC, 2007; Frone, 2013; SAMHSA, 2009). The studies of Belhassen (2012) and Belhassen and Shani (2012) revealed similar patterns in the resort city of Eilat, Israel, indicating substantial consumption of illicit drugs and alcohol among hotel workers.
Prevalent substance use among hospitality employees appears, therefore, to be the norm, but should this be a cause of concern for employers and the industry as a whole? This commentary illustrates the main shortcomings of current references in the hospitality literature to substance use among employees, calling for a cautious and skeptical approach on the part of hospitality scholars and practitioners in the face of a general alarmism regarding the impact of substance use on the workplace.
A clear and present danger?
Kitterlin et al. (2015) have no hesitation in stating that something must be done “to prevent or curb substance abuse” among employees in the hospitality sector (p. 811). In a similar alarmist tone, Pizam (2010) warns that the “dangerous rate of alcohol consumption” of hospitality employees “can lead not only to severe personal health problems including death, but can also cause serious economic harm to the entire hospitality industry” (p. 547). From the point of view of the employer, the hazards of substance use by their employees are manifested as an increased likelihood of workplace accidents and consequent compensation claims, lower productivity, increased absenteeism and a greater staff turnover (Belhassen & Shani, 2012). Consequently, it has been enthusiastically recommended that employers and managers apply a series of precautionary actions to mitigate the “problem,” such as cultivating an organizational culture that bans substance use, introducing employee assistance programs, conducting random workplace drug testing, and adhering to hiring and termination policies that ensure a “drug-free workplace” (Kitterlin et al., 2015). In this regard, although objecting to strong policy enforcement, Zhu et al. (2010) argue that alcohol consumption and illicit substance use among foodservice workers has detrimental impacts on the organization and therefore must be prevented or minimized through the implementation of health promotion programs.
Excessive alarm about the threat of substance use
Despite the decisive conclusions of the above academic studies on substance use among hospitality employees and its consequent implications, such studies nevertheless suffer from some severe drawbacks. In particular, these works often cite disputed figures from questionable sources. For example, Kitterlin et al. (2015) cite “evidence” that substance-abusing employees are 3.6 times more likely to be involved in work-related accidents or injuries, and Belhassen and Shani added that they are four times more likely to file compensation claims. These figures are quoted repeatedly on numerous occasions, although they are based on the so-called “Firestone Study”, which in fact never existed (Morgan, 1987). The “study” is basically an address given by an executive at the Firestone Tire and Rubber Company during a luncheon, based on data that according to White (2003, p. 1896) were “produced out of thin air.” In addition, as noted by Henriksson (1991), other statistics that are often utilized to support alarmist arguments are derived from survey or interview data gathered mainly from heavy drug users, thus skewing the gravity of the problem.
It would thus appear that the consequences of employee illicit drug use in the workplace, particularly with regard to employee productivity, are by no means crisp and clear. In a study conducted at six US worksites, French et al. (1998) found “insignificant relationships (both direct and indirect) between drug use and both wages and absenteeism” (p. 334). Using US national data sets, Foster and Vaughan (2005) found that “abuse-based absenteeism is, at best, an incidental cost to business and is insufficient to justify significant…investments of scarce human resource dollars to achieve an abuse and dependence free workplace” (p. 27). Although some studies did detect a difference in absenteeism rate between drug users and non-users, a report by the US National Academy of Sciences (NAS) noted that “the evidence does not necessarily show that use causes high absenteeism. It is possible that other variables can account for the relationship” (Normand et al., 1994, p. 158). Counterintuitively, in yet another study it was found that nonchronic illicit drug use is not significantly associated with employment and labor force participation (French et al., 2001). More broadly, a review of the scientific literature led Zimmer and Morgan (1997) to conclude that there is nothing in the relevant data to suggest that marijuana (by far the most popular illicit drug) decreases people’s motivation to work, negatively affects their employability, or diminishes their capacity to earn a salary.
Similar results have been obtained regarding other employee performance measures. As stated by Frone (2004), “[d]espite the widely held belief that the use of alcohol and other psychoactive drugs…among employees may negatively affect employee productivity, past review of the literature suggest that this relation is neither consistent nor robust” (p. 129). Regarding workplace safety, the above-mentioned NAS report (Normand et al., 1994) could find no clear evidence that drug use meaningfully contributes to the overall rate of industrial accidents. It was concluded that, similarly to moderate off-duty alcohol consumption, moderate illicit drug intake by employees during off-duty hours is not likely to compromise workplace safety. Frone (2004) noted that since there is no credible scientific evidence to support the assertions that the mere consumption of an illicit substance leads to workplace injuries and accidents, alarmist claims to the contrary should be viewed as unsubstantiated exaggerations.
These findings point to the futility of random drug tests, which mainly identify employees who use illicit drugs and alcohol on the weekend or during vacations, rather than while at work. In other words, a positive drug test indicates neither intoxication nor impairment. It should be mentioned that not only have drug tests proved to be of limited practicality, since they do not measure actual impairment (Normand et al., 1994), but they have also recently been shown to have adverse effect on employee morale, as drug testing is perceived to be a degrading and demeaning act and an invasion of workers’ privacy (Char, 2014). Indeed, in an earlier study on US high-tech companies, Shepard and Clifton (1998) revealed the potential damaging effects of pre-employment and random drug testing, as both were associated with lower productivity. It was posited that the drug testing generates a negative work environment that deters competent applicants and creates an organizational culture of distrust and disrespect. More recently, Mehay and Webb (2007) found negative net benefits of the US military’s “zero tolerance” drug testing policy and consequently advocated the abandonment of this policy in favor of counselling, rehabilitation and educational programs.
Substance use alarmism debunked
It is thus evident that the above alarmist observations and interpretations regarding employees’ substance use in the hospitality industry and its consequences are not consistent with the existing body of knowledge. Most fundamentally, ‘alarmist’ studies have failed to adequately distinguish between substance use and substance abuse. While the former is defined as “taking a drug in such a manner that sought-for effects are attained with minimal hazard”, the latter is regarded as “taking a drug to such an extent that it greatly increases the danger or impairs the ability of the individual to function adequately or cope with the circumstances” (Nicholson et al., 2002). As noted by Nicholson et al. (2013), it has been consistently demonstrated that among the users of illicit drugs, the vast majority are occasional or moderate users (not abusers), being typically normative, well-adjusted and productive members of society. These authors therefore advocate focusing only on the prevention and treatment of drug abuse rather than implementing the current prevalent policy of a “war on drugs,” which targets illicit substance users whoever and wherever they are. In this regard, there seems to be no rational justification for tolerating employees’ moderate off-duty alcohol consumption, but applying harsher standards for the similar use of marijuana, which is the drug most often used (Cook, 2006). Leslie Iversen, Professor of Pharmacology (University of Oxford), sums up the relevant scientific literature on the effects of marijuana by stating that “[o]verall, by comparison with other drugs used mainly for ‘recreational’ purposes, cannabis could be rated to be a relatively safe drug” (2005, p. 69). The in-depth review of Fox et al. (2013) demonstrates that alcohol is clearly a more hazardous drug than marijuana, in terms of effects on driving ability, acute toxicity, health consequences of heavy consumption, and occurrence of addiction. Considering the issue from public policy perspective in Canada, Thomas and David (2009) found that “the health costs per user of tobacco and alcohol are much higher than for cannabis” (p. 13).
Another related issue is the failure of commentators in the hospitality literature to address the context of substance use among hospitality employees rather than the more frequently considered overall drug use. As is argued by Frone (2004), differentiating between off-the-job and on-the-job substance use is essential if we are to accurately assess the relation between illicit drug use and job performance, as on-the-job use is “more predictive of performance than measures of overall (i.e. off-the-job) substance use” (p. 136). He adds that most individuals who use illicit substances do so in such manner that their ability to work is not impaired. Referring to overall use as a meaningful measure is misleading, since the mere consumption of illicit drugs is unlikely to significantly affect workplace safety and other productivity outcomes. Thus, both research and managerial focus should be directed to employees’ on-the-job substance use and/or drug-related impairment rather than to their personal lifestyle choices away from the workplace.
Conclusions and implications
Hospitality managers and scholars should now acknowledge that – as is the case for alcohol consumption – moderate off-duty consumption of illicit substances is the rule and not the exception. The vast majority of users lead normative and productive lives, without deteriorating to substance dependence, destructive behavior and/or impaired performance at work. The privacy and personal habits of employees outside of the workplace should not be infringed, provided that their choices do not result in lost productivity or put workplace safety in jeopardy, as is typically the case for moderate off-the-job illicit drug use. The rate of substance use among hospitality employees is indeed relatively high, but recent alarmist references to the issue in the hospitality literature are based on unreliable figures, with a tendency to disregard counter-evidence and to rely on erroneous stereotypes about both drugs and drug users. Illicit substance users in Western society comprise vast groups of people with diverse socio-demographic and psychological characteristics, along with other individual differences. Thus, making generalizations about how their lifestyle choices impact on the workplace is incongruous and gives rise to exaggerated alarm regarding substance use and its consequences. Such generalizations may also result in recommendations to implement costly employee assistance programs and drug testing, both of which are of little value to employers while having unintended deleterious effects on employee well-being.
In summary, hospitality scholars should avoid unreliable generalizations and instead rely on rigorous empirical evidence that properly distinguishes between substance use and abuse and between off-the-job and on-the-job substance use. Managers and workplace policymakers, for their part, should implement alternative approaches (other than drug testing) for dealing with serious substance abuse. Such measures could include training managers and supervisors to identify (based on deterioration in job performance), confront and refer impaired workers to appropriate intervention programs, conducting impairment testing of employees in specific sensitive positions, and ensuring thorough reference checking of job applicants. According to a report of the American Civil Liberties Union (1999), such alternatives are more cost effective and are not perceived as an unfair infringement of employee privacy. However, future research should assess the validity of these claims in the hospitality industry through empirical studies.
Hospitality employers, for their part, should refuse to join the “war on drugs” by not targeting workers who use drugs recreationally. Although employers may not approve of certain personal lifestyle choices of their employees, imposing their own views on others is both impractical and immoral. “The right to be left alone”, stated the late Associate Justice of the United States Supreme Court, Louis Brandeis, is “the most comprehensive of rights and the right most valued by civilized men.” The private lives of hospitality employees along with their pharmacological tastes should not be an exception.
 This includes excessive and exaggerated alarms about substance use and its consequences, “deliberate ignorance” regarding counter-evidence, and the communication of supposed facts concerning illicit drug use through emotive language.
Amir Shani is a Senior Lecturer in the Department of Hotel and Tourism Management at Ben-Gurion University of the Negev, Eilat Campus, where he teaches courses in ecotourism, hospitality and tourism ethics, marketing research, and marketing for tourism and hospitality.
Dr. Shani specializes in tourism and hospitality ethics, including tourism and the environment, sustainable tourism, ecotourism, and animal use in tourism and entertainment. Other related areas of interest consist of the quality-of-life of local residents in tourism destinations, as well as the occupational wellbeing of hospitality employees. He has also initiated and is involved in research projects focusing on food ethics and its implications for the restaurant industry and culinary institutions. Another of Dr. Shani’s areas of focus is contemporary issues in tourism marketing, particularly destination image, destination loyalty, and the management of tourist attractions.
Dr. Shani’s articles have appeared in a variety of leading tourism and hospitality journals, such as Annals of Tourism Research, Journal of Travel Research, Tourism Management, Journal of Sustainable Tourism, International Journal of Tourism Research, Tourism Analysis, International Journal of Hospitality Management, Cornell Hospitality Quarterly, and International Journal of Contemporary Hospitality Management. He had also contributed chapters for edited books focusing on destination marketing, zoos and tourism, and quality-of-life and tourism.
Dr. Shani has a Ph.D. from the Rosen College of Hospitality Management, University of Central Florida (2009). He earned his B.A. (Summa cum laude) in Management (2003) and an M.B.A. (2005) from Ben-Gurion University of the Negev.
In addition to his academic position, Dr. Shani is a member of the Israeli Freedom Movement, a non-partisan movement that is striving to increase the freedom of the citizens of Israel in the spirit of classical liberalism. Email: email@example.com
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- Kitterlin, M., Moll, L., & Moreno, G. (2015). Foodservice employee substance abuse: Is anyone getting the message? International Journal of Contemporary Hospitality Management, 27(5), 810-826.
- MacCoun, R. J. (2011). What can we learn from the Dutch cannabis coffeeshop system? Addiction, 106(11), 1899-1910.
- Mehay, S., & Webb, N.J. (2007). Workplace drug prevention programs: Does zero tolerance work? Applied Economics, 39(21), 2743-2751.
- Morgan, J.P. (1988). The “Scientific” justification for urine drug tests. Kansas Law Review, 36, 683-695.
- Nicholson, T., Duncan, D.F., & White, J. (2002). Is recreational drug use normal? Journal of Substance Use, 7(3), 116-123.
- Nicholson, T., Duncan, D.F., White, J., & Stickle, F. (2013). Focusing on abuse, not use, in drug education. Journal of Substance Use, 18(6), 431-439.
- Normand, J., Lempert R.O., & O’Brien, C.P. (Eds.)(1994). Under the influence: Drugs and the American work force. Washington, D.C: National Academies Press.
- Pizam, A. (2010). Alcoholism among hospitality employees. International Journal of Hospitality Management, 29(4), 547-548.
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- Raschzok, A. (2015). Illegal drugs: The two worlds of authority. In C. Knill, C. Adam and S. Hurka (Eds.), On the Road to Permissiveness? Change and Convergence of Moral Regulation in Europe (pp. 234-264). Oxford, UK: Oxford University Press.
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By Michael Oshins
The complexity and challenges of owning and operating a hotel have changed over the years. Traditionally most hotels were owned and managed by the same person (or company). In today’s marketplace, several entities can be involved, including owners, developers, management companies, brands, affiliations/consortiums and asset managers, resulting in a far more complex organization. The following scenario (created by colleague, Dr. William Kahn) features the relationship between the hotel owner and general manager and highlights the impact of this important relationship on the organizational culture of the hotel. The case was posed to several industry professionals who were asked to use their expertise to advise on how they might respond to this scenario. The BHR would like to hear your opinion; please share your ideas in the comment section at the end of the article.
Steve Leighton, a seasoned hotel manager, is in his fifth year as GM of The Seaside Hotel, a mid-sized property that is part of the world-renowned 60-year old Oceans By The Sea (OBTS) hotel corporation. Seaside was purchased just a year ago by successful manufacturing magnate, Ben Reston, a first time hotel owner. Recently, Steve began receiving more and more emails from Ben, all marked urgent and all addressing matters of day to day operations in the hotel. Much to Steve’s frustration, none of Ben’s communication responded to Steve’s repeated requests for increased investment in the physical upkeep of the hotel, despite the need for capital improvements to address wear and tear in the function rooms and suites at a time when several big corporate contracts were up for renewal.
Today, Steve arrived at the hotel and found a new string of escalating emails from Ben. The first one, from 8:00 p.m. the night before, had the subject line, “Outrageous,” and read:
Hi Steve. I wanted to let you know about the experience my nephew and his friend had at the hotel earlier tonight. I told them that we had a new chef and that they should have dinner at the hotel, my treat. When he called me later, he said he could not believe how rude the desk clerk was to him. My nephew said that he simply asked about getting a cab to go pick up his friend, I think—and that the desk clerk barely gave him the time of day. He asked to speak to you, but you were gone for the day, and the Manager on Duty was busy in another part of the hotel. My nephew said that the dinner was okay (I want to talk to you another time about the salads, which I still think are presented poorly) but that the whole interaction with the desk clerk just ruined it for him. As you can imagine, I was mortified. Please call me.
The subject line of Ben’s second email, this one from late last night, was “Pelham.”
Steve: I called the front desk and found out that the name of the associate who was so rude to my nephew was Pelham. I think I remember him. Wasn’t he the one that messed up one of my wife’s cousin’s reservations last spring? I think so. Anyway, I want you to look into this. If he is making this many mistakes, he’s probably not doing the job that we want. I certainly don’t want someone like that representing my hotel. We can’t afford a reputation for rudeness. The market is just too competitive around here. I’ll call you tomorrow about this.
Steve found this strange. Kevin Pelham was one of the best associates on the front desk. He had a reputation as unfailingly polite and unflappable, calm in a crisis, good with the guests and the corporate customers. Terry knew that there was certainly another side to this particular story. He opened the third email from Ben, sent earlier this morning with the subject line: “Changes.”
Steve. We really need to make some changes. It’s not just this Pelham fellow. There are other associates I’ve noticed recently who are not doing the kind of job that we want them to. Some speak too quickly to the guests, like they’re trying to rush them. Others are too informal in front of the guests. They need to be more professional. They need to be shaped up a bit. Maybe they’ll perform better after we do something about Pelham. That might scare them some. That works in my business—when my staff is afraid for their jobs, they work better and faster. I’m sure it will work at the hotel too. Anyway, I’m coming in around lunchtime, and will want to meet with you then.
Steve went to see Ilana Baylor, the Manager on Duty the previous night. Ilana was surprised that Kevin Pelham was the issue. She told Steve that it had been a bit crazy the night before. There were two wedding receptions, a corporate function, and several mix-ups with guest room reservations, and they had been short-handed at the front desk because one of the associates was called away by a family medical emergency. Ilana said that as far she knew Pelham did a good job holding the front desk together. She said that she would call him to find out what happened with the nephew.
Steve found himself increasingly annoyed with Ben. It seemed, from the emails, that Ben wanted to take a decidedly more active role in managing Steve’s staff. Steve wanted Ben’s support. But wanting Ben’s support and involvement was different from wanting him intruding in the hotel’s basic operations.
Steve walked back to his office. He was not looking forward to dealing with Ben later that day, but hoped that he could find a way to make it constructive. He sat down at his desk, saw yet another “Urgent” email from Ben, sent just minutes before. There was no message, just a subject line: “See you at noon.”
1. What are the key issues you see in this scenario? Which issues do you think are most important?
2. What initial steps would you take to address these issues?
Key Issues in Order:
1. Communication protocol
2. Defined Roles
3. Management Philosophy
4. Mutual Respect
5. Mutual Goals
Initial Steps to address these Issues:
1. Approach the meeting from an offensive not defensive position
2. Imagine the roles (owner/GM) were reversed
3. Present and execute a retraining program addressing service observations
4. Ask to formalize and establish an FFE schedule
5. Emphasize financial and GSS results
6. Agree that management by fear yields at best short term gains.
7. Propose weekly “coffee” chats to keep door open
8. Offer to “walk” the hotel once in awhile.
9. Follow up to benchmark Owners perception status
If all this fails, update CV.
-Tim Kirwan, Principal, Hotel Creation NE, Boston, MA
Tim Kirwan is the Principal of Hotel Creation NE located in Boston, Massachusetts. Prior, Kirwan was the Managing Director of the InterContinental luxury property located on Boston’s waterfront. No stranger to Boston, Mr. Kirwan has been the sure guiding hand behind the openings of the Hotel Commonwealth, the Cambridge Hyatt Regency and the Bostonian Hotel, which he served as Managing Director from 1982 – 1990.
As Managing director of Hotel Commonwealth he created a new destination in Kenmore Square which included thirteen boutique stores, the award wining Great Bay Restaurant with Michael Schlow and Chris Myers, as well as Eastern Standard Brasserie.
He was the General Manager of the 364-room Westin Hotel in Providence, which he also opened and managed with distinction and national acclaim for seven years. In addition, he is deservedly credited with playing a key role in the re-birth of the city of Providence, both through his service as chairman of the Providence Convention and Visitors Bureau, as well as for garnering positive exposure for the city as chairman of the Providence Film Commission.
Three key issues are apparent to me and they are, in order of importance:
The owner’s relationship to operations: It’s pretty clear that Ben wants his hotel to operate at the very highest standard, which is a laudable goal. But he has no idea how to motivate his team toward this end. His style might work in manufacturing, but not in a hotel. A seasoned general manager like Steve will quickly tire of Ben’s constant interference. Experienced general managers are most effective when given measurable goals along with the autonomy and necessary resources to attain them. Being micromanaged demoralizes good leaders and creates resentment, even if both parties share the same goal. Steve needs to show Ben that his constant emails and negative assessments are counter-productive. He should suggest having a regular weekly meeting with Ben to go over the operation and get Ben’s input, at which time he could report out on progress made during the past week.
Turnover: Ben seems to believe that firing people solves problems, but that’s rarely the case. Turnover is expensive and generally leads to reduced service levels until new staff are trained and comfortable in their positions. Again, Steve should speak from his experience in the hospitality industry and attempt to educate Ben on what works and doesn’t work. Let’s hope Ben listens!
Staffing levels: It seems that staffing could have been more robust on the night when Ben’s nephew showed up. I’d review this situation to see if it points to a systemic problem and make adjustments as required.
-John Murtha, General Manager, Omni Parker House, Boston, MA
John D. Murtha, CHA, is a 37-year veteran of the hospitality industry. He is currently General Manager of the Omni Parker House Hotel in Boston, the longest continuously-operating hotel in America. He has been an adjunct lecturer in the School of Hospitality Administration at Boston University since 2001. He was recently inducted into the Hall of Fame by the Massachusetts Lodging Association. John graduated from the Hotel Administration program at the University of New Hampshire, where he is currently a member of the Hospitality Leadership Council and Advisory Board.
The interaction between Kevin Pelham and the nephew.
The communication between Steve (GM) and Ben (owner).
Regarding the incident with Kevin and Ben’s nephew, the first step to a resolution is to inquire about the situation with the employee. It is important to never go into a discussion, or disciplinary conversation, with an anticipated outcome. It is vital to allow employees the opportunity to express themselves and share their point of view. Once hearing from said employee, the supervisor should then elect an appropriate course of action, whether the issue conclude with the verbal conversation, or be taken a step further with written documentation Kevin may have felt frustrated during his shift because of the heavy traffic in the hotel and limited staffing, but it is important to stress to him the importance of hospitality. Without it, our business would not exist. On the other hand, while Ben might be quick to fault Kevin, the core of the problem could be a lack of staffing due to the call-off. This might entice the GM or Director of the Front Office to look into part time staffing for situations such as this. On call employees would reduce fluctuation in quality of service by stabilizing staffing.
A conversation with Ben is a must. It is common for someone with limited hotel operations experience to lack a complete understanding of the hotel culture. While Ben might believe disciplinary actions against Kevin would “scare” other employees and “shape them up,” it is likely to damper the trust between Steve and his employees above all else by turning the situation into a “he said, she said”. Steve should explain to Ben that he has spoken to Kevin regarding the situation, and has informed him how his actions were perceived by Steve’s nephew. Steve should also share Kevin’s explanation for the situation. Steve should then proceed to deliver appropriate disciplinary actions and keep record of the conversation, whether it is a follow up e-mail or formal documentation. It is important to be cautious of disciplinary actions because employers should preserve a good balance between a structured work environment and maintaining trust with their employees.
Steve should also converse with Ben regarding the hotel’s discipline process. He should explain that he apologizes for the unfortunate interaction with his nephew, and appreciates the feedback as he takes guest’s complaints very seriously. Steve should clarify his step by step process for situations such as these, and assure that it will be handled properly. Moving forward, Steve and Ben should agree on a form of communication which eliminates the frustrations and hostility exhibited in these e-mails.
-Chelsea Salamone, Front Office Manager, Washington Hilton, Washington D.C.
Chelsea Salamone currently serves as a Front Office Manager for the Washington Hilton in Washington, DC. Prior to this position, she completed the Management Development Program for Hilton Worldwide. She also worked with Pinnacle Advisory as a consultant analyst, and held interim positions in various hotel departments including Sales and Finance. Chelsea Salamone is a graduate of Boston University’s School of Hospitality Administration.
1) There is only a rudimentary relationship between the new owner of the property Ben and the General Manager Steve. Steve needs to take the lead on building a strong professional relationship with Ben.
2) There is neither a focused nor a sustainable communication between Ben and Steve.
Ben receives ‘snapshot’ impressions from his ‘circle of trust’ about latest service issues.
He forwards these information to Ben with his proposed guidance without listening to the concerning parties’ first or awaiting Bens feedback to the recent happenings.
3) There is a lack of training. Associates need to always put each guest in the center of their attention during each interaction.
4) Steve needs Ben’s commitment and approval for capital investment in FF&E. Strategic capital improvements need to be made in order to maintain the hotel adequately.
1) During the upcoming meeting at noon, I would listen to all of Ben’s concerns first and take notes. A transparent, clear and repeated face to face communication between operator and owner is necessary in order to provide a sustainable and long lasting financial partnership, which is satisfying for both parties. A meeting agenda needs to include all important topics and track their progress.
2) I would find out what Ben’s top three goals are. In general, owners expect
a) return on investment (ROI)
b) maintenance of their product and
c) building a positive reputation/ image.
I would build the meeting agenda around these mutual goals and would diplomatically discuss how to attain these goals in a sustainable way. Due to the high turnover and challenging maintenance in the day to day operation, hotels generally olden much quicker than comparable products like boarding houses, serviced apartments or other paid accommodations. For this reason most operators have contacted capital investment accruals related to the respective revenues. For example 3% FF&E accrual between year one and three after opening a new property, following 4%-6% of total revenue in the following years of operation depending on the standard of the hotel.
3) I would use a diplomatic approach to help Ben see the bigger picture, instead of letting snapshot impressions form his opinion. A strategic approach would be total quality management: by reviewing existing processes and systems it can be determined what elements need to be revised in order to improve guest and owner satisfaction. I would strategically address the problems at hand and make progressive changes in attitudes, practices, structures and systems.
A first action item would be training and improved communication with the associates, e.g. raising the awareness/ knowledge about Ben and his family by using pictures and preferences. The Front office associates will be able to recognize and assist the key players in Ben’s circle of trust more effectively.
A second action item should be interdepartmental cross training of associates, in order to use all resources strategically during peak business periods or when faced staff shortage. By providing lateral service, resources can be optimized and associates can assist where needed most.
-Cyrus Heydarian, Regional VP & GM, Breidenbacher Hof, Duesseldorf, Germany
His extensive hotel experience spans three countries and two continents including Germany, United States of America, and Switzerland for such brands as Broermann Hotels & Residences, Boca Raton Resort & Club, and Seiler Hotel Mont Cervin.
Most outside of the industry and many within it probably perceive the role of a hotel manager to be one mostly focused on guests and employees. However, building and maintaining a healthy relationship with owners is critical.The healthiest and most profitable relationships must be based on trust – trust in knowing that we’ll manage their asset and make the best possible decisions to drive the highest possible return on their investment. In all honesty, most large hotels are now owned by institutional investors who need to be able to focus on the capital side of things rather than operations and they will not tolerate a management team who they don’t have complete confidence in. The case in question is a little different in that the owner is more personally invested in and closer to the asset. This is definitely a situation that could lend itself to a more difficult balancing act for a hotel manager, especially if the manager and the owner are not on the same page about their goals for the property and how the hotel should be managed.Steve is most likely to have a productive meeting and working relationship with Ben if they can agree a few key principals:
1. Managing the people in a service business is very different to managing a manufacturing environment and while Ben has achieved great success in the past, he may need to give Steve time to prove that a different approach to management is required here.
2. There are a huge volume of non-subjective ways to measure the hotel’s performance, from financial metrics, to employee and customer surveys, social media sentiment, etc. The working relationship between Steve and Ben would benefit from setting clear goals around these kinds of KPIs than on the much more qualitative and subjective approach being used today.
3. Finally, it is clear that Steve cannot be successful in his role in the environment today. It seems like he may need to undertake a concerted effort to win Ben’s trust but at the same time may need to convey to Ben that he is concerned for the future of their relationship and the property if they cannot change the dynamics of their relationship.
-Lisa Pavlides, Director of Human Resources, The Westin Boston Waterfront, Boston, MA
Lisa Pavlides is the Director of Human Resources at The Westin Boston Waterfront in Boston, Massachusetts. She began her career at the Westin Copley as a Rooms Management Trainee before moving into a human resources role where she chose to continue her career. In 2005, Pavlides took a role at Director of Human Resources for the Westin Waltham before transition her position to the Westin Boston Waterfront in 2007.
She was born and raised in Dublin, Ireland and received her bachelors degree in business from Trinity College an a Higher Diploma in hospitality management from the Dublin Institute of Technology. Prior to moving to Boston in 1999, she lived and worked in London and California working in food and beverage, sales, and marketing.
What steps and issues do you think are most important to approach this situation?
Michael Oshins is Associate Professor of the Practice of Leadership in the School of Hospitality Administration at Boston University. He is former Vice President of Integer Dynamics, a hospitality consulting firm focused on operational productivity and technology. He holds a doctorate in human resource education from Boston University and a master’s degree in hotel administration from Cornell University. Email firstname.lastname@example.org
By Erinn D. Tucker
In various parts of the United States, there is a significant workforce shortage because of an inadequate supply of workers with in-demand skills. Even though many Americans are graduating from high school and college, employers are concerned about the preparation and specific skills of new graduates. Unless major improvements are made to the American educational system, American employers will be unable to find enough qualified workers for the growing numbers of skilled jobs.
Policymakers and business leaders in New England are concerned about the ramifications of a potential shortage of skilled labor. Besides worrying about insufficient numbers of skilled workers, policy makers and business leaders are also concerned that the region’s workforce will not have the right mix of skills to fill the jobs created by the New England economy. While the region needs a mix of high, medium, and low skilled workers, it is the lack of workers needed to fill the middle-skill level that is of primary concern.
“Special attention needs to be given to attracting and developing a non-professional workforce,” says Dr. Sandra Casey-Buford, executive vice president of strategy and innovation for Decision Insight, Inc., an organizational transition management firm located in the Greater Boston Area. “It has been well noted that the non-professional and paraprofessional workforce in Massachusetts remains in the shadows of the hundreds of highly skilled professionals who graduate from the state’s mecca of colleges and universities.”
What is a middle-skill job?
One that requires more than a high-school diploma, but not a four-year college degree.
What is the projected growth for middle-skill jobs?
Some 40 percent of all job openings in Massachusetts between now and 2016 will be middle-skill jobs.
Who provides training for these jobs?
Employers, community colleges, apprenticeship programs, nonprofit community-based training organizations, and private career schools.
How can we meet the demand for middle-skill and high-skill jobs?
Every Massachusetts resident should have access to the equivalent of at least two years of education or training past high school and the basic skills needed to enter that training.
A recent research report for the New England Public Policy Center, ]Mismatch in the Labor Market: Measuring the Supply of and Demand for Skilled Labor in New England, identified the middle-skill category as facing the greatest imbalance between the supply and demand for labor in New England over the next two decades. Middle-skill workers are considered individuals with some college education or an associate’s degree. These workers often fill critical jobs in healthcare, education, information technology, and other industries such as the hospitality industry. These jobs require some specialized skills, and often involve interpersonal interaction that cannot be easily outsourced or automated. This description fits the hospitality industry to a tee. Great service cannot be outsourced; you must come to the service professionals who know what it is and how to deliver.
Recent labor market trends and future projections for southern New England (Connecticut, Massachusetts, and Rhode Island) vary tremendously from northern New England (Maine, New Hampshire, and Vermont). In northern New England, where population growth is projected to stagnate, policies aimed at attracting and retaining skilled workers will be a priority. In southern New England, where the population is projected to shift toward minority and immigrant groups, policies need to ensure that workers have the right skills to fill jobs created by the region’s economy.
Massachusetts is experiencing a shortage of middle-skill workers]. In 2007, about 45 percent of all jobs were classified as middle-skill, but only 32 percent of Massachusetts’ workers had the education and training required to fill those positions. In reality, the gap was likely even greater in certain industries because many workers trained to the middle-skill level—and even those with bachelor’s degrees—did not have the specific technical skills needed. This means that thousands of well-paid and rewarding jobs are going unfilled in the Commonwealth. Middle-skill workers provide the fuel for industries, such as hospitality and tourism that are, and will continue to be, essential to keeping businesses in Massachusetts while also enhancing the state’s economic portfolio.
While, Massachusetts has made significant investments in education and training for its workforce, especially in K–12 education, basic skills, and incumbent worker training, the Commonwealth has under-invested in public higher education and vocational and technical training—two critical components of the state’s training infrastructure that must be better aligned to meet industry demand for middle-skill workers. It is recommended that Massachusetts develop affordable pathways to post-secondary education and training for all residents, including those with very low skills and incomes. Massachusetts should also address the gaps that often exist between adult basic education, post-secondary training, and industry-specific skills training.
Dr. Casey-Buford suggests that firms need to form more partnerships with two-year vocational schools and community colleges. “I find that many people don’t know what opportunities exist in lodging and related industries,” she said. “Therefore, partnerships should include career awareness seminars and workshops, internships, mentorships, scholarships, and sponsorships to grow a pipeline of well-prepared candidates.”
In addition, it is suggested that Massachusetts also make significant investments in programs that will train more residents who are laid off, or working in low-skill jobs, for better paying middle-skill jobs and careers. Specifically, the hospitality industry provides the greatest opportunity for this investment due to the multiple business segments it affects directly. The chart on the following page identifies, but is not limited to, the various segments of the hospitality industry.
Due to the effect the hospitality industry has on various business sectors and suppliers, this opens up an opportunity for Massachusetts to address the middle-skill shortage. There are many different pathways to middle-skill jobs and the table below provides a brief summary of opportunities for workforce deployment training programs for Massachusetts.
Addressing the need for middle-skill workers will require attention not only to educational opportunities for young people, but also for those already in the workforce. Close to two-thirds of the people who will be in the Massachusetts workforce in the year 2020 were already working adults in 2005—long past the traditional high school-to-college pipeline. That is why talent management and workforce development have become and will continue to be some of the most important issues emphasized by human resources management. This provides southern New England with the opportunity to shape and develop human capital for a sustainable and growing economy.
Erinn D. Tucker is an Assistant Professor in the School of Hospitality Administration at Boston University. Her teaching and research is in the areas of human resources, event management and student engagement. She holds a bachelor’s degree in business administration from Florida A&M University, a master’s degree in sport administration from Florida State University and a Masters in Business Administration (MBA) from Winthrop University and Ph.D. in hospitality administration from Oklahoma State University. Email: email@example.com
By John D. Murtha
Doctors say that people who exercise, eat right, reduce stress, and have a balanced outlook on life stay healthy and live longer. So, could it be said that teamwork, having the right resources, maintaining a stable operation and fostering a productive culture will make a hotel healthier and more successful over time? Yes. A focus on keeping things “healthy” offers useful perspectives for hotel managers looking to enhance the culture and results of their operation.
Setting the Tone
The hotel I manage is home to a lot of history and more than 30 associates that belong to our 30+ Club signifying 30 or more years of service to the property. Their tenure is an important element of the atmosphere, culture, and success of the hotel. Part of my job is to make sure this special staff attribute is nurtured, applauded and contributes to the overall “tone” of the operation.
What’s a “tone”? It’s a style, a manner of being, or as Merriam-Webster says: “The state of a living body or of any of its organs or parts in which the functions are healthy and performed with due vigor.” Establishing a tone that infuses the operation with health and vigor is a critical step in cultivating success over time.
The GM is the one to take the lead on this, enrolling his or her management team in the tone-setting process. It starts with having shared goals and tactics for achieving outcomes. Then, it means fostering an atmosphere where people feel comfortable, recognized as individuals by everyone in the hotel (especially the GM) and acknowledged for their contributions.
A simple thing like noting an associate’s birthday goes a long way. As often as I can, I do so in person with the associate at their workplace, along with sending a card to their home. I also make a point of congratulating sales managers when they hit their monthly goal, or gently urge them on when they miss it. At those times, I find it works better to be a cheerleader and leave the coaching to their director.
Setting the tone includes being fair and consistent in all dealings with associates and guests, being easily accessible to everyone and telling the truth, even when it’s not easy to do so. But, it also means injecting some humor into the operation. The hotel business—and, it is a business—can be stressful at times, so keeping things light when the pressure’s on allows people to relax and perform better.
A Balanced Diet
Doctors also recommend a balanced diet as a way to stay healthy. The same advice works to keep hotels healthy. What constitutes a healthy diet for a hotel? In my view, it comes down to a balanced “feeding” of the primary constituent groups served by the property, including the owner, the guests, and the staff.
In order for a hotel to prosper over time, it must generate a reasonable return for the ownership entity that risked its capital in the first place. You need to pay bills on time, keep the property in great physical condition and acquire, develop, and retain a professional staff. This all requires sustained profitability.
The guest also needs to gain something from the hotel’s operation. Travelers expect personalized service, cleanliness in everything, modern systems, and good memories of their experience. You may very well be leaving some money on the table to generate high levels of guest satisfaction, but that comes with the territory when you’re looking for a balanced diet.
Your staff must be well served in the process, too. Fair rates of pay, good benefits, opportunities for training and advancement, personalized acknowledgement of their contributions to the operation, and consistent application of rules and regulations are essential elements of generating high degrees of employee satisfaction and low turnover. Again, some profit may be foregone to make sure that the staff is happy and taking good care of your guests. But it’s worth it.
Dual Health Benefits of MBWA
A few decades back, we learned that unstructured management by wandering (or walking) around (MBWA) was distinguished as a valid way to improve the morale and productivity of an organization. I think that MBWA is intuitive to most hoteliers because we know the best way to understand what’s happening in our hotels comes from being “on the floor” and responding to what we directly observe, rather than from reports, documents and other sources after the fact.
Japanese businesses use the notion go to gemba (“the real place”) to highlight the concept of having managers spend their time where the work is done. This approach asserts that direct experience best informs problem solving and process improvement.
MBWA is a great way to catch your associates performing well so you can acknowledge their contributions immediately or provide feedback for improvement, when needed. It also works to increase the amount of time you spend with guests, in the lobby and elsewhere throughout your property. One should use time spent at “the real place” productively and not simply to get out of the office.
The second benefit of MBWA is the health benefit to you, personally, from being on the floor. Some fitness experts claim that staying healthy requires a steady diet of 10,000 steps per day, which for a person of average height is about 4 ½ miles of walking. You may not be able to walk that much each day on-property, but practicing some level of daily, unstructured MBWA can reduce stress, keep you healthy and strengthen your operation.
Another benefit of MBWA is that it’s probably the best way to experience how your associates are performing. You can then praise or coach them in “real” time. But there’s an important distinction in how to approach this task. It’s the difference between checking “on,” and checking “in,” with your staff.
Tip: Evaluate everyone involved in assembling and finalized your forecasts, then add to this list. You may find that a “more is merrier” approach will improve accuracy.
I suggest that checking “on” is based on an unstated belief that the person being monitored might have done something wrong—even unintentionally—that needs to be corrected. One checks on people to make sure they adhered to established standards and procedures, to verify that specific instructions have been precisely followed or requests have been fulfilled in an acceptable manner. Managers accustomed to checking “on” their colleagues use the phrase “inspect what you expect.”
On the other hand, checking “in” with an associate assumes no wrong-doing, but rather that you care about them and their work. Good morning! How’s it going today? Is everything okay? Can I give you a hand? Is anything missing? Did you get that report you needed? How’s our guest that needed some TLC yesterday? These are the questions posed by a manager checking “in” with, and not “on,” their associates.
The answers you receive and observations you make still alert you to problems that need to be addressed, but your comments based on the checking-in style will more likely be perceived by associates as support for their efforts, not criticism. I think this is a healthier management approach that works to ensure both guests and staff have a memorable experience of your hotel.
Many hotels have an all-associate meeting, once a month or a quarter, sometimes known as a “Koffee Klatch”. At one of our recent meetings, most members of the
executive committee presented their team’s accomplishments for the previous year.
One member of the committee neglected to do so.
This particular division head knew immediately he’d made a mistake. His team had done quite a lot to improve the operation during the year and they deserved to be recognized in front of their peers. After the meeting, his team politely asked “Hey, what about us?” Be assured that the division head made up for the error at the next meeting.
I’ve normally found it easy to show gratitude to my staff for doing great work but wanted to know if there was evidence that doing so improves their well-being and results. I did some quick online research to see if any studies have shown a connection between showing gratitude and improved employee engagement. It turns out that lots of work has been done on this subject; here are some findings that I found interesting:
- Praising someone’s good work causes dopamine to be released in his or her brain. Dopamine is a chemical that is credited with generating feelings of pride and pleasure.
- Showing gratitude also increases feelings of goodwill in the person delivering the praise.
- People who don’t receive praise for their efforts report having the notion “What am I doing this for?” This implies that it’s not all about the money.
- Recognizing entire teams of associates for the value they add to the overall operation bolsters the enthusiasm of each member of the team and improves their standing within the organization. This is why we celebrate Housekeeping Week.
- Faint praise doesn’t work and neither do scheduled recognition ceremonies, at least not for very long.
- Appreciation and praise needs to happen on a regular basis under typical business conditions for it to be effective.
- Praise also needs to be very specific. A simple “great job” won’t suffice. Tell them exactly what they did that had you say “great job” in the first place.
- Rodd Wagner and Jim Harter, authors of 12: The Elements of Great Managing, said “Great managers are extremely effective in figuring out the best form of praise for each person. Some managers worry that they can give employees too much recognition. But the research shows that it’s extremely difficult to do that, as long as the recognition is right for the person.”
Operating a busy hotel can be stressful at times so it’s in everyone’s best interest to avoid stress whenever possible. Here are some common business activities that most hoteliers wouldn’t typically describe as stress reducers but that I find work that way for my team and me:
Accurate Forecasts: If everyone in your operation knows what is really going to happen, then plans and resources will be aligned correctly. This is especially true when scheduling staff. Accurate forecasts lead to department schedules that appropriately match staffing with business levels, thus avoiding the last minute scrambling that occurs when solid information was absent during the scheduling process.Purchasing activities also benefit greatly from accurate forecasts. Haven’t you ever had to jump in your car to fetch something for the chef that he or she needs right now but didn’t buy sooner because the forecast was “off?”
Appropriate Meetings: Most of us who prefer to be on the floor don’t like to be in meetings, so start relating to them differently—as opportunities to reduce stress. The more that you and your associates know about what’s going to happen, the better that everyone can prepare to deal effectively with those upcoming realities. Your guests will benefit as well, from the friendly service that is naturally offered by relaxed, “in the know” staff members.
Handling Issues Immediately: Issues and the stress they create aren’t going to disappear until you and your staff deal with them head-on, so you might as well handle things quickly and completely. It’s the next best thing to having done it right in the first place, the best stress reducer of them all.
This material was originally published on my blog, “The Healthy Hotel”, at HOTELSMag.com. I hope that you’ll check out future postings and take the opportunity to share with other managers what you’ve done to improve the culture and results of your hotel.
John D. Murtha, CHA, is a 38-year veteran of the hospitality industry. He is currently General Manager of the Omni Parker House Hotel in Boston, the longest continuously-operating hotel in America. He has been an adjunct lecturer in the School of Hospitality Administration at Boston University since 2001. He was recently inducted into the Hall of Fame by the Massachusetts Lodging Association. John graduated from the Hotel Administration program at the University of New Hampshire, where he is currently a member of the Hospitality Leadership Council and Advisory Board. Email firstname.lastname@example.org
By Michael Oshins
Roman philosopher Cicero believed self-confidence was critical to one’s success: “If you have no confidence in self, you are twice defeated in the race of life. With confidence, you have won even before you have started.” This key to success was reiterated by sports legends Vince Lombardi, “Confidence is contagious. So is lack of confidence.”
In sports, business, politics, and life, the importance of self-confidence is repeated as one of the key components to success. Boston University School of Management Professors George Hollenbeck and Tim Hall define self-confidence as “our judgment as to whether or not we can do something.” They highlight that judgment is the result of our thinking and is based on our perceptions. In addition, they emphasize that self-confidence is task-specific. This aspect of self-confidence underscored by Paul Hersey and Ken Blanchard in their Situational Leadership model, whereby a manager provides more direction to an employee with limited experience (and thus less confidence) for a specific task. In understanding self-confidence, Hollenbeck and Hall also show the importance that it can be changed over time.
How do hospitality managers build their self-confidence? Boston University School of Hospitality Administration seniors take a capstone course in leadership. Each semester, the seniors conduct field interviews to learn how these executives built their self-confidence. The following discussion reports findings from the student surveys collected since 2005. Students met with a wide range of hospitality leaders in operational and corporate positions, from hotel department heads and executive committee members, to restaurant general managers, upscale and luxury hotel property general managers, entrepreneurs, restaurant owners, contract food service companies, and senior-level hotel and hospitality corporation leaders. Participants ran the gamut of experience, including managers near the beginning of their careers and seasoned veterans with decades of experience and success. Over eight years, graduating hospitality seniors conducted more than 450 interviews. Whenever possible, interviews were conducted in person, at the interviewee’s place of business and the student did not have a close, personal connection to the manager. Although the student may work for the same company, the interviewee was someone he or she did not know well (e.g., not a family member, close family friend, or someone who worked directly with him/her). The majority of the hospitality managers interviewed were from the New England / New York area.
Several common themes developed from the industry interviews about the building of self-confidence. The top source for self-confidence in hospitality: experience. Many felt “there is no substitute for experience.” World-class salesman Dale Carnegie agreed in the value of gaining experience—Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy. By working in a job, becoming good at it, performing the functions well, and being successful, one can enhance one’s self-confidence in that particular role.
Often the experiences described by interviewees involved making difficult decisions or performing challenging tasks. Their success and confidence propelled them forward to take on more challenging endeavors. One catering manager talked about successful events and was able to increase his budget from 60-thousand-dollar to five-million-dollar events. An interviewee stressed that his successes from entry-level positions to department head, then to executive committee member and assistant GM gave him the confidence and skills to be an effective general manager. This research reinforces the findings by Ireland, Hitt, and Williams from the early 1990s, “Self-confident managers set personal standards for excellence, which are established through a manger’s willingness to work long hours, his or her obvious commitment to excellence, and in the setting and reinforcement of high performance standards.”
Second, in connection to experience, many managers attributed their confidence and success by building upon small wins. Stephen Covey, author of The Seven Habits of Highly Effective People, calls this baby steps: “Start small, keep at it, and stay consistent until you’re ready to pick up the pace.” This reason was particularly prevalent when managers reminisced about their experiences shortly after graduating college. One restaurant manager, after discovering a poor corporate culture, implemented an employee “family meal” every night at 5. This simple action increased employee morale and enabled him to learn more about his staff.
A director of sales & marketing found out that he was going to miss his sales quota by a huge number. Instead of trying to fix everything at once (an impossibility), he set small sales goals for each month and by the end of the year only missed his target by a small amount. A hotel manager for a five-diamond hotel identified building small wins with his first job as a bell person. Being responsible for making guests feel welcome, he had to learn how to make small talk with famous people, politicians, and presidents of corporations as he carried their luggage and provided an overview of the hotel operations and services.
A third component of building self-confidence comes from goal setting. Repeating the findings by Ireland, Hitt, and Williams: “Self-confident managers…often establish more challenging goals and persist in the pursuit of these goals.” One purchasing manager set a goal of reducing the hotel’s exorbitant food costs to one of the lowest for the chain. A sales & catering manager persuaded the general manager and the hotel’s owner to renovate the ballroom, which would set new sales levels for the property. By focusing on the goal of owning his own restaurant, one of Boston’s premier chef/owners survived year of working in challenging situations for less-than-favorable characters. One hotel manager hosts the same annual charity event; although it is always successful and the client is very satisfied, she makes a list of improvements—even if they are only small changes or tweaks—to ensure the function is better the next year
Fourth, many of the managers recognized the importance of others who helped build their self-confidence. The three main sources of support came from bosses, family members, and mentors (who may or may not have been their direct supervisor). Most interviewees highlight at least one of these people, and many identified two or all three sources as helping them to gain confidence. Often the supervisor provided moral support—a belief that the manager could accomplish the task, trusted them, and gave them the opportunity for success. For example, a relatively new restaurant chain manager’s boss told her he believed in her and let her handle a large event. That belief boosted her confidence that she could take on the new challenge successfully.
Several managers reiterated that their boss’s emotional support and confidence in their ability to succeed helped raise their self-confidence. A director of housekeeping relied on support and advice from the director of operations when dealing with an upset guest for the first time. The director of operation’s explanations and expectations gave her a clear understanding, giving her much more self-confidence when dealing with unhappy customers in the future. A general manager of a luxury hotel feeds off the high level of success and confidence from his senior corporate managers, boosting his own confidence since they believe in him. President Theodore Roosevelt reiterated this attribute: believe you can and you’re halfway there.
The fifth pattern that emerged from the research is that learning from failure developed self-confidence. James Burke, former CEO of Johnson & Johnson, fiercely believes you can’t build a business without making mistakes. Earlier in his career, he was once congratulated by the Chairman of the Board for the failure of a business line. Burke recalled the advice from Mr. Johnson, “Business is all about making decisions. You don’t make decisions without making mistakes. I just want to congratulate for that mistake. Don’t ever make that mistake again, but please make sure you make other mistakes.” Burke took that lesson to heart and taught it to those who worked for him.
Many of the hospitality professionals interviewed openly discussed their mistakes and how they learned from their failures. This factor was specifically mentioned by almost two-thirds of the interviewees. Learning from their mistakes and overcoming their failures were important building blocks for increasing self-confidence and enabling future successes. An entrepreneur learned to carefully check invoices and pay attention to details, after he was once fired for not balancing invoices. A restaurant GM’s career accelerated when he learned to own his mistakes instead of fearing them; in the process he also lost his arrogance. One room’s division manager talked about how second-guessing his decisions caused his employees to not follow him. By following Burke’s mantra of making decisions, right or wrong, and moving forward, he would learn from the results and become a better leader.
Almost every industry professional offered advice for the graduating seniors starting their hospitality careers. Here is a sampling of their advice:
- Trust in others—which is a large part of self-confidence since in this industry you cannot just pull off fabulous events by yourself.
- Every mistake is an opportunity to learn.
- Set small goals and achieve them one at a time.
- No one is infallible, everyone makes mistakes, so keep taking chances, learning from your missteps.
- Self-confidence is something that is not given or taught, but something that you have to gain through experience.
- Don’t be afraid to ask for help when you don’t know how to do something, it’s better than not doing it at all.
- The important thing is to build your confidence by doing things you’re good at. From there, you can slowly build your way up to difficult tasks that you previously dreaded.
- You become successful when you make others successful.
- The first step to building someone’s self confidence is to give that person knowledge and respect.
- Remember, it’s the little chutes and ladders along the way that make the game fun.
- Confidence is a precursor to strong leadership, especially in a group. Be supportive of situational leadership. Have someone who understands your weaknesses to bring out the best in each other.
Many students were unsure of undertaking this task—perhaps due to their lack of self-confidence in interviewing hospitality leaders. However, the overwhelming response after the task was successfully completed was that it was a worthwhile exercise. Reflecting on the assignment and the lessons from meeting with their interviewees, every student offered their own insights. Several revealed a better understanding of the importance of self-confidence in the hospitality industry. Even the illusion of self-confidence (“fake it ’til you make it”) is important for employees and customers to believe in you until you have real confidence to believe in yourself; the corollary to that is it is okay to have self-doubt as long as you keep trying new ventures. Working with others, setting goals and “level-five leadership” (Jim Collins’ research illustrating the combination of humility and fierce resolve among effective leaders) were additional concepts that emerged. Making mistakes, admitting failure, and using those experiences going forward were also themes many students highlighted. Although there were many more observations and personal reflections, a final important point students mentioned was that to be effective leaders themselves, it was important to build self-confidence for their subordinates, passing on their own experience and lessons to their staff.
Michael Oshins is Associate Professor of the Practice of Leadership in the School of Hospitality Administration at Boston University. He is former Vice President of Integer Dynamics, a hospitality consulting firm focused on operational productivity and technology. He holds a doctorate in human resource education from Boston University and a master’s degree in hotel administration from Cornell University. Email: email@example.com
By John D. Murtha
The hospitality industry relies upon a supply of college graduates for entry-level management positions. Graduates can immediately contribute valuable services to employers and their initial jobs are a start toward future roles as general managers, corporate executives, consultants, and owners.
The Four P’s
When recruiting the most capable young women and men from university programs, there is a consensus among hospitality professionals about the qualities that make candidates stand out, get hired, and achieve success in our industry. These attributes fall into four categories, which can be termed the Four ‘Ps’ of hospitality recruiting.
Candidates should arrive having already done substantial research about the companies holding the interviews, and be prepared to ask questions that reveal such research was undertaken. For example, if a company has a management training program, then this fact should have been discovered by the candidate and questions probing the nature of the training should be posed to the interviewer.
The candidate’s resume must be absolutely perfect with regard to spelling, grammar, and punctuation. Formats can vary according to personal taste, provided they have an overall traditional look. It is strongly recommended that resumes be limited to one page for seniors and recent graduates.
Candidates must present themselves as professionals from the start, demonstrating traits that the interviewer believes are innate and not adopted merely for the interview. This means dressing the part and exhibiting a high degree of poise and maturity. A confident (but not cocky) demeanor and genuine smile are essential for success in the lodging industry and should be displayed by any college senior.
During interviews, candidates should appear comfortable with the process, be able to converse easily, and maintain a respectful demeanor. For example, addressing the interviewer by his or her first name is unacceptable, unless permission has been granted to do so.
It is critical that candidates have some idea about what they want to accomplish in their careers and that they express this in specific terms during interviews. Being vague about professional goals can be a deal-breaker.
Although having a hospitality degree is essential for entry-level management positions, and while graduates from such programs are generally well prepared for entering the business world, their schooling does not replace on-the-job experience. Great candidates also have realistic expectations for the early years of their career. They understand that it will take time to develop the skills needed to succeed, that they must accumulate a reasonable breadth of experience, and that they will be expected to ‘pay their dues.’ This often means long hours, lower salaries, and a willingness to relocate for career-enhancing positions until they have proven their capabilities.
A recent article in Hotels magazine by Nathan Greenhalgh pointed to this issue. He observed that “hotel school graduates sometimes have inflated expectations about their career paths,” but that “new curricula from hotel schools include more business-focused courses, as well as more experience in the field.” Chris Mumford of HVS Executive Search was quoted as saying there is “still this complaint among hotel companies that these hotel schools are responsible for giving an inflated set of expectations.”
While a high grade point average is great, practical experience and demonstrated ambition are better indicators of how serious a candidate is about making a career in the hospitality industry. There must be evidence that the candidate is committed to hospitality.
Interviewers look for job experience that is relevant, reveals a solid work ethic, and demonstrates progression through a variety of jobs during their college years. Experience in supervisory roles, or leadership positions in industry-related extracurricular activities or clubs, is especially valuable.
In addition to traditional interviews, some recruiters use personality tests or leadership style assessment tools to identify traits believed to make someone an ‘ideal manager’ for the hospitality industry. These include the Myers-Briggs Type Indicator and the Predictive Index. Critics of these tools argue that they are not infallible, so the results are often used to inform rather than determine decisions.
Most recruiters would like candidates to exhibit the following range of attributes that various testing tools can help to reveal:
- Open-minded and flexible, having the ability to understand a range of perspectives and opinions;
- Eager with a sense of urgency, having the ability to get things done quickly and correctly;
- Comfort with policies and procedures that are dictated by others;
- A team orientation, with a willingness to commit to the objectives of a group;
- Ambition, with the urge to advance and be seen as a leader
- Self-motivation, with an outlook that is undaunted in the face of challenges;
- A personable and happy manner, which increases the likelihood they will be liked by others
Marta McManus, Director of Career Services in the School of Hospitality Administration at Boston University, recently commented on these issues. She observed: “We view career services as a linkage between students and industry professionals. To create this linkage, we start from the career basics of resumes and cover letters. Then we prepare students on what to expect in an interview and provide them with a mock interview. Through this process, we also offer workshops on proper dress and professional protocol when working with business leaders.”
Natalie McGinniss, the employment manager at the Omni Parker House Hotel in Boston confirms that this comprehensive approach makes a difference. She remarked: “One thing I noticed when interviewing BU students is that they were all professional and well prepared for the interview. This made it more difficult, in a good way, to determine the top choices. So, we had to look more closely at their purpose and passion for the industry.”
The ‘Four Ps’ are a useful way for hospitality professionals to assess the qualities of prospective entry-level managers. Candidates should be aware that these categories are being considered and plan accordingly.
John D. Murtha, CHA, is a 37-year veteran of the hospitality industry. He is currently General Manager of the Omni Parker House Hotel in Boston, the longest continuously-operating hotel in America. He has been an adjunct lecturer in the School of Hospitality Administration at Boston University since 2001. He was recently inducted into the Hall of Fame by the Massachusetts Lodging Association. John graduated from the Hotel Administration program at the University of New Hampshire, where he is currently a member of the Hospitality Leadership Council and Advisory Board. Email firstname.lastname@example.org
By Rachel Roginsky and Matthew Arrants
In prior quarterly reports, Pinnacle Advisory Group presented timely updates about the New England lodging industry, which included focused profiles on particular cities. In this issue, the firm offers more general insight about the hospitality industry. Several Pinnacle executives recently participated in a panel discussion about investment, management, and careers in the hospitality industry. The results appear below.
What issues most affect hotel investment and valuation at the property level?
Within our daily practice, we focus attention on the hotel investment community and what prospective investors are considering when acquiring hotel assets. Two of the most important issues frequently discussed are hotel management and franchise affiliation (flags).
Not all hotel management companies are created equal. We have been involved with several projects involving a turnaround/repositioning where new management was able to drastically increase the profitability of a hotel. Since profitability (or net operating income) directly leads to hotel value, the ability of a management company to drive top line revenues in addition to operating efficiently on the cost side is enormously significant. Depending on the hotel type/chain scale, management must have the tools necessary to drive profitability for the hotel owner. When hotel properties are listed for sale, investors often find unencumbered assets to be more desirable.
While management does not always have the ability to select and/or change a franchise affiliation, this is another integral component affecting hotel valuation. Each brand targets specific customers and offers rewards/benefits to frequent travelers. When investors are considering purchasing a hotel property, one of the first questions is often regarding the brand. Is there an opportunity to renovate and reposition? Is there an opportunity to convert to a new franchise affiliation? The type of brand in each particular location can dramatically affect the overall value of a hotel property. It is important to select the right brand for each location.
Hotel values and investment are typically driven by a hotel’s potential income. A hotel’s estimate of value and investment are further determined, and potentially reduced, by current and/or anticipated capital needs. While property-level managers and owners cannot control the macroeconomics of a particular market, they can certainly impact day-to-day activities, which can ultimately improve a hotel’s amount of income, and they can preserve the physical condition of the asset thereby reducing capital needs. By doing this, the property-level owner and manager are helping to boost the value of the hotel and make it a more attractive investment.
A hotel’s income is driven by top-line revenues and reduced by operating expenses. Competent and effective property-level managers and owners should continuously monitor and address both supply and demand factors within the competitive market. The on-site team should strive to obtain the greatest fair share of demand, and the highest room rates possible, allowing the property to surpass competitors in its REVPAR penetration. Controlling expenses at an optimal level, combined with high gross income, will ultimately provide the hotel higher net income levels and elevated value.
Property-level management and owners also need to be aware of all deferred maintenance. They should continue to upgrade the property to the required standards of the brand, and ensure that the property’s physical condition exceeds the condition of its competitors. When a potential investor is deciding how much a hotel is worth, a lesser amount of capital requirements for the physical aspect of the hotel will only serve to increase the value of the hotel asset.
What strategies should hotel owners or managers follow in times of financial uncertainty?
There has been a fair amount of volatility in the economy over the last decade. One only has to look at the soaring hotel rates and values in 2006 and 2007, and then to the fallout experienced in the industry from 2008 to 2010 following the national economic recession, to have an understanding of how economic instability can significantly impact hotel operations. During tough or uncertain economic times, weakening demand, price sensitivity, and shrinking budgets (both for the customer as well as the hotel operator) can have tremendous detrimental effects on a hotel’s bottom line. To help get through these periods of economic turmoil, hotel operators can focus on two main areas: revenue management and customer service (guest satisfaction). These areas should always be in focus, but they can be particularly helpful in weathering the tougher times.
Revenue management is crucial during economic uncertainty. Understanding how to best utilize the multitude of distribution channels can prove to be the difference between maintaining rate integrity and having average rates fall off a cliff. Significant rate declines that occur as a result of recession often take multiple years to recover. It has not been proven that lower rates lead to more business, but lower rates certainly lead to lower profitability. Equally, if not more important, is a focus on customer service and guest satisfaction. During tough economic times, there is a tendency to eliminate amenities and ancillary services. To some extent, this may be necessary to achieve acceptable levels of profitability. However, ensuring that hotel associates are visible and truly are customer-centric can have a huge impact on the overall satisfaction level, and intent to return, for guests.
During an economic downturn, such as the recent times experienced due to the housing crisis and the years that followed the terrorist attacks of 2001, market demand is negatively impacted as travel across all segments decreases. Subsequently, market rate declines as individual properties compete for what little demand is available. Eventually occupancy will begin to rebound, but it is much more difficult for markets to drive rates to previous levels. For this reason, maintaining rate integrity during financial uncertainty is important to long-term profitability.
One of a hotel’s largest expenses is labor. As demand levels decrease, management must strategically budget (reduce) labor costs, while being careful not to sacrifice the product/service and ultimately the hotel’s reputation. Staffing needs are directly influenced by demand levels. When occupancy drops, so should labor.
Lastly, management will be held accountable for the strategies put in place to mitigate declining profitability. For this reason, communication between management and ownership plays an important role in avoiding any surprises as market demand declines and a hotel’s performance seems to dip.
Financial uncertainty is a given in the nature of the real estate cycle. To protect yourself and your asset during a downturn, it is often best to strive for operating efficiencies throughout the entire cycle, both good and bad. Avoid over-hiring and over-spending. Most of all, avoid over-leveraging the asset and making it more susceptible to risk. Anticipate heavy capital spending at least every four to six years, especially if the asset is licensed with a major brand. Reserve requirements are typically underwritten in the 4 percent of total revenues range, but from an owner’s perspective it may be more beneficial to establish a reserve 1 to 2 percentage points higher than the underwriting standard (especially for a full-service, branded property). Also, avoid ‘giving away’ rates too much during a downturn for the sake of filling up rooms. This will make it harder to re-establish the property’s former rate position following a down-cycle period.
What advice would you give to recent graduates of hospitality schools?
It’s exciting to have achieved a degree. It’s a sign that you have really persevered and completed something. But to make your first years in the industry as productive and successful as they can be, I would offer the following advice.
In the hospitality industry, we all rely on each other. The most expensive facilities in the world do not achieve five-star status without kitchen porters and room attendants who care about their work and take pride in it. Acknowledge and appreciate the contributions of others, particularly the unsung hourly workers who make our hotels great. And along the way, you can learn a lot from those hourly workers, including how to make the hotels you eventually manage more efficient and profitable.
It is very tempting to point out the deficiencies we see in others. “This person messed up this” or “that’s not how this should be done.” The advice: Don’t. When you complain or gossip about others, the walls have ears and it inevitably gets back to the person you are talking about. One management trainee at my hotel complained about a restaurant manager to the food & beverage director. When he completed his training program, he became an assistant manager in that very restaurant. He got the worst possible shifts. Every time. Coincidence?
In interviews, focus on the positive. Telling an interviewer about all the negative things that a prior employer has done will not make you seem more knowledgeable or a pleasant person to be around.
Rather, the interviewer will start to wonder if you are a troublemaker .Nobody knows everything. And if you don’t know the answer to a question, don’t be afraid to say: “I don’t know. May I do some research and get back to you?” Then follow up. At this point in your career, you are not supposed to know it all. You just need to be willing to pitch in and find out.
Be curious. Ask questions. It’s a great way to learn, and most people will be delighted to help. Most people love to be considered experts. Just remember, at this point in your career, you are most expert at being a student of hospitality management, not being a hospitality manager. Be humble. You’ll get farther faster, and people will like you better for it.
When asked for career advice, I encourage students to focus on learning the industry and building strong relationships. They should not focus on the money. That will come with experience. Besides, as my mother used to say: “You’re supposed to be poor when you’re young, it builds character.”
The best way to learn the industry is to expose yourself to as much of it as possible. Most of the leaders in our business started washing pots and pans, or cleaning rooms, or parking cars. They all worked their way up the ladder. Rarely is the ladder straight. The breadth and the depth of your experience are equally valuable.
If you are entering the hospitality industry you are a ‘people person’ by definition. Building and maintaining relationships with your colleagues will serve you well in the future. In this industry, you are going to work hard and work with a lot of different people at a lot of different companies. Over time, you should be developing a strong network of friends that you can call on for advice and information that will provide you with future growth opportunities. Finally, whether you stay in the hospitality business or not, your range of experiences and depth of relationships will provide you with a rich life.
The hospitality industry offers a wide range of career options, and where your interests lie while you study in school may not be the only path worth exploring once you discover more of what is available in the field. Even if your major while in school was in one area, try to be open-minded when considering aspects of the industry that are outside of your focus. For instance, if you are looking to go into operations and your concentration was in marketing throughout your coursework while in school, don’t limit yourself to only looking for job opportunities in the sales and marketing department in a hotel. Often, to get your foot in the door with a company or property that you want to work for, you may need to look for options in other departments, such as rooms or food & beverage. Once you are working for a property and you work hard to prove yourself, others will see your successes, which can open doors for movement into other areas of the hotel. Continue to stay in close touch with senior managers in your hotel, so they know what your aspirations are. Always look for opportunities to show your skills which might be outside of your existing role. You may even discover that your passion lies in an area that you hadn’t considered before being exposed to it.
Along the way, perhaps one of the most important things you can do for your career is to maintain and increase your connections. This starts with your classmates from school. Within a few years, your peers will hold positions in a variety of disciplines, and the connections that you made in school will be valuable as you progress in the industry. The industry as a whole is close-knit, so it is important to maintain friendships and remain in good graces with former colleagues as you change jobs. You never know where your paths may reconnect again sometime in the future.
Rachel J. Roginsky, ISHC, is the owner of Pinnacle Advisory Group. She has more than 30 years of experience in hospitality consulting. Ms. Roginsky is a board member of numerous organizations related to hospitality, is a regular guest lecturer at the Cornell Hotel School, and is co-editor of five leading hotel investment books. Email email@example.com
Matthew Arrants, ISHC, is the Executive Vice President of Pinnacle Advisory Group. Prior to joining Pinnacle, Mr. Arrants worked in operations with Four Seasons Hotels and Rock Resorts.
He holds a master’s degree in hotel administration from Cornell University, and a bachelor’s degree in political science from Hartwick College. Email firstname.lastname@example.org
By Bradford Hudson
Three decades ago, American industry was obsessed with quality management. Thomas Peters and Robert Waterman helped create the enthusiasm during this era with their best-selling book In Search of Excellence. Although the subsequent quality movement was quite successful in the manufacturing sector, it has been less successful in services. Indeed, there is little evidence of effective quality management in the hospitality sector today.
The Quality Movement
The effort to increase consistency, minimize errors, and reduce costs has been a priority in manufacturing since the beginning of the Industrial Revolution. Notable milestones and pioneers include the interchangeability of parts attributed to Eli Whitney, the scientific management approach promoted by Frederick Taylor, the development of statistical process control by Walter Shewhart at the Hawthorne Works, and the influence of quality experts such as Edwards Deming and Joseph Juran on industrial reconstruction in post-war Japan.
The latter contributed to a significant and unexpected quality advantage among Japanese cars, which resulted in serious competitive pressure on the American automobile industry and the near collapse of Chrysler. This served as a wake-up call for automobile executives, but it also served as the catalyst for a renaissance in quality management throughout the economy.
The quality movement reached its zenith during the 1990s, in terms of its prevalence as a topic of discussion among business practitioners and within the popular media, and it has faded in importance during the following two decades. This decline could be attributed to several causes. Perhaps quality was never actually a problem, maybe quality was simply a fad, perhaps ideas about quality were not communicated well, or maybe the solutions proposed by experts never actually worked.
My suggestion is that the principles of quality management were embedded in the repertoires of practitioners and the curricula of business schools, and that quality management has become routine for any executive in the manufacturing sector. The lessons learned from the Japanese were widely adopted in the United States and Europe, and have now become global standards that are followed even in developing nations. The quality problems in manufacturing that existed two decades ago have now been solved or at least improved significantly.
The quality movement in manufacturing was followed shortly thereafter by a quality movement in services. A new academic field, variably referred to as service management or services marketing, was developed by faculty members at several leading business schools. Notable among these were Leonard Berry (Texas A&M University), Roland Rust (now at the University of Maryland), and Valarie Zeithaml (University of North Carolina). The pioneers also included numerous academics affiliated with Harvard Business School including Christopher Hart, James Heskett, Christopher Lovelock, Earl Sasser, and Leonard Schlesinger.
Services marketing is now an established field with its own extensive literature. At the core are two basic principles. First, services differ from manufacturing due to their intangibility, variability, simultaneity, and perishability. These characteristics can be problematic for managers who use principles and tools designed for manufacturing without adapting them to the unique aspects of the service sector. Second, services are usually produced and delivered by people rather than machines. This means that service companies must understand the linkage between employee behavior and customer satisfaction, and develop sophisticated systems in the areas of human resources, management, and organizational behavior.
Service Quality Today
Despite the attention paid to service quality over the past three decades, and the extensive academic literature that has appeared during this time, my contention is that service quality has not improved at all. Problems with service are prevalent throughout the economy, but they are especially notable in the hospitality sector. Two cases from my own experience will illustrate this point.
The first case involves hotels in the luxury segment. Two decades ago, we vacationed at a beach resort, which was part of an international chain of luxury hotels renowned for its quality management systems. The individual property was rated
‘Five-Star’ by the Mobil Travel Guide and ranked as the top resort in the United States by a leading travel magazine. During our stay, we experienced a series of errors and lapses in service that compelled us to write a letter of complaint. The general manager responded with a tepid letter of apology, which offered a complimentary visit to make amends. However, the problems were so serious that we never returned.
Earlier this month, my family vacationed at a different beach resort, which is part of another internationally renowned chain of luxury hotels. This property was rated ‘Five-Star’ by the Forbes Travel Guide and ranked among the top 20 resorts in the world by a leading magazine. Again, during our stay we experienced a series of errors and lapses in service that compelled us to write a letter of complaint. The problems were very similar to those experienced at the other hotel two decades earlier. Again, the general manager responded with a tepid letter of apology, which offered a complimentary visit to make amends. And again, the problems were so serious that we resolved not to return.
The second case involves restaurants in the quick service segment. Two decades ago, we visited a quick service restaurant that was part of an international chain renowned for its standards and consistency. During our lunch, we experienced a series of errors and lapses in service that compelled us to write a letter of complaint to the corporate headquarters. The area manager subsequently contacted me to apologize and offer some coupons to make amends. He admitted that similar problems at this location had occurred so often that his company decided to rescind the franchise rights and assume direct control of the unit.
Earlier this month, my family visited a different quick service restaurant, which is also part of an international chain respected for its standards and consistency. Again, we experienced a series of errors and lapses in service that compelled us to write a letter of complaint to the corporate headquarters. Again, a senior manager contacted us to offer apologies and coupons.
These two cases occurred in different industries within the hospitality sector, in different segments of their industries, with locations operated by different managers, represented by different chains, in different parts of the country, across the span of two decades. And yet, in both cases, the quality problems and the management responses were almost identical.
An astute reader might wonder if the problems in these cases were attributable to difficult customers who were impossible to satisfy or a typical guests with unusual preferences. In response, it should be noted that every unmet standard had been established by someone else. Guest expectations were calibrated against widely recognized industry or segment norms, explicit standards of the chain or property, or the star-rating system that the property was promoting.
One could also argue that these cases, while compelling, are limited and anecdotal. However, my personal experience as a consumer of services in numerous industries and contexts indicates otherwise. It seems indisputable that poor service remains a real and widespread phenomenon, and that these cases are representative of the status of service quality throughout the hospitality sector to day.
A Missed Opportunity
My academic expertise includes services marketing and hospitality management. My prior career includes work as a manager with a leading luxury hotel chain and as a consultant in the area of service quality for multinational corporations in numerous industries. Based on these experiences, three conclusions seem valid.
First, the quality management revolution somehow bypassed the hospitality sector. This is a stunning contention, given that leaders in the hotel and restaurant industries consider themselves to be the exemplars of superior service.
Second, the basic principles of quality management, specifically that poor quality and customer dissatisfaction are costly, remain valid. Service problems undermine the financial performance of hospitality companies and, due to the immersive nature of services, have a significant impact on the quality of life for guests.
Third, the techniques of quality management have proven to be quite successful in the manufacturing sector, and academics have subsequently offered voluminous advice on how these principles should be applied to the unique characteristics of services. The hospitality sector is simply not using them.
The Cost of Quality
Business practitioner and quality consultant Philip Crosby devised the maxim ‘quality is free’ to convey the idea that the savings achieved through improved quality typically exceed the expense of implementing quality programs. This reflects the prior work of Demings and Juran, who had proven conclusively that improved quality delivers financial benefits in manufacturing contexts.
The same dynamic also occurs in services. An example in the hotel industry is an erroneous room service order, which requires the entire production and delivery sequence to be repeated and the improperly prepared item to be discarded. The duplication in labor and food costs, which typically represent about two-thirds of the revenue generated from the order, are quite significant and completely eliminate any operating profit for that transaction. Now imagine the cumulative cost if such errors occur repeatedly.
My first job in the hospitality sector was as a room service manager in a five-star hotel. Even minor errors, such as a missing spoon on a tray, would cause significant problems, because the server would be required to repeat the delivery process. Given the consequences of failure, it was astounding to discover that the error rate for orders in room service was nearly 50 percent. More astounding was the revelation that senior managers had known about this situation for months and, while concerned, had not done anything to implement a systematic approach to diagnose and resolve the problem.
The hospitality sector has an amazingly lackadaisical attitude about service failures. Even in five-star hotels, a service failure will result in little more than a sharp rebuke to the manager responsible, a computer-generated apology letter to the guest involved, and perhaps an offer of a complimentary dessert or a room during the off-season.
This amounts to little more than appeasement of angry guests, and does virtually nothing to correct the root causes of problems, which will undoubtedly occur again.
Although service failures are typically regarded as independent events, caused by uncontrollable circumstances or ineffective employees, they are more often the result of poorly designed service delivery systems or inferior management systems throughout the organization. In some instances, such problems reflect the nature of an entire industry. My contention is that quality failures in the hotel and restaurant industries have fundamental causes.
First, the hospitality sector is not particularly sophisticated in terms of management systems and practices. The inseparability of production and consumption results in thousands of small and relatively independent locations, which cannot support the types or layers of specialized management that are common in centralized manufacturing facilities. This is further exacerbated in the case of independents, which have no corporate infrastructure. The tools required to effectively manage service quality are simply unavailable. Even if front-line hospitality managers understand quality techniques, the analysis necessary is often seen as peripheral to basic operations.
Second, the financial costs of implementing quality management systems are readily measurable and significant, while the financial costs of service failures are hard to measure and easily overlooked. It is very difficult to predict, capture, and measure events that never occur. Services generally cannot be returned after delivery, and the easiest remedy for unsatisfied guests is simply to return less often or never return at all. Nonetheless, the work of Frederick Reichheld and others in the area of loyalty and retention has demonstrated conclusively that a lost customer has a significant negative financial impact.
One of the case scenarios discussed earlier will illustrate this point. Since we experienced problems at the first beach hotel two decades ago, we have never visited another property in that chain, despite staying at numerous competing luxury hotels in destinations where the offending brand had a hotel. The leaders of the parent company have no idea that they have lost us as potential customers, nor have they attempted to measure the lifetime value of our patronage, which amounts to tens of thousands of dollars.
Third, strategic management is often separated from daily operations, even in contexts where operational experience is a necessity for career progression, such as the hospitality sector. During my appointment as chief executive officer of a restaurant company, my attention was devoted almost exclusively to financial performance and acquisitions, rather than the details of daily operations and the satisfaction of individual guests.
It was amazing how quickly my own experience as a quality consultant was forgotten, despite my philosophical commitment and practical expertise in this area.
A Way Forward
Another round of enthusiastic promotion and persuasion by quality experts, in which a series of logical arguments is used to garner commitment to quality principles by hospitality executives, is unlikely to have the intended effect. If the impasse is being caused by excessive attention to the costs of implementing quality management programs, and a lack of understanding about the true costs of service failures, then perhaps a solution can be found in the particulars of cost accounting rather than the platitudes of service excellence.
It is my contention that academics in business schools and hospitality programs who are committed to service excellence, and who have their primary appointments in non-financial disciplines (such as marketing, management, or operations) should engage more effectively with topics and colleagues in the disciplines of finance and accounting. The financial analysis of quality failures must be embedded within courses or modules about service management or services marketing. To the extent possible, faculty members interested in services should also request and encourage the discussion of service quality in courses about financial accounting, managerial accounting, and corporate finance.
One practical example of integrating quality management and financial management can be found in the service guarantee technique. In its purest form, guests are offered the opportunity to ‘return’ unsatisfactory service experiences by invoking a guarantee, which results in an immediate and unchallenged refund of their expenses.
To be clear, this is not the same as offering a complimentary dessert or room during off-season to placate a guest. This is a reversal of the entire amount charged to their credit card for the visit in question, which must then be deemed waste, in the same manner as an improperly formed beam in the steel manufacturing industry.
The nuances of the guarantee approach are described extensively in the work of Christopher Hart, who popularized the technique during his time at Harvard Business School, and will not be repeated here. The point is that, in the guarantee system, the amorphous nature of poor quality is made concrete, because it is formalized as an exact amount of unrealized revenue in the financial statements. At the end of every month, even the chief executive officer of a huge chain can evaluate the effect of quality levels at the unit level, and even a chief financial officer will become committed to guest satisfaction.
A Time for Reckoning
It is time for executives in the hospitality sector to be honest about the ubiquitous nature of service failures and admit that service quality has not improved in decades. Quality management systems must be adopted or improved, even at five-star properties. Significant advances could be made by more closely linking service operations to financial accounting, and academic curricula should be adapted to recognize this connection. Beyond that, we have an ethical responsibility to deliver on our promises. We can and should do better.