When I was writing this article I was shocked to here the flash news about Mumbai’s brutal terrorist attack where our collogues in other hotels and the ATS chef of Mumbai was shot dead by terrorist. My condolence to their families, it hurts us when we find innocent civilians and brave officers of our country are being targeted, but the question is during this crucial time when the world is witnessing global financial meltdown, what is our duty? Are we need to be panic? I believe that we are in the middle of a Financial Panic and Global Terrorism threat.
Many are hoping that things would get better and wanting to avoid adding to the panic.
I understand that approach. I don't want to add to the panic either. I didn't cause this mess, and I am very sorry for all who are hurt by brutal attach of terrorists. But I do believe that things have reached a point that we can only move on if we admit where we are, are we realistic about the situation, and make the best of it that we can. Being an ostrich will not improve our situation.
Citibank laying off 50,000 employees worldwide, consumer’s confidence at the lowest point, Sensex is down so many points etc . . . Where do I stop?
Have you talked to people losing their jobs and family members of those brave mans who sacrifice there life recently to save this nation or those who are struggling to meet a mortgage or being wiped out by money market? People are scared. They are terrified. They are in a "panic" that I believe will go down as one of the most important financial disasters in the past 200 years (Yes. That was 200, not 20). So why pretend everything is fine? Even better, why not look for opportunity?
"Next to my daughter I love a good panic more than anything else."
I hope the "downturn" is a short and silly one, but that is not what the data indicates. The most optimistic experts are now looking to mid 2009 as a possible bottom, but others are looking to 2010 or beyond, and fear a weak recovery when it finally comes.
Do your own research. Look at who made money then. You will find fairly big lilt of names around you.We may still have some significant pain to suffer, but there will be a phenomenal opportunity to make money in the very near future. We are still having trouble accepting that things are this messed up. So every new piece of depressing data immobilizes us like we were for months after the 9-11 tragedy -- frozen in front of our TVs, watching the twin towers getting hit over and over.
NOW is the time to get ready for the unprecedented opportunities. Somewhere in 2009 or 2010 the landscape will start to look different. You can hunker down until then or you can start looking for opportunities that will put you way ahead of the game.
We are on the verge of value opportunities that we haven't seen for at least 20 years.
Here are some of the opportunities I see which I shared with you.
Discounted notes. Opportunistic investors with capital will look first at discounted rate. With out regard to real value of the underlying asset, which may be compromised in varying amounts. This is an area where we expect price and value will take bigger adjustment faster. Look for the discount of 20 percent or more. Some are seeing what they believe are up to 30 percent now.
Recapitalizing distressed borrowers. One way to invest in the upside is to buy assets or outright equity in distressed owners needing capital to fund operations or to meet other financial challenges, may even step back into a passive position with little prospect of economic gain other than delaying. This is an area for creative and aggressive deal making with the assistance of a competent advisory team.
Equity purchases or investment. It's not "whether" it's going to come back, it's "when." Cash is king, so if you have money then get ready to jump in the game. How long should you wait before you jump in? Don't wait too long - a good deal is a good deal. I remember the 1992 when my father wanted to invest but he could not. "We don't know if it's low enough to buy yet; how long can we carry it?" A few years later my father use to say : "I should have bought everything I could." My friends who bought made a bundle.
Workouts. Workouts are an opportunity to harvest great value. Don't let this stop you! Hook up with those experts who have knowledge, energy, and capital and have been through the workout drill before. There is a ton of capital on the sidelines. Workouts will help the deal flow.
Mixed use and hotel mixed use. If you have the stamina and the intelligence, properties can be repurposed with great profit potential. Due carefulness is particularly critical here. If you don't know how to create a successful hotel regime, then you don't know the right questions to ask to see if your potential investment can succeed, or to develop the exit strategies!
I asked so many people about the future of our economy. At least 90% of them said they are optimists! It's a good thing too. These are the people who will do the deals they will help to get the economy back on track. Some of them will even make a fortune.
This current environment will continues to provide great opportunity and . . .danger. Fortunes will be made . . . or lost in the coming months.
Monday, December 29, 2008
Monday, December 22, 2008
Sales Planning is the Principles of Success in a challenging economy.
"Plans are only good intentions unless they immediately degenerate into hard work."Peter Ducker
12 Successful Fundamentals in Sales Planning that can make the difference!
The current global economic news is not generally positive these days in the hospitality and many other industries. The need for planning is more critical than ever and the quote from Peter Drucker says it all - it takes focused efforts to address the situation and begin to turn the situation around.
Would you like to make your sales effort more successful?
The following are all fundamentals in sales, but are too often overlooked in exchange for what are actually marketing strategies. Pursue these sales guidelines when soliciting and booking business and servicing accounts:
1. Acquire and use good selling knowledge. Finding out who your customers are, where they are coming from, how they came to select your property, why they stay at your property, how long they stay and how much they spend- among other information -will help focus your sales effort.
2. Plan A Good Market Mix. It is extremely hard to be all things to all people all the time, which means knowing your proper customer base. While one does not want to turn away potential, understanding the mix of business reflects how much of what type of business you're doing. Ask yourself: What percentage of my total room sales comes
o from meetings at your hotel or nearby centers
o from youth groups or sports related activities
o from the transportation center (airport, bus, cruise lines, trains, etc)
o from seniors and why
o from the brand reservation center and at what rates and plans
o from transient business, walk in guests and other categories?
Now, after you review the past 3-6 months to accurately see trends, what decisions do you need to make in your selling activities? What mix of business would be most profitable?
3. Know Your Competition and specifically your direct competitors. I have heard more than one brand CEO warn at recent meetings that there are "going to be more e the areas in which you can compete the best, whether it is location, price, size, product, service or amenities. The idea, of course, is to sell your positives and to expand your market share.
4. Research and qualify your multiple price policy. There's nothing wrong with selective discounting. Hotels have been doing it for years, with special off-season, corporate, group, senior citizen and military rates, among others. Do you know which special rates are generating business for you? A periodic review of all your rates will help you establish the multiple-rate policy that's right for you. There are many 3rd party sites that may or may not help your profitability and/or cash flow, Rooms used, rooms denied because you were full, rooms declined for reasons of rate, location, etc. so that you can evaluate the business decision. Determine what your competitors are doing by there organizations as well you may.
5. Make high-quality Business Contacts And Make Them Work For You. Getting good business contacts is the first step, and making sure they're bringing business into your property the second. Make sure your contacts are frequent users of either the area and/or your property and then ask them to provide you leads.
6. Try New Things. Remember: most successful entrepreneurs would not be where they are today if they didn't take a chance and try new things. Come up with new ideas to promote business and don't be afraid to put them into action.
7. Develop new sales techniques to book more rooms and new proposals to land more group business.. . If only half of your new schemes works, you'll be ahead of the game.
8. Be Attentive To Selling Costs. In any business, spending more than you take in, of course, is dangerous. Cost effectiveness in selling for a hotel is very important. As total sales expenditures start to creep up, you must continue to expect a greater return from your sales effort. Budgeting for sales and monitoring the sales budget against results are essential.
9. Follow Solid Management Procedures. In general, try to do a better job communicating, developing, training, motivating, planning, organizing, directing and controlling. It's not enough these days to hire a salesperson and say: "Get out there and sell."
10. Recruit High-Quality People. You want and need sales professionals who are sincere, believable, down-to-earth, friendly, committed, well dressed and well mannered; in other words, individuals who will represent your property well.
11. Set Realistic Growth Plans. Yes, even in down economies, there must be some stretch goals. These should assess where you are today and honestly project where you expect and want to be next year, the year after, and so on.
Sell Aggressively. Aggressive and assertive are not synonyms. One means hard hitting and the other confident - in challenging economic times, those professionals in sales must have some of both.
12 Successful Fundamentals in Sales Planning that can make the difference!
The current global economic news is not generally positive these days in the hospitality and many other industries. The need for planning is more critical than ever and the quote from Peter Drucker says it all - it takes focused efforts to address the situation and begin to turn the situation around.
Would you like to make your sales effort more successful?
The following are all fundamentals in sales, but are too often overlooked in exchange for what are actually marketing strategies. Pursue these sales guidelines when soliciting and booking business and servicing accounts:
1. Acquire and use good selling knowledge. Finding out who your customers are, where they are coming from, how they came to select your property, why they stay at your property, how long they stay and how much they spend- among other information -will help focus your sales effort.
2. Plan A Good Market Mix. It is extremely hard to be all things to all people all the time, which means knowing your proper customer base. While one does not want to turn away potential, understanding the mix of business reflects how much of what type of business you're doing. Ask yourself: What percentage of my total room sales comes
o from meetings at your hotel or nearby centers
o from youth groups or sports related activities
o from the transportation center (airport, bus, cruise lines, trains, etc)
o from seniors and why
o from the brand reservation center and at what rates and plans
o from transient business, walk in guests and other categories?
Now, after you review the past 3-6 months to accurately see trends, what decisions do you need to make in your selling activities? What mix of business would be most profitable?
3. Know Your Competition and specifically your direct competitors. I have heard more than one brand CEO warn at recent meetings that there are "going to be more e the areas in which you can compete the best, whether it is location, price, size, product, service or amenities. The idea, of course, is to sell your positives and to expand your market share.
4. Research and qualify your multiple price policy. There's nothing wrong with selective discounting. Hotels have been doing it for years, with special off-season, corporate, group, senior citizen and military rates, among others. Do you know which special rates are generating business for you? A periodic review of all your rates will help you establish the multiple-rate policy that's right for you. There are many 3rd party sites that may or may not help your profitability and/or cash flow, Rooms used, rooms denied because you were full, rooms declined for reasons of rate, location, etc. so that you can evaluate the business decision. Determine what your competitors are doing by there organizations as well you may.
5. Make high-quality Business Contacts And Make Them Work For You. Getting good business contacts is the first step, and making sure they're bringing business into your property the second. Make sure your contacts are frequent users of either the area and/or your property and then ask them to provide you leads.
6. Try New Things. Remember: most successful entrepreneurs would not be where they are today if they didn't take a chance and try new things. Come up with new ideas to promote business and don't be afraid to put them into action.
7. Develop new sales techniques to book more rooms and new proposals to land more group business.. . If only half of your new schemes works, you'll be ahead of the game.
8. Be Attentive To Selling Costs. In any business, spending more than you take in, of course, is dangerous. Cost effectiveness in selling for a hotel is very important. As total sales expenditures start to creep up, you must continue to expect a greater return from your sales effort. Budgeting for sales and monitoring the sales budget against results are essential.
9. Follow Solid Management Procedures. In general, try to do a better job communicating, developing, training, motivating, planning, organizing, directing and controlling. It's not enough these days to hire a salesperson and say: "Get out there and sell."
10. Recruit High-Quality People. You want and need sales professionals who are sincere, believable, down-to-earth, friendly, committed, well dressed and well mannered; in other words, individuals who will represent your property well.
11. Set Realistic Growth Plans. Yes, even in down economies, there must be some stretch goals. These should assess where you are today and honestly project where you expect and want to be next year, the year after, and so on.
Sell Aggressively. Aggressive and assertive are not synonyms. One means hard hitting and the other confident - in challenging economic times, those professionals in sales must have some of both.
Wednesday, December 17, 2008
Hotel Business Strategies For Economic Downturn
Research shows hotels are not immune to changes in supply and demand as market places evolve. Over the last five years, the hotel industry has experienced overall strong growth, some rationalization occurred before the credit crisis began and further rationalization will occur as the global economy experiences further pressures
Even though the short term outlook is uncertain, it is important to understand potential longer-term consequences of reactive decisions made during an economic downturn and review how hotel may take advantage of market changes during economic downturn.
For example:-
· Development Plans - as others around you shelve hotel development or refurbishment plans, it may be advantageous to continue with the project, assuming funds are available, and take advantage of the increased availability of trades people, advisors, trainers and suppliers you will require to continue with your project. You may be able to negotiate better pricing and timelines due to reduced workload.
· Staff Retention - given the shortage of qualified and experienced hotel employees, it will be more cost effective in the longer term to retain staff so when the market bounces back, the business does not effect and the time and cost of recruitment is saved.
Many hotels have been too busy during the boom time to focus on improving the way their business operates, so any slowdown may provide the opportunity to make required changes. A full review of the business may seem a difficult and time consuming task, so break it down into key areas to make it easier. For example, some important activities which aim to minimize the negative effects of reduced demand, whilst establishing systems and procedures to ensure your hotel runs smoothly during busier times to come, include:
Management
· If you cannot, or decide not to reduce the number of staff to match reduced demand, keep idle employees productive with training and special projects and encourage them to take annual leave owing.
· Review the financial reports to identify areas so that the hotel could reduce costs and improve profitability.
· Review industry benchmarks to identify areas in which the hotel is performing above and below the local industry average. Initiate activities to improve the hotel’s weaknesses and maintain the hotel’s strengths.
Marketing
· Modify marketing collateral to adapt to consumer sentiment, for example, emphasize hotel’s treatments and services which aid stress-relief if it is relevant to your local community.
· Raise the awareness of about services offered to encourage consumers.
· Ensure treatment prices remains competitive as the local market changes. Consider adding more value to establish a competitive point of difference, rather than automatically discounting standard treatments and products.
Operations
· Review and update standard operating procedures(SOP) to minimise hidden costs associated with inefficient activities, product and supplies wastage and outdated policies.
· Ensure there are no gaps in procedures, to minimise risk to clients, employees and property which could result in legal action.
· Employees are responsible to implement service standards correctly so the guest satisfaction is maximised to retain existing customers and encourage free, positive word-of-mouth advertising to generate new clients.
Even though the short term outlook is uncertain, it is important to understand potential longer-term consequences of reactive decisions made during an economic downturn and review how hotel may take advantage of market changes during economic downturn.
For example:-
· Development Plans - as others around you shelve hotel development or refurbishment plans, it may be advantageous to continue with the project, assuming funds are available, and take advantage of the increased availability of trades people, advisors, trainers and suppliers you will require to continue with your project. You may be able to negotiate better pricing and timelines due to reduced workload.
· Staff Retention - given the shortage of qualified and experienced hotel employees, it will be more cost effective in the longer term to retain staff so when the market bounces back, the business does not effect and the time and cost of recruitment is saved.
Many hotels have been too busy during the boom time to focus on improving the way their business operates, so any slowdown may provide the opportunity to make required changes. A full review of the business may seem a difficult and time consuming task, so break it down into key areas to make it easier. For example, some important activities which aim to minimize the negative effects of reduced demand, whilst establishing systems and procedures to ensure your hotel runs smoothly during busier times to come, include:
Management
· If you cannot, or decide not to reduce the number of staff to match reduced demand, keep idle employees productive with training and special projects and encourage them to take annual leave owing.
· Review the financial reports to identify areas so that the hotel could reduce costs and improve profitability.
· Review industry benchmarks to identify areas in which the hotel is performing above and below the local industry average. Initiate activities to improve the hotel’s weaknesses and maintain the hotel’s strengths.
Marketing
· Modify marketing collateral to adapt to consumer sentiment, for example, emphasize hotel’s treatments and services which aid stress-relief if it is relevant to your local community.
· Raise the awareness of about services offered to encourage consumers.
· Ensure treatment prices remains competitive as the local market changes. Consider adding more value to establish a competitive point of difference, rather than automatically discounting standard treatments and products.
Operations
· Review and update standard operating procedures(SOP) to minimise hidden costs associated with inefficient activities, product and supplies wastage and outdated policies.
· Ensure there are no gaps in procedures, to minimise risk to clients, employees and property which could result in legal action.
· Employees are responsible to implement service standards correctly so the guest satisfaction is maximised to retain existing customers and encourage free, positive word-of-mouth advertising to generate new clients.
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