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.