CEO’s Blog – March 2017 – Profit Optimisation

Profit Optimisation has been one of the most widely discussed topics amongst hoteliers for many years, with exec level staff under constant pressure to get it right. Yet many of the conventional ways of looking at the challenges still haven’t changed.

Profit Optimisation is the name given to the process involving a forensic review of all aspects of how a hotel is currently performing relative to its potential, and the resulting project plan incorporating recommendations, milestones, measurement criteria and expected financial outcomes.

Within this context one of the biggest issues today is undoubtedly staffing.

In a large section of the industry there is still quite a traditional approach to determining a hotel’s organisation structure, reporting relationships and individual job designs, even though this might not produce the most efficient and effective systems for delivering product and service to customers.

Generally, manpower is the most significant operating cost within the hotel and, as such, it needs to carefully managed, monitored and measured. Outputs from individual jobs should be identified and recognised for their potential to positively impact profitability, enhance customer experience and satisfaction, and create an ideal workplace environment, which leads to a higher level of employee satisfaction and increased productivity. Despite this, restrictive work practices and workforce demarcation can exist within a hotel for a number of reasons, including workplace/union agreements, old fashioned hierarchy models, and personal preference playing a role in company politics.

The ability to flex your manpower across varying levels of business activity in all areas of the hotel is essential in controlling your costs. Therefore, manpower planning is critical, and supervisors and management should be well versed in its correct applications.

Broader based job designs tend to flatten organisation structures, improve communication, increase skills and empower employees. The more you can empower your employees, the more responsibility you can bestow on them, which in turn then requires less supervision.

I would say that nearly all employees come to work each day to do a good job; however, how good a job they are able to do is generally governed by their workplace environment (and any associated constraints), the attitude of management in recognising and rewarding effort, and the opportunities available to them for consistently good performance.

These are just some of the critical issues IAHGM’s new Advisory/Consultancy specialists can assist with. Well versed and highly experienced in these areas, our consultants can develop the optimum “fit for purpose” organisation structure, staffing complement, reward system and human resource initiatives necessary to ensure optimum performance for your business. To find out more, click here.