The New Normal

(EDITOR’S NOTE: This is the final installment of a three-part series looking at the year that was 2009 and what’s ahead in 2010. The series began on Monday.)

There’s no clear outlook for 2010 or means to accurately predict what the future will look like based on the present state of affairs. Many of the changes forced on the industry by the new economic realities will likely go the way of the overnight shoeshine when the economy improves. However, some changes are expected to become part of the industry’s new “norm.” Newly minted ‘best practices’ will go a long way in smoothing out the year-long learning curve, bringing with it dynamic improvements.

Despite little evidence to the contrary, optimism still reigns as the curtain begins to fall on 2009. As Jeff McIntyre, a partner with Gemstone, put it, “the lining [in the cloud] may be tarnished, but it’s still silver.” McIntyre expects that as long as demand increases, the rates will return long before supply catches up. Davidson Hotel Company Chief Operating Officer Pat Lupsha, an optimist by nature, anticipates new properties coming online in the next year will help strengthen its bottom line.

Seeing less erosion at year-end, business models will likely become more evolutionary rather than revolutionary in the coming year with little changing in terms of focus on the 3Cs: cost-control, cost-containment and cost-reduction. “The goal is to preserve profitability,” affirms Bruce Stemerman, a managing director at Jones Lang LaSalle.

As the next four quarters dawn, protecting profit, employee and consumer confidence while sustaining brand equity, will continue as core measurements for how well a company is doing. Conceptually, reality has set in and will likely continue to permeate the mindset of the operator. Nevertheless, a number of initiatives will transcend the short-term view. Below are some predictions for permanent changes:

Innovation/Doing more with less: Focuson amenities (features/benefits) with the most perceived and actual value to the guests that can be delivered in the most profitable manner possible (at the right labor ratios). Acknowledge and reward employee loyalty, commitment and sacrifices. Greater emphasis will be placed on customer loyalty.

Benchmarking/Guest satisfaction: Happy guests are the best measure for how well a property is doing. Guest satisfaction scores will become the chief benchmark by which success is measured. If left unchecked, unmeasured or unattended to, the operator is likely to see guest erosion or other issues within 90 days or fewer. Guest feedback will become central to the brand message and will be integrated across operational units and will become the stuff that best practices are made of.

Recalibration: Measurable, repeatable and achievable goals will replace the gargantuan expectations and annual write-down exercises of years past. Recalibrations will occur more frequently (as part of planning/forecasting) to hit clearer, more defined targets that better match reality.

Protecting/Profitability: Right-staffing will lead to more efficiency, more productivity and more profits flowing through to the bottom line. Flat organizations, contained hourly wage rates and sustained amenities that guests care about will help keep organizations proficient in good or lean times. Retaining optimal asset value will continue to be a primary objective among operators.

Target marketing: Those that have harnessed the power of the Internet and ecommerce will lead the way. New media allows for real-time targeting, loyalty and relationship building, and will become more finely tuned and widely used. Public relations, cost-efficient and customer-specific research (psychographics/demographics) and outreach methodologies that rise above the din will replace one-size-fits-all mass media buys. Brand messaging will be funneled directly to prospects via multiple, tightly integrated media channels.

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