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“The Essential Toolkit for Managing the Bottom Line”
Sofitel Hotel, London Heathrow Terminal 5
Review of the BAHA Annual Conference 2009
Despite the recession, the 4th Annual BAHA Hospitality Finance and IT Professionals Conference and Exhibition – entitled ‘The Essential Toolkit for Managing the Bottom Line’ – attracted a record number of 294 delegates and exhibitors in November to the Sofitel Hotel, London Heathrow at Terminal 5.
The general message to the conference from a distinguished line-up of expert speakers – ranging from keynote speaker Bob Cotton OBE, Chief Executive of the British Hospitality Association (BHA) to Liz Hall, Head of Hospitality and Leisure Research at PricewaterhouseCoopers (PwC); and Sarah Duignan, Senior Account Manager, STR Global – was that that though the mood in the hotel sector is now overwhelmingly more optimistic, the industry is not out of the woods yet. Indeed, Bob Cotton believed that the industry was “still in survival mode”. He said that the real worry in the current economic climate was the way that many hoteliers were cutting investment in their product, people and marketing; and a key challenge for the industry in 2010 was to keep the investment going in their businesses.
“Fundamentally companies squeeze on margins and squeeze on cash,” he said, “and the first thing they do is stop refurbishment programmes – the carpets get tired looking, the normal painting and decorating doesn’t get done so quality suffers. Never ever do that! Equally important, don’t cut back on the training and skills of your staff – fundamentally the thing that gets you through any difficult situation is the skills of your people. Lastly, if you have got a great hotel with great people, you have got to put the proposition to the customer through investing in marketing.”
Bob concluded that for the foreseeable future, the leisure customer was going to be the primary source of hotel business, not the corporate client. This would prove “a shock” for many accommodation businesses. “Leisure customers require a different approach to the corporate client,” he said, “because they pay their own bills which they carefully scrutinise, whilst wanting real value for money and good service. They also make their own decisions as to whether they return or not, and whether they recommend the experience to their friends.”
He ended his presentation on a reassuring note by saying: “If you are best in class, best in your town, best in your city, best in your grade, you have got a great future.”
Delegates were then treated to ‘An Unusual View of the Industry’ by Alan Burns, Vice-President, Finance, Hotels.com and Venere.com. He provided some fascinating global industry statistics, using the latest technology, illustrating – for instance – how the reduction in airline capacity has adversely impacted on airport hotels in particular. He also demonstrated that it was not all gloom for the UK oversees travel consumer – with hotel bargains still to be had, despite the weakness of sterling, in destinations such as Moscow and Marrakech where the average room prices per night, according to the Hotels.com Hotel Price Index, were down 36% and 20% respectively for the first six months of 2009, compared with the corresponding period in 2008.
BAHA Chief Executive Carl Weldon interviewed one of the world’s leading hoteliers – Meinhard Huck, President of Swissôtel Hotels & Resorts – about his illustrious career. Since joining Swissôtel Hotels & Resorts, Meinhard has driven the expansion of the international hotel chain’s portfolio. Talking about the current difficult global trading conditions, he said: “If you have a strong brand, I believe that you survive”. Prior to becoming the company’s President, Meinhard was the Senior Vice President, Europe, Middle East & Mediterranean of Raffles International Hotels & Resorts, as well as the Senior Vice President, Europe for Swissôtel Hotels & Resorts. Meinhard’s first management position was at the Holiday Inn Dover in 1979, during a 20 year period working with Holiday Inn International in the UK and Europe, before moving in 1989 to Periquito Hotels.
It was then time for the first of two Panel Forums – ‘Green and Corporate Social Responsibility (CSR) Impact – Responsibilities, Costs and the Bottom Line’. David Clarke, Chief Executive of Best Western Hotels; Henry Le Fleming, Manager, PwC Sustainability & Climate Change; and Dr Rebecca Hawkins, Project Director, Considerate Hoteliers Association, and Director of CESHI Ltd., discussed the impact and the technicalities of green issues and regulations on hospitality’s bottom line. The forum was expertly chaired by Peter Davis, Political Editor from the Ethical Corporation – a media business founded in 2001 to encourage debate and discussion on responsible business through publishing, conferences and independent research and advisory work.
The panel’s conclusions and advice included:
- Best not to talk about the environment as being something “special” or an ‘add-on’ to the business – better to approach it as good operational management practice that is integral to the day-to-day running of the business. In essence, this will involve the careful management of energy, waste and water to maximise carbon and cost savings. A minimum 10% saving can be achieved, for instance, on energy costs through adopting ‘best practice’ environmental management.
- Environmental Regulations – such as the Carbon Reduction Commitment (CRC) designed to help the UK meet its carbon reduction targets by 2020; and the Landfill Tax – will have, and are having, significant impact on the cost base of hotels and will require greater scrutiny to understand how the regulations, energy costs etc will impact on an operation’s bottom line. Introduce ‘granularity’ into a hotel’s accounting to help address this so hoteliers know where they stand financially.
- Recognise the difference between costs and consumption – need to understand, for instance, energy and water consumption patterns (i.e. when in the day, in which departments, and at what times of the year consumption is at its highest and lowest etc) to get the best possible energy deal and the right technologies for a business to reduce its costs and carbon emissions
- Consider the ethical aspect of a hotel’s business – concerning, for instance, its supply chain – are sheets supplied by companies using child labour etc?
The second Panel Forum – consisting of Warren Mandelbaum, Head of Revenue Management at Whitbread Hotels & Restaurants; Jonathan Langston, Managing Director of TRI Hospitality Consulting; and Robert Barnard, Partner for Hotel Consultancy Services at PKF – examined ‘Revenue Trends’ and the value of revenue management skills in the current difficult economic climate, under the adept chairmanship of Professor Peter Jones MBE, Advisor, Edge Foundation.
The forum’s observations included:
- In straightforward terms, revenue management is a technique to optimise income revenue from a fixed, but perishable inventory. The challenge in hotels is to sell the right rooms to the right customer at the right time for the right price. The role of the revenue manager (RM) is evolving and developing. Basically the RM is the link/middle-man, providing the relevant intelligence upon which intelligent decisions are made, between the finance and the sales and marketing departments – asking questions such as how can I mitigate the downturn in the low season, or how can I maximise revenue in the peak season? Tracking the way a hotel’s revenue shifts on a seasonal basis has become enormously important. In the current difficult economic climate, the revenue management tool has proved its worth
- The skills shortage, regarding revenue management, is a major issue that needs to be addressed and Professor Jones believes “it is a selling job for BAHA in the future”.
BAHA provides the only industry specific hospitality finance education programme; and the promotion of best practice Revenue Management skills in the hospitality industry is one of the priority concerns at BAHA. Toward this end, in conjunction with Oxford Brookes University, the Association is currently designing a new and unique second route through our Education and Training Programme expressly for Revenue Managers.
A comprehensive programme of highly topical interactive education Workshops –putting ‘theory into practice’ – were the order of the afternoon for hospitality finance and IT professionals. The Workshops helped reinforce delegate learning in the key areas of wage cost, revenue management, purchasing, use of IT systems and business analysis. Basically, the well-received Workshops were the ‘Essential Toolkit’ element for the 2009 BAHA conference theme of ‘Managing the Bottom Line’.
Rounding off the conference, Derek Wood, Managing Director of Derek Wood Associates Ltd. and Ted Horner, Managing Director of E. Horner & Associates, debated the topic of ‘Investing in New Technology or People’. It was highly entertaining and was followed by a very popular repeat from last year’s conference – Frank Wolfe CAE, Chief Executive of BAHA’s strategic partner US-based Hospitality Financial and Technology Professionals (HFTP), wowing delegates with the latest guest bedroom technology in his guestroom 20X presentation. Frank was accompanied by the current HFTP President Terry Price, who talked about the current work of the HFTP.
All in all, it had proved a most informative and enjoyable conference programme, punctuated by the very successful ‘five minutes of fame’ presentations by exhibitors from the excellent accompanying ‘cutting edge’ IT Exhibition.
The photos from the event can be viewed here.