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12-1999

Best Practices in Hotel Operations

Judy A. Siguaw Cornell University, [email protected]

Cathy A. Enz Cornell University, [email protected]

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Recommended Citation Siguaw, J. A., & Enz, C. A. (1999). Best practices in hotel operations [Electronic version]. Cornell Hotel and Restaurant Quarterly, 40(6), 42-53. Retrieved [insert date], from Cornell University, School of Hospitality Administration site: http://scholarship.sha.cornell.edu/articles/482/

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If you have a disability and are having trouble accessing information on this website or need materials in an alternate format, contact [email protected] for assistance. Best Practices in Hotel Operations

Abstract Operations is the heart of a hotel. Efforts to improve operations can focus on a single department or address the entire organization.

Keywords hotel industry, operations, profitability, best practices

Disciplines Hospitality Administration and Management

Comments Required Publisher Statement © Cornell University. Reprinted with permission. All rights reserved.

This article or chapter is available at The Scholarly Commons: https://scholarship.sha.cornell.edu/articles/482 Best Practices in Hotel Operations

Operations is the heart of a hotel. Efforts to improve operations can focus on a single by Judy A. Siguaw and department or address the entire organization. Cathy A. Enz

managers nominated a limited num­ considerable0_ task of fulfilling all the ber of hotel companies or properties promises that a hotel’s merchandis­ to be selected as best-practice ing effort has made while enticing champions for their operational guests to book a room in the hotel. initiatives (see Exhibit 1). These Without a doubt, well-administered champions are AIMS, Bristol Hotels operational functions are the chief & Resorts, Days Inn Altoona, Essex determinant of whether the guest’s Partners, Four Seasons & Regent hotel experience is satisfactory.1 The Hotels, Good Nite Inn, Grand ability to deliver on promises and Theme Hotels, Hotel Bel Air, Mar­ satisfy the needs of the guest results riott U.S. Postal Service Conference in the repeat business that makes a Center, New York Marriott Finan­ hotel profitable in the long term. cial Center, Newark Gateway Hil­ Our study of the industry’s best ton, Preferred Hotels & Resorts practices found that hotels ap­ Worldwide, Residence Inn, the proached the task of improving op­ Ritz-Carlton Dearborn, SAI Luxury erational standards in many ways. Hotels, Sheraton Elk Grove, and In this comprehensive study of best Sunstone Hotels. practices in the United States lodg­ Some of these champions in op­ ing industry,2 peer organizations and erations have chosen to focus their

1 See: Laurette Dubé and Leo Renaghan, Judy A. Siguaw, D.B.A., is an associate “How Hotel Attributes Deliver the Promised professor of marketing and sales at the Benefits— Guests’ Perspectives on the Lodging Cornell University School of Hotel Industry’s Functional Best Practices (Part II),” Cornell Hotel and Restaurant Quarterly, Vol. 40, Administration «jas92@cornell. edu», No. 5 (October 1999), pp. 89-95. where Cathy A . Enz, Ph.D., is the 2 The full study is available in: Laurette Dubé, Lewis G. Schaeneman}Jr.f Professor of Cathy A. Enz, Leo M. Renaghan, and Judy A. Siguaw, American Lodging Excellence: The Key to Innovation and Dynamic Management Best Practices in the US. Lodging Industry (Wash­ «cae4@cornell. edu». ington, DC: American Express and the American Hotel Foundation, 1999). ©1999, Cornell University

42 CORNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY G I N G C E S

Exhibit 1 Overview of operations best-practice champions

Operations champions Practice initiated, developed Measure of success AIMS, Inc. Restores bankrupt or dilapidated hotels to Hotels are profitable, averaging 60-percent occupancy financial health Bristol Hotels & Resorts Created process for streamlining operations Surpassed Holiday Inn quality-index average in “resource challenged” hotels

Days Inn Altoona Integrated strong development, marketing, Enjoys 70-percent repeat business, is market occupancy and human-resources practices leader, has high employee retention, received Days Inn awards

Essex Partners Gains high-level performance with system Reduced interest rates an average of 2 percent, reduced of budgeting and cost controls costs to improve bottom line Four Seasons & Maintains system-wide process for quality Received quality awards from travel magazines and rating Regent Hotels operating and service standards services Good Nite Inn Developed time standards for completing all Increased scheduling efficiency, increased employee morale property-maintenance tasks and retention, decreased worker-compensation claims, improved hotel and guest-room maintenance

Grand Theme Hotels Identified task-time requirements to reduce Increased productivity and consistency in performing tasks labor costs Hotel Bel Air Empowered engineering department and Improved hotel maintenance, reduced guest complaints eliminated traditional work tickets regarding maintenance Marriott U.S. Postal Completes advance check-in on shuttle bus Increased guest-satisfaction-index scores Service Conference from airport Center New York Marriott Assigned accountability and responsibility for Received several company awards, increased employee Financial Center results to department teams with monthly morale, practice adopted systemwide report meetings Newark Gateway Hilton Completes advance check-in on shuttle bus Increased guest satisfaction, establishes tone of operational from airport efficiency Preferred Hotels & Implemented comprehensive and detailed Encourages innovation and continuous improvements in Resorts Worldwide, quality-assurance program quality standards, creates quality-standards model for Inc. managers, uses service-standards reports as a training tool Residence Inn Developed collaborative approach to quality Maintained 83-percent guest-satisfaction rating assurance The Ritz-Carlton Created guest-recognition program so that Practice adopted systemwide, improved guest satisfaction Dearborn frequent guests can bypass traditional check-in SAI Luxury Hotels, Inc. Purchases and improves distressed properties Averages over 100 percent in derived profits to sell at a profit Sheraton Elk Grove Annually implements a new practice to improve Increased employee-satisfaction scores and profitability, financial viability and guest and employee improved customer service, physical product, and guests’ satisfaction value perception Sunstone Hotels Maintains focused growth through acquisition 500-percent growth achieved in four years, increased RevPAR and revitalization of substandard hotels and revenues, named Marriott Developer of the Year

December 1999 • 43 attention on a particular area of able, substandard hotels can become an offer price. After the purchase operations to improve performance lucrative entities if they are managed SAI keeps close tabs on its invest­ and increase profitability. Others properly. ment by requiring the manage­ integrated all areas of operations to Turnaround specialists. AIMS ment company to submit numerous improve guest satisfaction and drive uses the following strategy to turn detailed financial and marketing financial growth. In this article we around unprofitable hotel opera­ reports. provide a detailed description of tions. AIMS first acquires distressed Sunstone Hotels also acquires our champions’ best practices and hotels by negotiating a lease based hotels that are producing substan­ examine the successes attributed to on 10 to 15 percent of the average dard profits, are perhaps not in ac­ those practices. We conclude with gross room revenue realized during ceptable physical shape, and are our respondents’ insights and sug­ the three years prior to purchase. available at a low cost-per-room gestions about implementing such On particularly dilapidated proper­ price in strong markets with barriers programs, as well as some observa­ ties AIMS requests a waiver for the to new competition. Sunstone con­ tions we have made. first year’s lease payments. Lease fines its purchases to the west coast, duration may vary from five to the mountain states, and its home The Best Predices thirty years, and any F&B operation base of Rochester, Minnesota. Once Our operational champions’ best is leased to an outside operator. The the company acquires and restores practices can be divided into four hotel is inexpensively refurbished by a hotel, the property is rebranded groups. One group consists of purchasing FF&E cast off by major based on its size, type, market posi­ hotel-wide approaches to improv­ chains as they renovate properties. tion, and competition. To facilitate ing operations. Those champions The company establishes a strict its rapidly growing operation, are AIMS, Bristol Hotels & Resorts, budget and financial forecast for Sunstone comprises two entities. Days Inn Altoona, Essex Partners, each property, communicates daily Sunstone Hotel Investors, a REIT, New York Marriott Financial Cen­ with each property’s managers, and owns the properties, and Sunstone ter, SAI Luxury Hotels, Sheraton inspects each hotel monthly. AIMS Hotel Properties, a management Elk Grove, and Sunstone Hotels. encourages its employees to provide firm, operates the SHI-owned ho­ A second group (i.e., Good Nite honest feedback about operations. tels. The formation of a publicly Inn, Grand Theme Hotels, and the SAI Luxury Hotels has found traded REIT was an excellent Hotel Bel Air) comprises practices that it can make a profit by buying means of drawing capital to finance that focus on improving the effi­ and renovating properties without the company’s acquisitions during ciency of the maintenance and becoming a long-term holder. SAI the 1990s. housekeeping functions. The third developed the following criteria to Resource-challenged proper­ category, which emphasizes im­ determine the soundness of each ties. Corporate staff members at provements in check-in procedures, potential investment. The hotel Bristol Hotels & Resorts developed is composed of Marriott U.S. Postal must be in a good location, prefer­ a streamlined process to facilitate Service Conference Center, New­ ably in a downtown metropolitan improvements in “resource chal­ ark Gateway Hilton, and the Ritz- area, and be eligible for a major- lenged” properties—both existing Carlton Dearborn. The last category brand franchise. The property and newly acquired. Resource- involves practices aimed at imple­ should possess sufficient character challenged hotels are those with menting and maintaining quality and charm to be classified as an fewer than seven managers, fewer standards. These champions are upscale property after renovation, than 60 employees, or fewer than Four Seasons & Regent Hotels, but it should be a relatively old fa­ 250 rooms. The plan to address Preferred Hotels & Resorts World­ cility in dire need of rejuvenation. those properties’ shortcomings be­ wide, and Residence Inn. The table The owner should be motivated to came known as “Bristol Lite,” be­ in Exhibit 2 gives a description of sell, and a third-party management cause the objective was to substan­ each practice, the method of imple­ company should be in place. Finally, tially lighten the workload of those mentation, and the name of a con­ the hotel must offer a minimum hotels’ managers and employees. tact person. base for room revenue and signifi­ The plan’s three phases were (1) cant potential to increase net oper­ evaluate and modify the newly ac­ Overall Business-ctavetopinarit Practices ating income. Before an offer is quired properties, (2) integrate new The practices of AIMS, SAI Luxury made SAI estimates renovation processes into existing Bristol hotels Hotels, and Sunstone Hotels are costs, secures funding, projects that qualified as resource challenged, built on the premise that unprofit­ monthly cash flows, and determines and (3) implement any applicable

44 CORNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY LODO C E S

Exhibit 2 Operations best-practices cases, descriptions, implementation, contact people

Operations champion, Title of case Description of case Method of Implementation Contact person AIMS, Inc. Acquires and restores bankrupt or Turnarounds are accomplished Ashok Kumar, president Making Profitable dilapidated hotels. Turnaround through careful negotiation, Hotels strategy is used to restore hotels leasing food and beverage 415-215-7434 to profitability within one to three outlets, strict budgeting, and Fax: 415-552-4626 years. employee empowerment. Bristol Hotels & Resorts Developed process for streamlining Implemented in three phases: Steve Boyle, regional Streamlining the operations in acquired hotels with (1) evaluation and modification of director of accounting Operations of few resources. Eliminated non- the new properties, (2) integration Resource-challenged valued-added services to allow of new “lite” processes into re­ 972-391-3106 Properties hotels to focus on quality and source-challenged hotels, and Fax: 972-391-3798 profits. (3) implementation of any appli­ cable “lite” initiatives systemwide. Days Inn Altoona Cultivated the Altoona, Pennsylvania, Carefully selected location and paid Greg Sheehan, owner Integrated, Community- market with a coordinated suite attention to details in construction based Marketing Plan of development, marketing, and and interior design to satisfy target 814-944-9661 human-resources practices. markets. Began marketing and Fax: 814-944-9557 customer-relations activities six months prior to opening of property by canvassing businesses door-to- door and sending out fliers. Pro­ vides community-service and nonprofit organizations with free meeting space. Set “recession- proof rate. Selected highly quali­ fied employees and offered best salary possible plus benefits pack­ age. Conducts regular property inspections. Essex Partners Established a system of budgeting Controls costs not usually deemed the John Mooney, CEO Achieving Greater and costs controls that has al­ management company’s responsi­ Profitability Through lowed the management company bility, such as financing, insurance, 716-272-2315 Budgeting to perform at higher levels than and legal and audit expenses. Ties Fax: 716-272-2396 its competition. managers’ bonuses to performance relative to their budgets and pro­ vides a stock-option program. Four Seasons & Maintains a focus on quality operating Top managers travel frequently to Wolf Hengst, executive VP Regent Hotels & and service standards to facilitate maintain checks on standards. Resorts a luxury experience for all hotel Each hotel is routinely inspected 416-441-4353 Ensuring a Luxury Hotel guests. by divisional vice presidents, and Fax: 416-441-4381 Experience an outside consulting firm inspects each property twice a year. Operat­ ing standards are updated by a committee that meets quarterly. Good Nite Inn Established standard time frames for A task force determined the specific Skip Hall, VP of operations Establishing Time the completion of all property- daily, weekly, monthly, and Frames for Preventive maintenance tasks to allow for quarterly time requirements for 310-268-7772 Maintenance Tasks proper scheduling and staffing of maintenance tasks on fixtures, Fax: 310-268-9172 guest-room maintenance. The furnishings, and equipment (FFE). practice requires that the mainte­ Time specifications included set nance staff be accountable for up, break down, cleanup, and completing specific quantities of break periods. Maintenance duties work within a set time interval. are assigned with standard times attached. Continued overleaf

December 1999 • 45 new initiatives to all Bristol hotels with a coordinated suite of develop­ in 1999. ment, marketing, and human- The Bristol Lite processes were as resources practices. The hotel’s follows: (1) The corporate office owner—operator carefully selected assumed responsibility for employee the property’s location to obtain the hiring, orientation, and benefits best site available and paid careful One enrollment to reduce the properties’ attention to construction details. workload and staffing requirements. The owner approved budget in­ tiv AhmBjBbIv fill (2) After eliminating duplicate forms creases when the result would be ' MrW wW^WWwWBWp ^'wHlMWWfy *■ » vV^fi the company substituted electronic improved guest perceptions or more forms for paper where possible. durable equipment. The hotel re­ (3) All hotels’ breakfast presenta­ tained an interior designer to deter­ tions were standardized. (4) Newly mine a guest-room layout, colors, acquired hotels were omitted from amenities, and furniture that would corporate e-mail groups and best satisfy the selected target listservs to prevent initial informa­ markets. tion overload. (5) The back office The hotel initiated marketing reduced the number of accounts activities six months prior to open­ from 761 to approximately 200 to ing. Sales employees solicited local reduce confusion in coding AP businesses, sent fliers to members of invoices and to realize faster P&L the Chamber of Commerce, and reviews. (6) Similarly, the human- joined organizations that offered resources office reduced the number networking opportunities. The sales of payroll job codes from 119 to representatives also contacted mili­ approximately 50. (7) Rather than tary and government offices for maintain food, beverage, china, glass, possible business and canvassed and linen inventories, the company community-service and nonprofit switched to just-in-time purchasing. organizations to offer free meeting (8) Bristol eliminated tracking for space. The hotel set room rates to complimentary F&B functions so “fall within the guests’ comfort that an income auditor would no range” and provide a perception longer need to track those expenses. of value. (9) About half of the company’s The owner was careful to choose internal-control checkups were highly qualified workers and offered eliminated, reducing the number of them the highest salary-and-benefits steps from 205 to 105. (10) Finally, package that the hotel could afford. because of the reduction in the The hotel held regular meetings number of job codes and codes in for initial training to reinforce the the chart of accounts, the company hotel’s operating philosophies and simplified forecasting and budgeting, standards. Training is complemented thus granting employees more time by an established system of em­ to spend caring for customers. To ployee recognition and rewards. assist with the implementation of Finally, to maintain the high stan­ this plan, the company installed dards of the property, a daily inspec­ computers at each property to auto­ tion serves to correct maintenance mate the transfer of revenue num­ and appearance problems before bers and other data. The company they are recognized by the guest. also beefed up its orientation and Careful budgeting. Essex Part­ accounting training and provided ners is an independent management follow-up training in each func­ company that has established a sys­ tional area. tem of budgeting and cost controls Preopening excellence. Days that promote high performance. Inn Altoona cultivated its market Essex took three steps to make its

46 HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY LODGING OES

Operations best-practices cases, descriptions, implementation, contact people (continued)

Operations champion, Title of case Description of case Method of Implementation Contact person Grand Theme Hotels Conducted time and motion studies Held meetings to explain the process. Mark Kane, GM The Creation of a for hourly positions to determine A third party measured tasks using Process to Track and how long each task required. different personnel on different 407-351-2100 Control Labor Costs Supervisors and managers pre­ days in different parts of the hotel Fax: 407-345-5249 pare schedules according to to derive an average number for those targets. minutes of each task. Employees share in any cost savings. Hotel Bel Air Members of the engineering depart­ An engineer immediately responds to George Edwards, Proactive Property- ment are empowered to make a phone-in request, logging the chief engineer maintenance decisions to solve maintenance trouble only if it requires entering Program problems as soon as any problem an occupied room, but no written 310-472-1211 is found; no traditional work work order is required. The work Fax: 310-440-5860 tickets are used. One engineer is verified by the floor’s room- is assigned to check rooms for inspection staff. One engineer is problems before they develop. given the ongoing daily responsibil­ ity of checking the rooms as they are vacated. Marriott U.S. Postal Instituted a practice that allows guests Shuttle-bus driver has a canvas bag Dan Gallant, director of Service Conference to complete their hotel check-in that contains guests’ room keys rooms and reservations Center procedure while on board the and a voucher imprinter for credit Express Check-in on Hotel shuttle bus going from the airport cards. Guests can go directly to 405-447-9100 Airport Shuttle Buses to the hotel. assigned rooms. Fax: 405-366-1865

New York Marriott One day per month is reserved for the Executives review the financial results Dan Flannery, hotel manager Financial Center executive-committee members to for each department once a month. Regular Status Meetings meet with department manage­ The department head is respon­ 212-385-4900 Between Executive and ment teams on their financial sible for departmental results and Fax: 212-266-6118 Department Teams status and current month’s results. has to present an exceptional Each department team is respon­ reason for failing to achieve bud­ sible for its department’s results geted results. and prepares for the monthly interviews with the executive committee by graphing results. Newark Gateway Hilton When guests arrive at the airport and Cross-functional team developed the John Luke, VP of front-office Guest Check-in on board the shuttle bus, they are Mobile Zip-in Check-in program. operations & systems the Shuttle Bus automatically checked into the When boarding the shuttle bus, hotel via their credit card or Hilton the guest presents a credit card or 310-205-4452 HHonors card. Each shuttle bus Hilton HHonors card. This informa­ Fax: 310-205-4437 carries a global positioning device, tion is relayed via wireless commu­ which tracks the location of the nication to a dedicated workstation van, and a card reader, which at the hotel front desk, where the tracks the guest’s arrival via wire­ guest’s name is displayed on a less communication with the front computer. The guest’s prepared desk. key packet is retrieved and handed to the guest at the front door by a hotel team member. Preferred Hotels & Refined and developed one of the A quality-assurance committee devel­ Robert Cornell, senior VP Resorts Worldwide, most comprehensive and detailed oped the initial set of standards of development Inc. quality-assurance programs in the and practices, which are reviewed Development of the industry. To become and remain a and updated as needed. When a 312-913-0400 Preferred Standards member of Preferred, a property property applies for membership, Fax: 312-913-0444 of Excellence must meet these quality standards Preferred’s auditor conducts an and practices. unannounced inspection of the property. Members are also in­ spected annually. Continued overleaf

December 1999 • 47 operations more efficient and profit­ ployee morale, guest satisfaction, benefit from an incentive program able. First, the firm hires the best and financial outcomes. During the that is tied to the improvements that managers available and rewards course of the meeting the executive result from the implementation of them appropriately. Managers’ bo­ committee first and foremost re­ the practice. To facilitate the type nuses are tied to performance rela­ views each department’s financial of decision making required by tive to their budgets, and each man­ performance using a graph prepared this program, executive committee ager participates in a stock-option by the department head. Each team members participated in one-on- program. The stock options have is held accountable for its depart­ one training in “fact-based decision produced an increased awareness ment’s results, and the department making.” among managers of corporate oper­ head must have an exceptional rea­ ating revenues and expenses. Be­ son for failing to achieve budgeted Maintenance and Housekeeping cause the managers realize that goals. In addition, each month the Practices underperforming properties can department head must outline the Good Nite Inn wanted to substan­ affect the value of their stock op­ steps taken to improve guest satis­ tially reduce guest-reported mainte­ tions, they have pulled together to faction and employee morale. Com­ nance problems. To accomplish this assist a manager who might be ex­ mitments made to action steps are goal, Good Nite Inn’s managers periencing difficulties with her or documented and followed up decided they needed to gain more his property. Essex also retains an at the next meeting. control over maintenance tasks industrial psychologist to work with Malcolm’s ghost. The executive while obtaining greater accountabil­ the regional and general managers committee of the Sheraton Elk ity from the maintenance staff. To to encourage team building and to Grove annually selects and imple­ do this, the hotel first created a task increase communication. ments a practice that is considered force to determine specific daily, As a second step, Essex creates the best method by which to im­ weekly, monthly, and quarterly time and maintains a budgeting process prove financial viability and guest requirements for each maintenance that assures the maximization of the and employee satisfaction. The ex­ task performed on every fixture property’s potential. To start the ecutive committee selects a “best and piece of equipment or furniture. process, each manager projects rev­ practice” according to “Malcolm The time-and-motion study exam­ enues for the coming year via tele­ Baldrige” criteria.3 The practice ined setup, breakdown, and cleanup phone meetings and then submits must be sufficiently broad that it activities, as well as allowing for the expense portion of the budget affects the entire hotel. Once the break periods. The task-force study to the regional manager. The re­ practice is selected, the hotel pro­ revealed that the time required for gional manager and each property vides information about the practice the execution of regular preventive- manager then meet to review the at a meeting of all employees, where maintenance duties still yielded 2.5 budget line by line. Finally, Essex management explains how the ho­ hours per maintenance shift for constantly reviews expenses and tel, employees, and guests will ben­ specific guest-room maintenance attempts to control costs that are efit. To implement the practice, requests and for emergency mainte­ not usually deemed a management members of the executive commit­ nance. Based on this information, company’s responsibility, such as tee identify key processes and con­ the hotel made the rooms-quality financing, insurance, and legal and stitute subcommittees with the re­ manager responsible for creating a auditing expenses. To that end, re­ sponsibility of executing on each schedule of maintenance duties to gional managers, senior managers, assigned component. As part of their be performed and for designating and corporate staff meet each accountability, the subcommittees the standard times needed for each Monday to review every possible provide weekly reports on their task. As a result, on any given day, a area of cost reduction. progress and problems. Line staff maintenance engineer knows ex­ Marriott’s plan. New York actly which maintenance tasks are to Marriott Financial Center imple­ 3 The Malcolm Baldrige Award, an annual be completed for which guest rooms mented a program in which one day program administered by the National Institute and the time span during which the of Standards and Technology, is intended to per month is reserved for the execu­ discern the highest-quality corporations in tasks are to be completed. tive-committee members to meet America by applying a rigorous set of criteria. Hoping to reduce costs in a tight with department-management The only hotel company ever to win this award labor market, Grand Theme Hotels teams on their financial status and is Ritz-Carlton. See: Charles G. Partlow, “How engaged a third-party firm to con­ Ritz-Carlton Uses ‘TQM,’” Cornell Hotel and current month’s results. The pro­ Restaurant Administration Quarterly, Vol. 34, No. 4 duct a time study similar to that of gram is intended to improve em­ (August 1993), pp. 16-24. Good Nite Inn to determine the

HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY EDGING BEST PRACTICES

Operations best-practices cases, descriptions, implementation, contact people (concluded)

Operations champion, Title of case Description of case Method of Implementation Contact person Residence Inn Developed a collaborative approach After benchmarking other companies, Pat Adams, senior VP of A Collaborative in its quality-assurance program. a different procedure for quality quality assurance Approach to The purpose is to provide assis­ inspections was formulated. Em­ Quality Assurance in tance to properties rather than ployees cannot fail an inspection; 301-380-4502 Extended-stay Hotels criticism, and in the process, rather, the employees are advised Fax: 301-380-7507 improve employee performance. how to correct quality problems. The Ritz-Carlton Offers one-stop check-in and registra­ The frequent guests are identified by Lisa Rezin, Dearborn tion using a guest-recognition the Ritz-Carlton guest-tracking guest-recognition Special Check-in program (OSCAR) that permits system, but this practice works manager Service for Frequent frequent guests to bypass the only with repeat guests of the Guests traditional check-in at the front property, since it depends on the 313-441-2000 desk. guests being visually recognized. Fax: 313-441-2121 For OSCAR members arriving on a given day, a key packet is readied and a room assigned based on the guests’ known preferences. Upon each guest’s arrival, the doorman or valet parker hands the key to the guest, so the guest bypasses check-in procedures. SAI Luxury Hotels, Inc. Identifies and purchases distressed Developed criteria to determine Devendrá Sharma, CEO Business Development, properties, improves the physical whether a property has sufficient Renovation, property and management struc­ potential to warrant investment. If 919-846-8959 Turnaround, ture, and then sells the hotel for so, company determines an appro­ Fax: 919-847-3995 Repositioning a profit. priate offer price, renovation costs, and funding. Once purchase is complete, numerous daily reports are required from the management company to ensure that the hotel yields a profit. Sheraton Elk Grove The executive committee identifies Using criteria from the Malcolm Mike Larson, GM Annual Implementa­ and implements a broad-based Bald rige Award, the executive tion of Broad-based practice that is considered the best committee selects a new practice 847-290-1600 Best Practices method by which to improve finan­ to implement. Each executive Fax: 847-290-1744 cial viability, as well as guest and committee member is responsible employee satisfaction. The chosen for implementing a key process of practice must exemplify a “Hotel of the practice. An incentive program the Year” practice. for the staff is tied to the improve­ ments that result. Sunstone Hotels Using a REIT, Sunstone has ex­ Acquires, restores, and rebrands Robert Alter, CEO and Focused Growth of panded its ownership of hotels hotels with substandard profits, in chairman Hotel Company through a focused policy of hotel poor physical shape, and having a Utilizing a REIT size, type, and geographic loca­ low cost-per-room price. Formation 949-361-3900 tion. By staying with the policy of a publicly traded REIT provided Fax: 949-361-5196 guidelines, the company is better financing flexibility. able to maintain control over its operations and produce a more consistent profitability.

Note: The case titles correspond to the cases written on each champion in: Laurette Dubé, Cathy A. Enz, Leo M. Renaghan, and Judy A. Siguaw, American Lodging Excellence: The Key to Best Practices in the U,$. Lodging industry (Washington, D.C.: American Express and the American Hotel Foundation, 1999).

December 1999 • 49 time required for each task (e.g., the room attendant prepares the check-in, cleaning an occupied room for the next guest. room, cleaning a vacated room, serving a meal). The consultant Improving Check-in measured the time it took different The Marriott U.S. Postal Service employees to do the same task on Conference Center, the Newark A popular guest-service different days in different areas of Gateway Hilton, and the Ritz-Carl- the hotel. From those measurements ton Dearborn designed practices to strategy is to allow guests the researcher derived a standard eliminate (and thereby speed up) the length for each task (based on the traditional check-in process for their average times). The company held guests. Both the Marriott USPS traveling from a nearby airport employee meetings to explain the Conference Center and the Newark purpose of the process and discuss Gateway Hilton created a system to the hotel to complete their the proposed standard task times. whereby guests traveling from the The managers adjusted the standard nearby airport to the hotel could check-in procedures while times when the employees voiced complete their check-in procedures disagreement, and task times were while en route on the shuttle bus. en route on the shuttle bus. also adjusted depending on whether At the Marriott USPS Conference a property held three or four stars. Center, the shuttle bus driver is sup­ The project enables supervisors to plied with a canvas bag that contains prepare their schedules according to a voucher imprinter for credit cards the time standards. To increase em­ and room keys for the guest rooms, ployees’ motivation to comply with which have already been blocked by the established time targets, the the front office. Since credit is estab­ chain implemented a reward system lished with a credit-card swipe when based on the production quotas. the guests are still at the airport, they (The resort operator also reduced can go directly to their assigned labor costs by changing bedsheets room when the bus arrives at the every third day and replacing only hotel. This practice was developed those towels left on the bathroom in part because the 23-mile bus ride floor.) from the airport to the hotel’s loca­ Rapid response. To eliminate tion in Norman, Oklahoma, takes or reduce the time guests have to 30 minutes, affording considerable wait for maintenance problems to time to check-in guests en route. be resolved, the Hotel Bel Air em­ Moreover, the center handles up powered all members of the engi­ to 600 check-ins per day. neering department to solve main­ The Newark Gateway Hilton uses tenance problems as soon as they are a similar approach. When boarding detected. When the engineering any of the hotel’s airport buses, the department receives a request, an guest can present a credit card or engineer immediately responds to Hilton HHonors card to the driver. the request, logging that request This information is relayed via wire­ only if it requires entering an occu­ less communication to a specific pied room. Otherwise, no written workstation at the hotel’s front desk. work order is required, thus saving The front-desk agent opens the time and effort. The completed task guest s folio and retrieves a prepared is verified by the room-inspection key packet. To complete the process, staff. A proactive preventive- a hotel team member greets the maintenance program complements guest at the front door and hands this empowerment practice. One the guest his or her key packet. The engineer is responsible for checking guest is then free to go directly to the rooms that are vacated each day the assigned room without stopping and resolving any problems before at the front desk.

50 HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY G I N G C E S

The Ritz-Carlton Dearborn also Maintaining Quality Standards service. This system makes member­ allows frequent guests to bypass the The three best-practice champions ship selective, and only one in ten front desk with its OSCAR pro­ cited for their quality-assurance would-be member properties is gram (“one-stop check-in and reg­ approaches pay careful attention to ultimately chosen. When a hotel istration”). Unlike the Marriott’s establishing and maintaining their applies for membership, Preferred’s and the Hilton’s program, OSCAR quality standards. Direct monitoring auditor conducts an unannounced works only with repeat guests, be­ is a large part of these quality pro­ inspection of the property. Over cause it depends on the guests’ be­ grams. the course of a two-day stay, the ing visually recognized. The hotel Four Seasons & Regent Hotels auditor awards points according to requires no minimum number of established and maintains high- Preferred’s standards and practices. stays for guests to be eligible for quality operating and service stan­ Even after the property becomes OSCAR, other than being frequent dards by having top managers travel a Preferred member, unannounced enough visitors that the door em­ frequently from property to prop­ inspections continue annually. At ployees recognize them. The guest erty to check on standards. To en­ the end of the audit, the inspector joins by giving the hotel permission sure compliance with the chain’s meets with the general manager to to bill the guest’s credit card for all high standards, divisional vice presi­ review critical facility or service expenses incurred during the visit. dents routinely examine each hotel, areas. The report constitutes an ob­ The front office prepares a list of and an outside consulting firm in­ jective, comprehensive, third-party OSCAR members arriving on a spects each property semiannually. review of the hotel, which includes given day and distributes the list to A committee of top executives the auditor’s photographs and notes. all departments at the daily meeting. meets quarterly to update the Preferred’s intent is to communicate Coordination is critical because chain’s operating standards. The to the general manager major con­ the guest has not physically arrived committee obtains input and sug­ cerns that the inspector may have so on the property even though she or gestions from focus groups, guests, that corrective action can begin he is checked in early in the morn­ and general managers and incorpo­ immediately. Thus, the report serves ing. Thus, the PBX operator must rates modifications as needed. Be­ as a training tool for the general be informed, for example, so that cause the company allows no com­ manager. (A record is kept of the phone messages and faxes can be promises in attaining established individual auditor’s scores to track delivered once the guest arrives. standards, it employs an array of any biases.) The front-desk executes the normal training methods and devices to The report also becomes part of a preregistration process for the arriv­ ensure that employees are able to database at Preferred’s headquarters ing OSCAR guests, assigns rooms maintain those standards. to track how well the hotels are based on the guests’ known prefer­ Preferred Hotels & Resorts performing in different categories as ences, and readies the VIP key Worldwide refined and developed a means of analyzing trends or spot­ packet, which is placed in the its Standards of Excellence to be ting potential problems. Hotel man­ OSCAR notebook. The OSCAR one of the most comprehensive and agers are provided with comparative notebook contains a checklist of detailed quality-assurance programs data of unnamed member hotels, so items to be verified by the door­ in the industry. This quality program the general manager can see how his man: the guest’s name, who handled has become key for determining or her property compares with check-in, the room occupied, who Preferred membership, maintaining other members in quality levels, by handled registration, and the time quality, and marketing and building operating department, and by size the guest received the keys. The the brand image. Preferred adds and type of hotel or resort. Inspec­ door or valet staff receives the new criteria in response to emerg­ tors are encouraged to note innova­ OSCAR notebook and key packets ing technology, customer require­ tions so that this information can be to be handed to guests as they ar­ ments, and innovations. At this disseminated among members to rive. Once the guest is in the hotel, writing, Preferred has established facilitate further innovation. the doorman informs the front desk approximately 1,500 distinct stan­ If a property fails an inspection, so that all departments are aware dards and practices on which to it is placed on probation for six that the guest has arrived. If the evaluate a member property. To months and then reinspected by a guest does not, in fact, arrive, that become and remain a member of different auditor (to ensure objectiv­ preregistration is removed from the Preferred, a property must achieve ity) . If the property meets the mini­ system so that the room is available and maintain a passing score in each mum passing requirement, proba­ for another guest. category related to the facility and tion is lifted; but if the hotel fails the

December 1999 • 51 as well as local reputation. The chain Days Inn properties in Pennsylvania then trained its general managers to to receive the Chairman’s Award conduct their own quality-assurance for Quality. programs and to train their employ­ The New York Marriott Finan­ ees. In addition, Residence Inn ana­ cial Center’s efforts to establish lyzed letters from guests to advise greater departmental accountability W11P fra flfffiflwWpi^P" ttm i fifi h fito k fyfliutimWO’l^wwlwtiy H if general managers of problems that and responsibility has been so suc­ guests have encountered. cessful that other Marriott hotels involved their employees in have begun to use the same practice. Sucittsiftfie Practices Additionally, since instituting the The champions that implemented practice, the property has received designing operations practices emphasizing overall busi­ several Marriott awards, including ness development used a variety of national awards for team initiatives best practices and shared measures to determine the success and highest associate opinion sur­ of their practices. AIMS noted that veys. Perhaps most important, the resatHag cost savings all its hotels are profitable and in­ guests have increased their quality- creased average occupancy rates. assurance ratings for the hotel. withWWI «If IlltffiVlljVVwftmnlnueec a SAI’s policy of improving hotels and Sheraton Elk Grove’s annual then selling them has yielded, on implementation of a best practice average, better than a 100-percent has significantly increased the hotel’s profit. Finally, Sunstone’s practice of employee-satisfaction scores, profit­ purchasing and refurbishing substan­ ability, and guest-satisfaction scores. dard properties substantially in­ Guests have also commented on the creased RevPAR and revenues, enhanced service, improved physical fueled the company’s 500-percent product, and increased value. growth in the mid-’90s and earned Rooms in service. The cham­ Sunstone Marriott’s Developer of pions that implemented practices the Year award. focusing on maintenance and reinspection, its membership in Bristol Hotels & Resorts notes housekeeping also reported im­ Preferred is subject to termination. that its “lite” processes dramatically proved guest satisfaction. Good Nite In addition to the third-party audits, increased the quality ratings of its Inn found that developing time Preferred has begun experimenting previously substandard hotels to ten standards for the completion of with collecting evaluations from points above that of the average all property maintenance tasks in­ guests as a means of ensuring that Holiday Inn brand. While Bristol creased scheduling efficiency and Preferred’s standards are maintained. has focused on improving quality employee morale. Consequently, Expert benchmarking. Resi­ ratings, Essex Partners has concen­ employee attrition in the mainte­ dence Inn formulated a collabor­ trated on cost-cutting practices that nance and repair department ative approach to its quality- directly improve the bottom fine. As dropped from 150 percent to assurance program by benchmarking a result, Essex was able to refinance 50 percent. The practice also Ritz-Carlton hotels and Walt 12 of its managed properties with substantially decreased worker- Disney Resorts. Residence Inn’s an average reduction of 2 percent in compensation claims, saving the program emphasizes teaching rather interest rates. Furthermore, by bid­ company between $50,000 and than punishing, and the chain allows ding out the audit costs for its 16 $100,000, in part because the lower no one to fail an inspection. Instead, hotels, Essex has been able to effect turnover resulted in more-experi­ underperforming employees are an average savings of $6,700 per enced employees. Moreover, hotel taught how to correct any quality property. and guest-room maintenance im­ problems. To implement the pro­ The occupancy leader in its mar­ proved and is more consistent, re­ gram, a quality-assurance team vis­ ket, Days Inn Altoona reports en­ sulting in fewer guest complaints. ited each Residence Inn and thor­ joying 70-percent repeat business. After instituting its time require­ oughly inspected each hotel for the Moreover, the hotel has been recog­ ments for each task, Grand Theme quality of maintenance, guest rooms, nized as the number-one Days Inn Hotels has regularly achieved or dining rooms, lobby, service and property worldwide in its size cat­ exceeded its productivity standard. safety processes, fabrics, and parking, egory, and it was one of only three As a result, the hotels have experi­

52 CORNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY LODGING BEST PRACTICES enced greater consistency in quality. nology and practices emerge. Em­ Similar positive outcomes have en­ For managers seeking to improve ployees need a learning environ­ sued for the Hotel Bel Air. Since their operational processes, our ment in which they can help solve empowering the engineering de­ champions offer the following ad­ problems to attain superior quality. partment, the Hotel Bel Air is now vice and observations. To begin This may entail, as noted Lisa better maintained, and work requests with, they consider it essential to Rezin, the Ritz-Carlton’s guest- are handled more promptly and stay focused on the goals and design recognition manager, knowing who efficiently. More important, the pro­ a targeted program. They suggest your guests are, what they want, and active preventive-maintenance pro­ involving everyone who will be how they want it. The quality of gram has reduced guest complaints, affected by operational changes in the product and service will deter­ since most maintenance problems the development and implementa­ mine guest-retention rates. are identified and corrected before tion of new practices. As Steve the guest occupies the room. Boyle, regional director of Bristol Guest Satisfaction and Profits Advance check-in has also Hotels & Resorts, found, “The The focus of best practices pre­ yielded positive consequences. The more people involved, the easier sented here is improving customer Marriott U.S. Postal Service Confer­ the process becomes, because you satisfaction while maintaining care­ ence Center and the Newark Gate­ have more people taking owner­ ful control of costs. Effective opera­ way Hilton each report increases in ship of the program.” Further, Mike tions are the linchpin in the value guest-satisfaction scores in the wake Escalante, general manager of chain that begins with the promises of their streamlined check-in proce­ Sheraton Elk Grove, advises im­ made in merchandising the hotel. dure. Similarly, managers at the plementing the program slowly To deliver on those promises, man­ Ritz-Carlton Dearborn noted that enough so that employees have time agers must recognize and incorpo­ guests “love” the new registration to understand and align with the rate the practices that will best assist program, and “enjoy OSCAR’s pay­ program. Greg Sheehan, owner of the organization in satisfying the ment convenience and check-in Days Inn Altoona, points out the guest and ensuring repeat custom­ speed.” As a result, OSCAR is being importance of “treating people the ers. Our champions show that implemented throughout the Ritz- way you want to be treated.” Essex guest-satisfaction ratings can be Carlton chain. Partners exemplifies this advice by improved by a diverse body of prac­ The quality standards promoted including and listening to its man­ tices—whether the practices involve by Four Seasons, Regent, and Pre­ agers in all phases of the budgeting developing a quality program for ferred are essential to success in the process and in making cost-control the entire business or simply im­ upscale segment. Mobil has awarded decisions. proving one operation, such as each Four Seasons Hotel either a Good timing. The matter of check-in. They demonstrate that four- or five-star designation, while implementing time standards must implementing improved operational AAA has bestowed its five-diamond be handled carefully. In particular, practices can benefit many areas of designation on most Four Seasons managers should ensure that the the organization, whether that im­ Hotels. The properties have captured time specifications have been vali­ provement is hotel wide or located 18 slots in Travel and Leisure’s “Top dated and confirmed, and the hotel in a single department. We note 100 Hotels,” and 16 out of 100 slots should share any savings with the with interest that a key facet of in Institutional Investor’s “World’s Best employees. Along that line, manag­ many of the practices is to involve Hotels” survey. ers should update and track opera­ employees to share in the cost sav­ Preferred Hotels & Resorts’ Stan­ tional programs as necessary and ings resulting from streamlining dards of Excellence has created “best provide constant feedback to operations. We believe that the full practices” models that inspired the employees. participation of all employees in general managers to improve stan­ Our respondents point out that it both the design and outcomes is a dards and quality, fostered an overall takes time to develop standards and key to the success of these practices. increase of quality standards, and practices, along with a commitment The essential lesson from this ex­ encouraged innovation through the to innovation, personal service, and amination of operations best prac­ sharing of practices. Finally, Resi­ quality. However, as Peter Cass, tices is that hotels cannot remain dence Inn’s collaborative approach president and CEO of Preferred static. To retain the lifeblood of the to quality assurance has yielded a Hotels, has learned, managers hotel business—repeat guests— chainwide guest-satisfaction rating should be prepared to modify pro­ managers must constantly seek to of 83 percent. cedures and standards as new tech­ improve operations. CQ

December 1999 • 53