The time to prepare for a flat tire is not after running over a nail. The same can be said for those who run hotels—the time to prepare for a downturn is right now. By the time a financial or economic downturn happens to your business, it is too late to begin planning how to handle it. Taking a hard look today at what you would do if challenges came tomorrow is one of the smartest ways you can prepare to weather a downturn in the hotel business, whether you’re looking at a hotel property for sale or have owned for a long time. Here are some of the major areas you may want to consider.
Study the Past
Perhaps you already owned your property during a prior economic downturn. Did you discover any specific areas in which you were underprepared? Have you already made adjustments in case that problem comes again, or do you need to come up with more specific plans?
Prepare Your Staff
Your staff may be one of your biggest liabilities cost-wise, but they can certainly be an asset during tough times.
- Cross-train: To be the most flexible during a downturn, it helps to have staff that can perform different essential functions at the hotel.
- Consider not backfilling: If someone leaves their job, is there a practical way to not backfill the position?
- Be honest: You work with adults, and they should be treated with respect. While you don’t need to share every financial detail, downturn implications should not come as a complete shock to employees if their circumstances need to change.
Make Wise Decisions
While nobody gets things 100% right 100% of the time, you can be smart about the decisions you’re making now to ensure they’re putting you in the best place for the future. Scrub you annual expenses with a fine tooth comb. Note that saving 3% in one category and 5% in another, repricing vendors and contracts, will assist in creating a leaner and more efficient operation which can weather any downturn in the economy – not to mention help your current bottom line. A single savings may not seem huge, but a whole bunch of small savings across the board can add up to some great savings.
- If you are considering adding food service to your property, do you already have some facilities available that may only require minor upgrades, or will it require a massive up-front investment that may be problematic to pay back?
- Are you using the most efficient means you can to make your larger purchases, such as toiletries or in-room amenities like coffee? What about services such as laundry or recycling?
- Does the technology you offer—WiFi, television—provide a good balance of selection for guests, and cost-effectiveness for you?
Whether you already own a property or are looking for a new hotel property for sale, you can put yourself in a good position to be ready for any downturns that come your way. Contact NewGen Advisory for expert hotel investment consultation. We’re dedicated to helping you succeed.