Day 27: April 7, 2009

Can you afford not to renovate?

By Allison Sansone, HWN Columnist

Taking on the expense of a hotel renovation during a downward economic cycle may bring the image of cliff-diving to mind. On the contrary, the decision to renovate should be based on the future economic benefit relative to the cost and not on the cost alone, even during a year like 2009.

Asset management, growth and protection
The primary driver for this decision is at the fundamental core of investment principle. While there may be short-term uncertainty in the economy, there is a long-term certainty that the market will turn around. Reginald Heard, president and CEO of Bankers One Capital, explains: "Conventional wisdom for executing a stock investment strategy has always been to buy low and sell high. However, in market cycles under downward pressure, investor psychology tends to default into either a ‘hold’ or an exit strategy. In fact, downward market cycles actually present an optimum time to invest into the market. Similarly, those investment principles hold true when it relates to an upgrade to your hotel assets.

"Completing a timely renovation project during a downward cycle aims to protect and maximize the property values, and it yields a greater return on investment during the market recovery periods," Heard says.

Lessening the loss
For those who are not positioning their asset for acquisition, there is secondary operating rationale for renovating during a down cycle. Michael Cryan, president of Lighthouse Lodging Group, explains the advantage of renovating while occupancy is low.

"If you can avoid taking rooms out of service in high-demand cycles, then you will minimize the displacement of revenue," he says. "Renovating in a period of lowered demand due to economic conditions is not unlike the custom of renovating in seasonal low-demand cycles, such as Thanksgiving through March.

"A hotel that displaces rooms available to rent—whether in high season or a high economic cycle—experiences a greater loss of revenue, in addition to the cost of the renovation," Cryan says. "This simple calculation doesn’t even take into account additional revenue per available room potential that can be lost when renovating during a high-demand cycle."

As for basic cost-reduction opportunities, Aaron Plante, CEO of Apollo Hospitality Group, is familiar with those trends. "During a down economy, franchises are sometimes more willing to negotiate the scope of renovations with owners, and suppliers are more motivated to negotiate pricing," he says. "These savings all add up in this strategic approach to the timing of a renovation."

Increasing market share
The final case in point for renovating during a down cycle plays into your balance sheet by creating an obvious sales and marketing advantage.

According to a Consumer Reports survey (July 2007), guestroom upkeep, including outdated décor and poorly functioning furniture, fixtures and equipment were major factors in rating the value of a hotel experience. The few guests who exist in the demand chain are going to be easier to capture when rooms are newly renovated. This gives you a guaranteed leg up on your competition in the short term, the opportunity to build a foundation of guest loyalty that will supplement the occupancy gain when the rest of your market returns in the up cycle.

Overall, the assumption that a renovation is only beholden to affordability on your balance sheet is neglecting key short- and long-term strategies. There are proven tactics in renovating during a down cycle both as an investment in your asset and as a cost savings experiences on the expense side. The real question is, can you afford NOT to renovate this year?

Allison Sansone manages marketing and business development for Apollo Hospitality Group, a turnkey hotel renovation company based in Southern California. Contact her at 714-494-2324 or allisonsansone@apollohg.com.

BACK TO TOP

Survey: Corporate travel crucial to company success

A survey given to business leaders by the U.S. Travel Assn. shows a majority in favor of corporate travel—some saying travel budgets are integral to building a competitive advantage.

The survey results reveal 72 percent of businesses say increasing travel while others are cutting back creates an opportunity to build market share and new customer relationships. Fifty-three percent says companies that reduce their business travel will give an advantage to competitors who maintain their travel commitment.

The findings seem to show that, contrary to the prevailing sentiment that business trips are lavish and wasteful, businesses need them to properly run their operations. Basically, all of those businesses that reduced travel and meetings at your hotel may regret it.

“It’s a classic trade off between short term cost-reductions and long term value,” Daniel Diermeier, Kellogg Business School professor, says in a statement. “During times like these, many companies will go too far, and actually cut back on the activities that would best position them to compete in the future.”

The survey of business executives at companies with more than $50 million in annual sales found that:
•  82 percent of companies surveyed believe that business travel is important to achieving their business results
•  81 percent believe that more client contact is necessary in a slow economy
•  A strong majority (59 percent) strongly agree that in-person contact grows their business; and
•  72 percent of businesses believe that increasing travel while others are cutting back creates an opportunity to build market share and new customer relationships.

Source: U.S. Travel Assn. website at www.ustravel.org.

BACK TO TOP

9 tips to help job seekers get noticed

Undergoing a job search is never an easy task. And no matter how many times you’ve done it before, there is always one detail that just about everyone gets caught up on: the résumé. From how long it should be to the method by which you send it, actually getting your résumé on paper and “out the door” is quite the undertaking on its own.

David Creeger, president of executive search consulting firm Sanford Rose Associates in Fairlawn, Ohio, offers tips on how to best work with a job search resource, otherwise known as a recruiter, human resources person, hiring manager, screener or anyone else standing in between you and your next career.

“Candidates are competing for a JSR’s time and interest, and the following tips are suggested as practical ways for job-seekers to make themselves easier to work with and to enhance their chances of being considered for a new opportunity,” Creeger says in a statement.

When contacting or asking about opportunities from a search firm or other JSR, send a copy of your résumé along with the request.
•  Send a résumé via e-mail unless otherwise requested.
•  Create a signature for all e-mails you send out that includes your first and last name, phone number and e-mail address.
•  Send your résumé as a Microsoft Word (versions 1997-2003) document. It is easier to work with, is the most commonly accepted format and is easier to copy and paste into a database.
•  When sending a résumé, include a brief description in the cover e-mail regarding your interest in the position, background and expectations.
•  Make your cover letter the text of the e-mail, keeping it concise, short and to the point.
•  Paste a copy of your résumé at the bottom of the cover letter e-mail and also attach it as a Word file.
•  Limit your résumé to no more than two pages. In fact, one page can many times be more effective because it shows prioritization and consideration of a JSR’s time.
•  A simple Word format is the easiest to work with, rather than many of the fancy templates others may suggest. If you need to submit your résumé in a text-only format, try pasting it into the document first to check to see if it coherently presents the information in a readable format.
•  Keep your résumé simple and consistent so that it may be read and understood in the shortest possible time. 

Creeger says following these tips will demonstrate that a candidate knows how to communicate effectively, is able to prioritize and values and respects the JSR’s time and consideration.

And remember, he adds, the job search boils down to a numbers game: The more of your information you can have considered by potential employers, the better your chances are of finding that next job.
Source: David Creeger, president of Sanford Rose Associates

BACK TO TOP

Sponsored message: Americas Best Value Inn

Americas Best Value Inn = Greater R.O.I.
With more than 800 hotels in less than 10 years, our performance is reflected in our numbers and innovative Freestyle Brand Affiliation. Discover how you can generate more R.O.I. for your property today. Visit AmericasBestValueInn.com or call 888-316-2378 for details.

• DOWNLOAD PDF
• RETURN TO 100 DAYS TO FIGHT THE RECESSION HOME PAGE