CHAT Shanghai 2016
China Hotels & Tourism Conference

September 21-22 | Shanghai Marriott Hotel City Centre

Sail into – Innovation Hotel Operation

2015-10-28

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In the Salon session of “Sail into – Innovative Hotel Operation” at CHAT Shanghai, two invited guest speakers discussed how hoteliers can become daring and creative, in order to have a breakthrough in finding the right direction to improve revenue and operation efficiency.

 

People, they make a hotel.

 

Mr Bin Luo, Managing Director of Beijing FourD Hotel Management Company, started the session by reminding the audience of the brutal truth: In recent years, many hotels in China, which were not properly planned and positioned from the development stage, are suffering from poor performance. Facing the decline in revenue and ever raising costs in the past years, many hotels are already seeing red figures in their P&L. It is high time for hotel managers to review if the current way to manage is still effective.

 

Mr Luo then shared his idea on the new key success factors in hotel operation: review, letting go, and be rational.

 

Review: Hoteliers need to have a better understanding of the local hotel market and thus better positioning and operate the hotel based on what the market needs.

 

Letting go: The hotel owners and operators need to be more determined in giving up those less effective procedures and streamlining the operation. We should also value more market demand, creativity and profitability.

 

Be Rational: Owners and developers need to be more rational and focused on offering what the customers need, and give up the way they used to invest blindly without taking serious consideration about the return on investment. 

 

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Mr Luo shared with the audience a case study on a hotel that his team is managing in Beijing, to point out the importance of being people-oriented in hotel operation. The hotel has a rather poor location. Suffering from loss in the first two years after its opening, the hotel was a “nightmare” for any hotelier. “The hotel not only had poor facilities, but also suffered from a poor external environment and market condition.” Many would have thought the hotel was grasping at straws. However, Mr Luo and his team took over the management of the hotel in 2010, and within just 4 years, the GOP of the hotel has reached RMB 20 million, with the GOP Ratio above 45% for 3 consecutive years. This made us wonder: What is Mr Luo’s secret weapon to save a hotel that was at the brink of death?

 

Fuel the operation with motivation.

 

Through adjusting the way employees think and work, Mr Luo helped improve the efficiency and performance of the hotel. He also flattened the organisational structure of the hotel, enhanced the division of work, and eliminated the procedures that are of little help to the business. Meanwhile, various department heads took turns to lead the Executive team, which allowed the senior employees to experience a higher level of responsibility and see the bigger picture of the operation.

 

Mr Luo also suggested the hotel should take out the low value-adding parts in the management. “Do not supervise for the sake of supervising. Procedures that do not generate value for the hotel should be eliminated”.

 

With that background, Mr Luo shared the real secret for bringing the hotel back to its feet – employee motivation. In order to drive the hotel revenue, every employee has to care about the hotel’s performance. And the best way to achieve this goal is to link their salary to the income of the hotel. The management adopted a lower base salary, and the employees’ motivation and initiative became the decisive factor for the variable part of their income. Meanwhile, through integrating internal resources, the hotel can optimise the value created by every employee.

 

It is people who can make a difference.

 

To conclude, Mr Luo pointed out that even if the hotel does not have a good product or location, it still could be successful as long as it has a good team. “It is the change in our attitude and belief, the change in the way we work that helped this hotel to reborn.”

 

Innovate with technology

 

Following Mr Luo’s sharing, Ms Minmin Wang, VP of Shiji Information Technology Co., Ltd shared her experience on how technology will reform hotel operation. She suggested that we need to optimise hotel operation internally and externally.

 

Internally, we need to improve the efficiency of our operation so as to enhance the guest experience. And externally, we need to expand our sales channels and strengthen the customers’ loyalty.

 

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The new “integrated” management

 

It is a common headache for the front office staff to handle hundreds of registration cards every day. Very often they have to squeeze out more space from the already crowded back-of-house area to store these piles of paper. And technology may help to end this ordeal. Shiji has just launched an e-signature system with hotel groups including Shangri-La, which allows guests to sign on a digital screen when they check in and out of the hotel. This will not only allow the hotel to store and manage the records more effectively, but also can reduce the usage of paper and make the hotel more eco-friendly.

 

Another difficulty faced by front-line employees is that they often have to use multiple and usually unconnected systems at work. Ms Wang shared one of the latest interface developed by Shiji, this system not only can help front desks to go paperless, but also can link the front desk system with Alipay. Hotel can now have multiple steps including registration and payment to be consolidated onto one single page. Moreover, this system can be connected to the OTA portals, which enables OTA reservations to be generated automatically in the hotel PMS, without having to process them manually again.

 

Apart from developing technologies to offer better guest experience, Shiji’s system can also help hotels improve their employee productivity. For example, the new mobile app can replace the traditional way of allocating work using SMS or phone calls. With this technology, housekeepers can now have an instant update on the status of each guestroom, and to change the status directly in the system. Housekeepers can even take a photo and submit it with the maintenance request to the engineering department, avoiding miscommunications.  

 

New experience that redefines hotel experience

 

Many travellers have once envied those people who can skip the line and go straight to the counter using the “Diamond Members” lane. What Shiji recently developed with Alipay may make this available to everyone. The “Post Post Pay” system, which is linked directly with the Alitrip and Alipay platform, will allow eligible customers to check in using their Sesame credit, and therefore no longer require paying deposit or settling their bill at the front desk. Those eligible customers with enough Sesame Credit, a popular credit system owned by Alibaba, will have their bill directly charged to their Alipay account. Soon Chinese travellers can bit farewell to the long wait at checkout.

 

This technology not only brings the guest experience to a new level, but also revolutionises the way hotel sales managers work. “What we create with Alibaba is a platform for direct sales, which is fundamentally different from OTAs. Hotels can now regain control over the rate and type of room they want to sell.” Ms Wang also pointed out that hotel sales managers relied too heavily on OTA over the past decade, and have lost their ability to conduct sales. It is a problem for hotels, as when customers make reservation with OTAs, hotels have no access to the detailed demographics of the guests; while a direct sales platform allows hotels to directly face the customers and thus regain the opportunity to understand their customers. 

 

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Technology is not the magic bullet.

 

Although new technologies often come with more convenience and a refreshing experience, Ms Wang reminded the audience that technology may not be the perfect solution that fits every hotel, and we have to refrain from blindly adopting every new technological application available. What is best for hotels is an integrated solution that fits the need of its operation.

 

Meanwhile, there are still a lot of constraints of applying the existing technologies. For example, some hotels are going keyless by allowing guests to unlock their guestroom doors using WeChat. But guests often have to go through a lot of steps and it also creates problems such as how to activate the elevator or key card power switch with smartphones. She hoped that when new technologies are created, we could overcome these hurdles in the future.

 

Use technology to complement human’s creativity. Be innovative, be daring, and be thorough.

 

In the final discussion, the host initiated the discussion on how human and technology can work side by side to revolutionise hotel operations. And the guest speakers concluded that: No matter which way we adopt to improve hotel performance – through applying technologies or enhancing human resources management, hotel owners and management should create a tailor-made solution that is suitable for the situation of individual hotels. And as the Chinese idiom goes: Going too far is as bad as falling short.

 

With no doubt the proper application of technology will be of great help to improve operation efficiency, and to help us make better decisions by offering more accurate market analysis. However we should bear in mind that no matter how advance the technology may be now, it still requires a good management team to turn digits into reality, and the human touch is still going to be the fundamentals of the hospitality industry. As the host described: optimising the organisational structure and employee productivity is like run-ups to prepare the aircraft for take off; and then a good engine – technology will provide the hotel with the thrust needed for successfully taking off and flying into the future.

 

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About CHAT

Horwath HTL has created a new brand identity – CHAT, tailored for China’s hotel and tourism industry! CHAT, the abbreviation for China Hotels And Tourism, encourages industry people to gather, create dialogue and network through the platform, as well as exchange and share experience and knowledge. CHAT Beijing is an enhancement of the “China Hotel Development and Financing Conference”, which has been held for eleven years in Beijing. We further focus the conference specifically on hotel and tourism development and investment issues. There are 650 delegates attended 2015 CHAT Beijing with the largest segment being domestic hotel and tourism developers and owners. CHAT Shanghai is an upgrade of our annual “China Hotel Market Review and Outlook Seminar”, which has been held over the past six years. CHAT Shanghai focus on hotel asset management and operations. 510 delegates attended CHAT Shanghai in September 2015. CHAT Beijing and CHAT Shanghai held in Spring and Autumn respectively cover the full hotel and tourism business cycle from development and investment to asset management and operations. CHAT will enable you to achieve successful business development through its various powerful platforms!

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About Horwath HTL

Horwath HTL is the management consulting of Crowe Horwath International that specializes in hotel, leisure and tourism industries. Established in Asia in 1987, Horwath HTL has consulted about 4,000 hotel and tourism related projects throughout the region (including over 1,200 projects in China) for clients ranging from individually held businesses to the world’s most prominent operators, developers, lenders, investors and industrial corporations. Horwath HTL now operates offices in several key cities throughout the Asia Pacific region, including Auckland, Beijing, Hong Kong, Jakarta, Kuala Lumpur, Mumbai, Shanghai, Singapore, Sydney and Tokyo. Our offices work closely together to ensure that our clients receive a multi-skilled international perspective for their projects. Horwath HTL is also supported by the Horwath database, the largest and most complete hotel and tourism related database in the world. No other firm is better positioned to meet today’s and tomorrow’s industry challenges than Horwath HTL – Experts in the hotel, tourism and leisure industries.