Friday, August 10, 2007

Hotel property management software

There are many options available for property management software these days. Where do you start? We have settled on Check-Inn by as the system of choice. The designers understood the hotel business keeping in mind the system must be easy to use and designed this software package to standout from the others.

The user interface is built in a manner that allows the check-in, checkout and reservation functions to flow smoothly. The system also comes with an audit logging capability that records all the all transactions, entries, modifications and so on. There also is are a wide array of reports that range from daily, monthly, guest tracking, housekeeping, reservations made, shift reports, audit logs, forecasting, A/R report and many others that will let you perform audits, A/R billing, research and business intelligence that is necessary to be competitive in today’s market.

The system also features add-ons for:

  • Call Accounting
  • ID Scanning
  • Reservation Booking Engine for your hotel's website
  • Multi user needs
  • Credit Card processing

Thursday, August 9, 2007

What are your hotel acquisition criteria ?

Hotel room revenue multipliers are in the 4.5 to 6.0 times gross range in the Pacific Northwest versus 3.5 to 4.0 times gross until 2005. Also, there are many investors with cash waiting to jump on any opportunities that arise near any metropolitan area. How do you evaluate what is a deal worth pursuing? Below you will find some items that I assess when considering a potential acquisition:

  • What is the average 3 year income trend? You can use this in conjunction with what you feel the market multiplier is to determine the purchase price.
  • What is the age of the property? Generally we do not pursue properties built before 1985 in most cases.
  • Is the property mismanaged and is there an upside? Efficiently run properties are currently performing at or above past historical highs making the acquisition risky.
  • What upgrades are necessary to achieve a 2 to 3 diamond AAA rating.
  • What are the major business draws and are they consistent? One thing to look out for would be major construction projects in the area that could have brought workers in over the past few years. This is non reoccurring business and you can not bank on these in the coming years.
  • What operating expense can be reduced?
  • What marketing opportunities have not been implemented? Look for online reservations systems, strong website presence with online advertising campaigns, what advertising is currently under agreement and where can you focus.
  • What is the price per unit? If you are within 30% of the new construction cost per unit then you might as well build new.
  • What are the occupancy and ADR levels? Is the hotels occupancy and ADR below the market?
  • Hotel collocation - It is actually a positive to be located nears other franchised hotel that sell at a higher rate because you can draw from their customer base and their brands ability to draw walk in business.
  • Lastly and most important is location, location and location. Does the hotel have easy access while driving on the main road, what is the visibility like and what is the access to the highway/airport/downtown like?

Overall we have been most successful in purchasing and repositioning distressed properties.

Wednesday, August 8, 2007

Is your hotel in dire need of a renovation ?

So where do you start and what provides the best return? Based on our results, we have found that the following renovation items completed in phases yield the best results:

  1. Work on increasing the curb appeal by upgrading the grounds and the exterior of the building.
  2. Take 50% of your units and redo the interiors by upgrading furniture, carpets, beds, drapes, bathrooms and so on.
  3. Redo your lobby and common areas to provide a modern look.
  4. Complete renovation of the remaining units.

There you have it, a quick overview of where I think you should put your money and in what order.

Tuesday, August 7, 2007

Are your housekeepers over on hours daily?

Dealing with your housekeeping staff is not as easy as one would expect. The goal is to have them meet a high bar of cleanliness without taking a large amount of time per room. With that being said we have come up with a worksheet each housekeeper fills out at the end of their shift and a master form for the head housekeeper. In this form they calculate the time expected to do their duties versus actual hours and list the variance. The head housekeeper does the same but for the entire department on a daily basis.

They calculate their hours as follows

  • Maids - Number of rooms cleaned x 25 minutes per room to clean = X mins /60 for X hours
  • Head Housekeeper -Total Number of rooms cleaned x 5 mins for laundry per room + 90 minutes for commons areas + Number of rooms cleaned x 25 minutes = X mins /60 for X hours

They then compare the hours calculated versus the hours taken for either an overage or shortage. You can view these numbers on a daily basis to see how close you are to your budget but in all actually you should review this across every pay period.

Monday, August 6, 2007

The year of Revenue Management for Independents

2006 was a year of building occupancies and getting heads in beds. All of our properties performed at record levels in regards to ADR, occupancy and total room revenues. This year there has been a swing in occupancies and we are seeing a 5 to 8 % decline, in occupancy, across our portfolio. We feel the main contributing factor is our midweek construction/corporate guest business is down.

Fortunately with the demand being high during special events there is a way to make up the difference. We have raised our daily rates by 10 to 15% on non special event dates. During special events we are driving our ADR in the $90 to $100 range. Overall revenues for 2007 versus 2006 are either the same or within 3% of last years totals.

Check what you competition is doing and price yourself either at or above them when demand is high! Be patient and confident in your pricing.

About time someone started a blog for independent hotels

So you think you can buy a hotel and make money? Sounds simple enough, but there is allot involved to generate cash flow and build a solid business. We have been at this for 30 years now and have decided being an independent hotel is the way to go. I call the shots and spend the money where I think is fit. I am going to post some of the day to day issues I come across and decisions we make. I own 3 independent hotels and there are 8 we manage for a total of about 600 units throughout Washington and Oregon.