5-Star Hotels: What makes them different?
You’ve read so much verbiage regarding the 5-star property, and my goodness, I’ve been one to contribute to this pile!
But let’s set the story straight:
The physical property does not deliver five stars.
It is the human capital that does!
Yes, the guest room, ambiance, quality of linens, historical presence, etc., all are part of the equation, of course, but don’t be deceived. You can pour a million dollars into each room, but with faulty housekeeping, it goes all to naught. One bad apple in reception and you’ve lost the guest before they even enter their room.
So why do we spend so much time fussing about the physical while neglecting human capital?
My hypothesis:
Human capital can be measured on the P&L as a cost.
Reduce labor, and you increase property NOI.
Compare this to your build price, which is capitalized.
GMs and Management Companies get bonuses based on EBITDA, so capital expenditures have less scrutiny.
The next time you consider a $2,000 desk lamp (times, say, 100 rooms), think about buying one at half the price and invest the balance in your team.
Look at this year’s budget, and if you’re an owner, ask your GM to outline his/her training budget.
Photo credit: iStock molishka1988