Preparing for the Anticipated Hospitality Industry Turnaround in 2021

Plenty of time has been spent analyzing the effects of the past 18 months, and still more has been spent estimating the timeline for recovery. But what steps are hotel owners taking to position hotels for the better days ahead? Charles Snyder, Head of Hospitality Investments for Ross Group Development, provided us with some key takeaways from his years spent working in the hospitality industry.

Focus on Stabilizing Operations

  • As demand in most markets has now reached more predictable and sustainable levels, hoteliers are reviewing and revising departmental staffing to ensure service delivery is on par with guest expectations, while also optimizing profitability.

  • The hotel industry is suffering from a severe labor shortage. By some accounts, the industry is still missing more than 15% of its pre-pandemic workforce. In light of this, hotel owners and operators are focusing on staff retention to avoid losing key operating personnel. As you know, it’s much more cost efficient to retain existing employees than to recruit, onboard, and train new ones.

  • Operators are also being more aggressive in their efforts to recruit new employees. While increased wages and signing bonuses appear to be a reality in the near-term, operators are also focusing on communicating career growth opportunities to attract new talent to the industry. Recent graduates of university hospitality programs are a prime target for operators looking to build a talented labor pool via manager-in-training programs.

  • Owners and operators are looking for permanent operational efficiencies. There is a clear trend toward permanently removing daily service in all hospitality segments except luxury. This will help maintain or improve profit margins in the face of rising labor costs. At the property level, every hotel temporarily halted a variety of non-essential tasks during the pandemic. Management teams are now looking to make some of these permanent.

Optimize Your Departments

  • Now is the perfect time for hotel owners and operators to review every department and look for ways to improve efficiency and profitability. Focus on areas that include a heavy labor expense and those that generate other revenue streams. In the rooms department, the time to clean a room has slowly crept upward over the last several years. Focusing your efforts on streamlining room turnovers is one example of how to increase profitability.

  • Parking represents another area of focus. Consumers in higher end segments have become accustomed to paying for parking. Many hotels are now reviewing their ability to charge for parking or to increase current parking prices, especially those with valet operations, to offset rising wages.

Review Repairs & Maintenance and Capital Expenditures

  • Many hotel owners deferred routine maintenance for the past year and their hotels are starting to show wear and tear. Now is the time for hotel operators to perform a thorough audit of hotel maintenance conditions and revise property maintenance programs with new safety and cleanliness standards in mind.

  • Hotel owners are realizing the value of preparing three to five year capital expenditures plans to keep their properties in good condition. For those properties with sufficient capital reserves, this is a great time to execute more complex renovations to guest rooms or meeting spaces while those activities will displace less business.

Update your Marketing Campaigns

  • As travelers continue to return to hotels, the industry needs to consider the best way to communicate with guests - starting from the time of search and booking through arrival and checkout. Booking lead times are currently very short (between 10 and 21 days for most segments). Keep this this near-term window in mind when developing your marketing campaigns, and even consider promoting or rewarding spontaneity. Guests still require a lot of flexibility and should be assured they will not be penalized if their travel plans need to change.

  • It is also essential to communicate that health and safety are the top priority, without painting a bleak or disheartening image of travel.

CASE STUDY:

Charles and the other members of Ross Group Development have spent the last year providing active asset management and oversight to position the Tulsa Club, Curio Collection by Hilton for success. Our team provided a deeper look into how the steps above can be successful.


Background: Ross Group acquired the abandoned 1926 historic Art Deco building that once housed the Tulsa Club and Tulsa Chamber of Commerce. We spent years meticulously renovating this local landmark. The hotel fully opened in May 2019, less than a year before the hospitality industry ground to a halt.

Stabilization: Like most hotel owners, Ross Group participated in federal and local programs to allow the hotel to continue operations. The property operated with a skeleton crew and the in-house restaurant, Chamber, was closed. The City of Tulsa provided additional support, which was crucial to the stability of its business community. Our relationships with local lenders also proved essential.


Operational Turnaround: In late 2020, Ross Group engaged Greenwood Hospitality, a national hotel management company to assist us with the challenges associated with the pandemic. Greenwood has a long track record of executing hotel turnaround strategies and they adeptly rebuilt the operating team at the hotel, rehiring or replacing employees who had left the hospitality industry. They hand selected a strong team of leaders for the property who successfully navigated an ever-changing set of health and safety protocols. Ross Group and Greenwood made calculated decisions to expand staffing and service levels to meet the growing demand.


Growing Optimism: Based on a number of factors unique to Tulsa, including an open economy and the renewal of events in the downtown area, the hotel’s performance in May eclipsed pre-covid levels. Still, there is uncertainty about how long these trends will last. Ross Group and Greenwood are developing strategies to ensure continued success for the hotel, including a careful return to normal staffing levels and relaunching the Chamber restaurant.

Unexpected Surprises: The hotel faced unprecedented freezing weather in February, leading to a string of mechanical systems issues. Ross Group relied on our deep relationships with local vendors and subcontractors to bring in experts to provide emergency repairs. Additionally, an unforeseen labor shortage has impacted hoteliers nationwide. At the Tulsa Club, our dedicated staff has worked plenty of extra shifts and Greenwood has employed an aggressive recruiting campaign searching for new hires from other states.


Fixing What’s Broken: A year of crisis takes its toll on a property. Ross Group has planned and budgeted a series of essential repairs to make sure the hotel remains in great condition for its guests. A list of additional improvements has been planned for 2022 that will include improvements to the public space and banquet facilities, which should see increased use next year.


Excitement for What’s Ahead: As it is now much safer for Americans to travel and gather, the Tulsa Club plans to re-open Chamber restaurant with a new chef and an exciting new menu. The hotel also plans to host pop-up events in partnership with local vendors and will welcome the public to enjoy our Art Deco inspired holiday decor and activities.

The Tulsa Club is now operating normally with our staff providing gracious hospitality to guests every day. While headwinds persist and revenues may remain suppressed for some time, Ross Group and Greenwood are continuing to optimize our hotel and look forward to greeting you during your next stop in Tulsa.

Hotels are dynamic businesses that requires active engagement from ownership, a great hotel management company, and talented staff. As recent events have proven, the hospitality industry is resilient, and as long as people can travel safely, hoteliers will be ready to welcome them!

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