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Investing in hotel real-estate requires a lot of funds. We are talking about tens or hundreds of millions of dollars/euros. You need to ensure a proper ROI is generated with such a strategic investment. Moreover hotels are a multi-million dollar operation. In any other industry we would be looking for a well experienced CEO to manage such a company. Who would you trust to manage your hotel investment?

Surprisingly enough we, at XOTELS, see many hotels being managed by former F&B or Front Desk managers with little true experience in finance or business strategies. The hospitality industry is known for its policy to promote from within. Putting an un-experienced or not sufficiently skilled manager in charge of your hotel operation without the proper support team, means you are taking a risk with the results of your investment.

general managerThe typical career path of a general manager starts in operations, and he/she works him/herself up to the top over a span of 10 to 20 years. The prospect of growth opportunities of course is good from the perspective that it keeps staff eager to stay within the industry.

Unfortunately though, most knowledge and skills are acquired on the job over time. There is a lack of both in-company and external training. Career path development, except from in the large chains, is mostly unheard of in the international hotel industry.

In previous blog posts we have identified weaknesses of hotel sales managers and skills required for revenue managers. The General Manager in a hotel is another key position that should be reviewed. What knowledge, competences and experience should the chief of all managers of a hotel possess?

Of course we should not look the obvious trades of a hotel manager like leadership and motivational skills as well as hospitality experience. But it should not end there. The role of the General Manager in a hotel goes, or at least should, much further.

In terms of strategies, the typical General Manager, in a hotel, insists to have the final say and often overrules researched advise of his executive management team, based on his/her intuition or gut feeling. Ever too often do I hear a GM reverse strategic well-founded decisions based on his/her years of experience.

We see this with hotel website design, search engine optimization, social media marketing but also revenue management. Too many GMs tend to have an opinion on all matters and feel a need to influence all decisions by their team. They feel with the amount of years they have on under their belt in this industry, they are knowledgeable on all areas.

Instead a GM should acknowledge in which fields he has no experience, for example the technical aspect of internet marketing, and surround himself by experts in such field. He/she should not just rely on the opinion of his staff, which often also lack specialist and experience, but recruit or hire a team with suitable technical knowledge and experience.

The title says it ‘General’ Manager, it is a generalist position. We can hardly expect him/her to know all. It would be recommendable though for a GM to take advanced classes in revenue management and internet marketing strategies to be able to better understand his staff and providers.

One thing you should be wary of as an investor is a GM that tells you he knows it all. A GM that tells you he knows what a hotel website should look like, and can get a cheap deal is a potential liability to your ROI. Instead look for someone who has had good previous experience with an internet agency resulting in 40% to 50% direct sales.

Same goes for the overall strategy. To outperform the market and uncover hidden revenue potential of your hotel asset, look for a GM who has worked with the best revenue, marketing and sales managers and is convincing you to invest well in this area. Please don’t go for the one who tells you he can get it done with a junior team managed by him/her. A GM has many areas to overlook, and needs to be able to rely on his executive team to manage the different department.
Instead ask him to show his market benchmark results. Did he outperform his competition in MPI, ARI and RGI (learn more about hotel KPI). Have him show proof of his previous performance. Numbers are all that matter. Don’t fall for the beautiful stories hoteliers as true hospitality professionals are too well at to portray. It is in their nature to make people feel at ease. Look beyond this and obtain facts.

hotel investement keyLast but not least, a General Manager needs to have good financial business insight. An MBA for the hotel industry would not be out of order. It is very common in other industries for executives to enroll in a post-MBA program after a few years of work experience to broaden and deepen their knowledge and skills in terms of business administration and economic insight at large. This is something we think we really should start seeing more in the hotel industry as well.
Providing hotel asset management services and revenue management consulting for a wide range of hotels in Europe, USA and Asia, we feel there is a pressing need for more structural career path development for General Managers in the hotel industry.

A hotel is a multi-million dollar/euro business which requires a CEO type leader to generate a healthy return on investment. We hope our industry will develop into a more professional one in the next few years when it comes to strategic management. Hotels require both a well experienced and trained team internally and should also attract external specialists to bring in knowledge which is missing in the team.

Don’t let the strategies run by just a hospitality professional! It takes more than pleasing guests to make money in hotel, get a real business manager on board …