IF you are thinking of going into the hotel business but have no expertise, then engaging a hospitality management consultant may be your answer.
For a fee, the experts will come in and put in place the working systems and all the necessary to operate and manage a hotel property. The hotel owners will bear all the running costs and, once it is up and running, will have a shot at developing their own hotel brand.
Such a service is not new, says Iskandar Zakaria Melvin, a partner for management and operations at Lumira Hotels and Resorts International. They can be traced back to the early 1970s when full serviced hotel developments such as Kuala Lumpur Hilton, Holiday Inn, Equatorial and Regent had opened in quick succession.
Back then, hotel consultancy services started with very simple advisory and feasibility services. When specialist input was needed, experts from the US and the UK were sought to fill the gaps.
As the industry matured, experienced officers from these international hotel companies saw opportunities with smaller hotel owners and developers who could benefit from their expertise and they moved out to carve a path of their own by offering these small players their services.
“White label hotel management companies probably started coming up within the last 15 years. One attractive factor for entrepreneurs to look up these services is that there was no need for significant amounts of capital save for the experience of its founders, ” says Iskandar, who has spent three decades in the hotel industry.
He adds that new hotel owners were more keen to engage independent consultancy companies due to their reasonable fee structure, local knowledge of the landscape and flexibility with the terms and specifications.
AKS Training Centre managing director Raymond Ho says the last eight years has seen a boom in the demand for independent hospitality consultancy companies due to the rise in the number of budget hotels and online marketplace accommodations.
The company’s forte lies in food and beverage service training for cafes, restaurants and budget hotels.Ho says another boon for hospitality consultancy is the move by the Health Ministry to make it compulsory for all food handlers to be trained and be familiarised with relevant regulations as stipulated in the Food Hygiene Regulations 2009.
He adds that the industry’s tendency to hire foreign labour was also a reason why his services are highly sought after as these new hires would not have the necessary skill sets.
A white label hotel management company that caters to boutique and five star hotels will be able to provide hotel owners with insights on what to expect.
“The first thing most consultants will do is to hold a discussion with the owner and do an entire walk through of the property, ” say Michael van Ommen and Leonard Theng, the founders of Filoxena.
This is done to find out what the owner’s business plans are and how much understanding he or she has of the current business environment. Through a physical survey, a good consultant should also be able to assess if there are enough corporations or businesses to fulfill the demand of hotel services within a 5km radius of its catchment area.
Next would be the business financials. This is especially relevant when it comes to hotels that are looking to increase profit margins. Based on a hotel’s financial reports dating as early as four years back, it is possible to see revenue, expenses and payroll trends and gauge if they have been in line with industry standards.
Theng says revenue reports are a good indication of whether a hotel has been reaching out to the correct markets and if attempts to do this have been done through effective channels.
“From here, you can also tell if the hotel’s price point is correct, if too much is being paid for certain food items, if payroll matches operation size and if profits are in line with expectations of a well managed business, ” says Theng.
Service quality is another matter a consultant can look into, adds van Ommen.
To get a thorough understanding of the property, Theng and van Ommen have gone undercover before, posing as guests to understand the service culture of a hotel.
“When you come in at an appointed time with a suit, people treat you differently. But appearing in, say, shorts, slippers and two babies in tow will give you a true reflection of how hotel staff behave towards guests, ” says Theng.
From his personal experience as a mystery shopper, Theng says double standards are common.
“If you’re not in a suit, you don’t get as warm a welcome, ” he notes.
But to remain relevant in the face of acute competition, industry consultants stress the need for more training.
Emphasis should be given to the frontline staff. Are smiles natural? Is that same smile still there when guests are being checked in? Are reservationists fulfilling requests for baby cots and extra towels seriously?
“This will require checking at the back end. Consultants can see if the staff are trained and given proper standard operational procedures for their job descriptions. They can look at key questions involving department processes to deal with how tasks and requests are performed and communicated, ” says van Ommen.
Consultant charges will depend on what services have been rendered.
Ho reveals that a full-day session on basic food serving techniques for 20 people can cost between RM3,000 and RM5,000. If the job requires more, such as in the case of a hotel opening or turn around, Theng and van Ommen say the base fee can be around 2%-3% of total revenue plus an incentive amounting up to 8% of the gross operating profit.
As for how far owners can trust an independent company to put the necessary systems in place, a crucial factor is to ensure the consultants have the necessary expertise for the job, says Iskandar.
“I know owners who have hired food and beverage managers to run their hotels not realising that the skill sets and expertise for running one will also require experience in organising marketing and sales, evaluation of computerised systems, management audits and development of control systems, ” he says.
Theng and van Ommen opine that the proof is in the pudding.
“We are not miracle workers, but if after eight months of hiring us and the hotel financials indeed show a nice increase, that’s a sign that we’ve done our job, ” they conclude.
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