Carrying on from previous posts, I have recently seen that a small boutique hotel’s success could be improved by a complex department head with direct relations and contact with the owner. This is a weapon against the General Manager. Most times, an owner needs to learn more about the politics and the ins and outs of daily operations and understands only a slight amount about the balance required to bring together the property team, as they are off-location daily.
An owner sees things from a macro level; therefore, some challenges that need tactic, time and strategy seem easy to solve from an eagle eye view. Questions are then raised about why the GM needs to action these challenges actively, leading the owner to liaise directly with team members to solve the challenges. However, the underlying factors and misinformation given through the narrow channels cloud judgment. Therefore, one has to employ a competent General Manager to make these daily tactful decisions.
The Relationships between the owner and General Manager of a small hotel, not under management, are crucial to the business’s success. The General Manager is the critical link between the vision of the ownership and its interpretation and translation to the team to motivate employees to believe and succeed. More often, this link is not necessarily linear but in the form of a triangle, when the owner, possibly through a team member/s they are acquainted with, takes an active role in the hotel’s operations and decision-making.
With all due respect to owners, the GM is the person who operates the hotel. The GM implements the owner’s vision and achieves the goals, nurtures and sustains the hotel’s human resources and is the person who must take ultimate responsibility for the success or failure of the asset. The GM reports to multiple masters, responding to the owner’s and guest’s expectations. As a result, clear protocols of communication and accountability must be established, as well as a measurement technique for success.
Ownership should strive to identify and communicate a clear set of goals to the GM. Each hotel owner has different expectations and exit strategies for assets, from short-term custodial roles to long-term holds. The GM must understand the owner’s priorities to fulfil their mission, including developing a realistic business plan that covers financial budgets, cash flow projections, capital improvement requirements and marketing strategies. Focusing on the basics, such as customer service, human resources, product and profit, is also an integral part of the GM’s role, as is active participation in hotel sales department activities, financial management and communication with the owner regarding the property’s operating status.
Returning phone calls and completing projects for the owner can inhibit a GM’s ability to manage the hotel properly. Preventative mechanisms include scheduling meetings with the owner to discuss periodic progress, adherence to the business plan and general physical plant issues, with notes taken and action steps assigned with deadlines; the distribution of daily reports plus monthly financial statements with a written explanation of operational progress and deviation from the plan; and the immediate disclosure and distribution of information regarding unexpected challenges related to own risk or variation from the business plan.
There are no good surprises. Information, positive or negative, should never be withheld by management. In all cases, communication must be proactive and truthful without assumption or ownership’s pre-existing knowledge or awareness. The GM aims to educate the owner whenever possible and supply reliable information, which builds trust between ownership and the GM. Information flow should abide by the requirements of agreements set and the owner’s needs.
Owners measure success by achieving the business plan and expected cash flows. In some circumstances, success might also be calculated on the ability of the manager to enhance asset value for sale to another party. The alignment of interests between owner and manager should be basic and include maximised market RevPAR penetration, above-average customer satisfaction, the highest potential of competitive operating margins, employee retention percentage, employee morale and safety, and physical asset preservation.
Today, owners involve themselves in their hotel assets and dialogue with the GM; this should be the point of contact and critical communicator. This does not mean that the owner should go directly to team members. Of course, it’s a friendly approach that the owner is seen chatting with team members. However, business decisions should always be conducted through the GM. An intelligent owner should gain an understanding of and exploit the depth of their GM and their resources as part of the relationship they have. The synergies created by the owner and the GM relationship allow a “win-win-win” for all parties.
