Category: Economy Lodging

Are your expectations getting the best of you?

December 2, 2019

Are your expectations getting the best of you?

When my wife and I were first married, we went to meet with a counselor to learn some strategies for improving our relationship. I will never forget his advice after hearing both of us talk about our challenges.

He said, “You both need to do a better job of managing your ‘expect-or’.” Never having heard the term before, I asked him, “What do you mean by that?”

He quickly replied, “Life is a lot easier if you don’t have any expectations.”

Just as quickly, I vehemently disagreed. I thought, “How can you be in relationship with someone and not have any expectations?”

Since that time, I have learned that what our counselor said was true. I have discovered that many of our personal and professional frustrations stem from violated expectations, particularly those which we have not clearly identified or communicated to others.

Here are a number of expectations that may create problems in your working relationships with others if you are not giving them your attention.

1. Expectation of awareness

Often we don’t realize that we haven’t identified our expectations, nor have we distinctly communicated them, until we get different results than what we expected. When this happens, it is necessary to take a look at what we expected and determine if we clearly communicated our desires.

If you are in doubt, then you have no one to blame for your unmet expectations but yourself. We assume that others are aware of what we expect, but often they aren’t. Sometimes we become so busy or distracted that we fail to make others specifically aware of what we want.

2. Expectation that others read my mind

Because our thoughts and feelings about something seem obvious to us, we presume that they are to others as well. We figure if people know us and are tuned in, they should know what is needed without it being spelled out. Making these types of assumptions is a recipe for miscommunication and frustration.

3. Expectation of clear communication

When we take the time to tell people what we want, we suppose that they clearly understand what was communicated. Differences in communication style, life experience, education, age, various levels of authority, etc. mean that we might not understand each other in the same way. There are too many variables to assume understanding without being specific and allowing for clarifying questions.

4. Expectation of similar performance

We each have a level of performance and ability we are accustomed to achieving. It is common to expect people to perform exactly the way that we would. If you haven’t clearly explained how something should be done, you can’t assume that others will do it the way that you would.

5. Expectation of job satisfaction

Attaining job satisfaction rests with both the manager and the employee. Each is dependent upon the other to meet their expectations. The manager has the responsibility to meet the expectations of the employee. The employee is also required to meet the expectations of the manager.

If neither party has ever explored one another’s expectations, then it is entirely possible that neither party’s expectations will ever be met. So much for job satisfaction.

6. Expectation of engagement

Managers may expect employees to take responsibility for improving their engagement, while employees may expect that managers will take responsibility for their disengagement. When this happens, each party may be silently waiting for the other to meet their expectations. Meanwhile, nothing happens.

7. Expectation of infallibility

We would like to think that we are above making missteps. Because we are all different, you can trust that your expectations will be violated, plus you will sometimes not meet someone else’s expectations. The likelihood of difficulties will dramatically decrease as we discuss our expectations of others. Expectations are often held, but not communicated. Therein lies the problem.

8. Expectation of competence

Because we assume that no news is good news, we expect that the absence of negative feedback means that we are doing a good job or that our manager is satisfied with our performance. We may also assume if we don’t hear about problems from our direct reports, that all is well. Given that people are generally afraid to talk about what matters most, if you want feedback, you had better ask for it. If you don’t ask, you may never know.

9. Expectation of vision

You can’t expect that people want the same things or want to achieve the same goals. Working on the same project or having specific goals does not mean that both parties hold a mutual vision or purpose. The vision needs to be clearly identified and both parties need to understand how each contributes to the achievement of the mutual goal.

10. Expectation of why

Just because your expectations are clear doesn’t mean that people will understand the reasons behind what you are asking them to do. You want to be clear about the why to increase motivation and expand another’s purpose.

11. Expectation of priorities

You can’t expect others to know your priorities nor can you expect to know another’s priorities if you haven’t clearly communicated. Knowing how frequently they change, it is important to revisit priorities frequently if you expect your efforts to contribute to the desired results.

12. Expectation of need

We often presume to know what others need based on our expectations and experiences. If we don’t communicate with them, we may not be supporting them in the areas they need to achieve our expectations. Failure to meet an individual’s needs in areas such as resources, support, education and development may limit their success.

13. Expectation of feedback

Whether you are a leader, manager or employee, you generally cannot expect people to give you unsolicited feedback. Often the higher up the organization you are, the more difficult it is for people to want to provide feedback. So if you want feedback, you need to ask for it. When you receive it, listen for factual specifics or examples, and if you don’t get any, then you need to ask. Feedback is often hard to come by, so when you receive it, be grateful and express appreciation, then look for actionable items that can help you improve.

These are some examples of the kinds of expectations that may limit our success. Taking the time to clearly identify your expectations, communicate them to others and check that you have been understood will improve your relationships and your ability to achieve the desired results.

Economy Lodging: Always In Transition

December 7, 2013

By Mihran Kalaydjian, CHA

Since its inception, the economy segment has undergone a continual process of transition. Although most owners, operators and lenders take a “stick to the basics” approach, a problem arises when one attempts to define just what “the basics” are.

Since its inception, the economy segment of the lodging industry has undergone a continual process of transition. Although most owners, operators and lenders take a “stick to the basics” approach to economy lodging, a problem arises when one attempts to define just what “the basics” are.
There are essentially two schools of thought when it comes to defining the basics. In the first, they revolve around price/value, guest satisfaction and market position; in the second, they focus on minimum amenities, minimum services and Spartan physical facilities. Although profitability is the goal of both approaches and both tend to focus on occupancy, the former group additionally recognizes that average daily rate (ADR) plays a role in the room-revenue formula.
These two approaches create a dynamic tension in the economy segment. This tension contributes to the excellent price/value that economy-hotel guests enjoy. The entry barriers to the economy segment are relatively low: Less than $2 million, with minimal equity requirements, will develop a very nice 40- to 50-room economy property. Don’t scoff at that size, by the way: In many markets, it’s just about right. Yes, the hotel will be fairly Spartan and yes, the owner will likely be a neophyte to the hotel industry (though not necessarily to the development game). But that neophyte will learn in a few years what the old-time hotelier already knows: The mouse trap must be improved regularly if it’s going to continue to work well.
Enhancing guests’ perception of value vs. cost
As amenities and services are added, room rates must rise—but not beyond perceived value nor out of balance with the competitive market. Here is where the tension tightens: As soon as a new developer perceives an opening in the market and can obtain a secondary or tertiary site in a decent location, a new budget hotel appears on the scene. In response, management of the moderately priced hotel nearby moves to reposition it as an economy property by lowering rates. These two events create a market situation that’s viewed as either highly competitive or overbuilt.
New amenities and services added to economy/limited-service properties to make them more competitive usually are inspired by their full-service big brothers. The constraints to adding new amenities are cost, staff and available land (or its marginal cost). As a result, pools, hot tubs, and well-equipped exercise rooms have become almost commonplace in economy properties. Complimentary continental breakfasts, rather than just coffee and a doughnut, were adopted years ago from the all-suite model. Executive centers have appeared, complete with Internet access, fax machines, and copiers. Lobbies featuring couches, coffee tables and side chairs have replaced utilitarian entryways. When economy-hotel guests enter their room today, they expect to find Internet access, hair dryers, easy chairs, desks with large work surfaces, and remote-control cable TV with free movie channels. Even pay-per-view-movie firms, once reluctant to market their expensive installations to economy hotels, have discovered big profits in the segment’s guestrooms.
More profitability from investors’ perspective
Clearly, a significant number of investors believe that economy/limited-service hotels are more profitable than their full-service counterparts. All the statistics I’ve seen over the years support this premise as it relates to profit before income taxes as a percentage of sales. This is because the rooms department of any hotel, which is its very reason for existing, has the highest profit margin. Not only do the other revenue departments in fullservice hotels have lower margins, but they also add undistributed expenses disproportional to their departmental margins. The question then becomes one of whether they add significantly to occupancy and ADR (which is, after all, the reason extra facilities and amenities are included in a full-service hotel). It stands to reason, then, that operational profits as measured in cash flow are higher in full-service hotels, while the percentages are higher in economy/limited-service lodging properties.
However, this leads to another question: Is return on investment (ROI), another measure of profitability, greater in economy/limited-service hotels than in full-service hotels? In researching this question, I was unable to find any objective comparisons of return on assets or equity. Comparing ROI, by any definition, between the average full-service hotel and the average economy/limited-service hotel is difficult because of the criteria one would have to establish. However, I feel safe in saying that some investors are likely to accept lower returns on economy/limited-service lodging investments compared with full-service hotels because the risk is significantly lower. The primary reason for this is that the capital required to build one medium-size, mid-price, full-service hotel could build three or four economy/limited-service properties in various locations: Thus, the risk is spread over more markets. The higher profit margins on sales would seem to imply that the economy/limited-service lodging hotel would have a higher degree of resiliency in down markets and quicker recovery as demand returns. The minimum staffing levels and other semi-fixed expenses necessary to maintain these hotels’ service levels clearly set a very low floor on how much expense-cutting an operator can achieve once the variable expenses and value-added amenities have been cut in a depressed market. Because of the limited cash circulating through these properties, managers tend to be very conservative in their decisions regarding discretionary expense items, particularly in marketing and employee benefits.
Speaking of employees, labor costs in economy/limited-service lodging properties appear, on the surface, to be very low. I believe the opposite is true and that the actual cost is obscured by the high number of hours the manager and others work. With few exceptions, employee turnover is very high and is always blamed on local market conditions. The fact is that the typical manager has not been trained to check references, interview properly and effectively orient and train new employees. Often, the environment is such that the manager hires a “warm body” in hopes that the new employee will work out and the manager’s own work load be reduced. The cycle, however, goes on as the new employee often becomes disenchanted and leaves. The hidden costs in poor efficiency and quality of work resulting from this system are obvious to all but the most unsophisticated—and could be corrected by more emphasis being placed on proper recruiting, interviewing, hiring and training procedures.
As for marketing, economy/limited-service hotels tend to focus on room rate and location. Due to the low payroll budgets, sales representatives are virtually unheard of in the segment—managers are expected to shoulder the burden of the direct-sales effort. Unfortunately, the typical economy-hotel manager defines “management” as getting reports done, hosting, and holding payroll to a minimum by working at the front desk for an inordinate amount of time. Competent training of staff, inspecting, civic involvement and quality sales calls are not commonly found in these properties.
A major factor counteracting this tendency is the substantial support offered to operators by most franchisors in the economy segment. The top franchisors are getting more and more sophisticated in their marketing efforts. TV ads are becoming increasingly more effective, target marketing is implemented in very sophisticated ways, and any chain worth its salt has developed sophisticated Internet marketing and sales programs.
Keeping the ‘Big Picture’ in sight
In my opinion, the key factor in being a successful developer or operator of an economy hotel is simply this: Pay careful attention to every detail of development and day-to-day management without losing sight of the big picture. But just what is “the big picture”? I see it as a continuing, evolving collage that includes ever-changing guest preferences, shifts in the local competitive environment, and the dynamics of the local area’s economy and how it impacts demand for hotel rooms. This last piece of the big picture is probably where the least amount of support is available to the manager from either the owner or the franchisor. As a result, the economy/limited-service lodging operator typically reacts to, rather than plans for, change.
But perhaps the most important piece of the economy-segment big picture is this: It will always be a people business, whether the people are guests or employees. And whatever your definition of “sticking to the basics” might be, in the economy segment it should always start with taking care of people.