The Bowden Group Blog

In my experience over the last 22 years as an independent consultant to the Hotel, Catering, Restaurant and Pub industry, the biggest profit pitfalls are:

• Plan it all in detail first – and do the numbers. Do a budget. Before you start a business, do a Business Plan – there are plenty of examples on the internet for free. If you don’t plan it fully – don’t be surprised if you fail.
• Keep planning – keep doing Budgets and Forecasts. It pays to plan ahead – do your budgets and monitor your progress against them.  Do a new budget for every new financial year, then do monthly forecasts to see where you are going to be financially.  If it’s not going well you’ll, have to adapt your plans – but at least you’ll know about it.
• Do regular P&L Accounts. It is vital to know where you are financially.  You may not like the answer, but forewarned is forearmed, and then you can plan for it.  Make sure you do some form of P&L account done every month.  This doesn’t have to be over-complicated, and some simple book-keeping will achieve this, internally.  If you don’t do regular P&L accounts, you’ll never know where you stand financially
• Having regular P&Ls is one thing – the next is having enough detail in the accounts to be able to identify the problem areas. A good example of this is that you must separate out the income into Accommodation / Food / Liquor, and also split out the purchases out between Food and Liquor.  Only in this way will you be able to work out what your Profit Margins are. Having badly structured P&Ls is almost as bad as having none.
• Get the Profit Margins right. You have to make enough Gross Profit to pay all your overheads, and still leave enough to make a profit.  Don’t underprice your products, but do remain competitive.  If you don’t plan to make the right margins, no amount of sales could be enough!
• Do monitor your cost prices – and check for increases. Do react to price increases – don’t try to absorb them.  So many businesses have failed because they have failed to increase their selling prices when cost prices go up.  If you just can’t increase the prices, then you need to source a cheaper product to sell at the price you have  -  thereby ,maintaining your profit margin. Don’t let your margins erode by stealth.
• Continually market the business – don’t rely on business building itself. You may be lucky, but very few are.   All businesses need to work out a Marketing strategy, and then implement it.  And you WILL have to spend some money on Marketing.  Keep building the business!
• Employ good people. Employ people with a great ‘’can do’’ attitude.  This industry is all about Hospitality – the welcome that the customer receives, and how customers are treated, is the key thing to making customers want to come back again and again.  It is SO important to have a good welcome, with a smile, and a good farewell – again with a smile, and a ‘’thank you’’.

You can train someone to do a job – you can’t train them to be genuinely welcoming.  Employ Attitude!

If you are thinking of employing a hotel consultant to help you improve your hotel’s profitability, then you need to give it a great deal of thought.  Think of how much time and effort you put into selecting a wine supplier. How about all the various quotes you get for a new gas or electricity supplier?

You need to take the same care with appointing a consultant. A successful outcome will come from a consultant who:

• Knows the hotel industry backwards
• Has had at least ten years experience at a senior management level
• Has actually run a hotel
• Has a relevant management or professional qualification
• Can demonstrate a successful track record in consultancy

Once you have identified a few consultants who you feel may be able to do the job, using the above 5 criteria, it is then time to meet them. To be fair to them and make it easy for you to choose between them do try and ask them all the same questions and give them the same written or verbal brief.

What are the 10 steps to a successful engagement?

• Make sure that you can relate to the consultant on a personal level and communicate with them.
• Do you feel you trust them and are you confident about their background?
• Does the consultant’s real area of expertise match your needs?
• Have they helped hotels in a similar situation to yours?
• Tell them exactly what the issues are that you are currently facing and what you want to achieve by employing their services.
• Discuss the actual process of how they propose to help you and whether that work needs to be done onsite or from where they are based.
• Agree a fee for the work, whether it is a daily or an hourly rate and clarify any additional charges, such as travel and accommodation costs.
• Ensure that the consultant confirms to you their understanding of the brief and exactly what the charges are for the amount of work you want them to do for you.
• After the first agreed amount of work has been done, review what has been completed, consider the value of what has been achieved and ask yourself if you are really comfortable with doing more work with that consultant.
• If you commission additional activities ensure that each new task is briefed exactly as you have done before. Make sure that you continue to be comfortable with the outcomes. If not, then there are other consultants who can help you.

Be prepared for controversy

A good consultant will really challenge the ‘’status quo’’ so don’t be upset by that.  It is their job to ask difficult questions and get you to confront issues that you may have been ignoring or putting off.  By all means do put your own ideas and views forward but do listen, since a good consultant will have worked with dozens of different businesses and will have acquired a huge amount of valuable experience that you can benefit from.

IMPORTANT SUMMARY

Make sure you employ the right person since all consultants have different areas of expertise.  Don’t be afraid to really challenge the consultant by asking difficult questions. Probe into their background and, above all, make sure that the consultant has enough experience, both operational experience AND experience as a consultant; they don’t always go together!