Becoming a big hospitality chain from small beginnings takes diligent effort and focus. It is definitely no small feat. Now the situation has become even more competitive. Small hotels are faced with a different set of challenges. The ones that did not exist some decades ago.
Small hotel owners are constantly looking for ways to make their hotel operations better and increase their business prospects. The answer to any business expansion starts by taking micro-steps. Doing these small incremental changes right is the key to progress. And as they say – if you can’t measure something, you can’t assume it is progress. Measuring these micro-actions and their impact on the overall strategy is also a part.
Top 3 reasons why small hospitality businesses fail?
Listed below are some reasons that lead to the failure of hospitality businesses.
Poor customer service
The customer is king – it applies to small and big businesses alike. In the hospitality business, this sentiment is more. A small hotel or hospitality business must find creative ways to engage with its customers and develop a customer engagement strategy. They have to find ways to accommodate customization requests from customers. It even helps to create buffers and contingency plans to fulfill ad hoc requests from customers.
Without such an approach, anything else is qualified as poor customer service. Customers are finicky. They have a plethora of options in front of them. Treating them with care is the key to winning their comfort. They always travel to places where they feel comfortable and not ignored. So, good customer service is about prioritizing customer requests well in advance.
Lack of consistency
Small businesses are just starting out. They have done all the hard work to bring customers to their premises. But when the going starts getting good, they start becoming complacent. This is where a proper perspective has to be put in place. Small hotel businesses ought to know that being successful is only part of the story. Staying successful requires consistency. It simply means that the hotel business must raise their bar after every milestone.
Their new top should become their new bottom. Lack of consistency is one of the reasons why small hotel businesses lose customers fast. Customers are sensitive to any lack of customer service or food quality. And even a slight change of perception can make that business lose that customer – often, it is forever.
Lack of experience with managing costs
Small hotels often don’t understand essential things such as overhead management, pricing, volume sales, supply chain optimization, etc. Most failed hospitality businesses name costs as one of the main issues. When expenses surpass revenue, there is a need for cost optimization. The hotel management should understand where to fine-tune costs. These small changes produce an enormous effect. When looking at the balance sheet, identifying these small pockets that produce expenses and then optimizing them makes a lot of difference. Taking control of stocks, inventory, and supply chain are also important. These areas also need cost optimization.
Small hotels can see major benefits from software that can assist them with scheduling tasks, as well as with managing labor costs and overtime pay to the employees. And luckily for any small hotel owner, scheduling hotels just got easier with Agendrix, so you can perform these tasks with ease!
What can small hotels do to succeed in the hospitality industry?
Listed below are 7 pointers that can be taken into consideration by small hotels to succeed in the hospitality industry.
Small hotels should not be a mere replicas of other big hotels, restaurants, or hospitality businesses. They should strive to be innovative by developing different food settings, menus, cuisine options, dining options, wining options, ambience, customer service, customer engagement programs, etc. Although it is not that important to do things differently, it is essential to do things better. Small hotels should identify what the big hotels lack. Do they lack timely service? Do they lack the ability to fulfill customizations and ambience? Have they failed to design customer engagement programs? Do they lack menu options?
Small hotel businesses can fill all of these gaps of big hospitality businesses. Apart from this, a small hotel business can try to be its original self. So that when customers come in, they don’t feel like going to yet another place to eat, drink, stay, swim, and party. They should feel like getting into a place that offers them a variety of experiences.
Getting to the customer, instead of waiting for them
Many small hotel businesses do not realize the importance of spreading the word. A mere email here and there, some flyers, and billboards may not fully catch people’s attention. Small hotels need to forge partnerships with external marketing agencies. They must use the services of an SEO agency and a digital marketing agency to increase their presence on searches.
This is the way to get to the customer, instead of waiting for them. The percentage of people who try out new cuisines in new places is less. The vast majority of people are the ones who will go by recommendation. Tapping this demographic is crucial. One way to do that is through active and passive marketing.
Taking reviews seriously
Small hotels must be courageous to ask their customers for reviews. They have to be ready for negative reviews too. Ultimately, a small hotel should aim so high that even a fake reviewer will abstain from giving a negative review. The fake reviewer would know that no amount of bad reviews can defeat the truth.
When operating a hotel business, if the intent is only about customer service, the results are bound to come. The results will appear as good food, service, ambience, and eventually good customer reviews. This is a long-term and continuous strategy—every customer review matters. And small businesses that have taken reviews seriously have progressed faster.
Good communication is playing the A game
All the hotel staffers have to be able to communicate. It’s not just about speaking a particular language to perfection. It’s also about non-verbal communication skills- the qualities of empathy, generosity, and understanding fall in this category. It also helps to have staffers with skills in a particular language. It is so that the hotel can cater to customers from across the borders. When foreign nationals revisit the country, they will invariably go to this hotel.
Avoiding miscommunication is a part of good communication skills. When taking the order, when taking the re-orders, when checking for customizations, when detailing the specifics – all of these require good listening skills. Some customers may not understand some aspects of the menu. The hotel staffers must be able to effectively explain the menu, the menu item, and probably a bit about its creation process.
Giving hotel employees the flexibility to conduct operations
The hotel management should not constrain the hotel employees with rigid rules. The rules are put in place so that processes and systems work accordingly. But they should not be so rigid that it impacts the customer experience. Hotel staffers, including managers, should be given the tools and a free hand to pursue any service path that positively impacts the customer experience.
By entrusting decision-making power this way, it creates decentralization of decision-making. It alleviates the overhead on the management. It puts more responsibility, but in a positive way, on the hotel staffers and hotel managers. With this empowerment, they can arrive at flexible ways to plan for contingencies and create even make-shift plans to tap into trends such as nearby ongoing festivities that will bring in many visitors.
Hoteliers watching the competition can swiftly implement plans to tap into the trend. Those ignorant to the competition tend to recede unknowingly, only to find out later that they need to catch up with others. Monitoring competition is to understand other hospitality chains’ prices, promotions, room rates, deals, management shifts, expansion plans, mergers, marketing, and new business developments.
The intent is not to do a copy of their strategies. The goal is to understand why they are doing what they are doing. The small hospitality business should then assess if it needs to do something similar and if this activity applies to the business. This type of competitive intelligence and analysis is an ongoing one. There may not be immediate answers to all the questions. But the answers will eventually come.
Sometimes it’s good to sit back and introspect. A hotel business should have a process to conduct introspections on its various business processes and measure the effectiveness of the business process. The measurement criteria can be price, cost, delivery excellence, customer satisfaction, cost to-benefits ratio, revenue, pre-orders, post-orders, expenditures, defects, new customer leads, etc. There are innumerable ways to analyze business processes. But they have to be measured. Introspection allows small businesses to build good habits as they become large hospitality chains.
It takes a lot for a small hotel to succeed in the hospitality business. As more customers are booking hotels for various reasons, the reason to be picked by customers should be strong. A small hotel can find out the reason for its existence, and once it faces the truth, the rest of the journey is easy.
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