Fight through a crisis

.. a talk at Queen Sirikit National Convention Centre, Thailand

During crisis, most times, we think about training staff, stop overtime-time payments, cut expense on your Human Resources, unpaid leave policy or even lay offs.  I cannot say this is wrong, as long as it is most suitable and relevant to the situation.

On August 6, 2009 I was invited to be one of the panellists talking about “360 degree management for the tourism and hospitality industry during a “crisis” - organized by KBank, Thailand at Queen Sirikit National Convention Centre.  (I personally admire KBank a great deal for their continuous educational activities for their clients and non-clients as what they have done reflecting a sincere banking business).

I was asked what the first thing was in my mind when a crisis happened. My answer was “people”! How all employees can work and help us to go through the crisis together as a team, as owner or general manager could never be the sole person to fight and survive a crisis.  I did question the audiences (All owners and managers) whether or not they arranged meetings, to strongly and specifically communicate to all level of staff (even the cleaners) about the crisis situation and on how everyone, as a team, will walk through all difficulties during such and such a crisis.

Of course, the owners / general managers must go to the meeting with clear goals and plans. The meeting must be arranged to purposely have a productive two-way communication as all the employees will need to buy the ideas and follow direction.

Some employees might like to contribute some good ideas as well.  I have personally seen hotels’ management who left the staff in the dark and let the staff think that during a crisis, staff better behave well, or they will be the first to be kicked out.

This is very unhealthy management!

Next, for me, is still “people”, this time about our potential target markets and our customers that may be able to help to get through a crisis.  Look into all of the guest history and analyze carefully and effectively.  You may be able to pull some good ideas out for your next sales trip or your sales planning.  This must come together with all your relevant pricing and service strategies.  In Thailand, I have seen many hotels cut down prices and believe that it will work to boost occupancy.  Sometimes, it does indeed work when certain factors just happen to fit in, but unfortunately most times it does not work that easily.

What I like to emphasize is the “cost strategy”! You really need to watch and audit every business activity to ensure the costs are at a minimum and effective.  Each selling price must be carefully set with a very correct and minimum cost.  And, this has to be well-communicated to all your department heads and staff.

It is easy –but very wrong - to say that the breakeven point or loss is fine as it creates some activities for staff.  This is mostly said by many SME (small-medium-enterprise business) owners or management with no or limited hotelier background. I did experience such a kind of statement as well in managing a hotel! I honestly think this idea is explored to benefit some people for some purposes that nobody knows!!!!! I think one does not need to be a General Manager to make a statement like  “It is fine not to make profit; at least we have activities for staff”.

I reminded the audiences that during a crisis, I do agree that sometimes the operators do receive some kind of customer and agent pressure to lower the prices.  Nevertheless, costing is ultimately an important factor for the real profit making.

I tried to explain that if you used to have a price of 370. – Baht per head for your banqueting business, and you cut the price down to 325. – Baht or even lower – you must be able to calculate an exact Baht and Satang of how much you finally would make. Consequently, how much of service charge your staff would earn.  The staff may work as hard as before or even harder with a lower service charge to be received by the end of the month.  In the hotel industry, some operational staff very much depend on the service charge for their living.

I come back again to the management communication in the meeting! You have to inspire and educate the staff and eventually convince them of how to go through the difficulties.

Some businesses can depend on lower pricing with a bulk selling strategy.  However, in the hotel industry, you cannot over do it.  It does not mean you cannot do, but, I say it again, don’t overdo it, unfortunately many non-hotelier background management or owner could not see the risk.

Many of owners or management accepted to sell at a price that did not making any profit to just show their good face and I think they disrespect their operating team.

Each and every hotel business process needs people. So, to lower the prices with the hope to have quantitative sales will finally affect staff motivation and the expense as you have to finally pay so much for over-time, extra casual paid workers and so on and so forth and please note that some managers never ever calculate things in detail in their whole lives.  Therefore, they only look at the revenue and occupancy, but not a detailed profit.

I added on another important thing!  E-MARKETING. I shared a good story of the company called Mai-BS (Thailand) which is very successful after only 2 months being in operation.  Its website is very participative and popular.  I told the audiences to leave this important work to professionals and all hotel owners must seriously invest in this as in Thailand, we can depend very little on our government for any help.  We all should better depend and rely on ourselves, Kbank, and I wish to extend here that if you are in need for more, you can also reply on Mai-BS.

Not to forget, you have to be very careful of your expense! What I like to extend here is: I do not mean you have to be tight with your expense.  You should be reasonable in your spending! For example; you can take out some of the light bulbs from staff canteen or lockers or even from guest corridors and put out an internal campaign on “saving” throughout the hotel.  However, in the mean time, it is not wrong to consider purchasing a “lazy susan” for your tables, as it gives convenience to your guests and your staff - especially when you receive many complaints about it.

1. But once the business turned well enough, we were never called or asked for any cost saving meeting. I don’t know why?  To me, this truly reflects “crisis is an opportunity”, I think it is a learning that we gain during crisis and we can also apply some of the exercises during the booming period too,- FOR EVEN BETTER PROFIT AND OPERATING PROFITS!
2. It’s like you are playing in a football (soccer) match! Every second you can hit the goal.