Profit Optimization
The ultimate goal of any business is to achieve a return on investment. While all roads may lead to Rome, only a very few roads lead to financial success. SIHC, with its representatives all over the world, has not only an excellent geographical knowledge, but is equipped with the best road maps and GPS to find the best ways to reach the goal you are looking for.
To say that success can be guaranteed may sound boastful, but success is the result of experience, perseverance and some extra work and this is exactly what SIHC has and is specialized to do for its clients. Our Profit Optimization approach is either customized, according to your very specific needs or structured, according to the result of our performance analysis.
SIHC performance analysis is always build on the four pillars of the balanced scorecard. Only an equilibrium of all four main business drivers allow for maximum profitability. Whether or not your establishment enjoys such a healthy balance will be revealed by our in-depth performance analysis. Sure enough, we also establish a catalogue of necessary actions and recommend an implementation schedule to transform the action plan into sustainable performance improvers. The best of all is the absolute transparency of our work and incurring costs. Why you as the SIHC customer will always be a winner is explained in our fee structure and translates from our reference list.
Revenue Enhancement
In four out of five cases, revenue enhancement is the most effective mean of cost reduction. This is why cost saving and profit improvement can never be treated without the aspect of revenue enhancement.
In theory, there are 728 proven ways to enhance revenues in hospitality. Which ones are the most appropriate and effective for your establishment? A performance analysis by SIHC will reveal the answers and immediately recommend an appropriate implementation path.
Market Share Improvements
Revenue or profit growth alone is not an indication of successful management.
If your establishment increases revenue let’s say by 10% per annum and your competitors (the market) increases by 15% on average during the same time period, than you are falling behind your competition and are losing market share! Good performance, therefore, is also defined by performance against the competitive set. Through our market intelligence (or third parties) we are able to provide competitive information on occupancy (OCC) and average rate (ARR) of a defined competitive set. Alternatively, like-minded friendly competitors unite in informal groups to exchange* their experiences and financial results (KPI=Key Performance Index)
*where legally permitted
As hotel revenues are a combination of OCC and ARR, the market share performance (based on RGI) is measured by the revenue per available room (REVPAR). In other words, the best performing hotel within a competitive set is not necessarily the one with the highest hotel occupancy, but the one with the highest in both OCC and ARR, hence REVPAR. A market share index comparison could look like this:
Cost Management /
Benchmarking
Enhancing revenues is one very important part of profit optimization, the other one consists of streamlining costs. The hotel industry in particular is a very labor-intensive business and therefore payroll cost, depending on the country, can easily reach 50% and above.
Moreover, most hotel and tourism establishments include high cost food and beverage outlets, which want to be regularly scrutinized on their optimum cost structure. Regional or National benchmarks, if available, are generally representing good targets. Having said this, most establishments have some particularities in their philosophy, in their internal or corporate structure, that makes specific cost benchmarks useless.
Thanks to our international experience and constant exchange of best practices SIHC has developed 748 cost saving criteria, some yet many of them will apply to your operation and can move unwanted cost figures to your profit line. Statistically speaking has each expense a theoretical saving potential from 2 to 22%!
As Erich Kästner already once said: “Es gibt nichts Gutes, ausser man tut es.“ “Actions speak louder than words.“ When are you taking action to improve your bottom line? Contact SIHC now!
We now need to:
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Scrutinize and understand current expenses
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Chose one or several ways of cost reduction for each cost criteria
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Implement the ways in a sustainable manner
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Re-invest part of the savings in other cost saving initiatives
Ideally, a cost management session follows a SIHC performance analysis and is conducted in collaboration with the respective cost responsible department heads. Only if the implemented cost savings are championed by their responsible managers, they can be sustainable. SIHC is driving the process and coaches the cost saving champions throughout the various stages of the cost saving exercise in order to maximize results.
Cost savings can be achieved through many ways. The graphic on the left shows some of the most successful ones.
Quality Assurance
No other industry has to work as hard to maintain its quality than hospitality. This is due to the fact that our industry cannot be industrialized and always will depend on the service excellence of individuals. Whether this is a blessing or a curse depends entirely on the way quality is managed.
SIHC’s quality assurance matrix is simply divided in three areas: The MANAGEMENT PROCESS pyramid consists of your positioning, which in return is the result of the quality and service standards you aim to achieve, the total investment you are prepared to do and the support and training you are providing to your manpower. You are completely in control of all these aspects of the management process.
The FEEDBACK of your guests as well as the results of the mystery shopper gives you constant input whether your quality standards are met or may require adjustment, whether additional training is needed for your team to fulfill the promise or whether the product needs further maintenance or re-investment to live up to the expectations of your guests. Because of your inputs into your management process pyramid, you deliver a certain PERFORMANCE.
It can be measured in both, guest satisfaction and profits. The better you have transformed the feedback of your guests and the mystery shopper during your controlled management process, the better your performance will be. SIHC is an expert in the QA process and is able to assist you at any desired level of support.
Mystery Shopping
In today’s world, you get frequent and valuable feedback directly from your customers. No need any more for the good old mystery shopper? Far wrong! Mystery Shopping remains a very effective tool to examining your entire range of products and services.
It is complementing the mostly general customer feedback and gives you the assurance that all aspects of your operation are at the desired level. There are simply shortcomings you do not want to read about on the internet!
Mystery Shopping can be tailored to specific areas of your operation or towards specific problem zones. We generally conduct mystery shopping with local mystery shoppers with the highest value for money.
Guest Satisfaction Surveys (GSS)
There is absolutely no doubt: At the base of success is a satisfied customer!
Guest opinions often move to second or third priority due to managerial focus on revenues, profits, or sales & marketing efforts.
Fact is, that only happy customers are returning guests and also spread a good word about your services and facilities that by itself attract new guests. Therefore, only happy customers enhance revenues, increase profits and reduce the pressure on sales and marketing initiatives.
Did you know that the cost of acquiring a new customer is 10 times the cost of satisfying an existing guest?
Guest Satisfaction Surveys through SIHC not only help you to ask relevant questions and understand your customers’ needs and wants. We analyze your guests’ views, quantify and qualify all responses and most importantly recommend AND implement necessary changes that immediately lead to improved guest satisfaction.
Reinvestment Planning
SIHC can help you with:
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Inventorying your FF&E
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Preparing your FF&E investment plan
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Consulting in the establishment of investment priorities
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Sourcing, tendering and price negotiation for FF&E replacements
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Consulting in FF&E trends & new technologies
Be it for the hotel opening or a few years into operation, appropriate investment and re-investment planning are essential for business survival and a prerequisite for sustainable management.
Reinvestment planning under the aspect of quality assurance will be the focus here. Investment planning as part of the pre-opening process will be treated under Pre-Opening Assistance.
As a rule of thumb, an average of 4-5% of annual turnover should be freed to be re-injected into furniture, fixtures and equipment (FF&E). It is, therefore indicated to have a rolling re-investment plan for the coming seven to ten years. Needless to say, failure of optimal usage of the FF&E reserves will result in a imbalance of your management process pyramid and put both your guest satisfaction and your profitability at risk.
In hospitality and tourism, it is all about being ahead of the game. We at SIHC are continuously following the latest trends and news of today’s technology in order to consult our clients better.
Whether or not an investment in these trends is worth it, will be influenced by your target customer, by your competition and your positioning. From augmented reality to vegan food, from SEO to YMS, we are happy to give you the necessary knowledge on the current trends and present you with solutions that suit your establishment best.
Service & Technology Trends
