Properties everywhere want to save time and money and improve the guest experience — but achieving operational excellence is easier said than done. From managing multi-property locations to the aftereffects of the COVID-19 pandemic amongst the hospitality industry, it's becoming harder and harder to streamline operations and grow.
That’s why we’re looking at what exactly operational excellence means and where to start. We’ll explore strategies for improving operations, some challenges you may face along the way, and the key to true property operational success.
What is Operational Excellence in Hospitality All About?
Think of operational excellence as a way to make your property’s operations, well, more excellent. It means taking a hard look at your current front desk, back-office, and interdepartmental tasks and asking, “how can we improve?” From there, it gets a little more specific...
Operational excellence in the hospitality industry means committing to finding strategic ways to optimize processes, improve any room or on-site services you offer, and of course, make your product (AKA your physical location and lodging) the best it can be. All these improvements are typically aimed at increasing your guests’ satisfaction and their “intent to return” for another stay, as well as other key metrics you’d like to make more excellent. Of course, streamlining operations also often means optimizing processes, services, and products to save time, effort, and costs.
Although that’s the generalized idea of what operational excellence is, it’s important to understand that the meaning of operational excellence differs for every type of property— since it is based on how you define excellence and what it means for your hotel to operate excellently.
Why Does Operational Excellence Matter?
Anyone who works within the hospitality industry knows that above all else, the guest experience is what matters the most. You want guests to leave happy— so happy, in fact, that they would stay again.
But there are always guests who wouldn’t rate their experience as 5-star… Fortunately, operational excellence embraces the not-so-perfect feedback from both guests, employees, partners, and even vendors. It’s these areas of dissatisfaction that give you the opportunity to dig deeper and ask, “why aren’t these processes, services, or products operating at a gold standard? And how can I fix it?”.
Operational excellence digs into the issues causing the dissatisfaction, exploring any and all bottlenecks. Things like culture, innovation and technology, demand creation, profit improvement, and guest interaction are analyzed and critiqued— looking for ways to make them even better. Oftentimes, these improvements not only make guests happier but also save you valuable time and money.
Strategies for Improving Your Property’s Operational Excellence
Operational excellence isn’t something that can be achieved overnight. It requires implementing long-term strategies to slowly and consistently improve operations. Here are a few ways hospitality providers utilize continuous improvement strategies on the way towards achieving operational excellence. While these are not the only ways to pursue excellence, they are important areas of focus.
Product or Service Improvements
How could your product (your rooms, cabins, campsites, etc.) and your services (room services, amenities, activities, etc.) be drastically improved? Working towards operational excellence means taking a hard look at your offerings and looking for ways to make them better for both the employee and guest experience and, in turn, profitability. Because changes to your property and services don’t happen overnight, this often ties heavily in with other continuous improvements and strategic business planning— explained below.
Is the experience you provide to your staff and guests consistent? Improving operations involves looking at the areas of your business that vary and trying to streamline them into repeatable, scalable processes. Some will often strive for consistency by following the Six Sigma methodology or another standardized set of techniques and tools for process improvement to ultimately save time and money, all while improving the guest experience.
The hospitality industry often relies on a long list of technology and tools to operate; however, sometimes these products can work against you instead of for you. When working towards operational excellence, properties should audit their current tool stack and look for ways to fully utilize their tech and consolidate platforms to their advantage. The right tools often utilize automation to save valuable time and money so that staff can focus their efforts on the guest experience and business growth.
Employees who are treated well and believe in their company’s core values often are happier at work and pass on that positivity to their customers. Business leaders seeking operational excellence will often start with their internal culture, making improvements to better support their staff. From there, they can work to understand where there may be pain points preventing their employees from acting as true advocates for their brand and offering the best service to guests. In some instances, these pain points may be outdated tools or lack of resources to be the most efficient in their role. Managers may hold leadership workshops or conduct culture training to lay the right foundation for pursuing operational excellence.
To improve operational excellence, properties can look at their current sales and marketing efforts for how they’re fueling their revenue pipeline. Oftentimes this involves looking at the three “D’s” of demand creation: defining, developing, and distributing campaigns and plans for targeting and closing new guests. This is the opportunity for properties to look at their current demand gen model and make important changes to improve efficiency and success. This often involves looking at customer service and support as well and seeking solutions for improving the guest experience.
When striving for operational excellence, it is important to note that this is not necessarily something achievable in the sense that you ever “reach” it. Instead, it’s something you perpetually strive towards and are always looking to improve. With this in mind, many properties adopt a continuous improvement mindset and implement strategies to consistently improve. Kaizen, for example, is a Japanese management strategy that prioritizes small improvements that eventually build into large improvements over time.
Strategic Business Planning
It’s important to think of the big picture or to strategize the long-term future of your business. Pursuing business continuity plans or undergoing strategic planning to forecast success to come can help drive a vision for the “end goal” of operational excellence. For example, you can run a SWOT analysis— an acronym and framework for analyzing your property’s strengths, weaknesses, opportunities, and threats. This helps to see what your business is excelling at, where things could be improved, risks that could be mitigated, and how you may grow.
Challenges in Achieving Operational Excellence
While we wish everything would go exactly as planned, there are sometimes circumstances that make pursuing operational excellence a challenge for those within the hospitality industry, including:
Multi-property operations face complex challenges trying to achieve business success because they must compile insights of all problems across all sites. It's about streamlining your processes, services, and— of course — your product, across all locations. Businesses with multiple properties must compile insights and work towards making both the staff and guest experience repeatable and scalable.
COVID-19 & Changes in Guest Expectations
The international COVID-19 pandemic brought with it many changes across the hospitality industry. From the demand for contactless paying options to two-way messaging where guests don't need to interact face-to-face with staff for inquiries, the modern-day guest has a new idea of what the ideal guest experience looks like. The hospitality industry is now being challenged to think of ways to adjust processes, services, and products to keep up with the changing times. From new room cleanliness and sanitation methods to social distance-friendly communal spaces, the standard for operational excellence is evolving with the growing demands of guests and staff alike.
When staying at a hotel, campground, or RV park, the guest enjoys their experience at that very moment. Unlike a product that can be taken home and enjoyed over and over again, the pleasure of the stay diminishes quickly after checking out. After all, once a night has passed, that time is lost. For rooms and sites that were booked, once a guest has come and gone, that stay is irrevocable. For those accommodations that remained unbooked once that night is gone, and that room sits empty, you cannot get it back nor the revenue that would have come with it were it booked.
This perishability serves as a challenge for the hospitality industry at large, forcing managers to focus on marketing and nurturing efforts to keep travel top of mind.
Extensiveness of Maintaining an Online Presence
The modern guest always does their research online before booking accommodations. Beyond writing and designing an attractive, user-friendly website, you also need to be aware of your online presence beyond your property’s personal web domain. Hospitality businesses must maintain a digital image on various booking websites, review platforms, and let's not forget your social media outlets. For multi-property locations, managing your online presence can require multiple full-time staff. In some cases, it may even require an entire internal marketing department or outsourced vendor. But much like the vastness of the internet itself, maintaining this presence can become cumbersome. Between managing passwords and cyber security to developing content itself there are a slew of operational hurdles that come with being relevant online.
Lack of Data-Driven Visibility
Some properties don't have detailed or accurate reporting measures to track operations. Without this added visibility it can be hard to see where improvements can be made to save valuable time and money as well as improve the guest experience. Some property management systems come out-of-the-box with extensive tracking and reporting, while others don't. Properties benefit from insights into both their sales and marketing efforts operationally, but could end up investing valuable time and training into setting up proper analytics in tools that don’t give them the holistic view they need. This translates into wasted time you cannot get back and lack of visibility into the areas of data that will enhance your business operations.
Visibility Without Resources to Make Improvements
While some properties may have the visibility to see some issues and opportunities to improve their operational excellence, not all businesses have the resources they need to make improvements. Whether finances don’t allow or proper scalability is timebound, some properties have to stretch or adjust their goals based on their situation and resource capabilities. Many reservation and property management systems don’t automate crucial processes with “set it and forget it” features like dynamic pricing that sets automated pricing rules designed to optimize occupancy or yield, automated reporting that collects and analyzes data across the business, and triggered correspondence that sends emails or text messages at specific points of the guest experience that can save hours of staff time every day.
Examples of Operational Excellence in Hospitality
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Now that the summer season is over and autumn is underway, it’s time to get started on winter planning.
Holidays are notoriously the busiest time for campgrounds, especially in Northern states where camping’s appeal transcends seasons.
The Benefits of an All-in-One PMS for Operations
To try and streamline operations, many properties throw technology at the problem. But as technology within the hospitality industry continues to advance and you’re riddled with dozens of digital tools, operations actually become more complex.
Instead of juggling disconnected software, upgrade your once siloed tech stack into a single solution: an all-in-one property management system (PMS).
An all-in-one property management system natively provides many of the tools you need and allows you to integrate those it doesn’t so that all your software is speaking to one another. Not only is this integral for tracking and reporting, but it also enables some previously manual tasks to be automated, saving you valuable time and money with task management.
With RMS, for example, your property management solution includes:
- Channel management
- A booking engine
- A guest portal
- Event management
- Email marketing
- Text messaging
- Customized reporting
- Rate management
- Dynamic pricing
- Sales lead generation
- A point-of-sale system
- A payment gateway
- And more
That’s right! All tools are accessed by a single login.
Additionally, a cloud-based management system can be used across all platforms and browsers. All these streamlined tools and instant accessibility consolidate operations, free up your staff to focus on the guest experience and empower customers with the on-the-go, in-demand experiences they deserve.
Increase Your Average Daily Rate
With a PMS, you can track current/past guest behavior and target market upgrades, add-ons, and packages through the booking process and through targeted marketing campaigns. But it doesn’t stop there… Past occupancy trend reports can be utilized to apply dynamic pricing methodology to increase ADR for in-demand periods and shoulder nights. The ability to apply restriction-based pricing within a rate manager that integrates with a built-in channel manager could be your secret to increasing rental revenue and a key step in operational success.
In order to increase occupancy, your system must be able to quickly and agilely adapt to booking trends. A smart property management system will pace reporting variances so that the property can identify areas of low occupancy and make price changes that immediately flow out to all channels. With this insight, your property operations become leaner and more efficient, and can also allow you to send timely, targeted email marketing campaigns to attract guests during the slower periods.
Save Time and Money
As you can see from our list above, a property management system can bundle various tools and services into one solution to help unify systems, saving staff time and providing more visibility throughout your operations. Some offer a built-in channel manager with live, two-way direct connections to all major online travel agencies (OTAs) and global distribution systems (GDSs). Room and site inventory is live across corresponding OTA/GDS, with no need for an intermediary such as a central reservation system. By eliminating the middleman, an integrated PMS saves you time and money.