Roundtable: Talking points for HME Great GM Debate

Being a general manager is the dream job for most hoteliers, but with such responsibility comes a plethora of challenges to navigate. With the Hotelier Middle East Great GM Debate fast approaching on September 2, we gathered an advisory panel of top hoteliers to discuss the key talking points likely to dominate the debate

Ahead of the fifth annual Hotelier Middle East Great GM Debate, which expects to welcome 200 general managers to Jumeirah Beach Hotel on September 2 for a day of discussion and networking, Hotelier gathered an advisory panel of top hoteliers to debate the key challenges and opportunities facing today’s GM.

The group comprised senior leaders from FRHI Hotels and Resorts and general managers from the prestigious Burj Al Arab, iconic Atlantis The Palm, sparklingly new Sofitel Dubai Downtown, and trendy independent Media One.

Sami Nasser, SVP, operations, Middle East, Africa and India, FRHI Hotels and Resorts, proposed several topics to kick-start the debate, which focused on the all-important areas of performance management and benchmarking, leadership and development, staff training and retention, marketing and distribution, and reputation and social media.

Meet the Advisory Panel

- Sami Nasser, senior vice president, operations, Middle East, Africa and India, FRHI Hotels and Resorts
- Eddy Tannous, director, operations support, Middle East, Africa and India, FRHI Hotels and Resorts
- Klaus AssmaNn, general manager, Sofitel Dubai Downtown
- Heinrich Morio, general manager, Burj Al Arab
- Serge Zaalof, managing director and president, Atlantis The Palm, Dubai
- Mark Lee, general manager, Media One Hotel Dubai

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GMs must monitor performance; what are the challenges with benchmarking and obtaining hotel performance data in UAE?

Sami: We wanted to talk about the third parties, like STR Global; all hotels are using STR to report everything and sometimes the owner…compares us, the brand, to the others through the third parties but some figures are wrong because some hotels are including breakfast and some taxes, so you cannot compare. There is a real issue on which kind of figure we are talking about.

Klaus: There is an issue in the reporting of data to the third parties.

Eddy: Basically, one of the KPIs that we measure in hotels is revenue generation per available room and you compare that to your competition through an index so we call it RevPAR index, that’s the main component we look at.

STR is one of the companies in the region that’s doing that. This is very important because in most hotels this is part of your performance tests with your owner on the hotel management agreement, so you have to maintain a certain level of competitiveness in the market.

Hotels deliver the figures on a daily basis to STR then STR compiles everything. They would send me my information compared to my five competitors, not one by one but to the whole comp set.

But if I like to report my net figures, as we say, with no inclusion of taxes, service charge or breakfast, another hotel might be including all those, so suddenly your average rate increases by AED 100, which doesn’t make any sense.

So it’s not a fair ‘apples to apples’ comparison and with owners becoming more and more engaged with the results of the hotels in today’s world, this is becoming an issue.

DTCM’s role here could be regulating this and making sure we put a standard whereby the hotels are audited on the information they share with STR and then an agreement would be done with all the hotels on how to share information.

Klaus: The problem is as well, they do have guidelines and they clearly say that you cannot include apartment revenue and you cannot include breakfast, but the problem is they don’t really know what’s inside the numbers [hotels] send.

Eddy: The only way they can check is to compare the day to day data you send them with the month end data, but if you’re reporting in a certain manner on a day-to-day basis, you can always report at the month’s end as well so you don’t see that discrepancy.

Sami: When you see in your market the average rate is double your rate, something is wrong there. So STR is not happy to do the policing and checking the figures, they don’t have the right to do it, but we are not comparing the same things so this is a big issue for a lot of hoteliers. You have some hotels really not playing fair.

Heinrich: It is important to know how exactly the hotels in one’s comp set are calculating their RGI performance. A close relationship with your comp set is essential to obtain clarity on the method of calculation. In areas where discrepancies with the STR guidelines exist, they need to be addressed and rectified, if that is not possible then you should change your comp set.

Mark: The service charge element is still being added to STR reports by many operators; to such an extent that STR now recommends the percentage to factor in, in order to compare ‘apples with apples’ data. Clearly the easiest way would be for all properties to be open and honest when reporting ARR figures — without the inclusion of service charge allocation, municipality fees, and without any breakfast allocation.

Serge: The challenge with benchmarking and obtaining hotel performance data is the discrepancy of data which is used. There is a lack of consistency for room revenue reported to firms like STR, one of the reasons being the service charge.

For example, some hotels report the total room revenue including service charge, others take it completely out, and others calculate it partly in the figure. A common standard of how hotels and resorts report their numbers would definitely help with having a correct benchmark for the industry.

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Third party intermediaries such as booking.com and expedia are very important, but commissions are getting higher. How can you manage this?

Sami: These are taking more and more space in our booking and clientele. So what is the opinion of the different GMs on how we can get our business through our brand.com, and how do we achieve balance between those third parties and our brand.com because there’s a huge cost in terms of commission.

We are not saying we don’t need them anymore, we do need them because they can bring business from the destinations where we cannot go and play, but the commission is quite high… and also if I have a client coming through third parties, okay I am willing to pay the 20% commission or 15%, 25%, but the second time he should come directly through my brand.com. If I do my job, then I don’t pay any commissions.

So we are not saying we will fight with them but we have to have a balance. The owners are saying ‘why should I pay the operator when I can negotiate with the third party?’

Klaus: I completely agree with Sami, but at the end of the day, I think we as operators have to put ourselves at fault and say “why do people go to booking.com?” Maybe their platform is so much better than the ones we provide, and it’s easy to use, so maybe the question is why do they go to booking.com or expedia.com and not to our brand website?

Sami: It’s because of budget; we are not putting in a lot of money on marketing and they’re putting in millions.

Eddy: I think it’s about consumer behaviour. When you want to go to a destination the first thing you do is go on booking.com or expedia.com just to see what is there, what is available. So maybe we will never be able to compete with that but I think a discussion for this forum is [to address commissions].

These online travel agencies know hotels need them, and they play on that point and then they go to a hotel and say ‘I can increase your commission and then I’ll put you on the first page’. We’re all eager to get the business, so what’s happening is we keep paying higher and higher commissions and they’re doing the same thing with all the hotels.

So I think there has to be a discussion, similar to what we did during the recession in Dubai. Most of the directors of sales and marketing in Dubai would sit together and say ‘okay guys, lets agree on a bottom price that we’re not going to go to otherwise we’re going to go into a price war and we’ll all lose’.

Something similar to that concept where there is an understanding. Like Sami mentioned, we will never be able to live without them — life has changed, but we need to create that balance.

Heinrich: Experienced revenue management teams are key to finding the balance between OTAs, TOs and all other channels. Creating awareness through social media, being on top of your search engine optimisation and having close relationships with your suppliers are but a few of many activities necessary to optimise the right channel at the right time.

Mark: We must never forget the importance of OTAs and their contribution to the business, especially for independent properties who do not have the regional/international presence or exposure. Like any aspect of our room business, we need to evaluate the importance of OTAs (which will/may vary on a seasonal basis) together with careful use of the commission level.

For driving business to brand.com, there are a number of initiatives that we have implemented over the last 12 months in order to increase bookings via our own website, which will produce a higher net yield. We have re-vamped our website in not only content and images, but also to be compatible with all forms of mobile applications.

We have changed our booking engine to one which makes the booking steps even more consumer-friendly and provides us with more opportunities to up-sell. We have just signed up with a company to help us manage our PPC campaign and our community manager is busy working on SEO through keyword search; blogs, updated photos etc.

Serge: Third party intermediaries such as booking.com, Expedia, Orbit and others, play an important role in Atlantis, The Palm’s multichannel marketing strategy. These channels drive brand awareness and bookings in key emerging markets.

They also provide a billboard effect, which benefits atlantisthepalm.com by driving online traffic to our site. Looking at longer terms strategic partnerships with third party intermediaries enables us to keep a check on commissions and the value these channels bring. At various times of the year, Atlantis collaborates with these suppliers on strategic marketing activities to attract visitors from key emerging markets and drive bookings.

The Atlantis brand is about wowing the customer. We aim to impress our guests before their journey begins. The Atlantis online customer experience is far greater than that experienced on the third party intemediaries, which tend to be more commodity driven. We also have offers and packages, some of which are specific to atlantisthepalm.com

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GMs are responsible for their hotel’s reputation. How do you use social media to help you build this?

Heinrich: Social media is a wonderful tool to be in touch with your guests and build the reputation for your brand. Utilise your hotel’s USPs and let them tell a story. Create human interest stories. Exploit the physical attributes of your product to the fullest. In short, be creative and involve the whole team in the process. Today anything goes and one has to try many different angles to create interest.

Mark: We have to embrace social media and accept the fact that in today’s world, information is readily available instantly via the net. In April of last year we hired a community manager as we realised we needed a dedicated resource to manage our online strategy. What we have found, particularly over the last 12 months, is that the consumer has realised the power of social media and how to leverage it — this has resulted in some ‘sensational reviews’ providing a very one-sided view of a guest experience that is often exaggerated with selected facts.

Social media does, however, provide an amazing platform to directly target potential guests for special events and promotions. Our community manager and event partners use many social media platforms to effectively promote an event, and now we have even started forecasting expected turnouts based on ‘likes’ and other information we receive via these mediums.

Serge: Reputation management will be really important for the hotel industry in upcoming years. Considering there are millions of reviews written each day across a plethora of different platforms, the world wide web has the power of influencing one’s decision making process; being able to manage your business reputation will determine success or failure.

Social media and mobile already live in symbiosis and we will only continue to see them merge over the course of this year.

Mobile activity has allowed social media to live in real time by allowing users to create updates, tag friends and check in on their mobile devices. Smartphones represent 50% of new mobile devices being purchased and the growth of connected devices will only continue to rise.

Ericsson estimates that there will be over 50 billion connected devices in circulation by 2020, including laptops, tablets and smartphones.

In North America, 2014 will mark the first year that online access is greater from mobile devices than a desktop or laptop. Keeping an eye out for authentic ways to make use of emerging social/mobile applications will be of great value for hotels.

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On the flip side, what challenges does social media present for the GM?
Klaus: It’s a small thing but it really drives me nuts. Now we as consumers can just post whatever we want and really have the brutal power of damaging someone’s business. Uneducated comments are being made on Expedia for example, or Tripadvisor, where guests can post whatever they want because it doesn’t have an administrative arm to it.

But as a hotelier protecting your business — when you say ‘listen I can take comments when we made a mistake but comments that are absolute false statements, please remove those because that should not be posted to the world’ — it takes weeks to get that comment removed.

It has a brand-damaging effect, a hotel-damaging effect where I have to come to the conclusion that these third parties just don’t have enough manpower to remove comments and that is a small thing, but it’s annoying to see after weeks and weeks a terrible comment sitting there even knowing that it’s absolutely unjustified.

They create a platform to allow this; therefore they have the responsibility, in my opinion, also to manage it both ways. It cannot just work on the customer side, it also has to work for us on the business side.

So if they allow random postings, they also need to ensure that, when we can prove that something is an unjustified comment, it can be removed immediately and not let it sit there for weeks and weeks.

Sami: Yes but consumers today, when they talk on social media, they don’t want to be controlled. Sometimes comments are quite strong and we have to accept them and we’re allowed to answer the guests. To remove things, it’s quite complicated because they have to do a lot of checking and it will take time.

Eddy: It is a shift that we have to deal with and we have to engage with it. Yes, its annoying, I agree, sometimes you get unfair comments so I think we need to try to get more positive comments to highlight.

Klaus: Oh I completely agree, in the world of blogging you cannot influence that, but established platforms need to be controlled by that platform for being fair and square. I don’t mind people posting something if we really made a mistake — we should be absolutely transparent!

Sami: You have also in many hotels the [need for a] full time job for somebody who is taking care of social media and digital. It doesn’t really exist today. We really need somebody who understands the consumer, who knows how to write online, and can answer the guests 24 hours, because when you are on Twitter you need an answer immediately.

We have to be prepared in the future to have somebody really dedicated to the social media in each hotel or maybe we have to revise the whole strategy in terms of sales and marketing, reducing one position from here and adding one in there.

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How is the profile of the general manager evolving?

Heinrich: Leadership capability is the key ingredient regardless at what stage of our career we find ourselves in. Irrespective of origin, all aspiring hospitality executives must focus on building their careers on a solid base rather being under the illusion that there are shortcuts.

One has got to put in the time and effort, short of that the person will be ill-equipped to steer a complex business like a hotel through the tough and competitive environment Dubai has become.

Eddy: We have a leadership development programme, which I know a lot of other companies do, but we really take it very seriously. We started with only Swiss hotel schools — the very well known ones.
But then there were arguments that for this region we needed to get talent also from this region and from Asia. So we’re very active with that. Each hotel has at least three or four leadership development programme colleagues at a certain time and the promise is ‘GM in 10’ but that’s obviously dependent on how well they do. Some of them might make it in seven; some of them might never make it.

Mark: I believe there is an absence of Emirati GMs but this will need to be addressed on a wider issue of the industry successfully convincing young Emirati’s of the huge role they should be playing in promoting hospitality and tourism in their country of origin. It is great to see more female GMs in the region, however, I am not sure that GMs are getting any younger — it is just the existing GMs are getting older!

The talent pool now in Dubai means new openings recruit up to half their staff from within the city. What can GMs do to retain staff?
Heinrich: GMs need to be in close touch with their leadership team and coordinate hands-on activities around retention with their HR departments. Job development programmes, career development plans and proper appraisals are key to ensuring that the team knows where they stand and what their future is in an organisation.

Mark: Staff retention is always a challenge within the hospitality industry — not only in the UAE but also in other parts of the world. There are no rocket science solutions to staff retention — running an exciting property, in a professional way, growing and developing your team, and prioritising promotion from within are all tactics that have been successful in the past and will continue to be successful in the future.

I believe the GM has a huge role to play in setting the scene — the ideal work environment for a particular property — and this will play a huge role in creating loyal teams who believe in the strategy, who live the ‘spirit’ of the hotel and who appreciate that their future career development is more important in the mid-long term than job hopping for a few hundred dirhams more per month.

Serge: We are successfully operating an iconic destination resort; we do not rest on our achievements but challenge ourselves daily to deliver excellence to our guests. Dubai’s economy is dynamic and has attracted the attention of other hotel operators from around the world. Atlantis The Palm has a great reputation to blow away our customers and to keep up with this we need to attract and retain talented and passionate people.

A genuine focus on training and professional development of all our team members is crucial because these are the people who will ultimately deliver the guest experience. Employee engagement is the key to retention.

Allowing employees to gain an intimate understanding of the purpose of their role, allowing them to be innovative so they have the autonomy to deliver service excellence based on their interpretation of the company’s vision and investing in their development so they master the necessary skills will keep them engaged and motivated to produce excellence.

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With 100s of hotel openings planned, will operators need to go back to the ‘old’ style recruitment trips, but at the same time, create careers, not jobs, for people? What is the GM’s responsibility on this front?

Klaus: We have now about 400 [new staff]. Obviously the hotels that are in a good location will drive higher revenues, higher revenues results in higher service charges, so I think that you will always have a little bit more of an advantage in getting qualified people to work for you because over the last 10 years, let’s not forget, we created a big hole of people within the industry in Dubai with them jumping from hotel to hotel.

Eventually, that doesn’t stop and its cascading downwards, there will be a hole and that tradition will have to be filled by recruitment trips etc., as we all have done in the past.

Mark: The GM is ultimately responsible for all aspects of the hotel reputation and operation, and therefore plays an integral part in this process.

‘Old’ style recruitment trips are particularly important for hotel openings when high headcounts are required and the presence of a GM on these trips will only further enhance the visit and benefit the success of the trip.

For me, the GM should be selling a vision that they have for the hotel property, a vision that encompasses all areas; the hotel vision, mission and values, the property itself, the orientation and training, the guest experience, growth and development strategy, life in Dubai etc.

Serge: I believe a GM’s role is to create the brand image that promotes the purpose behind the organisation’s business strategy. Successful organisations are filled with employees who understand the purpose and positioning of the company — this attracts and keeps employees engaged.

Employees are not looking for a job but rather for an opportunity to learn, grow and to add value. Recruitment campaigns, fairs, and career pages should communicate the opportunities for candidates to reach their full potential and how the company is prepared to invest in their future.

Before employees even join an organisation, they should know what career paths are available to them, the training courses they must complete with defined measurable outcomes, and the ongoing skills and competencies they need to develop to ensure they are prepared to take on more meaningful roles within the company.

The GM needs to be an active and visible champion behind this message so new and existing employees know that they have a future and that they are seen as a good investment. Living in a transient market such as Dubai creates its own share of risks and challenges.

Some in the industry are stuck in the old methodology of only providing the very basic training for employees to perform their jobs and fail to understand that they should be developing their employees for long lasting careers and excellent guest service.

Heinrich: As mentioned earlier, we as general managers have to be fully involved in the recruitment process. Hiring people from abroad continues to be an important source of new and fresh talent into the UAE. General managers should go on some overseas trips to participate in them just for the sake of promoting their brands and also to help select the right talent for their operations.

Essential Information

- Date: September 2, 2014
- Venue: Jumeirah Beach Hotel
- Format: One-day event with live interviews, panel debates, case studies, presentations, workshops, and networking opportunities
- Attendance: By invitation only and free to hotel general managers. Please register your interest with Amanda.elisha@itp.com
- Speaker opportunities: Please contact louby.maktari@itp.com or call +971 4 444 3578
- Sponsorship opportunities: Please contact Diarmuid.omalley@itp.com or call +971 4 4443568
- More details: www.hoteliermiddleeast.com/conferences