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Leading Change in dynamic Hospitality Industry.
By Mahendra (Mike) Rathore. CHA, CHE, CTA, FHCIMA, CTA, MBA
Saturday, 4th February 2006
 
In an ever-metamorphosing tourism and hotel industry the biggest fear confronting the operators and managers is CHANGE.

Change is a reality and constant factor I the industry. What we know yesterday is no longer applicable today .How we operated yesterday successfully can very well be premonition to extinction today.

The truth is that change is occurring all the time and the cycle of change is constant, and hospitality operators who are averse to change will either have to be content themselves with mediocre performance or bleeds with thousand cuts since competition will overtake them soon. In today's business environment everything is changing the customers taste & preference, competition, prices, policies, people and employees and products are can literally change overnight. The loyalty of either customers or associates for business in no more a fast and are governed by the new rules of business.

So the ability to effectively manage and embrace change is so of great benefit to today's hotelier and travel professional ties. To successfully meet and overcome change, we need to have specific attitudes and skill s for envisioning, anticipating and once we know the impending change, and planning for that inevitable change. And having know the impending change we need to know how effectively communicate that change to co-workers, clients and vendors and future prospects to stay abreast of the competition.

While change may to come easily, you as an operator can be sure that it will indeed come. And must be prepared for the inevitable changes that accompany the modern hotelier in variety of ways. Changes brought by the franchisers, amenities, creeps, new technology adaptation, marketing initiatives, capital expenditures, staff turnover, new competition and business threats, ADA, New Government legislations, consumer legislation,

From nowhere etc to name a few.

Planning for inevitable changes:

Changes in this business sneak up on you and you have to manage the change for success what has occurred. Therefore, anticipation and alarm are the two things that one has to constantly keep in mind while running the hospitality business. While you may not be able to predict the future, there are some useful indications or issues that you can consider to help you prepare for the future. The paradigms shift can be extremely frustrating and frightful for some depending on their past perceptions, background and educational background and cultural mores & social taboos. However, those who view change positive are more apt to benefit from it and create synergies and new opportunities for future. The most successful entrepreneurs are successful in this business because they always embraced change and found it exciting for their business rather than fearing or being intimidated by the change.

The paradigm can help hoteliers embrace change and plan of the future The example of paradigm could include that every guest will be served in most courteous and professional manners, the hotel will give irrevocable satisfaction guarantee, the communication channels between hotel and franchisers, marketing initiatives, current products portfolios and mix of lodging products etc. Division of roles & responsibilities are some of the paradigms that help reinforce positive service behaviors and deliver memorable guest services and generate desirable returns for the investors and owners. These paradigms help businesses organize their acts and provide structure that fulfill the business security needs. However, when the situations change, paradigm can prevent us from seeing the new opportunities that change brings to our business. We become accustomed to our set of rules and consequently we begin to fear and resist change that challenges our paradigms. When an established set of rules undergoes a change, a paradigm shift occurs. And these paradigm shifts are behind much of the troubles & turmoil's that usually accompanies change. Because we had a set of rules that we followed for years and then suddenly someone or something has changed the rules. We understood our old rules and boundaries and now we have to learn new ones.  These changes dramatically upset our well-organized and business structures in today's times.

Dealing with inadvertent: prosper or perish!

In the shipping world the jet planes initiated a paradigm shift. Old reservation system was challenged by advent of technology and Internet revolution that now contribute to about 60 % of all hotel bookings and is rapidly changing the way travel and hotel bookings are made.

Similarly in recent years the Hotel chains best rate guarantees on their web sites have threatened the third party travel distributor's sites business. Those who anticipated the paradigm shift and took positive steps to confront the reality change have sustained their business by devising the packaging for the travelers. That includes Air ticket, hotel room, rental car and sightseeing etc. The new packages system has benefited all the constituents of businesses and hence flourishing. Those businesses that resisted the inadvertent change, letting the shift occur without shifting with it, thus accepting a fate they believed meant a doom for their business.

ost of such businesses either withered away from scene overnight and many were sold out or merged/acquire by dominant industry players. They became victim of paradigm paralysis, inflexible commitment to the status quo in the face of great change. Some example of such paralyzed paradigm shifts victims when we hear at the check out counter a manager responding to the customer complaint and demand for rebate and or refund: "that's', impossible"; "It's against our policy to give full refund" The owners would reprimand the Manager for meeting guest request in the form of refunds responding in categorical terms "We don't do things that way in my hotels or around here! Or "Who gave you permission to change the rules" The demoralized Managers would then explain to owners that it is Franchisors written policy for absolute satisfaction or get your full refund.

The owners would shoot back it is my business and "Let's get real here, Okay" or "I wish it were that easy to follow everything the franchisors promise to the customers" In contrast, those operators who back the guarantees on service or standards are essentially embracing change and respond positively to business paradigm shift and see opportunity for in the face of change. They assess the present situation and look forward to future in terms of repeat business, positive word-of-mouth publicity. They find success in change and embrace the paradigm shift for betterment of business in the long term.

Embrace change for competitive advantages

Yet another example of such paradigm shift was high-speed Internet access in guest rooms. Some operators resisted the change and took a heavy beating in the guest satisfaction, and consequent loss of repeat clientele. While other perceived as business reality and made it free for all customers and instead made this as a marketing tool to drive traffic to their hotels. Some visionary hoteliers went one step ahead and came out with video on demand with in room fax and long distance service and made stream of revenues, significantly higher than what they might have made on by charging the HSIA in the guest room. Third party online distribution system has too undergone a sea change in recent years. Hotel groups that aw the paradigm shift quickly responded to it positively and made their distressed room inventories available to opaque and not-opaque online distributors and gained significant revenues. Others who were averse and acted late were not able to take advantages of changing business models.

During post September events many hotels started taking recourse to traditional solutions for bad times, some proactive players jump-started sales with SMERF and travel agents business when group sales took all time high cancellations. Star wood Hotels & Resorts made the same bet. The company quickly gained revenues while most companies were at stand still by selling room prices as low as $ per night to travel agents.  The group did not wait for customers to come looking, instead they went looking for customers. That is a basic paradigm shift in the business that was executed successfully. In tough times those who don't change are least likely to survive and a business have to be proactive and leaders most willing to accept change.

Similarly Revenue Management System is yet another example of a paradigm shift in hospitality industry. The focus in gradually shifting from heads in the bed occupancy and RevPAR to revenue per occupied guest (REVPAG). In evaluating the performance of hotels in the comp-set hotels, new shift is from the RevPAR index to Share Price index (SPI) that measures the growth in the share of business compared to other hotels in the competitive set. In an ever-changing dynamic business environment, rooms contract with groups and consortia have become outdated and obsolete because the hotels are not taking recourse to dynamic model of revenue Management. Since the room demand and forecasting models are based on several heterogeneous mix of variables rather than just focusing on the group business or corporate contracts for certain numbers rooms at a predetermined rates. In large metro cities hotels instead of quoting for long-term stay on average rates are now quoting rates for each night based on the properties occupancies and demands for property.

Successful hoteliers have come to reckon with the realities of paradigm that are all around them and are quickly responding to those paradigm shifts to stay competitive and to take advantages of changes situations. While paradigms are necessary and useful, the businesses have to realize that they can be detrimental when they block you from new ides or solutions. Winners are those who recognize their current paradigms –and willing to go beyond them seeing the new perspectives or opportunities.

Overcoming Resistance to change:

In the fact of such rapid change, the hospitality leaders need to develop abilities to analyze a situation and respond in a way that benefits the entire organization that most markedly distinguished them from managers who are primarily responsible for micro management with technical and human relations issues. In initiating such adaptations and change leadership and management abilities are necessary throughout the organizational change. Owners and key executives must not involve themselves with managing change but rather proactively commit themselves to leading change. True success occurs from leading change as well as altering the status quo, creating a new vision, communicating that vision throughout the company and getting employees to believe in it and then empowering them to action the desired change.

While planning for change requires owners to assess their own skills and perspectives, communicating change requires them to think of others involved in the change process. Our industry in recent times have witnessed huge resistance to business dynamics and changes in two kind of changes namely, transitional changes and transformational changes. Because both these changes requires dismantling of current way of operating businesses, systems, procedures and replacing those with new franchisers systems, procedures and policies often involving huge CAPEX and investments of time, capital and resources.

These changes have basically been evolutionary for hotel business due to growing competition between brands, constant upgradation and evolutions of lodging business. These market driven changes have been very costly but were the only options for the hotels chains to stay competitive and gain firm hold of their market segmentation. These changes have met with huge resistance and bitter criticism by the franchisee community against franchisors. A case in point is of Marriott international , the company faced huge resistance from franchisees for transformational changed of their Select Services brands," Courtyard hotels new prototypes and also about Fairfield inn & Suites etc. Be it the new suites design, new bedding investments or investment in curved shower roads.

Although these changes were introduced and hoteliers witnessed improved revenues and guest satisfaction scores, but initially the changes looked little threatening and often traumatic to the franchisees. Along with transformation and transitional changes, the new paradigm shift forced owners to organizational changes, and renewed vision. Similarly, choice hotels new focus on quality services and advent of amenity creeps also met with some resistance from the franchisee owners. Therefore important part of communicating change is anticipating and managing resistance Franchisers can manage the change and its resistance by involving the franchsi8ees in the change decision process right from inception, and explain the benefits of those changes in terms of impact on owners bottom lines. Further provide clearly and frequently information from time to time to allow the franchisees to understand, accept and finally prepare for the change itself.

Managing Change Proactively:

Change management necessitated thorough analysis and well-planned communication strategy before implementing changes Communication is paramount throughout the entire change process.

The change should be gradual and phase-by-phase to gradually introduce new elements into the old structure. This would enable people to shift more comfortably from their existing paradigm in to the new paradigm. Such a gradual transition can help overcome paradigm paralysis. People in times of change need additional education & training to boost their confidence and to develop their skills. Associated in particular would need internal training, in the form of coaching, or mentoring, and external training.

These could be in the form of educational professional courses and independent training seminars. This is very important and is needed to develop a skilled, motivated and confident workforce. From the first time that people first learn of the upcoming changes, its is important for them to assume responsibility for the change. With each additional efforts they invest in making the change happen, a sense of ownership increases. This fostered ownership sense would most employees should feel committed to change. Management should provide employees to incentives for successfully applying change. Set milestones for soliciting and responding to employee feedback. Incorporate new suggestions and ideas from the employees in the ongoing implementation process. Owners should insist on getting employees involved in implementing changes and that would perk up their pride and commitment in making the changes happen and would remove fears and resistance to the desired change.

Feedback should be an ongoing element in planning, implementing change. Feedback is sharing the results of change efforts continuously and consistently. This would strengthen the staff confidence and help the employees stay positive and motivated. Feedback is the best tool to give employees some insight about the outcomes of their performance. Successful implementation strategies must take into consideration barriers that currently might exist or might arise during the change efforts, and the consequences of those anticipated barriers. Once the owners/ leaders have identified anticipated and/or barriers, must find ways to prevent them or at least limit their negative consequences. Here's where your management skills, leadership ability, and common sense is the best way to accomplish the important task.

Leading change- winners Way:

Hospitality operators have to reconcile to the immutable law of change that impacts their businesses. You have to learn to deal with the nuances and effects of a changing environment. Dealing with change is an understanding o change and willingness to adapt. We have a tendency not to change until we really have to .The real threat to our future success comes not from outside the organization but from inside. Changes in the hospitality & tourism sector are bound to happen and its not the change themselves that will destroy our business, It's how you choose to respond and adapt. Sometimes our own past success is the biggest obstacle to change. We tend to rest on our past laurels assuming successful past would guarantee us future success. I t might usually lead us down a different future path. The most successful changes happen when old paradigms are abandoned while they still work. Fixing something that "isn't broke" takes foresight, courage, and a high degree of risk. Only true change leaders hoteliers successfully tackle and accomplish this feat.

Today's hospitality organization need people who adapt quickly, not those who psychologically resist change. Being able to change quickly will build your business reputation, while resisting change can ruin it. To survive and gain competitive advantage in the travel industry environment of fierce competition and fleeting opportunities, hoteliers need operate with an emphasis on ACTION Indecisiveness, resistance to change, or inaction, and excessive analysis is paralysis, and great obstacle to change and would be at the root of the lost opportunity. Owners, who love structures and detest fluid job roles and shifting priorities, try to be flexible. Uncertainty and unpredictability characterizes the hotel business. Hoteliers future success would rests largely on ability accept ambiguity and uncertainty of changing situations. Continue to upgrade sills and knowledge Hotel leaders should embrace change and focus on the big picture. Be responsible for every action you make in pursuit of that goal. Focus on ways that you can make a worthwhile difference in changing times and increase added value to your business and work place. Continuous process improvements should be the focus for improving the operation and gain enduring competitive advantage in ever changing business environment.

Mahendra Rathore is the president of the Ultima Management dedicated to management of full service, select service hotels and resorts as well as providing turnkey consulting services for the hospitality and leisure industries.

Ultima offers a wide range of professional services for hotel /retail and restaurant operations, management; sales & revenue enhancement strategies, F&B operations; strategic planning; and business plans.  Ultima conducts leadership and sales excellence training programs, quality assurance & service excellence plans, and executes Revenue & marketing plans, feasibility studies, strategic international outsourcing and franchise development services.
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