Essential Management Checks for a Successful Hospitality Business
If you ask ChatGPT for a “list of key management checks for a successful hospitality business,” you’ll likely get a different response each time. Not only is that the case, but you might also struggle with implementation, highlighting the gap between theory and reality. Having operated or coached hundreds of hospitality businesses and their operators, we aim to share our insights on how and why the best businesses succeed in this article.
Four Foundational Questions for Hospitality Success
Before diving into the specifics, it’s important to answer these foundational questions to establish a clear business direction.
1. What are you in business to achieve?
Write it down. If it takes longer than 5 minutes, you likely don’t know yet—so don’t rush it. Consider it carefully, and spend a day reflecting on it. It must be your truth.
2. Do you have an existing premise, concept, or style you’re committed to?
3. Who are your target customers, and what do they want and need?
4. Can you build a product or service around their needs?
Can you sell enough of it at a profitable margin?
Once you’ve developed viable answers to these questions, you have the foundation for your business plan and can proceed to an audit.
Management Checks
1. Financial Performance Management in Hospitality
Effective financial management is the backbone of any hospitality venture. Here’s what you should review regularly:
- Cash Flow Management:
Know your current bank balance, outstanding debts, and receivables.
- Profitability Analysis:
Track profitability by service and revenue streams (e.g., rooms, bar, events, food: dine-in/delivery).
Budget:
Do you have and use a budget for expected sales, labour costs, cost of goods, and profit?
Debt Management:
What is your debt as a percentage of your annual profit?
Contingency Fund:
Maintain reserves for unexpected maintenance or slow trading periods (e.g., tax reserves, building equity).
Break-Even Analysis:
Know your break-even point and how much you need to sell in each revenue stream.
Cost Control:
Review costs like utilities, housekeeping supplies, and food/beverage costs at least quarterly.
Financial Reporting:
Use real-time operational accounts (daily, weekly, and monthly trend reports, P&L, balance sheet, and cash flow).
2. Optimizing Marketing & Customer Engagement
Attracting and retaining customers requires a clear marketing strategy and strong customer connections.
Unique Selling Proposition (USP):
Can you describe what sets you apart in one sentence?
Customer Groups:
Define your target markets (e.g., business travellers, families, event guests). These are referred to as “Avatars.”
Customer Connection Management:
Use a client database for nurturing relationships, managing bookings/cancellations, and collaborating with referral affiliates.
Online Presence:
Update your website regularly with photos, availability, and direct booking options; manage listings on OTAs (Online Travel Agencies).
Customer Feedback:
Monitor reviews on platforms like TripAdvisor, Google, and OTAs, addressing them promptly.
Loyalty Programs:
Have a loyalty program to encourage repeat business and referrals.
Marketing Strategy:
Implement a marketing plan that includes online ads, partnerships, seasonal promotions, newsletters, and community connections.
3. Streamlining Operations & Processes
Efficient operations are essential for a seamless customer experience and business growth.
Standard Operating Procedures (SOPs):
Document SOPs for staff training, guest service, food safety, and Health & Safety compliance.
Quality Control:
Regularly assess all parts of the establishment for cleanliness, food quality, and overall guest experience.
Inventory Management:
Track orders, incoming goods, and stock levels across departments.
Technology & Automation:
Use integrated systems for booking, loyalty, POS, business accounting, food safety, and payroll.
Supplier Relationships:
Maintain strong relationships with suppliers to ensure continuity and stable pricing.
Operational Efficiency:
Ensure clarity in operational processes (e.g., room turnaround times, kitchen prep, and guest service).
4. Effective Human Resources & Team Management
Staff Training:
Train staff on desired standards, brand values, guest service, conflict resolution, and upselling.
Performance Reviews:
Use scorecards to evaluate staff performance in terms of guest satisfaction, service speed, attitude, and contribution to business success.
Team Communication:
Ensure seamless communication with shift briefings, reports, and team meetings.
Employee Satisfaction:
Measure staff satisfaction and retention, with programs for development and growth.
Compliance and Insurance:
Have a compliance checklist covering contracts, pay rates, health, safety, and statutory requirements, as non-compliance may affect insurance.
5. Strategic Planning & Growth
Vision & Mission Alignment:
Ensure staff alignment with the company mission and brand values for exceptional guest experiences.
SWOT Analysis:
Regularly perform a SWOT analysis to assess the market fit of your offerings.
Competitor Analysis:
Stay aware of competitors and adjust pricing/services for optimized value and profitability.
Long-Term Goals:
Set clear goals for occupancy rates, guest satisfaction, and growth (e.g., adding services or new locations). Track performance and hold yourself accountable for results. Coaching support can help accelerate progress.
Self-Audit Template for Hospitality Businesses
We suggest you review your business using our free template and mark each audit line on the following basis:
Assess each area as follows:
- Not in place (0)
- Partial/in place but needs work (1)
- Good/In place and well managed (2)
Make improvements where needed to achieve a weighted score out of 100.