Transcript: Episode 146: Bikinis in December
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[00:00:00] Susan Barry: This is Top Floor episode 146. You can find the show notes at topfloorpodcast.com/episode/146.
[00:00:13] Narrator: Welcome to Top Floor with Susan Barry. This weekly podcast ride up to the top floor features tangible tips and excellent stories from the experts and characters who elevate hospitality. And now your host and elevator operator, Susan Barry.
[00:00:28] Susan Barry: Welcome to the show. Bruce Jordan's first exposure to the hotel business happened when, as a long term guest, he was hired by the GM of a New Jersey Howard Johnson's to handle chores around the property at around age 12 or 13. After a stint in the accounting department of an oil refinery, Bruce was back in the hotel business working in accounting and operations across multiple companies and brands.
As managing partner of Hotel Guest Management, Bruce helps hotels grow revenue and has written The Hotel Revenue Bible. Today, we are going to talk about some of his tips and tactics for finding hidden revenue opportunity. But before we jump in, we need to answer the call button.
Call button rings
[00:01:25] Susan Barry: The emergency call button is our hotline for hospitality professionals who have burning questions. If you would like to submit a question, you can call or text me at 850-404-9630. Today's question was submitted by Tim. Tim asks, our owners want to sell the hotel, so they have told me to cut expenses by 10%. We already run a tight ship, so I'm not sure where to cut. Do you have any ideas? Oh my gosh, Bruce, what do you think? What ideas do you have for Tim?
[00:02:01] Bruce Jordan: Well, the first thing I would do is look at the electric bill.
[00:02:04] Susan Barry: Okay.
[00:02:05] Bruce Jordan: Um, because they're coming out with these programs where you, you just do an average of what the bill is and bill you that monthly. So you don't get this huge fluctuation in your bill.
[00:02:17] Susan Barry: Now's a good time of year for that too, for summertime, right?
[00:02:20] Bruce Jordan: Correct. Correct.
[00:02:21] Susan Barry: Okay.
[00:02:22] Bruce Jordan: And the next thing I do is I look at internet and cable because a lot of franchises are, they're saying, you know what, you don't have to have HBO anymore. So you can either get rid of HBO and move it to like an application, um, like Roku or Amazon or something of that nature. And people don't know how much they're really paying for internet. Like it keeps dropping. So I went from $300 a month to like $89 a month just by restructuring my contract.
[00:02:49] Susan Barry: Interesting. So it sounds like that may be good advice to take home as well. Maybe I'll start doing some of that stuff, uh, around the house. Your career started in accounting and finance. I'm so curious what appealed to you about that because as you know, I was a salesperson and the idea of doing accounting and finance, maybe not so much.
[00:03:13] Bruce Jordan: I know that's right. I definitely didn't have the personality for it. But, um, the reason why I chose accounting’s because it dealt, it dealt with money. I'm like, anyone who counts the money has to know the flow. So if I know the flow, I could pretty much master anything.
[00:03:29] Susan Barry: Got it. You worked at several hotels, both in accounting and as a general manager, including one 400 room hotel that you helped save from foreclosure. Can you talk about how your attitude about revenue and expenses changed over that time of that career?
[00:03:51] Bruce Jordan: Well, I didn't realize how bad a bad operation would, would really tear apart a hotel at that level. You know, most of my experience was like luxury or mid scale. So when I, when I had to bring an economy hotel up to a mid scale hotel, it was, uh, it was a disaster and it was a real eye opener. A lot of us don't realize, uh, the privilege that we have by, uh, managing the hotels that we have. So.
[00:04:18] Susan Barry: What about how you felt about revenue and expenses? Like, did that change from the beginning of your career ‘til now?
[00:04:27] Bruce Jordan: Absolutely. Absolutely. In that particular property, you don't have the operational budget that you would have, you know, at a mid scale luxury hotel. So you really, really have to count your pennies and restrict your payroll to make sure that one, you're able to make payroll until you really have to capitalize on opportunities when it, when you have them. When that high demand to make sure that you're able to get through that quarter. So it completely changed
[00:04:56] Susan Barry: As a consultant and managing partner of a hotel management company, you're called upon to help inexperienced hotel owners figure out whether the hotels that they want to buy are a good deal or not. Um, I do a little bit of that too, and I always think it's really interesting. What are some of the things that you look at first?
[00:05:16] Bruce Jordan: The first thing I do is I look at the market and the competition. If it's a franchise, I look at the franchise website to see if it may be they, maybe they want to rebrand because if you're competing against like 50 different hotels on your own franchise website, it's a, they have a whole lot of options and they just may not choose you. And then on top of that, there's like different markets on the same website. So at any given time, um, a luxury brand can dip into the mid scale segment. So.
[00:05:46] Susan Barry: Gotcha. Your book, The Hotel Revenue Bible, is full of really specific and detailed tips for hotels. Um, so I thought I would ask you about a few that really stood out to me as particularly awesome. For example, what is the 49 cents rule?
[00:06:06] Bruce Jordan: The 49 cent rule is making sure you always round to the nearest 49 cent. Um, a while ago, a lot of the franchises, OTAs, they stopped putting the cents on there. So when you're setting rates at 71 and 51 cents, the guests see 72. They automatically round up. So if you round to the nearest 49 cents, you get every single penny out of that rate.
[00:06:32] Susan Barry: But does it round up or does it round down?
[00:06:34] Bruce Jordan: Well, if it, if it's 51, if it rounds to the 52. So that rounds up if it's 49 and under, it rounds down.
[00:06:41] Susan Barry: So it looks a little bit less expensive, and then you're getting that extra 49 cents. Is that how that works?
[00:06:47] Bruce Jordan: Correct. Correct. Okay. So if you were to set a $72 rate. You can actually set it at 72. 49 and get that additional 49 cents.
[00:06:54] Susan Barry: Excellent. Talk about the approach to upgrades that you describe in your book. You say that the upgrade process should end at the front desk rather than starting there. So what do you mean by that?
[00:07:08] Bruce Jordan: Well, a lot of people think that upgrades are sold at the front desk. And when that happens, your closing rate is ridiculously low. So if you, if you're always pushing upgrades on the hold music, on the website, and the email, and the confirmation, in the lobby, when they get to the front desk and you ask them for the upgrade. The first thing that they should say, the guest is, hey, what's in the included upgrade. So that it improves your closing ratio because they've heard about the upgrade and this whole process.
[00:07:46] Susan Barry: Gotcha. It's sort of like that rule of seven that you have to hear about something seven times before it makes an impact on you. Same thing. Like you probably need to hear the word upgrades seven times before you're going to actually ask for one or try to get more information. There are some great suggestions for finding revenue in the way that hotels handle like cancellations, no shows, credit card holds. Can you explain that? Talk about what those things are.
[00:08:16] Bruce Jordan: Um, the no shows a lot of people forget the post to revenue or post the payment, and that is free money. And so you definitely want to make sure you have a process to audit that every night. Cancellations is the same thing. A lot of people's cancellation policy is just a little too lenient. Especially when it's low demand, so you want to make sure your cancellation policy isn't 24 hours.
[00:08:40] Susan Barry: Okay, so I have to push back on that a little bit because if you're low demand, you would, I would think you would want to have a more lenient cancellation policy so that you're more competitive. No?
[00:08:51] Bruce Jordan: Absolutely not. You don't want them to be able to cancel. Because you can't afford to lose them now when I, when it's high demand, I can afford to lose you because the rate that you came in at, I probably increased the rate another 30, 40, 50 dollars. But low demand. It's going to be a hard sell to sell that room again.
[00:09:09] Susan Barry: That's really interesting. And I think that's like the opposite approach of what most hotels take. Um, so gosh, I wish I had a hotel that I could just do an experiment with right now and see what happens.
[00:09:21] Bruce Jordan: Well, just think about it. Airbnb. When was the last time you've seen a 24 hour cancellation policy at Airbnb? Doesn't exist.
[00:09:29] Susan Barry: It's true. I mean, a lot of people wait until such the last minute to even put their inventory out on the short term rental OTAs like Airbnb and Vrbo that they can't have a 24 hour cancellation policy because the property's only been up for a week, you know?
[00:09:45] Bruce Jordan: And it's the same with low demand.
[00:09:46] Susan Barry: Okay, that's interesting. I have never thought about it that way. We like to make sure that our listeners come away from each episode of Top Floor with a couple of very practical, tangible tips to try in their businesses or in their personal lives. Since your book is full of specifics, I thought I would ask you about some things that aren't in the book, but that I think or I know you have an opinion on.
For example, you say that 98 percent of hoteliers focus is on expenses, and only 2 percent is on increasing revenue when it should be flip flopped. It should be the opposite. What expenses do hotel people get obsessed with that they need to just calm down about?
[00:10:32] Bruce Jordan: Payroll. The number one expense is payroll. It's so bad that instead of just replacing bad talent and get good talent that can produce more, they'll just rather get rid of it altogether. For instance, sales and marketing. Instead of replacing bad talent, they'll just say, you know what, the GM is going to do sales. They're going to do, they're going to be the GM and the sales director and it doesn't work.
The next one, of course, when it comes to, um, to revenue is going to be not having a good sales process at the front desk. They don't audit their other income and they don't have a revenue culture inside that particular hotel. So those are usually the two main things that I see when I go from hotel to hotel.
[00:11:22] Susan Barry: What would you recommend that a hotel do to set up a revenue culture? I like the sound of that, but I'm trying to think about how it would play out in reality. Like, what would you do?
[00:11:32] Bruce Jordan: There always needs to be a reward. Because if there's no reward, the front desk, they probably won't post it. Um, they, they, they see it as just an additional cost. They don't understand that there's, uh, there's bills behind this that needs to be paid. So we don't have maximize ADR. We don't maximize revenue that we're going to have to make cuts and they may be part of those cuts.
So the first thing that I do besides the upgrades is I charge early departure fees, pet fees. Um, I set up my rate plans. If breakfast is not included, I set a rate plans with that has breakfast included. So there's little small things that I do to, uh, to increase revenue, to create a revenue culture. I get, I get the, um, maintenance involved. I get housekeeping involved. Those are the people that I have at the tastings because they're the ones that interact with the guests. So they can recommend F& B because they actually tasted it instead of a bunch of people at a tasting that actually don't interact with the guests.
[00:12:36] Susan Barry: That makes sense. I feel like there's one that you didn't say that I think makes such a huge difference and it is the culture around sellouts. That if you've got a hotel culture where we're terrified to walk someone and we're terrified to sell out. So we're like, but I worked at a hotel where people were checking in fake reservations because they were so afraid to walk someone that they were filling the oversell with fake check ins so that the hotel never got oversold and they never had to walk anyone. Like, what utter nonsense, right? And I've worked at other hotels where the culture was so excited about a perfect sell or a walk and to your point, rewarding the team that for every single time that they made that. I mean, it just makes such a huge difference. And this like fear of overselling, fear of walks, to me is like, why are you in this business? If you don't want to fill up the hotel, like that's the literal only reason that we're here.
[00:13:43] Bruce Jordan: Absolutely. Absolutely. The reason why they were scared from what I've seen in the past is that they had to walk someone and pay for it. I remember one time I had to pay about $750 for a walk because it was from an OTA and the OTA had to take care of it. So they billed it back to the hotel. It was like $750.
[00:14:05] Susan Barry: Right. But I mean-
[00:14:06] Bruce Jordan: And then it was like $150 a year.
[00:14:07] Susan Barry: Every time you walk someone, you're adding another piece of data to your oversell strategy and getting that much better and better and better at what do we need to do in order to fill the hotel? I mean, of course you have to pay for a walk, but at the end of the day, that gets you closer to a perfect sell, at least in my opinion.
[00:14:27] Bruce Jordan: I agree with you 100%. But from an owner, my owner's mindset that only sees expenses, they don't get it. Like, they just see another expense. Like, I don't need another expense. Like, no, we can make this up later because now we have the data that we need to work on our strategy. But if all are you seeing the expenses. We're never going to be able to get to where we need to get to with revenue.
[00:14:53] Susan Barry: What expenses do you think should be cut besides what we talked about earlier? The internet and electricity bill. Anything else that you can think of?
[00:15:01] Bruce Jordan: I, I hired utilities, a consultant to come into a hotel when I first take it over. Cause you'd be surprised how many gas leaks there are, um, how many plumbing leaks they have that they don't even know about. Um, so I hire a consultant to come in to do a comparison just to make sure I'm not paying too much in utilities that I don't.
[00:15:23] Susan Barry: Oh, that's interesting. What about stuff like sales entertaining. I remember one of the worst properties that I ever consulted for, the general manager - the sales team were only allowed to each entertain someone once per month, and they had to get prior approval, like prior approval, like weeks in advance, like two or three weeks in advance. It was utter nonsense to me. That seems like an expense that not only should not be cut, but should not even be discussed unless there's someone abusing the privilege, but usually that's not the case. Usually people don't want to spend their lunch break with a client versus alone or doing something they want to do.
[00:16:07] Bruce Jordan: Yeah, that that's completely ridiculous. If anything, the SMP budget needs to be increased because how are you going to be a sale without an SMP budget?
[00:16:16] Susan Barry: I couldn't agree more. Well, we have reached the fortune telling portion of our show. So now is the time to predict the future so that we can come back later and see if we were right. What is a prediction you have about online travel agencies and their cut of hotel revenue?
[00:16:33] Bruce Jordan: I see it going down because I've seen franchises that were 18 percent that are down to 11 and it's just going to decrease more as the franchises start to market online more.
[00:16:45] Susan Barry: What about not just the commission itself, but the percentage of the pie? Like I think something like only about 20 percent of reservations are booked direct with hotels right now. 80 percent are from various OTAs. Do you think that number is going to increase, decrease, stay the same? What, what do you think?
[00:17:03] Bruce Jordan: I think as far as direct bookings for the hotels is going to increase because I see the marketing strategies that they're doing. The OTAs, they're making a shift towards to vacation rentals. And so they're going to, you're going to see a lot of increase with OTAs.
[00:17:19] Susan Barry: It's interesting, you know, hotels. I don't think most consumers or most travelers know this, but hotels are required to offer rates in parity on their website and on OTAs. You know who isn't? Vacation rentals. They can do whatever they want. That's right. So there is a distinct unfair advantage there, which surely will go either will go the way of hotels or won't because the short term rental industry will be like, are y'all crazy? Why would you ever do that? Which is fair. Um, But it is interesting to think about the fact that like Booking.com now has every vacation rental in the world on their site side by side with hotels. What about if you could wave a magic wand and create a new website for travelers? What would it be?
[00:18:13] Bruce Jordan: Oh, it will be a staycation website. Nothing but staycations.
[00:18:16] Susan Barry: Okay. Tell me more.
[00:18:17] Bruce Jordan: Well, the staycation is a new wave. Um, it's mostly luxury, but it'll be, it'll be like staycation.com where I will have a staycation rate for each hotel, but they have to be local, but they can't be from coming from Dallas to uh, to Florida or something like that. So that would be that that would be something that I would do.
[00:18:40] Susan Barry: Interesting. Have you ever worked with or encountered a hotel that didn't allow locals to stay there?
[00:18:47] Bruce Jordan: Yes. You see it a lot in a vacation destination.
[00:18:51] Susan Barry: That is so strange to me. What are the reasons that you've seen for that? Like the one, I was at one that was in maybe not a great area of a huge city with a huge crime problem. And so they felt like when locals were staying there, they were up to no good. So they didn't let anyone local. So I'm like, their money is the same as everybody else's. Like what difference does it make?
[00:19:11] Bruce Jordan: Well, one, they think they're going to be there forever. They think they're going to check in and never check out. So they're going to have to.
[00:19:17] Susan Barry: Oh, I didn't think about that. Yeah.
[00:19:20] Bruce Jordan: So they don't want to deal with the evictions. And two, um, locals tend to rent a room and party.
[00:19:28] Susan Barry: Yeah, that's why they're there. I mean, everyone parties at hotels. Like, people lose their mind at a hotel. But the rules are the same. At least if it's a local, they have somewhere to go when you evict them or kick them out, right? And call the cops. Whereas if they're from Dallas visiting Orlando, what are they going to do? Just go sleep in the parking lot? Probably not. Well, Bruce, what is next for you and what's next for your company?
[00:19:54] Bruce Jordan: Uh, next things. The next is going to be more management contracts. Uh, we've been doing a lot of consulting and uh, we've been getting a lot of offers when it comes to the management. I used to turn them down because I can only do so many at one time. Uh, but now that my schedule is starting to free up and I, uh, the properties have been performing so well that they're, they're selling faster. Now I can add a couple more.
[00:20:17] Susan Barry: Excellent. Well, good luck. Okay, folks, before we tell Bruce goodbye, we are going to head down to the loading dock where all of the best stories get told.
Elevator voice announces, “Going down.”
[00:20:32] Susan Barry: Bruce, what is a story you would only tell me on the loading dock?
[00:20:36] Bruce Jordan: Oh man, uh, a hotel owner had bought a hotel. Someone told him I was going to do a billion dollars a day and uh, they felt like they didn't need any reserves. Unfortunately, that hotel was a seasonal hotel. They blew all their reserves and they were counting on me. To not only restore the reserves, but also float the payables to a point where they didn't have to inject any cash during the slow season with no renovation at all.
[00:21:13] Susan Barry: So they just wanted you to not pay the bills?
[00:21:17] Bruce Jordan: No, they want to be to pay the bill, but they want to be to generate enough revenue during the slow season, which is impossible. Like you don't see people in New Jersey on the beach and bikinis and no December or January is a seasonal hotel. So, you know, I was able to save them from a complete loss, but there was no way I can save them from the demand that just wasn't there.
[00:21:41] Susan Barry: Good grief. Well, Bruce Jordan, thank you so much for being here. I know our listeners got some great tips and ideas, and I really appreciate your writing with us to the top floor.
[00:21:52] Bruce Jordan: Thank you for having me.
[00:21:54] Susan Barry: Thanks so much for listening. You can find the show notes at topfloorpodcast.com/episode/146. Jonathan Albano is our editor, producer, and all around genius. He even wrote and performed our theme song with vocals by Cameron Albano. You can subscribe to Top Floor on Apple Podcasts, Spotify, or wherever you like to listen. And your rating or review will go a long way in helping us give you more of what you like.
[00:33:29] Narrator: Thanks for listening to the Top Floor Podcast at www.topfloorpodcast.com. Have a hospitality marketing question? Reach us at 850-404-9630 to be featured in a future episode.