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Tips To Operate With Living Wage In The British Hospitality Sector

AETHOS Consulting Group 18 July 2017
On this basis, I sat down with Mark Kuperman, Chief Operating Officer at Revenue Management Solutions (RMS). Mark and his team assist the hospitality industry by providing data-driven solutions to better manage revenues. RMS takes "the guess work out of crucial business decisions while optimizing gross profit and protecting brand value." Mark and I spoke about how a significant number of employees in the UK received their biggest pay rise to date as the National Living Wage leapt to PS7.50 an hour on April 6th, 2017. In line with Chancellor Philip Hammond's Autumn Statement and Spring Budget announcement, more than two million employees over the age of 25 benefited from the 4% increase. Further to this, 21- to 24-year-olds received a rise of 10 pence per hour. This is in a bid to reach the government's target of PS9 per hour by 2020 for over 25s, with further demand to extend this increase to 21- to 24-year-olds. According to Tahola, an industry's leading business analytics provider, this could result in operators facing an annual increase of PS100,912.50. However, it's not just labour costs that will hit operators; planned increases in employer pension contributions from 1% to 3% could elevate the cost to operators to more than PS109,000 by 2020.It is thus quite clear that UK hotel and restaurant operators must become smarter in navigating this challenging business environment, which, in the recent past, has put a lot of pressure on the bottom line. Consensus within the industry is that many restaurant operators will be forced, amongst other operational levers, to raise menu prices, whilst streamlining their staffing structure. However, Mark believes there are other ways to effectively offset rising labour costs -- without the need to cut staff or dramatically increase prices. Here are some of his suggestions.1) Better align staffing needs to optimise labour costs: It may sound obvious; however, it's often something that gets overlooked by operators in search of shrewd ways to offset rising costs. Cutting staff is not the way, as this impacts the overall restaurant experience for customers. The key here is to manage the value equation in the eyes of customers and never consider raising prices, whilst cutting service levels. In fact, there's the saying, "food brings them in and service drives them out." Operators need to better align staffing needs, with consideration given to peak verses off-peak staffing rotas.2) The importance of taking a demand-based approach to pricing: Multi-site operators can go even further. Reviewing item-level data for each restaurant on a site-by-site basis across the estate will reveal which restaurants could be organised into different price bands based on customers' reaction to previous price moves. Taking the customer's willingness to spend into consideration will ensure customers continue to see value for money when visiting the brand. For operators to successfully navigate price barriers, they must first understand a customer's willingness to spend. For many operators, increasing menu prices is inevitable. However, there are certain price barriers consumers are reluctant to cross. Therefore, it is important that operators don't simply go ahead and increase prices, without first analysing customer sensitivity to pricing across all menu items. If done well, an operator can expect higher profits without any signs of customers changing their buying patterns and behaviours.3) Technology is the most powerful tool to let staff "serve up a storm": For the first time ever, technology really is becoming the driving force within hospitality. In such a saturated marketplace, operators are turning to technology, to not only get ahead of the competition, but also to deliver on that all-important customer experience. Think kitchen automation, delivery, online ordering, digital tablet ordering and mobile payments - the list really is endless. The beauty of technology for operators is that it seamlessly steps in as a silent partner to take care of the customer journey, leaving staff to deliver on that all-important experience.4) Get ahead of the times and have a game plan: Unlike increases in food inflation, which are somewhat unpredictable, rises in labour costs can be planned for. As such, operators need to get a long-term plan in place to address these additional costs. In an environment of increasing costs, operators will be in a much stronger position if they make price changes in smaller increments, which are spread over time, not touching the same items in consecutive rounds, rather than implementing them in one hit. The luxury of having time to plan also means that operators can test the water and assess what works best for their business, employees and customers before rolling it out across their entire estate.5) Profit versus efficiencies - spring clean your menu: Streamlining the number of items offered on a menu will help reduce labour costs and indeed improve execution. Chefs should be looking at the operational impact of specific menu items to see if the way certain dishes are prepared impacts profitability or throughput. Operators need to consider whether they have menu items that are profitable, but actually slow down service. To give you an example, a quesadilla could be a profitable menu item, but the resource needed to prepare it could be, in fact, slowing down operations back-of-house. Therefore, operators need to give serious consideration to where there are bottlenecks in delivering operational efficiencies.Mark thus urges the industry to be prepared and consider a variety of mechanisms available in one's tool box to combat the current business environment. Over a recent lunch with Mike Williams, People Director at Byron, Mike and I concurred with Mark's conclusion and recommendation. He said, "When faced with unprecedented operating cost increases, it can put the squeeze on even the best organisation. In the past, I have seen operations cut labour and costs to such a degree that employee engagement and the customer experience were both negatively impacted. Thus, a vicious circle begins... cutting costs because of decreased sales and thereby continuing to negatively affect the customer experience, which, in turn, puts further pressure on sales, resulting in a new round of cost cuttings." Mike continued commenting, "The solution is not so one-dimensional in such a complex and competitive sector. A blend of investment in technology, culture, service and consumer research can give you the best of chances to take advantage of this shift in the sector. While competitors cut costs and deliver less for more, those who invest and who are proactive will gain market share and continued consumer support." A senior industry executive spearheading business operations at another well-recognised casual dining brand added to Mike's comment, saying, "In times like these, characterised by a tight (and tightening) labour market, recruitment and staffing become even more challenging. We have thus re-doubled our efforts in regards to cross-training and building an internal talent pipeline whilst also further fine-tuning our processes and standard operating procedures to identify new best practices. Whilst none of this is revolutionary in itself, or even new, organisations are well advised to use these new market pressures and realities to re-direct and focus their efforts and energy."
Article by Andrew Hazelton

Hershey Entertainment & Resorts CEO Bill Simpson on Tradition and Technology in Business

AETHOS Consulting Group 3 February 2017
Some atypical brands are both iconic and notable for their nostalgia factor. CEO Bill Simpson is the current steward of a business grounded in one of these rare brands - Hershey. Everyone knows and loves the chocolate, but Bill has worked for approximately 20 years to make Hershey Entertainment & Resorts (HE&R) a premier guest service company wrapped in a timeless destination that provides memories that are just as sweet.Bill was appointed CEO in January 2013 after holding a string of progressively senior leadership roles at the company. He joined the company in 1996 as general manager of Hershey Lodge. That original passion for "operations" never left, and today he likewise focuses on building enterprise value for his stakeholders by aligning and maximizing the link between business practices and people practices in the organization.This is no easy task when you consider Bill is in the middle of an immense balancing act between maintaining traditions instilled in the HE&R brand and pushing for innovations that make visiting Hershey, PA, a 21st-century hospitality experience. He recently talked with me about his philosophy and approach to business challenges. His insights are an opportunity for everyone to appreciate the thinking and acumen of a true servant leader - so enjoy this uncensored conversation with Bill Simpson.Your organization is an unusual crossroad of businesses in hotel, restaurant, travel-tourism and retail - virtually all sectors of the hospitality industry combined. What are the biggest strategic challenges this introduces?In our mind, whether it's serving a guest at Hersheypark or The Spa At The Hotel Hershey, the guest is there for one reason and one reason only, "The Hershey Experience." Thus, we maintain our focus on providing that experience to our guest and, in turn, leveraging all the data we collect when it comes to guest satisfaction scores and feedback. Our biggest strategic challenge is how we can best leverage technology and take advantage of the tools and systems that we create, like the "Hersheypark App," to better serve our guests and enhance their overall experience. People come to us with a set of expectations and our goal is to fulfil those expectations. In this high touch day and age, it's all about making it easier for our guests to enjoy the "Hershey Experience."In your view, regardless of the hospitality vertical, what is this "Hershey Experience" people are looking for?As it pertains to the destination of Hershey, Pennsylvania, it is all about family. I realize that most of the focus these days is on the millennial generation, but for us it's family. But, as millennials grow and have families of their own, we want them to come back to Hershey, because our goal is to provide outstanding, timeless, family experiences that stretch across generations. To us, that is our common purpose and market differentiator.How do you address the apparent struggle between maintaining tradition and leveraging new technology in the business?Let's use Hersheypark as an example. If you look at ride inventory, there are rides that come to an end of life and need to be removed; inevitably, that ride was a guest's favourite that they may have enjoyed every year. So, you will receive feedback with every decision that you make...believe me. The best thing you can do is listen to your guests and provide an exceptional experience for as many people as you can. We are fortunate to be associated with such a highly recognizable brand. Our efforts, in conjunction with those of The Hershey Company, help deliver on the "experience" portion of that brand. Leveraging technology is important for us to amplify the overall experience for our guests. Our overarching priority is to exceed our guests' expectations. One of the tangible results of our success in that area is "length of stay" in our park. On average, our Hersheypark guests are with us for seven hours, which, in many cases, is longer than the length of stay for our competition. We are also an overnight destination, not just a day destination. That distinction means we have to provide an exceptional experience for a longer period of time at every guest touch point. Ultimately, technology helps enhance the experience, which allows us to meet our guest service goals.How does a leader balance the need to maintain one's authenticity on one hand and be "on stage" and under constant public scrutiny on the other? For me, it has always been about being as approachable as possible, as well as transparent and authentic to the public and my team. For example, at the start of every year, I spend time with our staff and present our strategic plan for the upcoming year, and I let them know exactly what our plan is and what is in store for HE&R, even if it's something that I don't necessarily want to be leaked to the public, yet.My thinking is simple; I owe it to my team to be transparent because that is in our DNA. Mr. Hershey was always transparent with this community as to what he was doing; thus, we continue that here today. That said, messaging matters and leaders should always strive to maximize their people and persuasion skills.How do you maintain a connection with your team, especially since you are constantly working in a very high-level, strategic role?The common denominator at HE&R is our core purpose, which is supporting Milton Hershey School. In addition, we follow a set of Core Values. Every employee knows this core purpose and our values:Devoted to the legacy: Acting in a manner that reflects the dedication and integrity of our founderSelfless spirt of service: Serving our employees and their families, our guests, our community and our environmentTeam focused: Supporting one another as we work towards common goals and earning each other's trustRespectful of others: Treating all people with dignity, while respecting their differences and ideasHaving all employees aligned on these values is how we stay connected at HE&R.What are the main factors, in your experience, that hold people back in their careers? Lack of self-awareness and low emotional intelligence. History has shown that you need to be able to navigate relationships to be successful, especially if you want to move up into greater roles and levels of responsibility with more emphasis on leadership. At the end of the day, you need to play well with others, have the ability to be influential, gain trust and have humility as well.At HE&R, it is all about leadership development. Early in my career I successfully moved up the ranks, because I had the operational skills, but when I found myself in a more senior leadership positon I found that I lacked the skill set to be a leader instead of a manager. No one taught me how to do so. I am also an introvert and, at the time, I didn't have enough self-awareness to know I had to find a way to manage that trait. A lot of my future success in this industry relied on my ability to connect better in a group or team setting. Just like athletes, leaders can practice and get better. In my opinion, you can improve on everything... you may never be the best, but you can always improve. For all of these reasons, I am a big believer in executive or leadership coaching and continued professional learning and development.Many companies only consider succession planning in a contingency situation, as opposed to thinking proactively and strategically about bench-strength continuity. What is your approach to succession planning? In my mind, your first job as a leader is to build more leaders and ensure you give people the opportunity to be in a better place than when you started. You want to have a strong pipeline of talent, and as a leader you need to improve the careers of others. We take training, development and succession planning very seriously. In my view, if we do a great job with training and development and if someone moves on from HE&R because of our efforts, then good for them and good for us, because we know we did what we were supposed to do -- which is build and mentor future leaders. One of the other points of difference at HE&R is that succession planning and leadership development come from my office, not from a Board of Directors as is typical in other companies. My team and I are in a better place to drive succession planning initiatives since we are on the ground, working with each other 24/7.Because development, succession planning and training are core to your culture, does this lead to negative internal competition whereby individuals are selfishly posturing for positions?It actually is not a big issue at HE&R because we are fortunate to have a culture where everyone wants to see each other succeed. We really take our time with people and dig into "what's next" and where they want their careers to go. I personally take the time to meet with a significant number of our team members, many of whom don't even report to me. The goal is to provide counsel and guidance to help them be successful now and for the long-term.What is your advice to those aspiring and working toward leadership? I would tell any future leader that it is very difficult to navigate this business on your own; thus, you need to ask for help and view it as a sign of strength, not weakness. This coincides with the need for mentorship. Any successful leader should have a team of mentors or "personal board of directors" to help them along the way. In my opinion, this needs to be a group of individuals who can provide you with unbiased advice and guidance. I would go so far to also say that surrounding yourself with people outside of your industry would also be beneficial.Speaking casually with Bill, I was easily impressed with his humility on one hand and executive presence on the other. Both qualities seem to work well together to give him personal perspective and the business acumen to persuade, align and motivate his teams. Bill embodies servant leadership, because, as you saw above, he is always invested in the success of others and how to push innovation and technology specifically to reinforce HE&R's brand experience, as opposed to trying to wow consumers with the latest and greatest gadgets, bells and whistles.In so many ways Bill is an effective case study of the power of what AETHOS calls the "Performance Matrix" - the proper definition and alignment among an organization's purpose and values, strategies and goals, structure and tactics, and metrics and outcomes. It's a never-ending challenge for companies to align and achieve these four points of performance... but when an organization does accomplish this well, due to the servant leadership of someone like Bill Simpson, you can get results like HE&R. Like the iconic Hershey brand, Bill Simpson has a firm understanding of the necessary components of success.
Article by Thomas Mielke

Hotel Leaders, "What's Your MTP?" - A Question About Business Transformation and Technology

AETHOS Consulting Group 20 July 2016
There may be no better way for hospitality firms to learn and gain inspiration for successfully transforming their businesses by leveraging technology than by looking at some of the "unicorns" that have successfully tapped into the hospitality sector.The firms that positively stand out in this respect all appear to have understood their "MTP", that is according to a recent book that should be on your summer reading list - "Exponential Organisations: Why new organisations are ten times better, faster, and cheaper than yours (and what to do about it)" (2014, by Salim Ismail, Mike Malone, Yuri van Geest). The simple acronym of "MTP" stands for "Massively Transformative Purpose" - a term coined by the authors, but a theme that has been echoed in many leadership books and entrepreneurial authorities (e.g. Jim Collin's Good to Great and the hedgehog concept). In Ismail's case, it boils down to three primary issues every business owner should be exploring and defining in order to become what the authors call "exponential organisations":What are you good atHow, and in what areas, can you leverage technology to become better and more efficientConsequently, tap into "externalties" for scaleSimple, right? The concept of MTP is one where businesses shift from a materials-focus to an information-based focus. In our industry, a company like AirBnB is a prime example for demonstrating the rhyme and reason behind MTP: This disrupting business does not build hotel rooms, it does not have a tangible brand, but rather offers a conceptual brand that stands for an idea and values, it does not create a physical infrastructure to get you into your hotel room/studio/apartment and neither does it deal directly with management issues such as housekeeping or maintenance.AirBnB merely matches accommodation seekers with local accommodation providers. It taps into the general public to crowdsource offerings in order to lower its cost of supply and to create something bigger, something which is not only creating financial value for the firm and third parties but which is also giving back to the community by using minimal resources. "Exponential organisations" are thus those that have understood how to scale their organisational structures. They use staff and/or assets "on demand" to grow beyond their firm's organisational boundaries, to adjust to an ever-changing work environment and to secure expert know-how and/or assets at minimal cost.It's interesting to note that the "exponential organizational" thinking of AirBnB was validated at this year's Boutique Lifestyle and Lodging Association's (BLLA) Hotel investment Conference in New York, where Ian Schrager (co-founder of Morgans Hotel Group) stated that, "Airbnb is a major, major threat, and I can't believe how many in the hotel industry are in denial about that. [...] More of a threat than the OTAs [online travel agencies] are to the hotel industry." So, if in the past entire economies have had to adapt from export-driven ones to consumption ones - and we nowadays live in a world where people pay with Bitcoin or Apple Pay and have the ability to use a 3D printer to produce material or equipment - it would appear that the time has come to become more creative in using technology and to embed it into our business strategies. The time has come to re-evaluate of what or wherein the value of your business lies. In our industry, technology does not and should not only be thought of in administrative and/or marketing terms - so, how do you plan to push the envelope and transform your business?How do hotel organisations successfully leverage technology?Superficially, it would appear that in the hotel industry, technology is routinely considered merely in marketing terms or as a tool to streamline processes or administrative functions. Of course, there are exceptions... take for instance the amazing technological resources Royal Caribbean has incorporated into its Oasis-class ships that help shape memorable guest experiences. More often, however, businesses rely on technology to engage better, more proactively and in a more targeted way with the ever-connected customer through social media or loyalty program platforms. We also use technology to more cost efficiently sell our inventory through online platforms and Apps. And of course we use technology to digitise processes and thereby improve work-flow efficiencies. Hotel executives might argue that technology is therefore really just part of a much larger tool kit. But are we in fact kidding ourselves in thinking that technology does not already play a bigger part in our business?Are hotel companies evolving into technology-led businesses?Looking deeper and surveying some of the strategic moves that hotel companies have made throughout the past few years, it seems that more and more firms have started to look at technology more seriously. In fact, they have fully integrated technology into their business equation. Take Yotel as an example - the firm capitalises on automated check-in/check-out and payment systems and luggage storage handled by a robot to be able to focus on limited but value-added "facetime" with its customers. Customers book online and use automated kiosks to stock up on everything from a chocolate bar to an iPhone charger. An e-concierge/App helps travellers to better connect and engage with the local community and enhances the overall guest experience. Motion sensors in the room help to regulate room temperature and lighting. At face-value, none of this might count as highly innovate - but the reason why Yotel stands out is because it has built its business around technology. Here, technology is not merely an afterthought - it has become part of the company's DNA. Other firms have integrated similar "gadgets" that not only serve as a marketing and PR gag but also fulfil operational needs and streamline efficiencies (e.g. keyless entry systems, infrared sensors detecting whether or not a room is occupied).Accor is another example to have gone "all-in" when it comes to technology: The company has made bold moves by acquiring the mobile developer Wipolo in 2014, Fastbooking.com in 2015 and Onefinestay in 2016. It appears that the firm is amidst a digital transformation, which is helping to drive direct bookings (capturing more of the business that would have otherwise gone to OTAs) and to collect better and more detailed consumer data. Moreover, Accor decided last year to open up its booking platform to third parties - thereby becoming de-facto a technology and distribution partner for independent hotels. This digital transformation, centred around improving its technology infrastructure and business intelligence, hereby seems to be at the heart of the firm's business strategy, affecting relationships and partnerships with all of its key stakeholders(consumers, employees as well as business partners). Other industry player, big or small, equally pursued a technology-led business strategy: US-based Choice Hotels started to invest heavily into its digital transformation and created a technology subsidiary in 2013 to offer property- and rate-management serviced to third party hotels (SkyTouch Technology). In 2014, Spanish Room Mate Hotels created BeMate.com, opening its platform and distribution system to third party owners (of apartments)...Moving ahead...All these firms seem to have taken marked steps in ensuring to better, and in a more meaningful way, implement and integrate technology into their business strategies. They do so without compromising their dedication to delivering customer service and creating memorable customer experiences. These companies have not "lost their soul" and are still staying true to their hospitality focused strategy - but they are equally trying to transform their business, make it more competitive and resilient to external circumstances. These firms are thinking about what they are good at and how technology can help them leverage those strengths. They are therefore trying to embrace technology and to ensure that it is not only an add-on strategy, but that it is at the core of their business plan... For many organisations, all this is certainly easier said than done. Still, businesses striving to be exponential organisations can begin with the informational foundation provided in this recent book. And business owners and leaders should ask themselves: What is their MTP?

AETHOS Consulting Group Report Reveals Poor Support in One HR Area Will Domino Affect Strategies, Efficiencies and ROI of HR Function

AETHOS Consulting Group 24 February 2016
In a recent survey of 68 senior human resources professionals in the hotel, restaurant, gaming and travel industries, AETHOS Consulting Group's Andrew Hazelton and Thomas Mielke discovered good news as well as concerning trends that HR and senior leadership should address when tackling goals in 2016. The root of the issue: poor support in one HR duty can launch a negative domino effect impacting overall strategy."We reached out to leaders from around the globe and asked them candid questions about the degree of alignment between performance expectations and the resources allocated to their human resources department," explains Mielke, AETHOS Managing Director based in London. The anecdotal responses share several surprising insights:93% of the respondents agreed that senior corporate leadership views human capital as a key success factor to achieve goals;94% agree that management considers HR a true business partner;94% agreed that HR perspectives are voiced at the Board table.However, Andrew Hazelton, AETHOS Managing Director based in Philadelphia explains that, "While this seems to be good news to validate the importance of HR in the corporate setting, the actual degree to which HR is supported proves otherwise. A startling 67% of the respondents agree that HR constantly fights internal battles for the necessary resources to achieve its goals.""Our findings suggest that while HR is supported in areas such as peer support, flexibility and deadlines, HR is not nearly as well resourced by staffing or budgets," adds Mielke. The daily reality of HR starts off well-aligned to corporate mandates, according to the AETHOS Report. "Building a talent pipeline, engagement and culture are of prime importance," continues Hazelton. "Unfortunately it's at this stage where derailment seems to occur, because handing issues regarding corporate relations takes precedence over training, development and performance feedback responsibilities," says Mielke. To view the Facing and Correcting the HR Domino Effect report in its entirety, visit: http://www.aethoscg.com/uncategorized/facing-and-correcting-the-hr-domino-effect/

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