CEO David Stanford from Lester Hotel Management Services (LHMS) and Lester Hotels, operating a portfolio ranging from 100 bedroom limited service hotels in London to boutique spa hotels with fine dining in Wales speaks to HTR Magazine about how his properties across city and provincial locations battled that recent economic challenges.
How has recent performance been for your hotels and what are you expecting for the first half of 2010?Running hotels has been too easy over the last 10 years and everybody was trying their hand at it, whether or not they had any experience. When times are tough professional expertise is needed, which is what we provide. When things get bad you need people around you that you can trust and who will go that extra mile – every time!We have found across our estate that recovery is patchy and varies from hotel to hotel and area to area. What is becoming apparent is that those hotels which have invested in their product and their people are doing better than those that haven’t. We operate a hotel in Reigate, the Bridge House Hotel, for an investor which on our advice has received significant investment. As a result towards the end of 2009 we have seen a developing pattern of growth in the last 3 months. For the period October to December 2009 sales increased by some 15% year on year. This business though has been won from our competitors. Whilst average room rate is lower than last year, occupancy has more than increased to compensate for this (+10%).How do you see the hotel industry’s recovery process?When the recession became a reality, which for our hotel guests seemed to be in mid November 2008, it was as if someone switched off the lights – it was rabbits in headlights time! Everything just stopped. We reacted quickly by making cuts [deep but so we would only have to do it once], increasing training,beefing up our sales team, and reviewing all our marketing. We looked at every penny we spent, and then we looked again. Being a tight knit company with just three directors [chairman Simon Lester and Finance Director Martin Johnstone] we can think quickly and make decisions quickly; there is no standingon ceremony. The concern is that whilst the signs are good that the individual or leisure market will continue to expand and this combined with a recovering business market all should be good, the new taxes that people are only just seeing through new tax codes and the prospect of higher interest rates means individuals are now getting nervous about spending, and businesses seems to be tiptoeing out of recession. Confidence will drive growth, but at the moment that is very fragile.What difference in hotel performance have you noticed between city and regional locations?City centre hotels, because of their location charge premium prices when times are good. When times are bad, they become a black hole by reducing their prices and sucking in all the business that would be located further out due to price and non availability in the city centre. With such a high level of fixed costs, as soon as things get better, up go their rates. City centre hotels have incredibly high overheads and need full bedrooms to service these costs. Regional hotels by and large are unable to charge these premium prices. Premium prices are charged when you know demand that exceed supply. As a result, regional hotel prices don’t have so far to fall.With this in mind, what strategies did you adopt in order to achieve optimal results in both city and provincial locations?We believe it is about building relationships. It is easier to retain an existing customer than it is to convert a new one. When the recession first started to become a reality we did the opposite to most companies. We didn’t sack our sales people; we increased them with the emphasis on each hotel having a locally based sales manager attached to their hotel. This person works with the manager to raise the profile of hotel, reaching out to local companies, offering special deals and working the local market. By building these relationships locally we see more meetings coming in, more local functions and events, more weddings, more conferences. People may be fickle, but when times are tough and people have a choice as to where to spend the limited funds they have, they go where they feel they will be looked after, acknowledges and get value for money. At the Bridge House Hotel, Reigate just before Christmas, Simon, our chairman organised a helicopter which he piloted to bring Father Christmas to a children’s charity event in Reigate. People want to see their local hotels playing a role in the local community. Other strategies included: increasing our sales team and charged them with working the local market; reviewing marketing consortia work; spent more money on training, getting our teams to work smarter and looked after our people by introducing a bonus scheme which covers everyone in every one of our hotels; and investing time and money in developing our managers and brought them together more often so they could share and learn from one another.
