Choose To Juice the Right Management Company To Boost your Hotel Business!

Foreign I'm leaving the office, it's almost about 8:30. Lokender and me are doing this final video before I leave today, today for the second time in this week and it's only Tuesday, the second time in this week I, I got a call from somebody who said I have a hotel and I'm looking at a few management companies to take care of my hotel. Which one should I go with? And you know, these are the kind of repetitive questions coming from people asking for advice or help or you know, on sharing our experiences allows me to find the right question which I feel will help more people. So the most relevant question has normally been that hoteliers, a lot of hoteliers are non hoteliers, which means that they might be real estate people or they're hoteliers who today don't want to run hotels and they have some beautiful properties in different places like Delhi, Goa, Bombay, everywhere in the world and they want to manage, they want companies to manage them. Now there's five star boutique companies which are the largest hotel marketing companies, hotel management companies in the world and then there are these small fly by night operators and there are some drill professionals who were yesterday working with hotels and today are taking their own management company. So there's a lot of stuff happening in the hotel multi ecosystem, in the hotel management ecosystem. Now how do I advise somebody to say which hotel marketing company you should go with? So there are some fixed parameters, some fixed things that I have now. Again it's my personal opinion, but being a hotelier myself and marketing hotels for such a long time, we have friends and partners in almost every management company around the world. So I've learned how these people work and how my management company should be chosen. So if you're a hotelier, I understand you put in your blood and sweat into building a hotel to bring it up to where it is and now you might not be wanting to run it yourself and you're looking for a partnership. Firstly, what is the stage at which you should be looking at a partnership? Either if your second generation, your next generation is not looking to get into the business and you're getting old and you don't want to work as hard, you give it to somebody to manage or you feel that where you are there's a lot of competition and you need a brand and you might be a standalone brand but you need to be under the umbrella of really powerful brands which have a marketing reach across the world. Or thirdly, if you feel that you have a better ROI for your time by doing something else and you give it to somebody else. In either of these scenarios, you need somebody who's professional. So here's how we choose these guys. We all say somebody has to be professional, honest, deliver what they promise and all of that. Right? So that's what takes so much time. I see people taking months and years sometimes to find the right marketing company. And then they sometimes settle by saying, I'll choose a GM and he'll be responsible and I'll work with the gm. That's not a bad idea as well. Firstly, yes, it is a time where brands are taking over. Standalone hotels are finding it difficult to market themselves. When you see the consumer side of things. A lot of consumers want to stay with hotels which are maybe not branded because the branded hotel which have those same cookie cutter things, the same kind of bed, the same kind of amenities. People want to go to a new experience, a new hotel, a new standalone property on the cliff, you know, which has personalized service. The husband, wife are taking care of you and you sit with them. You have a personal life experience. So don't get me wrong, those kind of hotels are definitely in demand as well. But if you are not that kind of a boutique place and you're not something different and you're not willing to invest your own time to make it different, then obviously you need a brand because a brand has a more international reach and can get you business. But at the same time you must know who are the promoters. If you're meeting the promoters directly and they are involved in the marketing of the brand, then you definitely want to be with them. There are some great companies in India and abroad which I've met, small boutique companies running 25, 30 hotels and they do a great job. Every hotel is there and it belongs to them and they take anywhere from 5 to 8, 9, 10% of the gross operating profits. And that is also broken up into different agreements. And I think there should be some watertight rules to this kind of an arrangement where you say this is my result. I will not want to only give you 7 or 6% of the gross operating profits or whatever you generate. There needs to be some fair assumptions and those assumptions need to be locked down in some numbers. If you giving a property and the other person thinks that he can make money out of your property, it has to be win win solution for both. So don't try to over negotiate with a good management company. Like I said, every business is about people. If you like the people and if you feel they're ready to passionately going to Run your hotel and they're going to not run down your hotel. They're going to take care of the equipment, infrastructure, everything. And most importantly a good Internet marketing team. Because see hotel marketing is great offline sales and travel agents and corporates. I'm not saying I don't think it's going anywhere in the very near future, but Internet marketing is growing, right? In some cases they say it might go up to 50%. So if a management company has its own marketing team, many people don't. What they have the right Internet marketing partners who understand each property coming under the umbrella. They know which, how the property is positioned, how that brand under that umbrella is positioned. It's a, you know, mid scale budget, upper budget, you know, upper scale, four star, five star luxury, whatever brand, resort. If they know how to position your, the brand under the umbrella and they know how to market each property separately, the digital marketing agency which is working with the management company has a fair enough idea of how that, how your location it could be Delhi, Bombay, Goa, Bangkok, Singapore, Dubai, how it works, which are your national geographies, which are your international source markets, how to target them. Then you're basically working with a team which is just going to plug in the right learnings and your hotel starts running from almost month one or quarter one. Instead of finding somebody who's still unfortunately finding his own feet and then finding partners who are trying to understand hotels and then trying to understand hotel marketing. So the crux is work with experts who know what they're doing, who are the best in class, who are go with the people who you feel know this business. Go with the right management company which have the right Internet marketing partners and you will get maximum bang for your buck. The other thing, should I do a long term lease, should I do only a few years? See many management companies say we'll take over a hotel, we do a percentage, but we want to at least for 10, 20 years. But if you're not willing to give your hotel away for a very long time, then you have to have a fractured lease. You might give it five, five years and have a renegotiation of a price or you might want to take it back. Because I understand from owner's perspective you might not want to give your property forever if you think things are not going correct. So in the right spirit of the game, I think a reasonable exit clause should be there. If the hotel management company is losing money, then you pay them. If you're abruptly wanting to finish the contract, give them the money for at least one year, the 12 month exit clause and if it's going mutually, then another three to six months. Whenever you guys think that you should mutually part way, that's when you part ways. At any given time the brand, if the brand is diluting your property or if the property feels or the property is diluting the brand, you should part ways. So these are few tips that I feel every hotelier should keep in mind while choosing a company. Oh yeah, one more thing. Work with a management company which is thinking of new concepts. Budget, resort, luxury, super luxury, all these are today I like to talk to management companies which say we're building a tech friendly hotel concept and yours could be a tech friendly under our tech friendly hotels. Yours comes under the Chandigarh property or the Goa or the Delhi property as a tech friendly. So you customize your property to be a tech friendly property and obviously your property is originally like that which can be made into a tech friendly place. Awesome. 4G wi fi all over the place and you have gadgets in every room. If you can do that and your management company has those kind of concepts, you find a great mix and you're going to be part of a new and upcoming era of new kind of hotels under the management company. So I always say ride the wave and the wave is something which people have not seen. So you always like in a game of cricket, you first swing, you don't know when to swing the bat because the ball is not coming yet. There's some kind of anticipation. So anticipation of a business sometimes is risky but that's what needs to be done. That's my belief. If we go after time tested principles, people say time tested principles but time changes and so do these principles. It's not a very profitable business right the way before it comes, find the management company which clicks. You know you got a feeling from the heart that these guys are the people you want to work with. They have the right Internet marketing partner because the Internet is what would be 50% of your business going ahead and then finally seeing if they have really nice awesome concepts which you feel will be help you and them be in business for the next five to 10 years. So this was basically how hotels should. What are the things that the hotel should keep in mind before finding the right hotel management company and partner? I hope you found this video useful. It's almost 8:30 in the evening and I think it's time for me and Nukendra to go home. Thank you very much for watching this video and stay connected and please comment here. Click here, comment here. Let us know what you thought about this video and if I, in my experience or lack of experience, missed out on something, please let us know so we can add that in our next video and share it with more more and more people. Once again, thank you for watching.