How to Start a Hotel Business - Lessons Learned From Hilton and Ritz

When starting a hotel business consider the life and lessons of some of the greatest hoteliers as a source of inspiration. Here are a couple of lessons culled from the lives of two of the most successful hotel entrepreneurs, Conrad Hilton and Cesar Ritz.

Conrad Hilton

Hilton, born on Christmas Day, 1887, began his career in the legislature of New Mexico, his home state. He served in World War I and started his first inn in New Mexico. He subsequently began buying and starting hotels throughout Texas. Hilton's hotel empire survived losses in the Great Depression and went international after World War II. Hilton was associated with generous charitable giving, but was a shrewd businessman.

Hilton is quoted as giving an extremely practical piece of advice to hoteliers: "If you are 100% occupied, you are not charging enough rent." This statement runs against the intuition of a new hotel owner to focus on renting every possible room on every possible night because a room that goes unrented will mean revenue lost forever. Hilton recognized that if you reach that point of 100% occupancy, you are actually losing money. Additional guests are being turned away and the guests in your rooms would have been willing to pay more. Take his advice and seek to maximize revenue per available room and not the occupancy rate of your hotel. Make sure you are spending as much time or resources thinking about pricing as you are about booking guests. Yield management systems with careful monitoring can assist with this.

Cesar Ritz

Ritz was born in the Goms Valley in Switzerland in 1850, the son of a mountain farmer. He learned the hospitality industry from the bottom up, first waitering at a luxury hotel while in his 20s. He went on to become the restaurant-manager of a hotel and built a reputation as having a knack for entertaining kings and diplomats. He bought and opened numerous hotels before his crowning achievement, the Hotel Ritz Paris. Cesar Ritz opened the Hotel Ritz Paris in 1898 with a celebration.

Isn't the opening of your hotel worthy of celebration? Your hotel may not be as ostentatious as the Hotel Ritz, but it will have an important impact for both the staff you employ and the community it will become part of. Hotels build the capacity of a community for tourism and business and can have an extremely positive economic impact. Find a way to celebrate this opening to build relationships for the future. Use the opportunity to invite members of local government, the tourism board, partnering and neighboring businesses, and even other hotels (if they are ever booked up on a given night, wouldn't you like them to refer their customers to your hotel?) so that they can all learn about the services your hotel will offer and see the kind of hospitality your hotel will offer first-hand.

Why Hotels Need Effective Customer Relationship Management (CRM) Implementations

Today's customer relies on the ability to enjoy their hotel stay beyond any freebee or rewards offered. The modern hotel is one that can build a relationship with their customers with a personalized stay - a stay that customers want to come back to again and again. But how does a large hotel create such personalization? The infrastructure of large hotels is no longer like the grass-roots hotel of previous generations.

How are today's hotel customers different?
Customers who were once pleased by rewards and prizes care more about the hotel that remembers them. The frequent traveler and the occasional vacationer are more likely to return to a hotel that gets to know them. The issue is that it can be difficult for customers to describe what they want in a personalized stay. Staff must be cunning and diligent, finding information by listening when their customers give them small talk or complaints, and being the pleasant surprise that the customer least expects.

What strategy can be used to connect to customers?
The use of a Customer Relationship Management (CRM) application to create a business strategy is an excellent way to increase customer loyalty and customer retention. By personalizing a customer's stay, a hotel can ensure that customers will come back again and again simply by remembering their favorite beverage, pillow or other preferred amenity.

So why do hotels need effective CRM implementations?
CRM implementations allow hotels to customize the stay of loyal and valued customers as well as create special loyalty rates for customers who continue to spend quality time and money with the hotel. This is important because customers remember hotels that gave them personalized care. Also, a business strategy put into place with CRM ensures that the hotel's technology is up to date and that a hotel can track a customer's satisfaction by creating a close relationship to that customer.

What are some other benefits to CRM implementation?
Today's technology allows a hotel to get to know loyal customers and provide special gifts such as sending flowers to a spouse or gifts for children simply from remembering how the customer feels about those who are special in their lives. Technology also gives a hotel the ability to provide advertisements to guests who are of a certain age who may or may not have children to provide them with personalized information based on who they are vacationing with.

Which customers have become the primary focuses for CRM?
Business customers travel frequently and high-end service is important to them in the hotels they stay in. Hotels are often impersonal for business customers, and it is important to make them feel as comfortable and as much at home as possible. Learning their needs produces more stays and requests for your particular hotel. CRM is important for logging the personalized amenities of business customers in order to ensure they have the best stay.

What is the profitability for a hotel with CRM?
With the primary focus on the customer's personalized needs and not on finance, marketing or sales, CRM allows hotels to maximize profitability by creating loyal customers, improving customer service and improving customer retention. The more customers who continue to stay due to the relationship they have built with that hotel through CRM implementation, the more profitable that hotel becomes.

Attention to the preferences and dislikes of a customer allows a customer's stay to be enjoyable, and implementing CRM applications into hotel technology creates a streamlined approach to personalizing the stay of customers. When preferences and dislikes are tracked, a hotel is able to provide the most comfortable stay, and becomes an enjoyable place for all customers to come back to again and again. Increasing customer loyalty is extremely important for the modern hotel, and CRM provides the relationship link between that hotel and the customer in order to give the customer a quality experience.

It is important to understand that CRM is a way to run your hotel, and not just a tool to use within the way your hotel is run. Although technology is used in the organizing of customer data, Customer Relationship Management is a strategy that your entire staff should be on board with implementing individually and completely.