The hotel industry is facing a formidable set of challenges today. Some of these are relatively new, such as the steady rise of digital commerce, the growing influence of mobile and social media and a general decline in brand loyalty. Others include the familiar challenges of globalization, intensified by growth market opportunities, activist shareholders pressing for short-term results, a continuing lack of guest confidence in many mature markets and talent shortages. Confronting these challenges successfully requires that CEOs of hotel companies possess traits that are less likely to be found in their counterparts from other industries, where investment horizons are often much longer and the feedback loops less intense.
We explore what it takes to run a hotel business effectively, from prioritizing the guest to understanding the realities of being the CEO of a hotel company.
In our work with hotel industry leaders, we’ve discovered the most rounded senior leaders have worked in multiple functions and have cross-cultural experience. These executives are often forced by circumstance to find ways to navigate through challenging problems they would not encounter in a mature market if they work in them exclusively. Cross-cultural experiences help develop entrepreneurial instincts that might otherwise be underutilized.
Hotel company leaders more often than not have spent the majority of their careers working in one or more areas of the business, allowing them to cultivate an open mind and a commitment to continuous learning.
The key to success: Focus on the guest
In the hotel industry, organizations succeed or fail in their ability to deliver a high-quality experience to the guest. The most successful hotel company CEOs bring a deep understanding of guest behavior, often cultivated throughout their careers.
For one former hotel group CEO, exposure to the front line came early in his career during a stint in sales at a CPG giant. “I remember being in a part of the city where there was no glass in the windows, nobody had any money and I was trying to sell all this stuff under pressure from a head office which had no understanding of the environment I was working in. They become detached, they don’t really understand what’s going on out there.” CEOs of hotel companies cannot focus on high-altitude issues to the extent that they lose touch with what the guest wants on a very local level.
CEOs also must evangelize this commitment to the guest throughout the organization. “As I look back, I guess I always had a close interest in understanding our guests, probing how they evaluate different options and how brands fit into their repertoire of choices,” said one CEO. “I try to push everyone in our business to offer guest insights and to use them to rethink the paradigm that we work within.”
Another CEO agrees that guest insights are key, but cautions that guests themselves may not always be the most credible source: “Guests never behave like they say they will. Having guest insight is critical, but this often means you have to know them so well that you can look beyond what they say.”
Getting to the truth about the guest takes time, requires you to keep your feet on the ground, listen intently and exercise sound judgment — for example, discerning what guests mean, regardless of what they may actually say.
Being a CEO — the reality
Despite the short-term pressures besetting most hospitality companies, several CEOs talked about the need for patience early on in their tenure. Stakeholder engagement is critical and building a long-term, sustainable performance advantage takes time, particularly in a business where people can be dispersed across different continents.
“The amount of time you have to invest in the development of ideas and to build consensus around ideas and direction before you actually execute was something that was a surprise to me,” recalled one leader. “You have to be a consensus builder, a team player and a great communicator.”
Making decisions with incomplete data
Most companies these days are awash with more data than they can deal with, and the hotel industry is no different. Often available in real time, this data is incredibly useful but is still only one part of the evidence base on which decisions have to be made. One of the key challenges for a CEO, says one industry leader, is being comfortable making decisions with less-than-complete information.
However, some do not believe you don’t necessarily pay a high price for making a wrong decision. As one senior executive advised, “Exercise your best judgment, but be prepared to be wrong and adjust course if that is what is necessary.”
Working through others
Whereas hotel executives tend to be good at leading from the front, the evidence from some of our assessment results suggests that they are less effective than their counterparts in other industries at working through others. As hierarchical corporate structures gradually give way to more fluid collaborative environments, the ability to exercise influence across functions and disciplines, as well as within departmental teams, becomes increasingly critical.
For one former hotel industry CEO, this goes to the heart of what it means to lead an organization: “There’s a misperception that leaders are all-powerful, but power to me is being able to just make decisions on your own, be unaccountable and do things that you want to do. What I say to people about their expectations is that the higher you go, the less power you have. The higher up you go, the more influence you have, but power in the strict sense you have less of. That was a surprise to me.”
Building the best team
Hotel companies’ ability to develop their future leaders hinges on a clear understanding of their capabilities and potential. It is essential for the CEO to know exactly where the leadership talent lies in the organization and what kind of experiences they should be exposed to.
All the CEOs we spoke to acknowledged the critical importance of getting the right team in place as soon as possible. Some believe a mistake many CEOs make is waiting too long to fix issues and replace talent who will not work out. Having the right people on the team is essential for the company’s overall success, especially at the highest levels of the organization. “The talented team won’t survive if they don’t respect their leader,” said one senior executive, who has a very simple philosophy that good people generally want to work for good people. “The further up you go, the more important it is to hire talented people underneath you.”
In addition, many leaders stressed the importance of creating a team that comprises individuals with different perspectives and backgrounds. In addition, surrounding yourself with people of good judgment is critical when you are running a business, more so a global one.
Another leader looks for an “inner resilience” among the people he hires onto his leadership team: “If I’m looking at very senior people, I want to hear about when they’ve been deeply stressed and emotionally upset and I’m not really interested in their CV. If you’re in this room it’s because you’ve achieved things, so now I need to understand you as a person.”
Setting the right culture
A large part of the CEO’s responsibility is to shape the company’s culture and this is especially important in a business focused on hospitality. One executive refers to a “magic alchemy” that occurs when there is a culture of inclusive leadership and a shared sense of purpose and values running through the organization. He says this allows the company to successfully deliver on their brand promise. He also speaks of the need to treat everybody at all levels entirely as equals as “one of my great lessons in life. It’s not a question of making a show. You have to believe it. You have to actually think that way.”
While successful CEOs from all industries share many common strengths, the CEOs running hotel companies share several specific characteristics. These include a close affinity with the guest, an ability to build collaborative and productive relationships and networks, and the flexibility to “fail fast” and change course. CEOs who can imbue the organization with a commitment to the guest while grasping the realities of the role are best positioned to succeed in a rapidly changing industry.
Originally published in Perspectives at Global Hotel Network.com.