What Retailers Can Learn From A Hotel Makeover [Case Study]

By Bob Phibbs

This is a case study on one of my early business makeovers as a retail consultant. Take a look - any small business can follow its award-winning principles. The challenge? While being part of a major brand, this small Newport Beach inn had stagnant revenues. Although the inn was located on the Balboa Peninsula near multi-million dollar homes, it didn't offer a pool, bar, or restaurant – basic amenities that could make it attractive.

The Specifics of the Situation

Rooms had only two queen beds, while families frequently showed up with more children than there was room for. The complimentary breakfast buffet was a source of complaints when it ran out of certain types of food. The front-desk agents consistently discounted the rooms; one even bragged that he offered people a $69 rate and always sold the rooms. In other words, the inn had become a pretty unremarkable motel.

Despite these challenges, the passionate inn owners managed to maintain high standards of cleanliness and hospitality, and the inn offered free amenities and easy access to Newport Beach's white sands. There were also several great restaurants within walking distance.

What kind of business do you operate? Evaluate what sets you apart and meet your customers’ needs to stand out. Want to learn how this situation turned around?

The Prescription

Before the Internet, the only ways to market your property were through the brand’s network of other properties and your own four-color brochure.

While the brand provided a vital link in making reservations, it didn't really fit with the emerging tony image of this boutique inn nestled among multi-million dollar yachts and palatial homes.

We had to determine whether the brand was helping or hurting the inn's situation.

What do you have in your business that doesn't really fit?

It could be your marketing, your merchandise, your logo - anything that doesn’t align with your promise to customers for a better experience than any competitor.

With renovations pending, we needed to increase revenues to upgrade the rooms. Until we could afford the renovations, we had to act “as if” we already deserved a higher price. That would come from staff training.

We needed customers to return to us repeatedly, not just in the high season. We also needed them to choose us over the big hotels on the mainland.

Have you considered how you talk to your customers to get them to return - and not just when you have a sale?

The upshot for your business...

The first stage of a culture change is taking stock of your strong points, examining the inconsistencies holding you back, then creating revenue goals. A great retail consultant knows it's not just that you need to get more profit for the owner’s bank account; changes need to be focused only on a remarkable experience for your customer.

The revenues will follow naturally.

Here's what we did next...

Phase 1

Encourage Longer Stays
We instituted a 2-night minimum stay for Saturday nights to cater to travelers wanting to spend time in Newport Beach, moving away from the “I need a bed tonight” crowd. We raised all the room rates but charged more for premium and view rooms.

Create a Better Experience
We purchased 5-star hotel beds for the premium rooms (and eventually all the rooms.) We expanded our free video library to include 100 new and classic movies which guests could check out to watch in their rooms. We added boogie boards, towels, and chairs for guests to take to the beach for no extra charge. We baked cookies every day at 3 pm for guests to enjoy after check-in at 4 pm.

Assess the Crew’s Strengths and Institute Training

Sales training was created to increase bookings on the phone and with walk-ins. Discounting was discouraged, but fallback policies that set limits for negotiating late-night walk-ins were included.

Phase 2

Be Remarkable
Your employees are your greatest asset. We took the check-in speech and made it a script for the front desk to use whenever they made a reservation. They would no longer just ask for when and how many rooms and a credit card deposit. They would ask, “While I check that rate, may I tell you a little about us?” This led to more conversions of callers to bookings and reduced no-shows. Once guests developed a relationship with the front desk agent on a call, they looked forward to meeting them in person.

Market to Those who know you
From examining the zip codes of those who stayed with us, we discovered they skewed heavily from Phoenix and Las Vegas. We couldn't afford big ads in those markets’ papers and knew those ads would only be incrementally successful. Instead, we entered the past several years’ registration cards into a database. A newsletter was developed and mailed out every two months to that list, often with a contest.

Retool your Customers
We elected to become focused on being a hotel that promised a cozy getaway for couples. The double queen beds were replaced with a single king for couples’ comfort rather than to cater to large families. Previously the hotel had only three rate seasons; this was expanded to eight, and rates went up again with upgraded furnishings.

Spread the Wealth
A revenue goal was set for the front desk staff to meet each month. The front desk staff split a cash bonus if the hotel hit its goal. This was presented at a monthly staff meeting which covered what was and wasn't working and how we could improve even more. Pictures of staff were included in the newsletters to build on the personal connections between staff and guests.

Phase 3

Keep upgrading for your Customers
We became one of the first non-smoking California hotels and added a $250 penalty for anyone who smoked in a room. We added all new windows, DSL, new air conditioning, and furnishings: drapes, headboards, bedding, plush carpeting, and tiled bathrooms.

Wonder What Helps, What Hurts
As revenues climbed, the owners began to question the wisdom of staying with the brand that was potentially keeping customers away. That brand image no longer matched their premium boutique hotel. Looking to a future separate from the brand, we installed a new reservation system.

Keep Your Face in Front of Your Customer
We sent custom postcards with an aerial view of Newport Beach and our property to all guests who stayed two or more nights. We included a personal note and an invitation to return soon, signed by their favorite front desk agent.

Build Community
We went to the Convention and Visitors Bureau with a brochure featuring the smaller properties to build more demand for the smaller inns within a few-mile radius. A spreadsheet that included all those small inns’ rates, amenities, locations, and contact information was created so that if one was sold out, they could recommend a neighbor and not lose the guest to Huntington or Laguna Beach.

A Takeaway...

The second stage of a culture change is the actual "doing." Many people fail in a makeover because they don't spend the time to create the process.

For example, they might just say, "We need retail sales training," but miss the underlying issues that, if solved, could make the sales training stick. HR, training methods, and scheduling are part of that, but the biggest is establishing a customer focus at all levels. And not just giving lip service but allocating the necessary money to make it happen.

Once that happens, the sky's the limit.

So based on the case study, these are some of the things you might look at in your own business:

Are you concerned with getting people in and out quickly - instead of building a relationship with them?
Do you ensure your business is a place people want to return to? Start with the things they will see or touch.
What must you purchase to upgrade and differentiate yourself from the competition?
What stock have you wanted to buy but were afraid you didn’t have the customer base to justify it? Maybe you need to court a different customer...
What systems can you put in place to make your business remarkable?
Are you monitoring what your employees say and do to sell your merchandise? Do they have a cowboy culture where everything is negotiable? If so, how’s that working for your profitability?
How are you keeping your face in front of your customers? Are you communicating through a variety of channels on a regular basis?
Would partnering with competitors help you all grow your businesses?

Phase 4

Never stop upgrading
To give the property a unique surfing persona, we contacted artist Jon Severson and bought the rights to have his work made into murals for the common areas and guestrooms. The property was re-landscaped, and new furniture was added for the balconies.

A separate computer desk was added to the lobby so guests could print their boarding passes and check e-mail. Fresh flowers were ordered for the guestrooms, lobby, and breakfast room. An apartment building next door was purchased to provide suites.

Phase 5

A Moment of Clarity
As property revenues increased over the years, the nagging question about our brand alliance loomed larger and larger.

It all came to a head when the chain’s inspector showed up for the usual inspection...

One of the owners had taken him around to show him all the improvements since his last visit, including the Severson murals, the large flat-screen TVs, the remodeled breakfast room, and other guest amenities.

Expecting a top-notch review, the front desk and housekeepers awaited their best-ever inspection score.

That’s when it fell apart...

The inspector began his report with a picture of the underside of a hinge with a bit of rust on it. The owner became incensed at his lack of consideration of the extreme makeover.

No one had installed crown moldings like that, had murals like that, and presented a unified upscale image to that brand’s customers like that! No, the inspector pointed up something no guest would see for the sake of a rusty hinge behind and underneath a bathroom door.

The owner stood up and said, “Get off my property!” The stunned inspector said he was just doing his job, causing the owner to repeat the command again. The inspector packed his things, quickly got in his car, and left.

The owners reviewed their agreement to see how soon they could debrand from the chain and sent the letter off that week.

A few months later, the new brand debuted with a red surfboard in its logo. Frequent travelers commented they always wondered why it had been aligned with the previous brand.

The Results

You Like Us, You Really Like Us
In 2002, the front desk agents started getting new responses to one of the standard questions, “How did you find out about us?”

“TripAdvisor,” was the answer. That day we went online to see what they were talking about.

Lo and behold, we had been reviewed a couple of times, and they liked us, they really liked us! In fact, the reviews quoted the reservation and check-in speeches because the benefits mentioned in those speeches resonated with our guests. Out of 17 hotels, we quickly became the #1 hotel in Newport Beach, and that's where the hotel still stands today, eleven years later.

Award Season
Fast forward to 2006 - we received a call from TripAdvisor telling us the hotel had won the Top Travelers Choice Award.

Fast forward to February 2012 - TripAdvisor received word that they are the number one rated hotel in Orange County, California - number one of 381 hotels and inns representing 19,574,187 rooms.

While one of the owners has retired, the other enjoys a reputation that is second to none. The front desk staff and housekeepers, some of whom have been there twenty years, are deservedly proud of their hotel.

Hats off to the owners who, nearly twenty years ago, embarked on a customer-focused program that continues to deliver the goods. Their investment of time and money cannot be overstated.

What it takes to succeed hasn’t changed; it’s about being customer focused.

As these owners proved, you can compete when your passion runs deep.

Recap for Retailers, Restaurateurs, and Hoteliers

Know what you have to work with.
Acknowledge your limitations.
Act “as if” until you are what you aspire to be.
Know that you probably need to raise prices.
Look at your competitors to help grow your market.
Know that without training, your employees will probably turn to a discount to get the sale.
Learn your customers, but don’t be afraid to focus on more profitable ones.
Success begets success.
Always be upgrading.
Find ways to stay in touch with your customers and remind them of you - not just a sale.
Form your marketing around benefits to the customer, not features.
The world is changing fast; if you base your operation on how you’ve always done it, you're missing it.

Imagine what that award-winning hotel could have provided to the brand that couldn’t see the forest for the trees...just sayin’...

About Bob Phibbs, the Retail Doctor

Companies from some of the very largest to some of the smallest, from luxury brands to startups, from franchises to regional chains, contact me as a retail consultant because they seek results. An owner may have read one of my books, seen my videos, seen me on TV, heard me speak, or read this blog to get a taste of my people-focused philosophy and my methods.

While every client and project is different, the ability to enlist me as a retail consultant who has a fresh set of eyes to look at the challenges you are facing results in a focused, effective, and creative path to profitable sales.

No matter your size, let's see how I can help you; take the first step and click the button below to contact me.