Case Studies

 

 

Case Study – Full-Service Hotel in Philadelphia, Pennsylvania

The subject hotel was developed as a high-rise Best Western in the 1970’s, was converted to a Holiday Inn in the 1980’s and a Crowne Plaza in December 2008. The hotel was developed by a family owner/operator with a regional presence in New York, New Jersey and Pennsylvania. The father handed the hotel to the operational reigns and ownership to his son in the mid 2000’s. Our client is a private equity group which provided capital to renovate the hotel to Crowne Plaza Standards in 2007 and ultimately took over ownership/operations with Gulph Creek as operators in May 2009. We were selected as the operator because we had a strong regional reputation and were perceived as a responsive, owner-dedicated, entrepreneurial management company. The new owner knew he would get our full attention and resources.

Gulph Creek blended the best of the select-service, empowered, efficient culture to a tired, dated, disorganized full-service operation. The following are highlights of our action steps to turn around the struggling property.

Management

  1. Hired General Manager from outside industry with fresh approach to operations. Strong, young, decisive leader.
  2. Replaced HR Director with former Rosewood HR manager.
  3. Transferred veteran Director of Sales from Gulph Creek sister hotel to stabilize high turnover sales team.
  4. Streamlined food & beverage with two sous chefs and front of house manager.
  5. Centralized accounting. Replaced on-site controller and two accounting clerks with one accounting clerk
  6. Eliminated redundant positions such as reservations manager, Crowne Meetings Director, sales manager, director of security, executive chef, food & beverage director, and reservations manager.

Renovation

  1. Completed renovation of fifth floor guest rooms when contract with St. Joseph’s University students was not renewed.
  2. Moved and upgraded existing (barter to $2,000/month) car rental tenant to less visible area within one half the former bar, converted former car rental room to coat room and storage.
  3. Constructed permanent breakfast buffet area in one half of the former bar.
  4. Constructed 8th floor lounge for Priority Club guests.
  5. Renovated pool area, replaced dated overhead windows and doors.
  6. Upgraded fitness equipment and tired room.

Sales and Marketing

  1. Replaced student contract business with base corporate business room blocks such as Verizon projects and nurses.
  2. Focused sales department by market segment with detailed marketing plans.
  3. Replaced all but two sales team positions, transferred two Gulph Creek sales managers to lead challenging IBT and catering sales departments.
  4. Conducted numerous blitzes and innovative (hot dog truck) sales campaigns to spread awareness and re-introduce the hotel to the marketplace.
  5. Implemented sales goals and reporting system
  6. Updated menus and collateral.
  7. Implemented neighbor club program with discounts and incentives to bring in locals.
  8. Renamed the hotel from Crowne Plaza Main Line to CP Philadelphia West.
  9. New signage and building imaging.
  10. Shifted catering business from family reunions to corporate meetings and events.
  11. Shifted market segmentation from less SMERF and discount to Corporate and Leisure transient.
  12. Actively solicited support and assistance from all levels of IHG operations, sales and administrative departments throughout tenure as operators.

Operations

  1. Renegotiated each and every vendor contract from fish tank cleaner ($300 per month savings), real estate taxes ($30,000 reduction) and locked in electric and gas pricing.
  2. Implement Buy Efficient to leverage buying power and ensure authorization for each expenditure. GM signs off on all invoices.
  3. Implemented highly-effective preventive maintenance program to reduce repair issues and guest complaints.
  4. Implemented labor cost efficiencies, reporting, improved housekeeping daily capacity.
  5. Shut down entire floors during off-peak period, compact fluorescent bulbs.
  6. Obsessive training throughout the hotel focused on friendly, responsive, personalized service.
  7. Implemented a service oriented culture – award winning hotel in compliance with brand service standards.
  8. Secured grounds and parking lot, improved relations with adjoining restaurant
  9. Strong core full-service leadership team is in place, with capacity for additional, challenging projects.

 

Case Study – Select-Service Newark Airport Hotel

The 200-room SpringHill Suites opened in 2004. A third party manager took over for the former owner operator approximately two years after the opening date. At the time of takeover the Hotel had a strong top line, but weak profitability. Anticipating continued economic growth and enhanced performance, a new owner purchased the Hotel in December 2008. At the time of takeover, the Hotel was not well-maintained, with significant deferred maintenance and three out of order guest rooms. Gulph Creek was hired as a Marriott approved, third party operator due to our reputation and relationship with the owner.

The SHS is located on a pad across from the Newark International Airport. The site is adjacent to a newly renovated 162-room Fairfield Inn and a newly renovated 146-room Marriott Courtyard. The SpringHill is located on Frontage Road but is the last hotel in the three hotel row. The SpringHill shares a shuttle with the Marriott Courtyard.

Upon takeover, we brought a full task force team to work with existing department heads and staff to stabilize and standardize each area of the hotel. Our short-term and long-term initiatives are outlined below:

Short-term Initiatives

  1. Put all guest rooms back in order and sellable inventory.
  2. Organize all storage and back of house areas
  3. Replace general manager and controller. Centralize accounting.
  4. Deep clean entire hotel.
  5. Repair all broken and non-functioning ff&e.
  6. Implement new standards and train all staff
  7. Sales blitz, new sales and marketing campaign.
  8. New sales goals and reporting through Sales Pro.
  9. Cut overhead and improve operating efficiency.

Long-term Initiatives

  1. Ensure empowered, guest service culture in place
  2. Significant reduction in all departmental costs
  3. Significant improvement in RevPAR, RevPAR index
  4. Consistent leadership from same General Manager
  5. Aggressive outside and internal sales effort with strong base business and building corporate and leisure transient as economy rebounds.
  6. Effective TPI, revenue management to grow ADR to pre-recession levels.
  7. Preventive maintenance to ensure well maintained facility despite lack of capital spending during downturn through Service Pro.
  8. Streamline accounting with M3.
  9. Implement Buy Efficient to leverage buying power and reduce expenditures.

 

RevPAR Variance with 200-Room SpringHill Suites

Year

146-Room Courtyard

151-Room Hampton Inn

2007

$37.20

$18.20

2008 (1)

32.85

19.67

2009

12.28

5.33

2010

4.74

5.58

Note: (1) GCH took over management in December 2008

 

RevPAR Index – SpringHill Suites

 

TTM March 2009

TTM March 2010

TTM March 2011

SpringHill

98.7%

107.8%

115.3%

% Chg. SHS

(6.4)%

(12.2)%

18.5%

% Chg. Comp Set

(7.7)%

(19.6)%

10.8%

Rank

2 of 6

1 of 6

2 of 6

Source: Smith Travel Research