Assessment Case Study

An Assessment Case Study – Finding the Explosive Revenue Growth Opportunity in a Hotel Bar By: Scott Martiny

What step can you take when you suspect your existing hotel bar venue is missing a lot of top and bottom line improvement opportunity? As you go through the upcoming year planning process, no matter how hard you push, the F&B revenue and profit targets for next year are the same as last year? Or as you push for capital funding for a venue renovation, ownership does not believe the business growth projections? You may want to consider bringing in a third set of eyes that can confirm and quantify the opportunity, and then define the comprehensive change effort required to achieve that opportunity.

In a recent project Strategic Beverage Solutions Inc. (SBS) went through that exact Assessment process. The first step was taking a hard look through the numbers window. In this kind of venue situation, there are two potential customer pools for the hotel bar. Hotel and group guests or end of business day non hotel guests. In the interview process management confirmed there was almost no non hotel guest traffic in the bar. So the B$RN metric was applicable. (see www.B$RN-How-Is-Your-Bar-Doing?.com) The B$RN number – $5.05 was very low relative to the $10-15 target standard, reflective that the bar was not pulling hotel guests into the venue post 4pm. A strong banquets business mix should ideally be pulling additional group event guests into the bar pre and post events. The relatively high in room dining number was another hint. End of day business guests were choosing to stay in their room or go somewhere else versus visit the bar.

The interview and observation components of the Assessment process confirmed and clarified. The Scorecard for the property (see www.Scorecarding-Your-Hotel-Bar.com) was full of red ratings. This was not reflective of poor performance, but rather that the product was off target with the strike zone setting, menu, service and marketing strategy for end of business day hotel guests, and group guests. see (www.Living-Room-Bar-Concepts.com) In addition faulty business processes and a lack of focus were likely impacting profitability.

The projected business impact of moving the scorecard red areas into green was well over $1M in increased top line and potentially as much as $500K in increased gross profit. 50 more customers per day combined with the dividends of increased average spend per customer visit in a living room bar format, were all that we needed to get that result.

The Project delivered the desired action position – a comprehensive set of changes that if executed effectively and collectively would dramatically change the business performance results. The process helped to clarify who the target customer was and what their strike zone experience needed to be to attract them into and hold them in the venue. What was basically running as an amenity restaurant with a bar, was now pointed towards an extended hangout customer venue strategy. (see www.Extended-Hangout-Customers.com)

The challenge now was how to organize resources to be able to execute the change plan. Hotel management teams are lean to begin with and loaded with obstacles to change in terms of ingrained existing practices and corporate standards. Inevitably these kinds of comprehensive change projects require some capital support and there can be challenges in securing that support. The most important thing to recognize, is you have to do it all at roughly the same time or you miss the result. You cannot do it piecemeal.

The last deliverable in the Assessment process was a Playbook that outlined all of the major change initiatives and the underlying action steps behind each key area. (see www.Playbooks-An-F&B-Change-Strategy.com) A task force execution strategy was recommended. (see www.Using-Taskforce-Strategies-in-F&B-Change-Projects.com) For an inside hotel team sometimes it’s a major project just to redo the cocktail menu.

It’s difficult to question why you do things the way you do, and formulate high level strategy questions which have to be answered before you start defining change steps. The Assessment defines the business performance improvement path in a way that your local team can digest and accept. The kind of comprehensive change required in many situations and the ability to project business impact in order to justify that change effort is critical to fully define and motivate the desired result. So whether you bring in outside eyes or form a swat team inside your organization that can execute these kinds of projects. You may be an Assessment away from a major business performance growth.