REPORT FROM THE U.S.—When a management company takes over a contract to manage a hotel, one of its biggest challenges is how it handles the hotel’s existing employees.
Change is scary, and the prospect of a new employer—potentially without warning—can make employees anxious and worried for their jobs. Hotel News Now reached out to executives at several management companies to find out how they handle transitioning employees when taking over a management contract.
Prep work
Taking charge of a new property requires doing due diligence, said Patrick O’Neil, president of Peachtree Hotel Group. O’Neil visits the property along with the VP of sales, the regional director of sales and the regional director or VP of operations to get a feel for it and meet with the GM and director of sales, he said.
“It’s an awkward time for everyone involved,” he said. “They know the hotel has been on the market. There’s some trepidation. They might not know much about us, and they’re worried what will happen to their jobs. We go in, and we try to get to know the people.”
Once the team has gone in and met with the existing staff, O’Neil said, the company then sets up phone interviews with employees to learn more about the nuts and bolts of the operation.
The whole transition process gets laid out the moment Hospitality Ventures Management Group knows it has a new contract, said Sue Sanders, SVP of strategic planning and chief human resources officer. Sometimes contracts are signed two weeks before it takes over, she said, and sometimes it has 90 days advance notice if the company is buying the property.
The company will assess the property as far in advance of the transition as possible, Sanders said. Every transition is different, and there’s no cookie-cutter approach to the existing hotel staff.
“There is value in understanding the difference in every transition and customizing what we do so the associates feel safe and secure with the new company,” she said.
Sometimes HVMG takes on management of a property in receivership or foreclosure, Sanders said. That means there hasn’t been any focus on the associates and there’s no money going into the property. When that happens, the previous management company sometimes puts weaker managers at those hotels, so the associates have had inconsistent or unskilled leadership, she said.
“Finances are tight, and leadership is not the strongest, but it can have a strong associate staff that’s been there for 20 years,” she said. “They’re invested.”
Sanders’ team tells the associates the company understands what they’ve been through and whatever has happened will be addressed head on, she said. Under the new management contract, the employees learn they can expect better benefits, pay increases and improvements to the property.
Day one and after
The existing staff is always a little nervous and apprehensive, said Chuck Powell, SVP of operations at Hotel Equities, so his company tries to meet with them immediately. A team with people from different disciplines goes to the property on the first day as the new management company to talk with the employees, he said, and they go over the history of the company, the workplace culture and try to make them feel more comfortable.
There’s also, of course, all the employee paperwork to fill out, he said.
Within 30 days of takeover, employees go through a foundations class that introduces the company’s culture. The employees receive company-specific training from their respective departments. Brand training tends to be done online, Powell said, but Hotel Equities prefers a hands-on approach.
“I think it’s still such a people business,” he said. “We like to connect with them, to connect in person with team members so they are able to connect with the guests.”
The approach when taking over management of a property depends on a couple different factors, said Mike Marshall, president and CEO of Marshall Hotels & Resorts. Some owners will let the staff know there’s been a change in management ahead of time, he said, while some others prefer to go the surprise route.
In the case of the latter, Marshall’s team goes to the property with the ownership in tow go to announce to the GM there’s been a change in management, he said. They set up conferences with all the department heads and arrange to have a staffwide meeting, and there’s an employee meeting later that afternoon or the next morning.
If the property has been sold, Marshall said, the employees typically expect a change in management to come along as well.
On the first day, HVMG holds a “huge celebration” for the staff, Sanders said, providing lunch, a custom-made cake, music, contests and prizes as a way to welcome the employees into the family.
Following that, employees go through training and orientation, which she said includes familiarizing them with the company’s professional development program.
Within 90 days of the transition, HVMG does an assessment and holds a roundtable with employees for face-to-face feedback on how things are going, Sanders said. Employees have the opportunity to say whether their new employer is living up to the promises made and if they’re enjoying the work.
The company also will check in with the property throughout the year, she said, and hold another celebration six months after the transition.
Employee retention
Generally, unless the ownership has a problem with the GM or the GM decides to remain with the existing management company, Marshall said his company doesn’t bring in a new property leader. Experience over the years has shown it’s easier to work with the existing staff, he said. This approach creates less turmoil throughout the line-level employees. The team lets the staff there know they’ll be evaluating everyone over the next 60 days, asking questions about them and the property.
“At the end of the day, we’re here to improve the hotel,” Marshall said. “We’re here to increase revenue and improve occupancy, which, in turn, increases hours worked. If we do our job, you do your job, there’s more money in your pocket as well.”
The company culture is that employees should be assisting a guest, Marshall said, and if they’re not, they should be supporting another employee who is. If there are employees who only do the work they think they are supposed to do, that becomes apparent quickly, he said. Within the first 30 to 45 days under new management, employees who don’t like the new operating standards will move on.
Peachtree Hotel Group retains GMs 75% of the time, O’Neil said. Sometimes the previous management company keeps them, and other times the GM will move in a different direction. The first order of business is to make sure everyone is informed as soon as possible, he said.
A month before taking over the contract, Peachtree lets the previous management company know its plans. It’s up to them to let their GM know what’s going on.
“We don’t post anything until they talk to their team members,” O’Neil said.
Lessons learned
One of the best things Hotel Equities has done is put together a transition checklist, Powell said. It allows everyone to understand what the process is in terms of the takeover and onboarding through the transition team.
“It allows everybody to make sure we’re covering all the bases and not missing anything during the takeover,” he said.
The existing staff is going to be nervous and apprehensive, Powell said. The transition team does its best to make sure everyone is calm and to reassure them they still have job.
“I’ve seen it in my past where a group will take over a hotel and not take the time with the team members,” he said. “Then you start to have a mass exodus.”
Marshall suggested management companies should start by performing an internal audit right away to make sure all money is accounted for and putting normal operating procedures in place. This will help weed out the “bad apples” pretty quickly, he said.
O’Neil noted some transitions are smoother than others. Sometimes the new contract means taking over operations from a single owner/operator, and that’s “extremely different” than taking over a hotel from a large-scale management company like Interstate Hotels & Resorts or Aimbridge Hospitality. There are different things to look at, he said, and there are different tools, systems and processes.
He said it’s important to remember hotels and hospitality are about people, both on the guests’ side and on the associates’. Taking over a contract means transition to a new hotel, but the people running the hotels are what the new management company is bringing on board. Listening to the existing employees at the beginning of the transition is a good idea, he said, because they probably have a lot of good insight.