NEW YORK—Often lost in the shuffle of a large, visible franchising program and the corporate wheeling and dealing of Hilton Worldwide, Hilton Management Services provides a stream of steady fixed-fee income for its parent company.
The company has become more efficient as it has navigated through the economic turmoil of the past two years, said HMS leader Joe Berger during a break at the New York University International Hospitality Industry Investment Conference earlier this month.
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Joe Berger, Hilton Management Services |
“The biggest challenge has been to make sure we’re yielding into the occupancy curve and driving rate,” said Berger, Hilton’s area president-Americas, who is responsible for the operations functions of more than 350 corporately managed Hilton Worldwide hotels and Hilton Grand Vacation resorts throughout North, Central and South America. “Understanding the demand environment is extremely important. There’s no way to go back and get it back if you don’t get it right the first time.” HMS’ portfolio runs the gamut from limited-service properties to luxury hotels. Berger said much of the recent focus has been on bigger operations in urban center locations.
“We had to manage through some pretty difficult occupancy levels,” he said. “Our goal was all along to become as efficient as we could become and at the same time we absolutely had to deliver on all brand standards.
“We didn’t want to make any changes that weren’t sustainable for the long term of our business,” he added.
Many of the changes occurred in the back of the house, where the company leveraged its balanced geographical locations, according to Berger.
“We can run two or three hotels with one executive committee,” he said. “We take the power of our bigger hotels and help drive success of some smaller hotels in a tight geographic zone.”
During 2009, company-managed properties had a revenue-per-available-room premium of 117 percent as they reduced costs by 30 percent through permanent cost controls programs and best practices, maintaining a new lower cost base even as business recovers, according to the HMS website.
The company places a high value on training, and provides for 10 minutes to 15 minutes of training every day for every employee.
“Delivering great guest service is a trade, it’s a learned skill,” said Berger, who previously served as co-president of LXR Luxury Hotels and Resorts and president of the now defunct Prime Hotels, which included the AmeriSuites brand in its portfolio. “We’re absolutely focused every day that associates are getting training. Success is about giving your employees the tools to drive great guest service. It’s not about amenity creep.”
Berger said he anticipates growth for the company once the credit markets start flowing again. It has seen its share of workout work from lenders who are looking for a professional company to manage distressed assets.