NASHVILLE, Tennessee — Hotel owners and operators have had to be nimble through the pandemic and recovery, and a big part of the new flexibility that has emerged has to do with a shift from top-down leadership to empowering property-level managers more.

On a panel on operational flexibility at the 2023 Hotel Data Conference, David Rosenberg, senior vice president of operations at owner and developer Hotel Equities, said his firm has challenged its general managers during the pandemic and into the recovery to adopt this shift in thinking.

“As we have gone through the pandemic, we’ve created more property-based leadership flexibility, while before there was a lot of top-down decisions,” he said, adding this was especially the case at full-service hotels.

Anna Marie Presutti, vice president and general manager at the Hotel Nikko San Francisco, said one thing that has helped her hotel is that it is a non-union property.

“That gives us some operational flexibility, as we can close or open things at will. If demand is not there, we can close down a restaurant or another space. This has been so important, considering San Francisco has been so peak and valley, especially this year,” she said, referring to the California’s city rocky performance.

Some of the operational pressures and costs to the bottom line are well-known.

Jason Freed, hospitality data evangelist at data firm MDO, said labor pressures, inflation and wage and operational costs are at the top of the list.

“Everyone has had to work more efficiently, maybe with IT, training or cross-training. Revenue managers need to be part of the conversation that allows businesses to have more flexibility,” he said.

An overriding question is how easy and possible is it to be operationally flexible when hoteliers need to satisfy and please several stakeholders — guests, owners and staff — said Jeff Higley, president of The BHN Group and the panel’s moderator.

Presutti said that is a difficult call for luxury hotels that have to maintain specific standards of service.

“It is a little more difficult to be super-flexible. We dabbled with the idea to pull back, but we found it took so long to get back to the standards needed. It became more of a hindrance,” she said.

Rosenberg agreed that chain scale does alter the landscape.

“We’re at a little bit of an inflection point from an ownership standpoint. It has become more transactional, to balance brand expectations post-COVID with owner expectations for margins. This is especially true in the franchise community,” he said.

Added to that are guest requirements, Presutti said.

“Guests are not more forgiving. We now have a customer in San Francisco buying luxury that was never there before, and they expect even what is beyond luxury,” she said. “Luxury is foremost about consistency. Housekeeping puts rooms back to how they were when [guests] walk in, and we get a lot of comments about that. I say, well, this shows we are doing it right.”

“Profitability is about keeping guest satisfaction levels up while putting into place these operational flexibilities,” Freed added.

Panelists said operational flexibility can be custom-fitted in different markets, but hotel brand companies also have become more resolute in resetting expectations and standards, which often comes at a cost to owners and at different price points in different chain scales.

“The challenge is that this is often expensive when you wish to protect margin and to deliver guest satisfaction and loyalty to a level that does drive business. What cannot change is the effort to drive repeat business, where acquisition costs are lower,” Rosenberg said.

He said flexibility is needed the most to manage the middle of the profit-and-loss equation.

Other solutions to lower costs are to grow talent internally and to further invest in staff.

“[The industry] will be labor-starved for a while. The culture the GM sets is important and a focus area where we have some scale. There is opportunity for this, but it needs to be intentional. It does not happen organically,” Rosenberg said.

Presutti said her hotel has a nine-month management-track program, and so far 20 to 25 people have completed it.

“We’re looking for one person who can do it all, but, again, I could not do that in a union hotel,” she said.

Two elephants in the room are the use and cost of artificial intelligence — which has the capability to help staff or eliminate their roles — and sustainability initiatives.

Presutti said AI is happening, but that it often seems to be over the heads of those in an industry that always has been and will be a human one.

“There are places we are introducing it. That said, we still have phones, but we are moving that to a point where you do not realize you’re speaking to a non-person that can speak 17 languages. We still must have someone to monitor it.

“We have [food-and-beverage] tablets in rooms, but still guests want to talk to someone, maybe about what is the glaze on the salmon. Then again, AI can do that, too,” she added.

Freed said the hotel industry’s relationship with AI is on the “cusp of a new era.”

“Remember this: The pace of its innovation now is the slowest it will ever be. All the data we have is impossible to analyze by human beings on their own,” he said.

“In the future it seems that data will move far more smoothly for whoever the end-user is,” Rosenberg added.

Rosenberg said ESG — environmental, social and governance efforts — is a “hodgepodge of initiatives.”

“To expect individual hotels or owners to do this, that is a real challenge. What we need is a menu as to what [ESG] really means,” he said.

Presutti said many cities and states have already mandated this menu or soon will.

Trial and error, a more entrepreneurial spirit and being agreeable of initiatives are all key methods not to sink in the tide of change, panelists said.

“Hang with it, and stay with it, as we cannot get in front of it,” Presutti said.

Rosenberg said it's key for leadership to be able to balance the expectations of all stakeholders.

“Our best days are ahead. Our industry is still thriving, but it will not be an easy 18 months, with those challenges differing depending on what stakeholder you are,” he added.

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