Happy 2003 And Forget Across-The-Board Expense Cutting

Anthony Marshall

Most hoteliers will agree with me that 2002 was a lousy year. It was painful to send holiday cards to so many qualified professionals who had received pink slips this year, many of whom still haven't found jobs. My New Year's wish is for the industry to bounce back quickly and provide gainful employment for all these fine folks.

I'd like to quickly move on to 2003 with a resounding "Happy New Year!" It seems like most hoteliers are a little queasy about the prospects, hoping the days of declining occupancies and room rates are finished.

"Well, we haven't officially lowered our room rates, Tony," one general manager confided to me with a wink. "We are simply being more ‘flexible’."

I toasted his euphemism as we chatted at a holiday gathering for local hoteliers, trying to make the best of the evening. There was no consensus among the partygoers about what kind of tidings 2003 would bring, but the word ‘iffy’ came up most frequently.

"Revenues have to pick up in 2003 because I have no more expenses left to cut without seriously affecting operations," was a common remark at the gathering. "I want my management team to chase revenue dollars, not expense pennies, because there are no problems that can't be solved by increased revenues," was another.

"Corporate demands a revised 2003 budget with reduced expenses," was a common complaint. When one manager suggested he was going to order across-the-board cuts for all departments as the fairest approach to go, I finally had to speak.

"It might be fair," I said, "but it's a dangerous way to do business. Pay heed that hotel departments are not created equal." Curious ears began to gather around as I stepped toward the bar, so I went on with my explanation: "Are you going to slash your security department's budget, too? I think not. After 9/11, snipers and terrorist threats, imagine attempting to prove your hotel exercised 'reasonable care' for guests' safety by trimming security."

"We always slash the training departments budget first," another manager chimed in. "Trainers are far from the ring of the cash register." Just then, the person at the bar in front of us asked the bartender for a "triple Turkey in a glass, neat."

"I think he's planning to fly home after the party," I commented to the general manager of the host hotel, who was standing beside me. "Why haven't they cut him off and fed him a turkey sandwich, instead?" The manager blushed and confessed he had reduced the training department's budget, and with it, those folks who administered the serving alcohol with care programme.
"Eliminating servers' alcohol-awareness training in dram-shop states is foolhardy. It doesn't make sense," I politely chastised him. "You can end up with a multimillion-dollar judgment against the hotel from just one drunk-driving accident lawsuit."

He nodded silently just as a kid rushed past us to the bar and ordered a drink.

"Who's that?" I asked.

"Damn, that's Jack's teenage son." He snatched the fresh drink from the kid's hands and scolded him and the bartender.
Most bartenders and servers are uncomfortable carding minors, particularly at private parties. It's not a pleasant task, and it affects their tips. Still, there are no excuses. It's absolutely necessary to avoid liability suits and preserve the hotel's liquor licence. Qualified trainers know that carding minors doesn't happen by accident, it only occurs when employees are well trained. Take away the training staff, and you've got no training.

Risk managers also seem to be at risk these days, despite that loss-prevention training budgets bear direct relation to the frequency and severity of employee and guest accidents.

Managers have to balance going for revenues with cutting expenses, but if expense cutting is mandated, do it wisely.

"Don't spend your time stomping out ants when the elephants are coming over the wall," my friend said, raising his glass to toast the approaching New Year.

My message to him and the other ‘revellers’ was finally getting through: Reducing costs across the board with a one-size-fits-all mentality doesn't make sense. While it appears like it's the fairest approach, remember that fairness is not your goal. Operational and fiscal stability is what you're going after.

It was my turn to toast. "I toast Janus, the Roman god after whom the month of January on the Gregorian calendar was named.

Janus has two faces that look in opposite directions. One faces the past, the other the future. We must adopt the faces of Janus. Look and learn from the past to avoid pitfalls in the future. And may it be happy new one for us all …"

[Anthony Marshall, dean emeritus of Florida International University, has practiced hospitality law, focusing on issues of safety and security, for almost 25 years]

(Courtesy: Hotel and Motel Management)