Co-founder of Newport Hospitality Group (NHG), Mike Pleninger knows a lot about transforming distressed properties into profitable ones. Here, he gives us the benefit of these years of experience.
What is the state of the business today?
Today, NHG manages 30 properties totalling just over 3,000 rooms with two more under construction and four in the planning stage. We manage most major brands: Hilton, Marriott, IHG, Hyatt, Choice and Wyndham – both select-service and full-service.
You’ve told me that performance in 2013 and 2014 has been outstanding?
NHG RevPARs from 2011 through 2013 were up 23.4% versus 14.2% for our competitive markets. The year 2014 is up 7.9% year to date, through June. Our markets have done well also, up by 6.0%. We attribute this success to four main disciplines :
- A strong direct sales effort. Most of us came up through the sales ranks, before the brands generated as much loyalty as they do presently. Someone told me early on: “Hotel occupancy is directly related to the number of outside sales calls.” I still believe that, and our company endorses it.
- A deep commitment to training. We’ve had a training department since 1995, when we had ten hotels. We currently have two people who visit most properties twice a year conducting customer service training and front office sales training.
- Emphasis on guest satisfaction. We strongly believe that the higher the guest satisfaction scores, the higher the revenues and profits. We think this applies to all brands and market segments. We are particularly proud of our TripAdvisor scores: 20 NHG hotels rank in the top 15 % of their markets, 12 are in the top three and six are number one.
- Consistent management. We have been able to develop an atmosphere where our top sales and management talent remain challenged and are able to grow along with us. Of the 70 general managers, directors of sales and corporate office staff, 35 have been with us five years or more, 17 have been with us over a decade and 11 have been with us over 15 years.
What goes into the process of chain/flag selection?
It depends on the market and, quite frankly, what flags are available and what saturation levels may have been reached. Franchise selection is critical. Several years ago, I heard a speaker paraphrase Yogi Berra, saying: “75 % of the success of a hotel is due to its location. The other half is due to the franchise.” You could say the same thing about management companies.
How important is social media to you as a management group?
We have been using Revinate for several years. It makes monitoring fairly painless. We use the user-generated reviews to assist with quality control and to award associates mentioned positively. It is also an excellent prospecting tool for our sales team. Our teams have actually contacted unhappy groups and guests who had been staying at competing properties and had them move their business to us. Thank goodness we have young folks who understand and live all this.
What economies of scale have you achieved through your current size?
Our centralised accounting certainly benefits from economies of scale. I wouldn’t say that the other management functions do. What size does provide is the ability to offer more resources for marketing and management disciplines.
Are there market opportunities for owners in any particular segment which can be exploited now or in the near future?
There are a large number of market opportunities, but they are niche and location specific. I personally think the extended stay segment as a whole is still underdeveloped, but gaining ground. Of the four hotels we have in the planning stage, two of them are extended stay. With all of the various brands being offered by the major franchisors, too much development is my real concern.
About the author
Larry Mogelonsky (larry@lma.net) is the president and founder of LMA Communications Inc. (www.lma.ca), an award-winning, full service communications agency focused on the hospitality industry (est. 1991). Larry is also the developer of Inn at a Glance hospitality software. As a recognized expert in marketing services, his experience encompasses Four Seasons Hotels & Resorts and Preferred Hotels & Resorts, as well as numerous independent properties throughout North America, Europe and Asia. Larry is a registered professional engineer, and received his MBA from McMaster University. He’s also an associate of G7 Hospitality, a member of Cayuga Hospitality Advisors and Laguna Strategic Advisors. His work includes three books “Are You an Ostrich or a Llama?” (2012) and “Llamas Rule” (2013) and “Hotel Llama” (2015). You can reach Larry at larry@lma.ca to discuss any hospitality business challenges or to review speaking engagements.
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