CHICAGO—Since 1970, Lodging Unlimited has managed and consulted underperforming assets resulting in more than $7 billion in lodging asset value. With nearly 50 years of experience in the hotel industry, Morris Lasky, CEO of Chicago-based Lodging Unlimited, has successfully turned around over 200 hotels and understands how to come up with solutions to common problems that arise facing hotels.
Having worked with independently named hotels and all major hotel franchisers, Lodging Unlimited has devised solutions to various problems—big or small. But the main reason why hotels often fail to succeed occurs as a result of inexperienced hotel owners. According to Lasky, successful entrepreneurs from other business models have delved into hotel ownership under the presumption that they can take their business acumen and apply those lessons to owning and operating a hotel.
“The owners may have been successful in other fields and brought their money to invest into the hotels, but they don’t have the hotel skills,” said Lasky. “Our average turnaround of total disaster to profitability is around 16 months, which means the hotel never should have never gone under in the first place if we could turn them around that fast.”
For Lasky, operating a hotel demands a high level of industry expertise in order to meet the demands of ownership, finance, franchise and consumer expectations. “The skill set has to be flexible, focused and fine-tuned as market conditions, industry trends and brand standardization dictate,” he said. Otherwise, well-intended business plans succumb to mismanaged operations, lower than projected profit margin and growing debt obligation.
In order for hotel owners and operators to achieve more bookings and higher REVPARs depends greatly on their knowledge of the industry. “The biggest problem in this industry is that people don’t have an education,” said Lasky. “They come from other industries and they don’t understand the nuances of the hotel industry. If you understand the mistakes, then you can cure the hotel.”
Lodging Unlimited frequently analyzes the branding of a property to determine whether the brand name matches the hotel and location. Lasky recently encountered a 300-room, high-rise hotel with an economy franchise flag. The hotel was failing to attract both economy consumers and mid-range guests. “The property was running 20% in a 65% market, which didn’t make any sense,” said Lasky. “It was immediately obvious that this property was not a typical economy, two-story, no frill property.”
Because of the hotel’s contract arrangement, Lasky was able to cut away the economy franchise and obtain a well-known, mid-range franchise flag. “Within 90 days, the property was well on its way to a healthy market share in its competitive set,” he said.
To help make the critical decisions to turn a property around, Lasky conducts a Streamline Study when then hotel needs a faster, inexpensive, yet thorough expert analysis. A Streamline Study begins with a client consultation followed by an analysis of pertinent documents and a two-day visit to see first-hand the potential issues of the property.
Using the Streamline Study, Lasky consulted a 217-room, mid-scale hotel in Biloxi, MI, in which 197 rooms had two double beds. The client “could not understand why the market area was running at over 60% occupancy and the subject property was running in the low 40s,” he said. Lasky then reviewed the last monthly franchise billing in the franchise company Denial Report with the general manager. Upon further review, the property had turned down over 27,000 room nights of business since January. In that month, the property closed out rooms with two double beds and never reopened the category, noted Lasky.
“The following day, I called reservations central and told them to put the hotel back on sell mode for double double rooms,” he said. “Within two weeks, the property occupancy jumped from the low 40s to mid-60%. The results were so dramatic that the hotel was sold within three months.”
Over the years, Lasky has come across a variety of surprising issues plaguing hotels, one of which is the poor presentation of a welcoming lobby experience. When Lasky recently traveled to a hotel in Mobile, AL, he was surprised to see trash strewn throughout the lobby while the desk clerk appeared untidy and disheveled. Two days later, his company took over the management of the hotel. The space was later cleaned and the desk clerk was dressed more appropriately.
“I saw trash on the floor, the desk clerk’s shirt was dirty and his hair wasn’t combed. There was an empty pizza box behind the counter, and this was a really nice hotel,” Lasky said. “If you’re a guest, you would probably think about walking out and never coming back again and make the assumption that if the lobby looks like that, then the rest of the hotel is like that too.”
Upon takeover, Lodging Unlimited assesses the physical condition of a property and makes recommendations on maintenance and/or extensive upgrades and renovations. But, in some instances, major changes aren’t necessary. Lasky recalls a luxury hotel in which a member of management team wanted to replace the carpets based on the request of his fiancé, in time for their wedding at the property. Instead of spending more money on new carpeting, the hotel cleaned their existing carpets.
“It’s the little things in hotels that cause the greatest trouble,” said Lasky. “The job of a consultant or turn-around management company is to challenge all of the notions that you see in the hotel making the assumption that they made mistakes and find the mistakes to help the hotel.”