Company Values - The Elephant in the Room

Most revenue management professionals are encouraged and directed to value topline revenue and profit as the highest priority - let the data do the talking.

In contrast, hotel company values usually reflect a dedication to service, quality, and a commitment to the well-being of both guests and employees. These values are laudable, portraying an industry that prioritizes the human element above all. However, a closer examination of actions reveals a more complex narrative where profit is often valued most, challenging the industry's stated commitments.

The Values Facade

Hospitality companies frequently tout values that emphasize guest satisfaction, employee welfare, and community engagement. These values are not just moral positions but also serve as a competitive edge, suggesting that a company's success is intertwined with its adherence to these principles. For example, Marriott International highlights "putting people first" as one of its core values, while Hilton Worldwide emphasizes "hospitality, integrity, leadership, teamwork, ownership, and now." Such values suggest a prioritization of people — both guests and employees — above all else.

The Reality of Profit Primacy

Despite the people-first rhetoric, the financial bottom line remains a silent but potent force driving decision-making in many hospitality companies. The COVID-19 pandemic offered a glaring illustration of this reality. As the pandemic ravaged the globe, our industry was among the hardest hit. Faced with financial turmoil, many companies discarded their values and were swift to lay off staff, even as they availed themselves of government relief programs intended to keep workers employed.

In my role as CEO of a large hotel brand, I faced the very real challenge of company survival. Nobody understood how long the pandemic would continue and we were all calculating our cashflow runway - how long could we survive on the cash we held in the bank. Our first priority was to limit our outgoing cash and protect the business's cashflow. This rush to cut costs, often at the expense of employees' livelihoods, starkly contrasted with the industry's professed values of putting people first and fostering a caring work environment.

The second priority during the pandemic was seeking revenue opportunities. With a Revenue Management background and a strong desire to support our people, I personally invested the majority of my time on this cause. How could we provide value to the community in a time of crisis and generate income for our staff?

All too often I faced internal resistance. For example, many hoteliers wanted nothing to do with government business; people who found themselves in unfortunate circumstances and required government assistance. Homeless, domestic violence victims, stranded migrant families all required accommodating but many turned their noses up. I witnessed some heroic hoteliers who didn't think twice about pivoting to keep their staff employed and help the community. Unfortunately, I also witnessed those that preferred to lay their people off.

Secondly, and directly related to the field of Revenue Management, is the 'junk-fee' trend prevalent in the US. I question what a hotel company is valuing most every time I travel in the US and pay a 'resort fee'. I get the logic of avoiding OTA commission and driving profit, but does it place people at the heart of the organization? Is this a customer first strategy or a profit first strategy? I believe a valuable, seamless, guest centric upselling strategy is the best alternative to achieve both goals but most brands choose the easy path ignoring the values they claim to live by.

Understanding the Dichotomy

This apparent dichotomy between stated values and actions in pursuit of profit is not unique to the hospitality industry but is perhaps more poignant within it, given the industry's service-oriented nature. The prioritization of profit, especially in times of crisis, raises questions about the authenticity of company values and the extent to which they are integrated into strategic decision-making.

The tension between maintaining profitability and adhering to espoused values is understandable from a business perspective. Companies must remain solvent to survive and thrive. However, the manner in which they achieve this—whether by aligning with their stated values or sidelining them in favor of short-term financial gains—can have long-lasting impacts on their reputation, employee morale, and customer loyalty.

Moving Forward

For the hospitality industry to bridge the gap between its stated values and actions, it must adopt a more integrated approach to decision-making that truly places people at the heart of its operations.

This could involve:

• Transparent Communication: Being upfront with employees and guests about the challenges the company faces and the measures it is taking, ensuring that these are in line with its values.
• Employee Support Programs: Creating safety nets for employees during crises, demonstrating a genuine commitment to their welfare. Are you a 'lay-off-first' company or a 'people-first' company?
• Stakeholder Engagement: Involving employees, guests, and the community in decision-making processes, ensuring that actions reflect the values professed. I wonder how many hotels are surveying their guests about their feelings toward resort fees? Or do they even want to know?

While profit will inevitably remain a central concern for hospitality companies, the manner in which they pursue it can significantly affect their adherence to their stated values. By aligning actions with values, even in challenging times, the hospitality industry can ensure that it not only survives but thrives, with its reputation for genuine hospitality intact.

I believe a genuine alignment of values and commercial strategy is central to attracting young people back into our great industry. Revenue management professionals have a clear role to play.

Does your revenue strategy reflect the values of your organization? Truly?

About the author: Rob Paterson was a 15-year veteran of Revenue Management before entering the C-Suite and eventually being named CEO of Best Western Hotels Great Britain in 2018, a role he occupied for almost 4 years. He now resides in the US speaking professionally on self-leadership and administrates the Elite Revenue Management Community. To learn more about how Rob can help elevate yours' and your company's performance, check out his web page and schedule a call.