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A common sense review process for capital investments
Benjamin Franklin was known for many things in his professional life, but he is often credited with his logical and sometimes frugal approaches to business and spending money. His Poor Richard's Almanac is chiefly remembered for being a repository of Franklin's aphorisms and proverbs, many of which counseled thrift and courtesy, with a dash of cynicism.
In this time of global uncertainty, there is a hesitancy to spend capital dollars without having a clear sense of the timing of the ROI (return on investment). That concern is reasonable, but it may also cause some hoteliers to delay needed updates or improvements at a time when lower occupancy allows for both availability of space and potentially lower costs from those providing the products or physical improvements. This delay could also allow new competitors to more quickly enter markets when the cycle does improve if existing hotels are not competitive or not meeting the current needs of evolving clientele.
Capital projects are generally defined by both a certain financial amount and government regulations relating to depreciation tables. These projects are usually completed for one of three reasons:
In my career, I have seen capital requests handled by owners and management companies in many ways. Some of these were organized and logical, while others tended to be biased and not necessarily based on probable business logic but more on what some of us might view as quirky. While capitalism allows ownership to make whatever decision they want, it can be frustrating for those of us in the field.
The following is offered as a guide to considering capital projects.
Assembling an assessment team once a year for evaluating capital fund requests and projects involves more people and allows for better analysis and discussion. By not making recommendations, the team is not responsible for seemingly stepping on the "toes" of senior management or ownership but this team can play a major role in analysis.
Feel free to share an idea for a column at firstname.lastname@example.org anytime or contact me regarding consulting, customized workshops, speaking engagements .............
And remember - we all need a regular dose of common sense.
Autographed copies of LESSONS FROM THE FIELD - a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES can be obtained from THE ROOMS CHRONICLE www.roomschronicle.com and other industry sources.
All rights reserved by John Hogan and this column may be included in an upcoming book on hotel management. The opinions expressed in this article are those of the author and do not necessarily reflect the views of this publication
John Hogan, a career hotelier and educator, is frequently invited to participate at franchise meetings, management company and hospitality association industry events. He is a successful senior executive with a record of accomplishment in leading hospitality industry organizations at multiple levels, with demonstrated competencies as a strong leader, relationship builder, problem solver and mentor.
Service to the Industry and Hospitality Education includes working with the Educational Institute Certification Commission of the AH&LA, the Hospitality Industry Diversity Institute, the AH&LA Multicultural Advisory Council, the Accreditation Commission for Programs in Hospitality Administration, the Commission for Accreditation on Hospitality Management Programs, the AH&LA and AAHOA Education and Training Committees, the Council of Hotel, Restaurant and Institutional Educators (CHRIE), the International Hotel Show and the Certified Hotel Owner program for the Asian American Hotel Owners' Association.
He writes weekly columns for a number of global online services (hotel online.com, eHotelier, 4 Hotels, Hotel Resource, etc) and has published more than 400 articles & columns on the hotel industry. He co-authored (with Howard Feiertag, CHA CMP) LESSONS FROM THE FIELD - a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES, which is available from email@example.com, ROOMS CHRONICLE www.roomschronicle.com and other industry sources. He resides in Phoenix, Arizona and expects to publish in 2009 his 2nd book based on his dissertation - The Top 100 People of All Time Who Most Dramatically Affected the Hotel Industry.
Hogan's professional experience includes over 35 years in hotel operations, food & beverage, sales & marketing, training, management development and asset management on both a single and multi-property basis, including service as Senior Vice President of Operations in a specialty hotel brand for six years.
He holds a number of industry certifications (CHA, CHE, MHS, ACI) and is a past recipient of the American Hotel & Lodging Association's Pearson Award for Excellence in Lodging Journalism, as well as operational and marketing awards from international brands. He has served as President of both city and state hotel associations.
He has served on several industry boards that deal with education and/or cultural diversity and as brand liaison to the NAACP and the Asian American Hotel Owners' Association with his long-term involvement in the Certified Hotel Owner program. He has conducted an estimated 3,200 workshops and classes in his career. He conducts mystery-shopping reviews of quality in operations and marketing, including repositioning of hotels.
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