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The Pareto Principle in Hotel Management
By feature writer Gordon G. Gorman
The Pareto principle (also known as the 80–20 rule, the law of the vital few and the principle of factor sparsity) states that for many events, roughly 80% of the effects come from 20% of the causes.
Business-Management Consultant, Joseph M. Juran suggested the principle and named it after the Italian Economist, Vilfredo Pareto, who observed in 1906 that 80% of the land in Italy was owned by 20% of the population; he later developed the principle by observing that 20% of the pea pods in his garden contained 80% of the peas.
Whether you believe that 80% of your revenue or your own success comes from 20% of your people, or from 20% of your own efforts, the Pareto Principle does inevitably pop up in some shape or form in most of our daily lives.
For example, I attribute much of my own success and happiness to the fact that I spend 20% of my day (around 5 hours or more) exercising, learning and training others. And I know for a fact that 80% of our revenues come directly from our sales and marketing team, whose numbers make up approximately 20% of our entire workforce.
Coincidence or not, I always keep a look out for other examples in my daily life, and came across a rather strange example recently, when flying home to Bangkok from Karachi last weekend with a leading Asian Airline, which receives 80% of all complaints on this route from 20% of the passengers.
I know this to be a fact because the Country General Manager for that particular airline is a close and personal friend, who openly shares such information with me in the hope that I may be able to help him reduce passenger complaints, and thereby increase his satisfaction ratio for that route.
What I discovered from my own frequent experiences on these normally full fights, and from him, was that the vast majority of complaints on this very busy route actually arise from a rather simple, or perhaps not quite so simple anomaly, which led to a case study of the facts with my TQM team, and with my interns, and here they are.
So, when one considers points 1-7, one needs to ask oneself, is the Pareto Principle at work here, or is this some kind of surreptitious airline business strategy to drive up ticket prices, i.e. by giving 20% of the passengers food they don’t want at a time they don’t want it, while giving 80% of the passengers food they also don’t want at a time they don’t want it?
Confused? Don’t be, the answer I received from the airline in question after I had written to them about this strange anomaly was that the snack/dinner option was preferred by the “vast majority (could be 80%) of their passengers”, over the light snack/heavy breakfast option (could be 20%).
However, as I fly that route at least four times a year and have never been asked my opinion on the meal plan, my guess is that the snack/dinner option is the one they continue to go with because it allows them to justify a higher ticket price.
While on that subject, I guess the same can be said about the Champagne, expensive French wines, Cognacs, the aged Single Malt whiskies, Port and liqueurs, all wheeled around the first class cabin, none of which I imbibe, and as I wonder whether the PP principle is at work here again, i.e. “refreshing” 20% of the First and Business Class passengers, who pay up to 80% more than the other 80% back in coach and economy, while also leaving them “high and dry”, but you can be the judge of that if you ever take this particular route with this particular airline, which seems to have a problem with its CRM approach.
PS. As a Business Class guest, have you ever been herded into a small “Business Class Breakfast Lounge”, where the selection of food and the service were of a much lower variety and quality than those enjoyed by the other 80% of the hotel guests who paid a lot less for their stays? It happened to my family while staying at a leading resort in Thailand over the New Year holidays, so it would seem the misinterpretation of the PP principle is not only restricted to the airlines.
About the author
Gordon James Gorman, General Manager Avari Towers (since 2006)
Gordon James Gorman has spent more than 40 years in the international hospitality industry, starting his journey at the Heart of Midlothian Football Club in Edinburgh, Scotland in 1972, not on the soccer field, but in the kitchens of their fine dining restaurant as an apprentice chef, later working his way up to the position of General Manager via stints at leading hotels in Glasgow, London, Paris, Rome, Nairobi, Mombasa, Abuja, Shanghai, Hong Kong, Bangkok, Hua Hin, Bahrain, Riyadh, Seoul and Karachi, with leading international brands that include Rosewood, Intercontinental, Crowne Plaza, Holiday Inn, Dusit, Accor, Hilton and most recently with Avari International Hotels in Karachi Pakistan, where he has spent the last six years.
He is an active blogger and feature writer for HOTELS magazine, ehotelier and various other Hospitality industry websites, the founder of FBAT, the Food and Beverage Association of Thailand, a much in demand keynote speaker on the subjects of Hospitality Management, Marketing Leadership and Young Entrepreneurship, and is an active supporter of many local charity and community projects in his adopted cities of Karachi and Bangkok.
His first book, entitled Five Years in Pakistan, Tall Tales of Hospitality from the Frontier of Terror, currently in the process of editing and publication, tells the story of how he and his team transformed the iconic Avari Towers, Karachi, which in 2007 was an uncompetitive four stars hotel, into the city’s leading five stars hotel, over the most tumultuous five years period in the nation’s history.
On his office walls at Avari Towers can be seen photographs of Mr Gorman, taken with many famous people, including President Zardari, President George Bush, Nelson Mandela, H.M. the Queen Elizabeth, Pope John, The King of Bahrain, President Moi of Kenya, Tony Blair, David Cameron, and many others to numerous to mention, all illustrating a lifetime of dedicated service which continues to this day in Karachi.
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