Carrying on from some previous posts, I have recently seen a small boutique hotels success being hindered through a difficult department head, who has direct relations and contact to the owner. This obviously a weapon against the General Manager. An owner, most times, knows little about the politics, the in and outs of daily operations and understands only a slight amount about the balance needed to bring together the team of a property, as they are not on location on a daily basis.

An owner sees things from a macro level and therefore some challenges that need tactic, time and strategy seem quite easy to solve from an eagle eye view; and questions are then raised as to why the GM is not actively actioning these challenges, hence leading the owner to directly liaise with team members to attempt to solve the challenges. However, the underlying factors and misinformation given through the limited channels clouds judgment. One has employed a competent General Manager to make these daily tactful decisions.

The Relationships between the owner and General Manager of a small hotel, not under management are crucial to the success of the business. The General Manager is the critical link between the vision of the ownership and its interpretation and translation to the team, in order to be the motivating factor for employees to believe and succeed. More often, this link is not necessarily linear but in the form of a triangle, when the owner, possibly through a team member/s that they are acquainted with, takes an active role in the hotel’s operations and decision making.

With all due respect to owners, the GM is the person who really operates the hotel. The GM implements the owner’s vision and achieves the goals, nurtures and sustains the hotel’s human resources and is the person who must take ultimate responsibility for the success or failure of the asset. The GM reports to multiple masters, responding both to the owner’s and guest’s expectations.  As a result, clear protocols of communication and accountability must be established, as well as a measurement technique for success.

Ownership should strive to identify and communicate a clear set of goals to the GM.  Each hotel owner has different expectations and exit strategies for assets from short-term custodial roles to a long-term holds. The GM must understand the priorities of the owner to fulfill his or her mission, including the development of a realistic business plan that covers financial budgets, cash flow projections, capital improvement requirements and marketing strategies. A focus on the basics, such as customer service, human resources, product and profit is also an integral part of the GM’s role, as are active participation in hotel sales department activities, financial management and communication to the owner regarding the property’s operating status.

Returning phone calls and completing projects for the owner can inhibit a GM’s ability to manage the hotel properly. Preventative mechanisms include scheduling meetings with the owner to discuss periodic progress, adherence to the business plan and general physical plant issues, with notes taken and action steps assigned with deadlines; the distribution of daily reports plus monthly financial statements with written explanation of operational progress and deviation from plan; and the immediate disclosure and distribution of information regarding unexpected challenges related to ownership risk or deviation from the business plan.

There are no good surprises. Information, positive or negative, should never be withheld by management. In all cases, communication must be proactive and truthful without assumption or ownership’s pre-existing knowledge or awareness. The GM’s goal is to educate the owner whenever possible and to supply solid information, which builds trust between ownership and the GM. Information flow should abide by the requirements of agreements set and the needs of the owner.

Owners measure success by achievement of the business plan and expected cash flows. In some circumstances, success might also be measured on the ability of the manager to enhance asset value for sale to another party. Alignment of interests between owner and manager should be basic and include maximized market RevPAR penetration; above average customer satisfaction; the highest potential of competitive operating margins; employee retention percentage, employee morale and safety; and physical asset preservation.

Owners today involve themselves in their hotel assets and in dialogue with the GM and this should be the point of contact and key communicator. This definitely does not mean that owner should go directly to team members. Of course it’s a nice approach that the owner is seen chatting with team members, however business decisions should always be conducted through the GM. A smart owner should gain an understanding of and exploit the depth of its GM and his/her resources as part of the relationship they have. The synergies created by the owner and the GM relationship allow a “win-win-win” for all parties.

Paul was born in Sydney, Australia and was exposed to the hospitality industry from a young age. He began his career in the family business, working in all aspects of the restaurant industry. He later took a post in a boutique hotel in Sydney to continue his studies in management.

Paul’s passion in F&B moved him from hotels to free-standing restaurants as he worked his way up to management positions at a very young age. With an eagerness to succeed, he opened his first café in the Sydney Suburb of Brookvale. He soon expanded into the second café in North Sydney.

Paul sold his cafes later in order to focus in the restaurant industry. Purchasing Milsons restaurant in Kirribilli, Sydney, at the young age of 27, Paul became one of the young restaurateurs of Sydney. This ‘One Hat’ fine dining restaurant continued its success with Paul at the helm. Later purchasing the sister restaurant, Jaspers of Hunters Hill, another ‘One Hat’ restaurant, Paul began to grow his company to create a mini restaurant empire. Successfully opening Essence restaurant in King Street Wharf Sydney, Paul continued to grow his restaurant company to 12 restaurants throughout Sydney.

Creating a strong following and a recipe for success, Paul founded Savvy IQ, advising fellow restaurateurs and hoteliers on his expertise and formula to success. His work expanded internationally, and later became Director Asia Pacific for Hilton Worldwide managing almost 300 F&B outlets in 17 countries. He then moved to Moscow as Director for Stepan Mikhalkov as Director for Verchisky, Vanil and a number of other restaurants and cafes within the group.

With an international focus, Paul has been appointed as CEO with restaurant groups in Saudi Arabia, Kuwait, Bahrain, and London. Now Paul continues his consulting company, Savvy IQ and developments concepts in London and internationally, with 4 restaurants concepts opening in 2017/18.