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How to organize a small hotel group

29 February 2024
In the competitive world of hospitality, small hotel groups face the unique challenge of optimizing their operations to stand out, deliver exceptional guest experiences, and ensure financial success. The key to achieving these goals is strategically organizing business functions across the group. By carefully determining which operations should be centralized and which should be managed locally at each hotel, a hotel group can significantly enhance its operational efficiency, grow its revenue, and maximize its profits.
This blog post aims to delve into the organizational strategies that small hotel groups can adopt to thrive in the ever-evolving hospitality industry. We will explore the advantages of centralizing certain functions to leverage economies of scale and maintain local autonomy to cater to specific market demands. This balanced approach ensures that hotel groups meet and exceed guest expectations, establishing long-term success and profitability.

The Case for Centralization

Overview of Centralization

Centralization in the context of a small hotel group involves consolidating essential functions and decision-making processes at a central point within the organization, typically at the corporate or head office level. This organizational strategy offers numerous benefits, including improved consistency, enhanced decision-making efficiency, and economies of scale. By centralizing certain functions, hotel groups can achieve uniform standards across all properties, streamline operations, and reduce costs, which are critical for competitive advantage and profitability.

Strategic Planning and Brand Management

A unified strategic direction and brand consistency are pivotal for the success of a small hotel group. Centralizing strategic planning and brand management ensures that all properties align with the group's vision, mission, and values. This unity fosters a strong brand identity that resonates with guests across different locations. Centralized brand management enables the group to implement uniform marketing strategies, maintain brand standards, and ensure that every property reflects the group's desired image and experience. This is true even for independent hotels with different market positions and names.

Revenue Management and Pricing Strategies

Centralized revenue management allows hotel groups to optimize pricing and inventory management across all properties. This approach enables advanced analytics to forecast demand, adjust pricing dynamically, and maximize revenue. By centralizing these functions, the group can take a holistic view of its commercial activities, identify revenue opportunities, and implement strategies that maximize profitability across the entire portfolio.

Human Resources and Training

The centralization of human resources and training functions offers significant advantages. A centralized HR department can ensure that recruitment, onboarding, employee benefits, and retention strategies are consistent and aligned with the group's objectives. Standardized training programs, developed and deployed from the central office, ensure that all employees receive the same high-quality training regardless of location. This uniformity in training and development helps maintain consistent service standards and operational efficiency across all hotels.

Finance and Accounting

For a small hotel group, central control over financial management, including accounting, budgeting, and financial reporting, is essential for cost efficiency and compliance with financial regulations. Centralization facilitates better financial oversight, more effective cost control, and streamlined financial processes. This unified approach to finance and accounting enables the group to make informed strategic decisions, optimize investments, and ensure financial stability and growth.

Technology and Information Systems

In today’s digital age, leveraging a centralized IT infrastructure is crucial for operational efficiency and data security. Centralizing technology and information systems allows all hotels to implement uniform software solutions, such as property management systems (PMS) and point of sales (POS) systems. This ensures consistency in guest experiences, improves data analysis capabilities, and enhances cybersecurity measures. Centralized IT support also provides all properties with timely access to technical assistance and system updates, keeping the hotel group at the forefront of technological advancements and operational efficiencies.

The Importance of Local Autonomy

Overview of Local Autonomy

Local autonomy in a hotel group refers to delegating decision-making authority and control over certain operations to individual hotels. This approach recognizes the unique characteristics of each property and its market, allowing for tailored strategies that cater to local preferences and conditions. The benefits of local autonomy include enhanced flexibility, increased responsiveness to market changes, and the ability to offer personalized guest experiences. By empowering local management, hotel groups can ensure each property remains relevant and competitive in its specific context.

Day-to-Day Operations

The significance of local management in overseeing day-to-day hotel operations cannot be overstated. Local autonomy allows hotel staff to make on-the-spot decisions regarding guest services, housekeeping, maintenance, and on-site dining, ensuring operational efficiency and high-quality service. This level of control is crucial for adapting to daily challenges and opportunities, directly impacting guest satisfaction and operational success.

Local Marketing and Community Engagement

Marketing efforts tailored to the local market can significantly enhance a hotel's visibility and appeal. Local autonomy enables hotels to engage in marketing initiatives that resonate with regional preferences and cultural nuances. This includes partnerships with local businesses, participation in community events, and targeted promotions. Engaging with the community strengthens the hotel's presence and creates a sense of belonging and loyalty among local customers and guests.

Customer Service and Personalization

Local staff play a pivotal role in delivering personalized guest experiences and achieving high levels of customer satisfaction. Autonomy at the local level allows employees to get to know their guests and tailor services to meet their specific needs and preferences. This personal touch can significantly impact guest perception, fostering loyalty and encouraging repeat visits. Personalized experiences, informed by local insights and flexibility, set a property apart in a crowded marketplace.

Local Procurement

The advantages of local procurement extend beyond cost savings to support the local economy and offer guests unique, locally sourced products. Local autonomy in procurement allows hotels to select suppliers that meet their needs, whether for fresh, regional cuisine or distinctive local amenities. This approach reduces transportation costs and environmental impact and enhances the guest experience by providing authentic and memorable offerings that reflect the local culture and environment.
In summary, while centralized management is essential for strategic coherence and efficiency, local autonomy is critical in a hotel group's ability to adapt to market variations, meet guest expectations, and remain competitive. Balancing these two aspects—centralization for strategic alignment and local autonomy for operational flexibility and personalization—is critical to the success and growth of a small hotel group.

Creating a Productive Organizational Structure

Balancing Centralization and Localization

For small hotel groups, striking the right balance between centralization and localization is crucial for achieving operational efficiency and market responsiveness. A hybrid organizational structure emerges as an optimal approach, blending the strategic coherence and efficiency gains of centralization with the market-specific adaptability and personalization of localization. This structure allows for the centralized management of overarching strategies and standards while granting individual hotels the autonomy to make decisions that best suit their local context and guest demographics. By carefully delineating which functions are managed centrally and which are left to the discretion of local management, hotel groups can leverage their collective strengths and foster a culture of unity and diversity.

Implementing Data Analytics and Reporting

Data analytics and reporting play a pivotal role in this balanced organizational structure. Centralized data systems can collect and analyze information from all properties, providing insights into performance trends, guest preferences, and operational efficiencies. This data-driven approach enables hotel groups to make informed decisions, tailor strategies to meet specific market needs, and identify opportunities for revenue optimization. Implementing robust data analytics and reporting mechanisms ensures that centralized and local decisions are based on accurate, timely information, enhancing the group’s ability to respond dynamically to market changes.

Fostering Collaboration and Innovation

Encouraging collaboration and innovation among properties is essential for a hotel group’s success. A hybrid organizational structure facilitates knowledge sharing and the dissemination of best practices across the group. Hotel groups can drive continuous improvement and innovation by fostering an environment where properties can learn from each other’s successes and challenges. Regular meetings, workshops, and digital platforms for collaboration can help properties share insights, strategies, and operational tips. This enhances individual property performance and strengthens the group’s collective capability to deliver exceptional guest experiences.

Adjusting Organizational Structures

Flexibility and the willingness to adapt are crucial to maintaining an effective balance between centralized and local functions. As markets evolve and the hotel group grows, reassessing and adjusting the organizational structure may become necessary. Regular reviews of operational, financial, and guest satisfaction metrics inform decisions about which functions might benefit from more (or less) centralization. This dynamic approach allows hotel groups to remain agile, responsive to market demands, and aligned with strategic objectives. Adapting the organizational structure as needed ensures that the group can continue to optimize operations, maximize revenue, and enhance guest experiences in a changing landscape.
Creating a productive organizational structure for a small hotel group involves carefully balancing centralization and localization. By leveraging the strengths of both approaches, implementing data-driven decision-making, fostering collaboration, and maintaining flexibility, hotel groups can position themselves for sustainable growth and success in the competitive hospitality industry.


In exploring organizational strategies for small hotel groups, we've delved into the nuanced balance between centralization and localization. Centralization brings strategic coherence, operational efficiency, and economies of scale, vital for maintaining brand consistency, optimizing revenue management, ensuring high standards in human resources and training, managing finances effectively, and leveraging technology for operational excellence. On the other hand, local autonomy empowers individual hotels to tailor their operations to the specific needs of their market, personalize guest experiences, engage with the local community, and make the most of local procurement opportunities.
The hybrid organizational structure is the most productive approach for small hotel groups, blending the best of both worlds. It allows for strategic decisions and standards to be centralized while giving local managers the autonomy to adapt to their unique market conditions. Implementing robust data analytics and reporting is crucial in this structure, enabling informed decision-making and performance monitoring. Furthermore, fostering a culture of collaboration and innovation across properties can lead to sharing best practices and collective growth.

Demand Calendar supports a hybrid organization

At the heart of implementing these strategies effectively lies the power of comprehensive data integration and analytics. Demand Calendar is a pivotal tool, seamlessly connecting all the dots across various commercial roles within a hotel group. Demand Calendar enables informed decision-making by providing the correct information at the right time, empowering hotel groups to grow revenue and maximize profits efficiently. Its capabilities in gathering and analyzing data across operations ensure that every decision, from pricing strategies to guest experience enhancements, is based on solid, actionable insights. For hotel groups aiming to successfully navigate the complexities of today's hospitality landscape, leveraging such a tool is not just beneficial—it's essential.