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What triggers the General Manager?

23 September 2021
The General Manager must spend time on things that lead to success. Define the essential leading indicators and set up reports and alerts that will trigger actions before too late.

The hospitality industry is slowly recovering from the pandemic. Depending on the destination, location, type of hotel, size, primary target group, and other variables, hotels have reached different stages in the recovery. During the pandemic, hotel General Managers focused on cutting any cost that they could eliminate. They all did a fantastic job, so there are no more costs to cut. All General Managers should now focus on revenue apart from securing delivering a high-quality guest experience. In small hotels, the general manager will drive the commercial work, while in larger hotels, there is a commercial team driving revenue.

The first question is if the hotel is moving towards recovery. Which indicators should a General Manager look at to get a complete and accurate answer to the question?

All hotels track the bottom line and balance sheets, but the figures in these reports are lagging indicators. The past performance does not necessarily indicate how the hotel will do in the future. Instead, a hotel should look at performance as an indicator of future revenues or profits.

Leading indicators in hotels

The definition of a leading indicator is anything measurable that predicts a change in another KPI before it occurs. For example, hotels use leading indicators to forecast changes before they materialize in the bottom line. Here are some examples of leading indicators.

Guest satisfaction predicts a change in future revenue. If guest satisfaction increases, then the hotel will attract more guests and higher spend in the future.

Employee satisfaction predicts a change in future revenue and cost. If employee satisfaction increases, the employees will serve guests better, and guest satisfaction will increase. Happy employees will also stay longer, so the hotel's costs for recruiting and training will decrease.

The number of visitors and visits to the hotel website predicts a change in future revenue. If the number of visits increases, it is likely that the number of reservations will increase in the future.

Inquiries predict a change in future revenue. For example, if new inquiries for rooms, meetings, and other products and services increase, the number of reservations and the future income will likely increase.

On-the-books predict a change in future revenue. If on-the-books is higher today than at the same time last year, future revenue will likely be higher.

There are many different leading indicators in hotels, and they vary in accuracy, precision, and leading relationships, so hotels need a range of leading indicators in planning for the future.

Focusing on leading indicators

To become a successful General Manager, you need to focus on leading indicators and acknowledge lagging indicators to confirm the success.

First, select the 3-5 most impactful leading indicators for the specific hotel. Then, for each measurement, define the following.

  • The information needed and how to collect it
  • How to calculate the measurement
  • Acceptable accuracy
  • Which KPI the leading indicator will change
  • Measuring frequency 
  • How to report the indicator

Then create the reports and set up an alert system so the General Manager can quickly take action if the leading indicators are off track.