When the hotel is run by Excel

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Series: Recruitment, AI & HR in the hospitality industry · Post #21 of 90

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When the hotel is run by Excel

Why key performance indicators are important – and yet can still throw entire organisations off balance

The previous post on chronic exhaustion, role dissonance and structural overload triggered a remarkable response. Not only because many people recognised their own reality in it, but because the discussion very quickly took a different direction.

Suddenly, it was no longer just about a shortage of skilled workers. The comments revolved around prices, commissions, budget targets, expected returns and personnel cost ratios. And again and again about the same basic question: Why are hotel managers so often held responsible for results over which they have only limited influence?

There was a common message between the lines: the problems often start long before a duty roster is drawn up or employees reach their performance limits.

The power of key performance indicators and their limits

First of all, a clear statement: key performance indicators are not the problem. No company can be successful without economic management. ADR, RevPAR, GOP, occupancy rate, personnel cost ratio, forecast. These are not bureaucratic toys, but instruments of professional corporate management. They create transparency, enable comparability and help identify developments at an early stage.

The problem does not arise from key figures. The problem arises when key figures begin to replace reality.

Because figures show results. However, they do not show the conditions under which these results were achieved. And that's exactly where it gets dangerous.

Two perspectives. One organisation. Completely different realities.

In many hotel groups, there are two perspectives on the same business, and they could hardly be more different.

The company headquarters sees budget variances, forecasts, RevPAR and GOP. It sees productivity, personnel cost ratios and benchmarks. The hotel manager on site sees sick leave, vacancies, exhausted teams and spontaneous shift cancellations. They see quality problems, complaints and the daily improvisation that is necessary for the business to run at all.

Both are looking at the same organisation. Both are right. The problem: not everything that is relevant appears in an Excel spreadsheet.

The invisible costs

When personnel costs rise, there is often immediate pressure to take action. When staff turnover increases, the response is often much slower, although the actual costs can be significant. Recruiting effort, training, productivity losses, loss of knowledge, declining guest satisfaction, rising error rates: many of these factors do not appear directly in the monthly reporting. Or they appear with a time lag. When the damage has long since occurred.

This creates a dangerous distortion of perception: what is visible in the short term becomes measurable. However, what is often decisive is what only becomes apparent months later.

When responsibility and scope for action diverge

The situation becomes particularly critical when responsibility and competence no longer go hand in hand. Today, many hotel managers bear full responsibility for economic results, guest satisfaction, employee retention and operational stability. At the same time, the crucial framework conditions – pricing strategies, personnel budgets, investments, distribution channels, systems and processes – are determined centrally.

The result is an area of tension that many managers know only too well: you are supposed to act in an entrepreneurial manner, but the key levers are outside your own sphere of influence. You are responsible for a result without having the means to make it sustainable.

This is not a question of a lack of competence. It is structural.

The illusion of efficiency

This pattern of thinking is particularly evident in the discussion about personnel costs. Of course, hotels have to operate economically. There is no question about that. But not every cost reduction automatically generates greater profitability.

If a reception is permanently understaffed, the visible costs initially decrease. At the same time, other costs arise: longer waiting times, lower service quality, increasing pressure on the remaining employees, higher staff turnover, more sick days, poorer reviews. The costs don't disappear. They just change their form.

Personnel costs become quality costs. Quality costs become reputation costs. Reputational costs become revenue losses. This relationship is complex, and that is precisely why it is so often underestimated.

The price of permanent optimisation

Many organisations unintentionally get caught up in a cycle from which they can hardly escape. Every deviation is analysed, every cost item is scrutinised, every percentage point is discussed. But the more the focus narrows to short-term target figures, the greater the risk of losing sight of the overall system.

This leads to decisions that make sense on paper but create new problems in reality. The organisation reacts. The employees compensate. The managers bridge the gap. And the system works until, at some point, it stops working.

What successful organisations do differently

The most successful companies are not characterised by using fewer key performance indicators. They are characterised by the fact that they place key performance indicators in the right context.

They know that not every measurable variable is automatically the most important variable. And not every important variable can be fully measured. They do not view profitability in isolation, but as the result of a complex interplay of employees, processes, quality, leadership, communication and guest experience.

Because in the end, it is not a single key figure that determines the success of a hotel, but how well the overall system works.

The real challenge

The hotel industry is experiencing a period of increasing complexity. Guest expectations are rising, digital systems are increasing, markets are changing faster, and the roles of GMs are changing in terms of content and structure, with completely redefined requirements for leadership. Employees expect – and rightly so – more guidance, development opportunities and reliability. At the same time, economic pressure is growing.

It is precisely for this reason that the industry needs a nuanced view of interrelationships more than ever. Because hotels are not spreadsheets. They are social systems – with people, with expectations, with relationships, with emotions. And with a reality that cannot be fully represented in cells, columns and percentages.

Perhaps sustainable economic success begins precisely there: not with the question of which figure can still be optimised, but with the question of what effects this optimisation will have on the overall system.

Translated with https://laratranslate.com