How to Treat a Financially Distressed Hotel


Global recession is as hot as global warming nowadays. The wave has hit almost every industry, including hotels.  The year 2007 was the worst year in the hotel industry, and at some point, some hoteliers found it hard to face the truth that they were submerged by a stress.

According to CEO of HHM, Naveen Kakarla, the number of financially distressed hotels the management company oversees has been raising in the past few years.

He said the main focus of the company is margin expansion. It includes identifying the kinds of margins that should be owned by a hotel and also whether the hotel is organized in order to meet the margin goal that has been decided.

Here are some tips on how to overcome distressed management, according to and HHM:

1. Understand the situation
According to a director at CB Richard Ellis, Graham Windle, all hoteliers have to realize how their hotel got to this point, whether the hotel has been properly marketed, and if the hotel has been run efficiently. He also suggested examining the hotel’s website and to fix ever flaw as soon as possible.

2. Competitive set analysis
A great hotelier should know how to make a thorough analysis. Barbara Purvis, the director and president of Essex Hotel Management LLC, said hoteliers have to compete in a realistic asset class. She said management officials must be sure that the company has an optimal competitive set.  The managing director at TRI Hospitality Consulting in London, Jonathan Langston, also shares the same view. He said the first step to wake up from the nightmare is to identify the position of the products in the market.

3. Budget management
Many experts in the hotel management field say that budgeting plays an important role in deciding the progress of the property. HHM itself admitted that it is more sensitive about fixed cost when dealing with a distressed management opportunity.  Hoteliers must know where they spend too much money and should realize where and when they haven’t spent enough money.

4. Communication
Communication is an important key to get out of any distressed situation. Hoteliers must bear in mind that a distressed hotel has a stigma attached to it. Therefore, they have to communicate to the staff and public to explain the situation.  Staff who work at a distressed hotel might worry that they will lose their jobs. Talk to them and lay out the plan together. Involve them in the effort. Hoteliers must be as transparent as possible.

Hotel Manager

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