Poor Leadership a Major Cause of Hotel Failure

Pinnacle Hotels pic
Pinnacle Hotels
Image: pinnaclehotelsusa.com

Bharat Lall serves as president and CEO of Pinnacle Hotels USA. In managing some of the most high profile brands in the industry, Bharat Lall has come to develop key insights into what makes for a successful hotel, as well as the warning signs of a bad hotel investment.

One of the biggest reasons why hotels fail is because investors look at the top management positions in terms of the lowest cost rather than the highest value. The wrong person at the helm of your investment can ultimately end up being very destructive to the bottom line.

Typically, the best people for these positions will not come cheap. It may also take time to find the right fit for your hotel project. But when we are talking about potentially spending many millions of dollars, it’s essential to take the time to find the right person, and be willing to spend the money it takes to protect your investment. A few dollars saved on the front end can cost an investor dearly on the back end.

When investing in an already existing property, one cannot place too much emphasis on conducting a proper analysis of current management. Unfortunately, in a large number of cases, the reason a property becomes distressed in the first place is due to either poor or dishonest management, and these issues are only exacerbated the closer a hotel comes to failing. Weak accounting and poor ethical standards are often the hallmark of failed leadership.

Be it a newly constructed hotel project, or the acquisition of a distressed property, it’s important to conduct due diligence when selecting the right team of people to lead the effort. Look for those with an established track record, long-standing relationships in the industry, and a strong understanding of how hotels actually make money. Bring in managers possessing a clear vision of how they can help contribute to the overall heath of the bottom line.

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