What Is the True Purpose of Your Hotel Business?

I would like to begin this article by asking a question for each of you to reflect on properly. Then, as you read the rest of the article, you may be surprised by what I am about to say, although you will surely agree with me. I know I am right.

“What is the true purpose of your establishment?”

I know hundreds of General Managers, executives and property owners. Throughout my career, I have had—and continue to have—the great fortune of speaking with many of them, and it is true that, with some exceptions, as there always are, the vast majority seem to share a somewhat disconnected view of the business world, but above all of the purpose for which an entrepreneur chooses to establish a hospitality business: their own. Contrary to what many may have thought, the true purpose of a business is NOT to generate profit. An establishment cannot exist outside society and must meet a specific need in order to remain in business; it must create or add value to society and to people. That is why the purpose of an establishment is to acquire customers, in order to fulfil its true purpose, as defined in its Mission and Vision statements. Some may think that the purpose of their establishment is to generate profit, contribute to environmental conservation, support a cause, and so on. In short, great Mission, Vision and Values statements, which are, ultimately, the purpose of this article. Put another way, profits in an establishment, whatever its type, are earned through the sustained acquisition of customers, and are necessary to achieve objectives that go beyond profit itself.

A hotel exists thanks to its customers, but they are not its fundamental objective.

According to Peter Drucker, one of the greatest management thinkers of all time, businesses are organs of society. They do not exist for themselves, but to fulfil a specific social purpose and meet a specific need of a society, a community or individuals. It is true that many hotel entrepreneurs, despite having their lives financially secured, view their businesses from a capitalist perspective. That is neither good nor bad in itself. It is simply another way of seeing things. The problem arises when that perspective—making money—is the only one they have in mind. That is why few, very few professionals would be able to tell me their Mission, Vision and Values statements. Even so, for whatever reason, the owner may have a defined purpose beyond the financial one, but I am convinced that those who run their establishments remain focused on profitability and financial matters, setting aside the Fundamentals, which are the very reason their business exists. If you work for a hotel whose sole reason for being is profit, take my advice: run away from there. In fact, this is what happens to the vast majority of them. Not only do the most valuable members of their team leave, but so do their customers. In other words: no establishment can exist without customers. They will simply cease to exist. First the customers disappear, and later the business itself disappears.

What is a Mission statement?

A Mission statement is important for any accommodation business because it defines the business, its products or services, and the customers it serves, thereby defining its main objective. It provides detailed information about what the establishment offers, how it does so, and for whom.

What is a Vision statement?

The Vision statement focuses on your goals and aspirations, describing what the future will look like if an establishment achieves its Mission. A Vision is timeless: even if there is a change in strategy or a repositioning process, the Vision will often remain the same. A realistic, credible and compelling Vision statement attracts commitment and energises both the team and customers. Furthermore, a well-considered Vision statement connects the present with the future while setting a standard of excellence. It also communicates the organisation’s purpose to employees and other stakeholders, and gives them the inspiration to achieve that purpose.

What is all this for?

Vision and Mission statements define the purpose of any business—and hospitality is no exception—as well as its organisation, while instilling employees with a sense of belonging and identity. This motivates them to work harder and better to achieve success and the higher objective, which is not profit.
They provide the right mindset for growing the business.
The Mission statement provides the direction to follow, while the Vision statement provides the goal—or destination—that will be reached by following that direction.
They help properly align the resources of an establishment or hotel group in order to achieve a successful future.
The Mission statement provides clear and effective guidance for decision-making, while the Vision statement ensures that all decisions are properly aligned with what is expected to be achieved.
Vision and Mission statements provide a focal point that helps align everyone with the company and ownership of the establishment, ensuring that everyone works towards a single purpose. This helps increase efficiency and productivity.

That is true, but what about the money?

Revenue and profitability, as I said earlier, are the mechanisms that will allow the hospitality business to endure over time. And there is only one way to achieve them sustainably: by Creating Value for Customers. In another article, I will discuss the Circular Flow of Revenue and how we must understand the role of the hospitality business within society. So, does your establishment create value for its customers? Or is it simply content to provide them with a service and charge for it... The more value you add throughout the customer experience cycle, the more likely you are to retain a customer and keep your business alive. If you do not, in the long run, your customers will no longer find value in your establishment and will eventually leave.

Returning to the Purpose of Your Establishment

Knowing all this, and assuming that few, if any, will disagree with my assertions about the Fundamental Purposes of your hospitality business, we must ask ourselves the following:

Do we know these purposes in our establishment?
Are we working towards achieving and sustaining them?

I must confess that in many of my conversations with Hotel General Managers who tell me that they have ‘all this sorted out’, I have to hold back my laughter. First, because they imply that they are unaware of the disconnect between their business and its true objectives.

They believe that successfully executing their Marketing Campaigns means they are achieving the purposes of the business.
They believe that good Revenue Management is the ultimate goal to be achieved simply because it delivers results, and they are unaware that it is merely another means at their disposal for achieving higher objectives.
They are aware of the importance of having a sound Human Resources policy and investing in training and employee empowerment, but they focus solely on operational skills rather than conveying the Mission, Vision and, above all, Values to their teams.

Do not confuse mechanisms with purposes. I am aware that day-to-day operations sometimes draw us away from what is transcendent, placing the urgent ahead of what is truly important. That is why a little help can always be useful. That is what we are here for. Use techniques and tools for what they are truly needed for, but remember that they are not the end, and focus all your efforts on fulfilling the Mission and Vision statements, while generating revenue by adding value for your customers. If you reverse the equation, or simply overlook one part of it, you will be condemning your establishment to failure. So, my dear hotelier friend, before telling me once again that you have everything sorted out, think twice. You and I both know that is not the case.

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