Moving the Center of Gravity
To resist margin pressure on the bottom-line and still be viable, Pandox hotels have introduced the innovative productivity management tool PMI.
Start of a Journey
Moving the center of gravity sounds like a typical day time activity of Captain Kirk and his team of astronauts or alternatively the extreme forces of nature influencing the conditions within an atmosphere of a planet in a far away galaxy.
As we tend to limit ourselves to staring at the stars at night with a sense of awe, lets bring this statement back to earth, back to our business environment, or to be even more specific, to the broader hospitality industry.
Pandox AS, a Swedish hotel property company, one of the world’s leaders with regard to specialist expertise in both hotel and property operations and active ownership, constantly move their center of gravity since their inception in 1995 and continue to develop their business model to choose the best strategy with regards to the local markets they operate in.
This has allowed Pandox to successfully kick-start their journey in the midst of a financial crisis to become Europe’s leading hotel focused property company in terms of geographical spread, number of hotels and brands.
Since its start, Pandox has completed acquisitions and sales transactions comprising 181 hotels with a total value of more than SEK 20 billion.
Focus on Progress
“Moving” can be defined in a variety of ways, depending on the context that it is used in. One relevant definition for Pandox is the focus on progress toward a particular state or condition.
A state or condition of their business model that allows them to deal with some of the new operational realities they are faced with in the different nodes they operate in. In other words, moving the center of gravity within their operating model.
But as often highlighted by Dr. W. Edwards Deming, one of the thought leaders within the field of continuous organizational improvement, transformation is only achieved if everyone in the organization is set in motion to accomplish such.
In the same way that application of effective revenue management strategies and practices within Pandox have been pivotal for the growth and success of the company to date, productivity management excellence is now at the helm of continued business success in the times ahead, driven by several factors.
Extensive use of revenue management practices has created market price efficiency and paradoxically made top-line growth much harder and is often not sufficient to deliver profitable bottom-line.
Increased pace of change of guest volumes demands dynamic collaboration and agility: widespread access to technologies and social media will continue to shorten the booking window for the city hotels, which in turn will exacerbate the need for managing resources in near real-time to achieve high productivity, reducing waste or risk of poor guest experience.
Conventional reporting is full of aggregated and average numbers, which conceal the magnitude of waste caused by daily negative and positive deviations.
If you have your feet in a burning hot stove and your head in a deep freezer, the average body temperature may be 37 Celsius, but it does certainly does not mean you are in an optimal state.
Center of Productivity Management Excellence
In partnership with d2o, the industry experts when it comes to productivity management, Pandox AS have decided to truly become thought leaders in their industry and have proudly launched their own in house “Center of Productivity Management Excellence”.
A center of excellence to ensure the right amount of intelligence, tools, targeted coaching and management support is provided to their hotels which safeguards their competitiveness and business viability.
Through a combination of dedicated d2o resources and Pandox team members a centralized focus has been created to strive for maximum resource productivity, analysis of labor productivity patterns, as well as identification of best practices within the various departments and properties.
d2o is the leading provider of real-time productivity management solutions for the hospitality industry since its inception in 2000, and is founded on the idea that effective productivity management should be done in real-time – not based on conventional period end and deadline-driven reporting and controlling.
Real business carries on in a continuous seamless flow of transactions and decision, so should managing business operations.
The Productivity Management Intelligence tool called PMI is designed to support this unconventional thinking. It is an integrated suite of performance navigation solutions that guide hotels and resorts to discover untapped profit by dynamically managing resources and eliminating waste.
PMI empowers operations to collaborate, share information and manage future outcomes. PMI solution functionality includes robust enterprise and department-level budgeting and forecasting, as well as food cost control, employee scheduling, labor productivity management, and much more.
Pandox hotels have introduced this innovative productivity management tool to their portfolio of hotels, which assists them to increase productivity without gambling with service quality or pushing employees to work harder.
Since the start of the PMI business integration process in September 2013, Pandox AS have been able to achieve some remarkable results across their portfolio.
Besides the fact that the term Productivity Management Excellence has become the norm and has been embraced by the organization on all levels, significant impact on the bottom line has been achieved.
The graph below visualizes the positive impact on both labor productivity as well as revenues generated across their portfolio.
Some consolidated highlights for a subset group of 8 of their hotels that started working with PMI from September 2013.
* Last 12 months since PMI Go-Live vs. same period last year
Fig 1. (above) Shows the positive impact on productivity at portfolio level, both when it comes to driving revenues as well as creating labor efficiencies.
The Journey Continues
These tremendous initial accomplishments are only the beginning of Pandox AS ambitions when it comes to productivity management, a journey they have embarked on together with their team of passionate hoteliers across their portfolio.
A start of a long and successful partnership between Pandox AS and the innovative technologies and expertise d2o has to offer.