Moving the Center of Gravity at Pandox Hotels
To resist margin pressure on the bottom-line and still be viable, Pandox Hotels have introduced PMI by d2o. This case study outlines their progress and success after implementing this innovative productivity management tool.
Start of a Journey – A Case Study of Pandox AS’ Progress
Moving the center of gravity sounds like a typical day time activity of Captain Kirk and his team of astronauts. Or maybe it brings to mind the extreme forces of nature within an atmosphere of a planet in a galaxy far, far away .
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. Let’s take it back to our business environment, or to be even more specific, to the broader hospitality industry. In this case study, we will see how Pandox has done this.
Pandox AS, a Swedish hotel property company, is one of the world’s leaders with regard to specialist expertise in both hotel and property operations and active ownership. They have repeatedly moved their center of gravity since their inception in 1995. To this day they 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. Despite the economic situation, they became 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 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 which allows them to deal with the new operational realities they face within the nodes they operate in. In other words, moving the center of gravity within their operating model.
But as highlighted by Dr. W. Edwards Deming, a thought leader in the field of continuous organizational improvement, transformation is only achieved if everyone in the organization is set in motion to accomplish it.
Application of effective revenue management strategies and practices within Pandox have been pivotal for the growth and success of the company to date. In the same way, 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. Often it is no longer sufficient to deliver a profitable bottom-line.
Increased pace of change of guest volumes demands dynamic collaboration and agility. Widespread access to technology and social media will continue to shorten the booking window for city hotels. This in turn will exacerbate the need for managing resources in near real-time to achieve high productivity, reducing waste or risk of a poor guest experience.
Conventional reporting is full of aggregated and average numbers. They 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 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 become thought leaders in their industry. Since then, they have proudly launched their in-house “Center of Productivity Management Excellence”.
It ensures the right amount of intelligence, tools, targeted coaching and management support is provided to their hotels. This 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. It 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 and revenues generated across their portfolio.
Some consolidated highlights for a subset group of 8 of their hotels which started working with PMI from September 2013.
* Last 12 months since PMI Go-Live vs. same period last year
Case study 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. Together with their team of passionate hoteliers across their portfolio, they will keep moving forward on this journey.
This case study outlines the start of a long and successful partnership between Pandox AS and the innovative technologies and expertise d2o has to offer.