In May 2002, Condenast Traveller listed The Water Club as one of the most unique and dynamic places to stay. Owner Joaquin Bolivar II and his design team created The Water Club with the sole purpose of exceeding travelers' expectations. They created a unique boutique property that was beautifully designed and ideally located, with tremendous capability to generate revenue. Unfortunately, it wasn't living up to its financial expectations. The owners were faced with a tremendous challenge: how to make the hotel profitable.
In August 2002, Bolivar looked to hotel management veterans Tecton Hospitality. With a 20-year history of providing innovative management services and solutions to owners and operators of nationally recognized hotel franchises, independent properties, boutique, and luxury properties, as well as specializing in the turnaround of under-performing hotels, Tecton was the perfect choice. The company took on the job and immediately dug in. "The first few steps we took were to establish baseline processes," said J. Raul Leal, President of Tecton Hospitality. "We conducted thorough audits of The Water Club's direct sales, e-commerce outreach, marketing, accounting, human resources, customer service and all other operations. We identified the key areas of improvement and quickly implemented new uniform standard operating procedures. We set target dates for compliance, set priorities and began to train all the staff in the systems."
The company made dramatic changes to revenue-generating efforts by redirecting the sales teams focus to more strategic account selling and marketing the hotel in typically high-yield distribution channels such as the Internet. "Recognition of the uniqueness of The Water Club by the press was outstanding, but the hotel's product wasn't on the shelf" explained Doug Carrillo, Vice President of Sales and Marketing for Tecton Hospitality. "Just like in any retail store, if the product is not stocked and presented properly, consumers can't buy it and your marketing strategies are ineffective. We reviewed all potential distribution channels, completed an overhaul of the website and focused the sales effort on key account management solicitation to ensure The Water Club was visible to its target audiences and priced correctly to earn the business."
To begin, Tecton sales and marketing representatives contacted online distributors, such as Expedia.com, Travelocity.com and Hotels.com, to ensure the hotel was positioned properly and priced accordingly in order to eliminate disparities among the website and minimize price erosion. "We wanted to make sure The Water Club was offering the same rates from one site to another," Carrillo said. "Different prices confuse the customer and also make it difficult to realize the hotel's ultimate revenue potential."
Next, Tecton addressed Search Engine Optimization (SEO) on the hotel's proprietary web site to ensure visibility on major search engines, such as Yahoo and Google. Tecton's staff researched consumer search trends in the San Juan and Caribbean boutique hotel marketing to target their efforts to their audience. To supplement the organic rankings the hotel was generating, Tecton implemented Pay Per Click (PPC) campaigns targeting the most relevant search terms for their market.
Finally, Tecton worked to make the hotel's website more consumer friendly, especially the site's booking engine. "We noticed results immediately" Carrillo said. "Within 60 days The Water Club reached the levels of revenue, occupancy and rates we were aiming for."
At the same time, Tecton made dramatic changes to back-office operations by instituting financial controls and reports. Standard operating procedures such as tracking purchasing orders, bank drops and petty cash had not been previously upheld at The Water Club, so it was up to Tecton to establish a system for proper financial management.
Human resources, a key element of Tecton's program, was also a major focus at the hotel, and employees received extensive training. "The hotel already had a great vibe," Carrillo said. "A lot of hotels that are high in style are low on substance, so we wanted to make sure The Water Club wasn't just smoke and mirrors. We really wanted to preserve that vibe."
Tecton involved each member of the hotel in its training, from managers to housekeepers. The initial process involved cultural training, educating Water Club employees about Tecton's belief system, which includes using a comprehensive, hands-on approach and making a commitment to customer service in order to impact a property's bottom line. "We feel there is a direct correlation between employee morale and customer satisfaction," Leal said. "If employees aren't happy and reflect that in their daily work, their attitudes will have a negative impact on guests and guests will not return."
The second step was to implement training through courses offered via video and on the Internet through the American Hotel & Motel Associations Educational Institute. Each associate was required to spend at least 14 hours per year participating in online classes, with Tecton Hospitality monitoring progress. Leal emphasized that the training process was especially important at The Water Club because no training program had been implemented prior to Tecton Hospitality coming on board. In addition to training, Tecton distributed surveys to employees in the various departments, finance, operations, marketing, etc., and asked what they felt were their greatest obstacles to complying with customer satisfaction goals. Using the results of these surveys, teams from each department sat down and brainstormed resolutions and developed ways to implement employees ideas. "The people closest to the guests are the ones who have the ability to solve the problem," Leal said.
Within 90 days of Tecton's work with The Water Club, occupancy jumped from 50 percent to 85 percent. Today, occupancy typically averages in the low-90 percentiles. At year-end 2003, The Water Club will report a 200 percent increase in net operating income, in addition to a 57 percent revpar index growth. This is a tremendous improvement from its net operating loss in 2002.
The Water Club has earned numerous accolades, including making the Condenast Traveller's 2002 Hot List, Condenast Traveller's 2003 Hot Tables award for Tangerine, the hotel's dinner restaurant; the 2003 Condenast Traveller's Readers Choice award, where The Water Club ranked third on a list of top 10 hotels in the Caribbean-Atlantic region, and Condenast Traveller's Gold List 2004 of the world's best places to stay, the only hotel in San Juan, Puerto Rico to be included on the list. In addition, Architectural Digest ran a nine-page feature about The Water Club in its December 2003 issue. "Tecton applies old-fashioned hard work and modern technologies and ideas," Bolivar said. "Tecton knows the keys to success in this industry. It's about being good at what you do and having the means to accomplish your goals. That is what Tecton helped us achieve at The Water Club."