Creating a Concept—And Building a Successful Hotel

Creating a Concept—And Building a Successful Hotel
Paul N. Leone
President and Chief Operating Officer
The Breakers Palm Beach and Flagler System Inc.

Fundamentals of Success
One misconception is that the hospitality industry is a fairly simplistic business. In fact, it's very complicated and challenging. It is people- intensive, capital-intensive, and time-intensive – a hotel is open 24 hours a day, seven days a week.

In the past, the primary focus was about service. If you took care of your customer, you built a repeat business. Today, you must excel not only at service but also at human resources, finance, and marketing.

The key to lasting success is establishing these competitive advantages. A unique location, a positive corporate culture, a solid ownership structure, and a strong financial orientation are all essential to long-term survival and growth. A great location can set one hotel apart from its competitors. For example, The Breakers in Palm Beach has been in operation for over 106 years and the architecture is extraordinary. That is part of what makes it a very successful business. Having a corporate culture where people want to work results in lower turnover and a staff that is more satisfied and more knowledgeable, and this translates in the end to high levels of customer service. Ownership and financial structure are crucial because in this business there is still a pretty high degree of leverage and that puts a strain on properties that are not well managed. Finances and administration are critical to the long-term success of a hospitality-oriented franchise. Over time, paying attention to all of these factors is what enables a hotel to endure.

Excellent customer service, of course, is still critical to success. Guests expect an incredibly high-quality leisure experience. Keeping that in mind, we have established standards that apply to each guest and we strive for flawless execution of those standards. Once those are met, we personalize our service as much as possible without imposing on customers beyond what they want or need. To ensure continued success, we measure customer service. We capture an inordinate amount of data on our service because we believe that what gets measured gets done.

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Finding the Right Staff
High-quality customer service is ultimately about people. Even with equipment and other tools available, a successful luxury property must still put more people in front of its guests than other comparable resorts. To meet that objective, it is also essential to become competent at identifying people who have a natural inclination for service and have the energy for this business. We want our staff to engage our customers, establish rapport, and create a relationship. That takes significantly more effort and resources, but there is a definite return on that investment.

Our greatest source of recruiting staff comes from employee referrals. It is much more efficient than any other method because our employees know what it takes to be successful here. They know what we value and they understand our culture. They are in the best position to make that connection and sell the property to prospects as a great place to work. In addition to word of mouth from employees, our property is an institution in the industry. We benefit greatly from word-of-mouth referrals from past guests, and from colleges and universities around the country touting this as a wonderful and unique place to work.

We also have an incredibly sophisticated and extensive outreach effort for a single independent property. Recruitment takes place all over the world for positions ranging from housekeepers to top executives. When we recruit people from Europe, one of the dynamics they bring is the view of the hotel business as a profession, whereas in the U.S., the industry in general is viewed as a transient form of employment. International hotel/tourism students are generally well traveled and more sophisticated in terms of their hospitality experiences. They are also fluent in multiple languages. In places like Jamaica, we find that our recruits bring an extraordinary level of motivation because the opportunity in their country is not nearly as great. That motivation really energizes others.

What we are looking for in general are people who have energy, ability, and integrity. We look for specialized skills as well, but without energy and integrity, those people will not succeed in our culture and our level of intensity in this business
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Culture and the Guest Experience
Once we identify the right employees, we are in a position to better serve our guests. Employees who are energetic and upbeat provide a higher level of service and are more productive than employees who do not show enthusiasm, especially in this organization where customer service is a top priority. One of our core values is respect. We take that to the highest level and apply a zero-tolerance policy. We also provide constant recognition, excellent pay and benefits, great working conditions, and an environment where people feel like they are part of a team.

We also have a culture of continuous improvement. We teach our staff that our success over the last 106 years is due to day-to-day performance and improvement; to succeed we must continuously get better. We are in an extraordinarily competitive industry, and we never lose sight of the fact that we are always competing for customers. Part of that process is knowing when you have done something wrong, owning up to it, and working to resolve it as quickly as possible. Our guests get instant gratification because of our constant diligence regarding the quality of their experience. If we discover a problem during their visit, it will be resolved before they depart. If we hear about it after they leave, it will be resolved as soon as possible. That continuous improvement brings guests back year after year. They love the fact that we preserved this historic masterpiece, but still find ways to improve the experience.

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Staying on Top of Customer Needs
Our ability to continue improving our service comes from building relationships with our guests. Although we have done focus groups from time to time to tap into consumer trending, we believe that we should not have to embark on a massive research project to determine what our guests expect. We know what they want because we ask and we listen and we have a relationship with them. It has been rare that a surprise has emerged out of a focus group.

One of the key trends we have seen in recent years at upscale properties has been the move from formal to more casual. It used to be that a high- end resort was very formal. Today, our customers are probably more affluent than ever, but they are generally seeking a more relaxed experience and do not want to be held to dress codes and lists of rules and regulations. Offering higher quality but maintaining that casual feel is a difficult balance to strike, but that is what our customers expect and we have responded accordingly.

Another evolving trend in the post September 11th era has been the increase in family travel. There has been an overall surge in family travel recently, but it has been even more striking at the high-end resorts, where historically one did not consider bringing the children. Now children are traveling with their parents more than ever. Visiting a resort like ours for a family vacation is certainly appropriate. There is also multigenerational travel with grandparents, parents, and children all vacationing together. We need to be equipped to serve all markets.
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Future Industry Trends
In the current environment even affluent travelers who once visited more exotic destinations are staying closer to home, which is supportive of the U.S. economy. I think that trend will continue for awhile. Another trend I see is that quality of service is falling at many properties. Whether a property is economy, mid-scale, or upscale, all service businesses should provide 100 percent customer satisfaction. Far too many forget that mission or deviate from it because of financial pressures or other concerns. I would like to see the industry increase its focus on improving employee satisfaction and quality of life along with the objective of also providing a higher level of service to our customers.

Pricing pressure is another trend that is putting a tremendous strain on the industry. This stems from the September 11th tragedy and the concerns regarding travel. Many hotel properties overreacted and set themselves back a few years with deep discounting. There definitely will be some fallout from that in terms of properties ceasing operation or being forced to sell the business. We also see the downside of this in terms of a lower quality of service. It is a lose/lose proposition – properties are not only losing money, but they are also not able to offer the service customers expect. To regain that equilibrium it is a challenge and a threat to a lot of properties, but the industry will come back. In the last ten years, we've seen the industry come out of the 1991 recession; properties were able to get their finances in order, and with the help of an economic boom, the industry significantly rebounded. What was built during that period set a whole new foundation. I expect we'll see this happen again in the coming years.

From a Certified Public Accountant to a world-class hotelier, Paul N. Leone has his eye on more than the bottom line. Leone has restored a strong sense of pride and teamwork in the 1,800 staff members at The Breakers since he was appointed President and Chief Operating Officer in October 1994, leading to dramatic improvements in service, profitability and industry ratings at the 560- room, historic Italian Renaissance property. The Breakers is located in the heart of Palm Beach and resides on 140 acres of oceanfront property.

The sentiment that The Breaker’s staff and customers are its greatest assets is at the very core of Leone’s values. He is considered to be an excellent communicator, approachable leader, extremely disciplined and dedicated to the highest standards of conduct and performance. A strong advocate of total quality management, and consistently delivering a superior, ever-improving product to his customers, Leone believes in hiring energetic, service oriented, talented people, and nourishing them with responsibility and his gratitude. Born and raised in New York, Leone was exposed to the hospitality industry at an early age having been raised in a family that owned and operated five local motels and two restaurants. But his ability to work well with numbers prevailed and he studied accounting at college to follow in his uncle’s footsteps and become a Certified Public Accountant.

After graduating from the University of Kentucky, Leone joined Coopers & Lybrand in Louisville, Kentucky. He later relocated to Coopers & Lybrand in West Palm Beach where he worked with various hospitality accounts, including The Breakers.

Leone joined The Breakers in 1984 as a Controller and was later promoted to Vice President and Chief Financial Officer. In 1992, he was promoted to President of Flagler System Management and two years later became President and Chief Operating Officer of The Breakers.

He is involved in the following civic and charitable organizations: Member Florida Council of 100; Chairman Academy of the Palm Beaches; Director Palm Beach Chamber of Commerce; Director Palm Beach County Economic Council; Member of American Institute of Certified Public Accountants; Member of Florida Institute of Certified Public Accountants; Member of American Hotel & Motel Association; Member of Florida Hotel & Motel Association

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