Stop Treating Your Front Desk Like An Expense. It's A Profit Center | Geoffrey Toffetti E64

Stop treating your front desk like an expense; it's costing you hundreds of thousands in property value. The biggest mistake boutique hotel owners make isn't about the property itself. It's ignoring the untapped revenue sitting right at your check-in counter.

In this episode, you'll discover how to turn your front desk into a profit center that can add 5% to your bottom line and potentially $500,000 to your hotel's valuation.

A hospitality revenue expert who helped pioneer the car rental upsell model and has spent 25+ years turning frontline employees into sales engines joins us to break down the exact system. Joffrey Toffetti's company, Frontline Performance Group, works with properties from 20-room boutiques to major brands, and his approach has transformed front desk agents from minimum-wage employees into top earners making $50K+ through incentives alone.

In this episode, you'll discover:

• Why the "value mode vs. experience mode" mindset shift changes everything about guest interactions
• The 3-tier incentive structure that motivates front desk staff without blowing your budget
• How late checkout offers alone can generate $40,000+ annually (with almost zero cost)
• The conversion metrics and "URI" formula to track whether your upselling is actually working
• Why keyless entry and kiosks might be sabotaging your guest relationships and revenue
• How to spot upsell opportunities during due diligence before you even buy a property

If you're serious about maximizing hotel profitability, this episode will change how you think about staffing and guest experience. Don't leave five figures on the table every year because your front desk doesn't know how to sell.

About Geoffrey

Geoffrey Toffetti is the CEO of Frontline Performance Group (FPG), where he leverages over three decades of experience to transform hospitality frontline teams into powerful revenue generators. Rising from a resort valet to the C-suite, Geoffrey has guided FPG’s expansion to over 2,500 properties across 100+ countries, helping global brands like Hilton, Marriott, and Hyatt unlock over $2.3 billion in incremental revenue. Through FPG’s innovative IN-Gauge SaaS platform and a "service-based sales" philosophy, he empowers hourly staff to elevate the guest experience while driving significant bottom-line profitability without additional capital expenditure.

Connect with Geoffrey

Connect with Geoffrey on LinkedIn or visit their Website.

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Transcript

Michael Russell 0:00

What if your front desk is costing you a half a million dollars in property value and you don't even know it? Most hotel owners treat their front desk like an expense to minimize. But today's guest has spent decades proving it's actually your most underutilized profit center. If you're not converting check-ins into upgrades, you're leaving serious money on the table. Let's dive in. The Hotel Investor Playbook, your guide to building wealth and freedom through hotel and hospitality ownership. Joffrey, welcome to the show.

Geoffrey Toffetti 1:08

Thank you, Michael. It's a pleasure to be here.

Michael Russell 1:10

Yeah. So listen, I want to start right out of the gate with a quote that I believe is from you, which is I've heard you say stop treating your front desk like an expense. It's a profit center. What do you mean by that?

Geoffrey Toffetti 1:26

Yeah. So this is probably the core of our whole mission in life is convincing business owners and managers of this fact that your front line, particularly a front desk at a hotel, they are in the position to promote your product probably better than any other position in the in this in the chain in the customer journey because they're standing there with them. And the best way to influence someone is to be in their presence. So if they know that that if if that potential is understood and you teach them how to do it, they can generate a very significant amount of money relative to your operation. In some cases, it's the equivalent of opening a restaurant, or it's the equivalent of adding a whole new amenity to your property that you're charging for. It can be one to in a boutique hotel, you realistically, two to three percent RevPAR is very achievable. That's a good amount. That's great. That's really a good amount. Yeah. I can add 5% to your bottom line just by having them do what they're doing anyway, which is interact with your guests. You don't need any more guests. You just need the guests to spend a little bit more money and have a better experience. That's that's really what it's all about. A lot of our hotel, especially the smaller or the sort of the mid-scale properties we work with, the difference between making your budget and missing your budget is often in the five digits. It could be 30,000, 40,000. And this is a way to shore up your budget. But if you're the owner, that five percent is more capex you can spend, it's more people you could hire, it's whatever you're up against running your business. It's just there. The main issue is the money is there, you're just not capturing it.

Michael Russell 3:00

But look, I mean, if you're just taking eight eight cap, let's just say it's an eight-cap hotel and you increase the bottom line by 40 grand, 40 grand divided by 8%, that increases the valuation by a half a million dollars. Exactly. That's incredible.

Geoffrey Toffetti 3:14

It is incredible, right? And it's and it's there, it's already there. You don't have to spend many money to get it.

Michael Russell 3:20

Okay, so let's dive into this then because we're talking about how the front desk can be a revenue profit generator. Can you give me some examples of how they can generate extra revenue?

Geoffrey Toffetti 3:32

100%. So the easiest to conceptualize a better room, I mean, everyone kind of understands that if you've if someone's gone on your website and they've booked an entry-level room, even if you only have two room types, or you have the same room type but with different views, they've bought the cheapest room online because that's what you do when you're shopping for hotels. But when you arrive, you're now in experience mode, you're not in value mode. So you walk in, you're greeted, the person knows you're in the basic room, they offer or recommend to you a better room. That's the easiest thing to conceptualize, but it's not the only thing. Another really popular one that a lot of hoteliers do not do is when someone is arriving, ask when they're departing. And if they're departing later in the day, offer them a late checkout. Because as a business traveler, I could tell you a lot of times my flight's at four o'clock, my meeting's over at 12:30, and I'm facing the airport lounge for the next two and a half hours. Where if they ask me when I check in what time is your flight at four, well, let's get you a late checkout. You can leave your bags here after your meeting and come back and freshen up before you go to the airport. Okay, so that's that doesn't sound like I've sold you something. It sounds like I'm doing you a favor.

Michael Russell 4:43

Of course. But what you're you're suggesting is, oh, look, there's a cost for this, right? And so I'm gonna pretend I'm I'm the front desk person. And I my my role up until this point that you've introduced this concept is to do whatever I need to do just to keep my job, right? I don't I don't necessarily have any incentive to want to do more than that. So if I'm gonna have to try to quote unquote sell someone on something, then that seems painful and fearful. And so, what is the incentive for someone working at the front desk to actually want to implement these upgrades?

Geoffrey Toffetti 5:15

Yeah, well, it's it's there's that could be a deep philosophical question, or that could be a very surface-y tactical question. So the tactical answer is give them an incentive to do it. So if your late checkout is 25 bucks, you you know, you give them 10% of that. They're gonna make $250 every time they sell one, and you're gonna make $22.50. And you can probably sell three to five a day, depending on the size of your hotel and what your turn is and your occupancy. But let's say it's five a day. It's $125 a day, seven days a week, 52 weeks, you can do the math. Just on the late checkout, you could probably make that 40 grand that we were talking about. So it's just giving them an incentive. Now, the deeper philosophical question is why are they there? Are they there just for a paycheck or do they actually care about helping people? Because that's another thing, is once they realize that offering people something like a late check, like, for instance, go back to the late checkout example. A front desk agent probably doesn't get on a plane every week and have to deal with all of this stuff all the time. If they understood how painful it is to sit in the airport for two and a half hours after you're in a meeting, you're still in your suit, you, you know, you want to be in jeans and a t-shirt, they would understand what a service they're offering. You can come back, you don't have to lug your bag to the meeting, you can come back, you can change your clothes, you can take a shower, you can go to the airport relaxed. That's worth $25. That's worth $50 to a business traveler, right? And the same goes for families. If you have families coming in for a sporting event and the sporting event is in the morning and they're driving five hours home, you give them a late checkout, they can come back and take a shower, relax for a few minutes before they hit the road. There's it's a it is a service value. So there's both of those things, is you want to make it important to them because it's important to you as the owner or the manager, and you want to give them an incentive for doing it.

Michael Russell 6:58

Yeah. So look, I'm reframing my mindset about this. Thank you for that. But what I'm taking away is you're framing this to the hotel staff that by not offering them this upgrade, you're you're really kind of doing them a disservice. They need this, they could benefit from this, or you know, at least give them the opportunity if they weren't aware of it. And this is gonna this, if you look at it from like, oh, I'm trying to extract more money from them, that can be culturally, that's that's icky. But if it's like, hey, I'm trying to offer the very best value, the very, very best service, and this is one way in which we can do that, that's just a mindset, change your frame of mind. And I really like that.

Geoffrey Toffetti 7:36

100%. We have a phrase we use that goes the best service you can offer your guest is to offer your best services, right? So if people don't know what rooms you have, they don't know what views you have, unless they're a regular at your property, they don't know. They can only see the picture online. And like one of our executives likes to say to the clients, if you could take a guest and tour the entire property with them when they arrive painstakingly and show them every view in the room, would they have booked the same room? The answer often is no. They would have booked the one on the corner because you can see the lake or the one that you can see the airports, the airplanes landing, or whatever the circumstance for that hotel is. Getting your front desk agents to understand that they are experts on the property. They know better what someone's gonna like. And if they're checked into a room that the front desk agent intrinsically knows is not one that everyone would book, then recommend another room. You're only charging them a fraction of the room night. You're improving their entire experience. And to your point, the ones that don't take it. Now, this is a stat that we got from a major brand that studied this, because they have a lot of the same questions as independent hotel years. They had a reduction in room-related complaints the more frequently the upsell was offered because you had a choice. So you checked in, they said you're in a great double room, it's beautiful, but I have a lakefront view, whatever, and you say no, and you go and you have no view, you're less likely to complain because you've been given the option. And just having that option and doing it in a way that is not salesy. We don't want to say, Do you want a better room? Because that implies that your room's not good, right? You just say, I have a room with a view available, people like it because of XYZ. You don't ask them a question, you make a statement, you make a recommendation, and then you it's easy. You can predict how they're gonna respond. There's only four or five ways someone's gonna respond when you make a statement like that. And and you can teach them, it's very simple. This is what we do. We teach them exactly how what to expect and how to answer each response. And it's easy. It makes it easier to be a front desk agent because you're having a conversation with someone and it flows very naturally.

Michael Russell 9:44

Hey guys, quick favor if this episode is helping you, text it to one friend who is either trying to buy a hotel or owns and operates one already. Sharing the show is the best way you can support what we're building here. Now, back to the episode. Take me back to what you said early on in this conversation. You led with something about when they walk into the hotel, they're not in a value state. They're in a, I think you said emotional state. What did you say? Experience state. Can you like walk us through that? Like, what's when you're transferring this to your to your staff to encourage them? Kind of what we're describing, walk walk us through that statement.

Geoffrey Toffetti 10:20

Yeah. So when someone is shopping for a hotel room or a car rental, they're looking for the best value. They're not necessarily looking for the cheapest, but they're looking for the best value. So they might end up with a double room or whatever. But when they are when that's done and they've made the booking and now they're traveling, even for business, there's an anticipation when they're en route to the hotel. Hotel is probably the best part of the trip, other than a really good dinner. Your hotel experience makes or breaks a vacation in a lot of cases. And it's not necessarily the aesthetic, it's the whole experience. But when you get there, you're now experiencing the hotel. You're not looking for the value, you're looking for the best experience. And certainly a great front desk agent that greets you warmly and is friendly and outgoing helps improve that experience dramatically. And I say this as a former front desk agent. You can make or break someone's entire impression of your property in 10 seconds with the front desk, because that that might be the only person that that guest ever speaks to in your entire company. It could just be the front desk agent because some people go right to the room, they go to the meeting, they come back, they sleep, they don't talk to people. The only person they're guaranteed they're going to talk to is the front desk agent. But they're in experiential mode, and that front desk agent can enhance that experience.

Michael Russell 11:30

You know, what you're saying here, though, I'm picking up on is this runs very contrary to what a lot of the mentality is these days with running hotels more efficiently. So the idea is look, if you have self-check-in kiosks and you have, in some cases, you have keyless entry, you just you don't even check in with the front desk. A lot of these smaller outfits, smaller boutique hotels, they won't staff a front desk because they're saving on labor. That again goes back to the first quote here, which is treating the front desk as an expense. But you're describing this as this is like your profit center is having a guide who is going to guide their experience and not only generate a better experience for the guests, but also generate more profit, very different than that model. How do you kind of reconcile those two paths? Like one could make the case that the self-check-in model, zero front desk, is a better option for ultimately the bottom line. You're describing something dramatically different.

Geoffrey Toffetti 12:34

Yeah, you can imagine I get this question fairly frequently.

Michael Russell 12:38

Even from I thought I was his first genius that asked it, right?

unknown 12:41

Yeah.

Geoffrey Toffetti 12:41

Well, when the keyless entry thing came out, everyone was like, oh my God, they're going to put you guys out of business. We we got bigger because it just took so the bottom line is this with keyless entry, the only people that use it are frequent travelers, what we call road warriors, and they're probably the least likely to buy an experiential upgrade because they're traveling all the time. So all it did was take them out of the lobby and made it easier to get a high conversion out of your arrivals. So that didn't pan out. And actually, pound for pound, there's less people using it as a percentage of arrivals than did 10 years ago. So it's kind of it's actually stalled out. Now on the kiosk thing, if you have a cookie cutter, little box, mid-scale or economy hotel in the inner city, by all means, you're not going to sell anything anyway, probably when you're selling rooms at 60, 70 bucks a night, whatever. That's we're not that's not the target for this. But if you have a boutique hotel with a unique character and it only has 30 or 40 or 50 rooms, you're crazy not to have a front desk agent because you're basically surrendering your relationship with your guest. You're saying, I don't want to know or talk to my guests. I have this great aesthetic. I built this nice boutique, I put a lot of time into the design, but I don't want to talk to my guests because it's going to cost me 10 bucks an hour or 15 bucks an hour. That seems crazy to me because, like I said, their whole experience of your service, quote unquote service, could be the front desk agent. If you forego that and it's a kiosk that sometimes doesn't work and it's annoying, what have you just done? You've basically surrendered your entire brand to a kiosk. So that I feel pretty strongly that you should always have a front desk agent because the right one will make you more money, will increase your guest loyalty, but they'll promote your products. When you have a front desk that knows how to sell, it's almost like a there's a switch point where once they get it and they're it's you're let's say they're earning enough money to pay their car payment off of their incentives. Okay. It's it's crossed the line to improve the quality of their life. They're gonna be asking for more to sell. And if you're a hotelier and you're like short on breakfast service, or you need to sell more stuff in the gift shop, or you need to whatever, you're now gonna have someone you can go to and say, Hey, I need to sell five more breakfasts every day. I'll give you two bucks per table or whatever. They're gonna sell it. It's they're now a sales engine, even if it's a sales engine of one. When I was a front desk agent, I went from being a valet to the front desk, and the GM said to me at the time, this valet at this resort were doing pretty good. This is back in the late 90s. I was making like 50 grand a year. I said that late. And he said, I'm gonna pay you half of that, right? But you you have a chance to make more money selling upgrades and walk-ins. I made more doing that than I made than they were paying me. So much so they promoted me because I was outside the pay scale of a front desk agent. I was making like 50 grand a year back then. That's a front desk agent. Because once they said, Oh, you can get paid for selling, I sold everything to everyone. Like I was constantly selling, and I wasn't even trained the way we train. Our training is much more service focused than I was doing. I was like, oh, you're coming from England for two weeks on a voucher. Back then it was called a voucher. I'm gonna sell you a suite for two weeks and I'm gonna double your reservation costs. But yeah, I mean, it's it's you shouldn't forego front desk agents unless you're in one of those situations where there's really nothing to sell and your clientele are not the type that will buy it.

Michael Russell 16:06

Yeah, I mean, there's okay, so let's go back. You breeze through this. The bottom line for the hotel. I mean, reasonably you might be able to expect an extra 5% lift to your bottom line. But what was the rough commission structure for front desk people that are providing these upgrades or selling these upgrades?

Geoffrey Toffetti 16:25

We prefer a three-tier incentive. So you set three tiers of revenue expectation, and for each tier, it's a higher percentage that applies to everything. So, for instance, let's just make this simple. Let's say that you're gonna set a $500 goal for each front desk agent per month, which is very low. But let's just say this we're gonna do so. The first tier from 500 to 1200 might be 5%, from $1,200 to 2,000 would be 10, and over 2,000 would be 15. So if you're if you're getting someone who's selling at over $2,000, four times your target, you're rewarding them more than someone who's just selling a little bit. And what we find is that balances out, if you put that, if you plot that on a curve, it should land at about 10% on average. But let's say you have three front desk agents, you'd have one in each bucket. That would get you 10%. And that's about how you want it to be a third, a third, a third, to be a healthy incentive plan. And the people that are consistently at the bottom, they're the ones getting remedial training. And eventually, as a business owner, you make a decision about whether they're the right fit for you or not. And then every once in a while you raise the tiers. You just make it a little harder each, every six or eight months, and you get to a point where we, I mean, we go into hotels where they're doing like 1,500 a month and upsell, and we get them up to 50,000 a month. And they're not huge hotels. They're, you know, maybe 150 rooms, but they're doing it all right. That can be done. We've seen 10% conversions, we've seen six, seven percent RevPAR impact.

Michael Russell 17:50

Well, let's dig into this a little bit because like I know that your company, it's a large company, and and you guys cater towards some of the bigger enterprise level hotels. But in today's age, what the scrappy boutique hotel investor is looking to do is use technology to be competitive, to be able to be nimble and to implement things, try things out without having the huge bureaucracy that a large enterprise hotel system has. Boutique operators like myself, we can just try something. If it works, great. If it doesn't, it fails, then we move on. Does your system, does this product, is this this technology, because there's a systematic approach here, and we can dive into that, but is this realistically applicable for smaller operators?

Geoffrey Toffetti 18:32

Yeah, 100%. I mean, we have hotels that are 20 rooms that are on our program. We have uh several hundred independent slash boutique style hotels. And then we also have a bunch of the stuff that are in the big brands that are in their independent brands like Curio or or Autograph and those. So yeah, it it the size doesn't really matter because we are we charge by room. So it doesn't, if you're big, you're paying more than if you're little. But it really just comes down to your own belief in your own product. And this is where we run into like limiting belief sometimes, is we have GMs that they don't believe that there's anything to sell at their hotel. The owners do, because they're the ones who renovated the suites, but the GM doesn't see the value in it. So you have this disconnect. But if you're the owner and you believe in your product and you believe that you want to better serve your customers, then there's always stuff to sell. And if you're selling things like late checkouts or room upgrades or view enhancements, they're very low cost differential. I mean, cleaning the same room with a different view doesn't cost you anything more, but you can make, you know, you can add 25, 30% to the room rate. It's just a matter of making it a systematic part of what you do is that you expect your front desk to upsell. And if they don't know how to upsell, you hire us and we're pretty cheap and we come in and we give you all the tools you need.

unknown 19:53

Yeah.

Michael Russell 19:53

I mean, I'm thinking about this and associating like on the far end of the spectrum when it comes to, I guess, price point, right? I own and operate two hostels. And hostels are known to be budget, the stigma being backpackers and whatever. But our product has evolved. We offer a very design-forward product. It's really geared towards what you're describing, the experience. People stay with us not always because it's the cheapest place to stay. Let's be honest. People can find Airbnbs if they're in a group and they can save money if they just go in on the same condo or whatever they're going to book together. The per bed cost, if you had four or five people, is going to be higher than compared to alternative lodging. But the reason they stay with us is because we offer this experience. We can't operate with a kiosk. There's no way in heck. Because if someone walked into our lobby and they're punching things, like just it's not even in the realm. We have to have people at the front desk because we create culture, we create experience, we create these moments that people treasure because it's all about bringing people together to be social. That is the product that we offer from a price point. It's at a very low cost. But I'm thinking through, okay, well, even at our far end of the spectrum, hostels, where can we upgrade people? And there's plenty of opportunity. As you're talking, I'm thinking about it, for example, activities. We offer now paid activities where, you know, we take people in a as a group in a van and they go sightseeing, right? We take them to the best waterfalls and hiking and all the fun things that people can do. But we charge for that. And if someone just walks in, the front desk says, Oh, look, we got an activity day. Do you want to sign up for it? Okay, boring. They're not going to sign up.

Geoffrey Toffetti 21:27

But if it's like, oh my gosh, you're going to go street spots.

Michael Russell 21:31

There you go. And this adds up over time, like this scales. And so I'm intrigued. I'm excited. I'm jumping out of my chair here because I never even thought about this. This is so novel. Like you live in this world day in, day out. This is what you do. But I've never heard of someone monetizing the front desk. It's always been how do I cut expense, cut expense, cut expense? But it's such a paradigm and thought to think, forget cutting expense. How do you maximize experience and profit from it, not just as a hotel owner, but your team because there's turnover. If people can earn more money, they're less likely to quit. Beyond just turnover, there's you mentioned it, but you saw that there were less negative reviews. I think you said when people get upgraded. It's room default reviews. Yep. Yep. If you've got a front desk staff who is engaged and happy and incentivized and motivated to provide that level of service, people are going to overlook a lot of imperfections. They're going to overlook some of the challenges that inevitably happen when you're dealing with hospitality. And that will affect areas that you don't always necessarily associate. Like your review score is going to give you the ability to probably stay more occupied. And if you're more occupied, you can charge more ADR. All of these things are interrelated. So, you know, I'm connecting the dots here, and maybe I've had too much caffeine, but I am pumped on this because this is this is a novel concept. So here's what I want to know this is great. I've got staff, I want to incentivize them. And then I go, oh, process. How the heck do I implement a process as a small operator with limited resources to where I can actually plug and play and this thing works?

Geoffrey Toffetti 23:11

Yeah, that I mean, that probably thank you for that. It's a nice softball. But that that's essentially why we exist is what we're teaching is not rocket science. I mean, another catchphrase we like because it works is turning common sense into commonplace. It's getting people to do simple things in repetition that benefit your business. That's essentially why we exist. So the subscription that our customers get, our technology, is basically the entire toolkit, soup to nuts, that you need to have a successful upsell program. It's everything from we consume the data from the PMS system or the point of sale system because we also work in restaurants. We haven't talked about that, but we work in restaurants as well. But we consume the data, we visualize it, we give the employees an app where they can see what they're doing, they can see their own performance, they can track their incentives, you can set goals that they can see how they're doing. They can view it through their app or on a computer. Uh, it provides an audit trail. So if your accountant or whoever you send your payroll files to, you know that that every transaction is correct. It will output an incentive file that you can then give to your payroll person and say, pay these incentives that you don't have to track it yourself. So it's basically everything that you need. It's even a recognition engine. So you can actually give people like thumbs up and give them comments on their performance directly through the application. So if you're someone like yourself that is a multi-unit operator, you could spend five minutes a week and go in there and give thanks and praise to people who are doing a good job directly through the app about what they're selling. So you're right, you're you're reinforcing that behavior, and you don't even have to be there. You can do it from afar. I say this all the time: you can affect revenue from afar just by picking up your phone in the morning, going to the top of the leaderboard, clicking a thumbs up and putting a message in thanks for being best this month, keep it up, send that person, and we've studied this. That person is going to get a juice in their performance for like six days after getting a comment like that. So the system is just engineered, and and it might, it might help to give a little context. Before COVID, we were an on-prem consulting firm that would send people to the hotels and they would stand at the front desk and they would work with the front desk managers and the agents. So we have hundreds of thousands of hours actually implementing these programs ourselves and actually leading the implementation. And we built the technology around that knowledge. So it's built to do everything that you could possibly need to do to have a successful upsell program.

Michael Russell 25:50

Well, what's your view on AI coaching for these teams? Like, where where does it help and where does it maybe go too far or it hurts?

Geoffrey Toffetti 26:00

So the approach we're taking, we actually have deployed AI for that exact purpose. What we're doing initially is we're sending the insights to the manager and we're we're showing highlighting for the manager what each agent's opportunity for improvement is because we want the manager to talk to them. We don't, I mean, we we are eventually going to do direct-to-agent AI coaching, but it'd be better if the manager did it. And we also recommend which training modules in the system they need to watch because every video is skill specific. So it could be that they're selling consistently, but always only a one-product upgrade instead of a two-product upgrade. So they might need to go on a rooms tour and they might need to watch a video about the value of sweets. Or, you know, if they're only selling sweets and they never sell a one product one thing, then they don't know enough about the views. The system can infer there's about 30 defects that they the system will infer. And so it'll recommend the video, it'll tell the manager what to do, what to say in natural language, and then it'll also give them who to recognize in their the daily stand-ups or their weekly meetings. And it what we're doing is we're trying to take the analytics that forever you and I in our careers have had to interpret and interpret it for the manager and tell them what it's telling them so that in a matter of minutes a week, they can affect the revenue.

Michael Russell 27:16

All right. Well, I want to zoom out a little bit from your specific product here and just I want to focus in general on maybe from an investor lens. If I'm constantly when I am evaluating acquisition opportunity, I'm looking for ways to add value. And this is a relatively novel concept for me. But I guess put your investor hat on for a minute and imagine someone going in and looking at a hotel and evaluating, of course, the physical structure, they're looking at the metrics, the financials. What are some like, what are possibly like three red flags that would tell you that a property is struggling in this particular area and there's an opportunity to implement this type of upgrade system?

Geoffrey Toffetti 27:59

Yeah. So again, assuming there's a few different room types in a property, occupancy of the top room type, what is that? Is it on an annualized basis? It, you know, in in big resorts, sometimes it's 20% of the of the premier product. But I would look at that. If you have room types that sit empty unless you give them away because you've sold out the house, you have a sales problem because we know people book in at the bottom. That's the revenue management strategy, that's what you want. But no one is upselling people out of an oversell in the bottom in paying for the top. So that's one red flag. You can see it immediately. What is the occupancy of the premiere product if it's too low? You can also look at, you know, if there is an incentive plan in place, and because a lot of hotels do have them, you know, what is the payout on a monthly basis? You can very easily reverse engineer without having to go into the detail. If the incentive plan is 10% and they're getting $100, you know that they sold a thousand dollars. You can do that math pretty quick and then say, what would that RevPar impact be? If it's below 1%, then it's basically people asking for upgrades and that front desk is not offering anything. They should be at a 1% impact if they're making any effort whatsoever. And then turnover of the front desk. That's another one. If there's a if they're turning them over every month or two or three months, then you're gonna struggle to get any kind of upsell revenue going because it takes a little while for people to get into their rhythm. This is like this is changing people's lives. I mean, hourly employees, and I could share a lot of these stories. We have stories where we find out that a front desk agent is living in their car, and through our incentive program, they get an apartment for their kids. You know, like people that in even in South America, we had a story where someone came to us and said that they they live in a dangerous place and their kid was being bullied horrifically at school. And because of her incentive, she was able to put him in private school. These are not trivial things, you know, and so we can change people's lives, we can help them make more money, we can help the companies make more money. So it led me into this company, and I came in as a managing partner and pretty soon was president, and then five years ago was CEO. And the founder is still very involved. I talk to him on a daily basis. But the move toward technology was something that we had done in my last company. We had converted from a services company to a SaaS business at the end and sold it. And so we've done the same thing. It's, you know, you learn and you apply what you've learned. But for me, it's always just been belief in myself and a curious mind. And if there's a problem to solve, I want to figure out how to solve it. And that's led us into this front desk. The founder came from car rental. So if you've ever been upsold at a car rental counter, you can blame him because he pretty much invented that model like 30 years ago. And so I I brought it to hospitality and theme parks and a few other things and and changed the profile.

Michael Russell 30:48

But I just I gotta talk, I gotta stop you there because respectfully, that's like that's a poor example. No, it is, but they he doesn't work. You know what I mean? When you go to the car rental and someone, you're like, no, I just want to give me my effing car. I'm tired, I want to go. And what shuttle do I have to hop on now to go get my damn car? And I don't want to upgrade and I want to spend more money. So, what you're describing to me with the way that you can train your team to offer more value, value-based selling, is feels significantly different than the carry still. I don't know.

Geoffrey Toffetti 31:22

Now it's like a superpower, and when we went away, they took that superpower to the worst possible extreme. I agree. It's it's like one of the worst experiences that you can have, but it wasn't back in the it was a much better experience. They've they've perverted it, they've become too focused on the ancillary. Same with the airlines. Now that they've discovered the crack of ancillary revenue, now it's like obnoxious. Like they want to sell you everything. That's not our philosophy. That wasn't our philosophy then. But that's when I came in, it was like how this there's this magical thing that he had, which is this process for how to sell at the front line. And I said, okay, where else can this be done? Well, I had been an upseller at a hotel myself, and so it made perfect sense to me. And it did. It made it does make perfect sense. We've had a lot of success with it.

Michael Russell 32:09

Yeah. You did pull on my heartstrings a little bit when I think about the person that's working the front desk working their butt off, right? And sleeping in their car. Like I know that this is a reality. It's this is not just hypothetically. There are people that have to work two and three jobs, especially in hospitality, because sometimes the wages can be so low. And as a property owner, as a business owner, like I want to feel good about what I'm doing. I don't want to exploit my labor. I do have to look at the bottom line. Like, I'm it's about making profit. I guess kind of pivoting back to what we were talking about with implementing these systems and such. I'm I'm curious, like, what's a what's a simple scoreboard for a property? Like, how do you keep track of this so that you know how people are performing and if they're they're hitting the goals to keep them in that position where maybe they're working the shift that has the most check-ins, things like that.

Geoffrey Toffetti 33:00

Yeah, that performance-based scheduling is a thing that owners have at their disposal that is way underrated. And that's true for every even housekeeping. Whoever cleans the best should be on the most rooms, you know. That just goes without reason. But a lot of people overlook it because they're too busy. But if you can figure out those performance metrics and you could schedule accordingly, you can raise your revenue or lower your cost, as it were. But from a leaderboard standpoint, there's a couple of simple metrics. Obviously, revenue is ob is the clear one, but what is beneath the revenue is more important. So we like conversion, and just like any sales environment, how many of your arrivals purchase something? That's probably fairly easy to get out of your POS or your PMS if if you have access to reporting. It's probably not that hard to find. We also like a metric called we we coined it, but it's free to use URI, which is the upsell rate index. So you take the the average upsell rate, meaning the extra amount you're charging, and divide it into your ADR. And you really want to see that above 30% on average. So that tells you how well you're selling. You don't want to sell rooms for $10. Like that's crazy. You want to be in the right ratio. So if you have a hundred dollar room rate, you want to be selling a $30 upgrade as an example. In luxury, it's more like 50%. But in in mid-scale, upscale, you're probably looking at 30. Maybe in economy, it's 15 or 20%. So you take conversion and URI and you and you can pretty much predict what you're going to do because it they both handle occupancy as a variable. So when with those two, you can put the conversion rate on a leaderboard very easily, top to bottom. And we believe in leaderboards. So whether you're using a system or not, write it on a piece of paper and stick it on the wall, it has a dramatic impact on people's psyche when they're at the bottom of the leaderboard.

Michael Russell 34:49

Yeah, absolutely. Yeah, we we do something similar where we have our staff, they each pick a Hawaiian kind of iconic animal, whether it's a turtle or a dolphin or something. It's kind of silly, but it's fun because of the other age, right? They're they're younger. And and of course, what we are judging their performance on has been reviews, right? So we incentivize that if someone leaves a review and mentions them by name, then they get a they get a small amount. It has really dramatically improved the quantity of reviews. I mean, like we bought a business that had 500 reviews and had been in business for like 20 years. And in six months, we got 500 reviews just by incentivizing and five-star reviews. Like, like we have a 4.9 rating out of five because we put intention into it. We builded culture. This wasn't just like you're describing, like it was aligned. There was mutual benefit for the guest and for for us, because people are not going to just write a review unless they're getting great service. They go hand in hand.

Geoffrey Toffetti 35:48

So I believe unless something goes horrifically wrong, that you're right. A good review is going to come from the service, not the property. I mean, I have this debate with restaurants all the time. What's more important, the aesthetic or the service? And maybe I'm biased because of the business I'm in, but I think you can have a hotel or a restaurant that's a little shabby, that needs a refresh and get great reviews because the staff there is amazing. Or you can have a pristine brand new property and the staff are jerks and you're going to get terrible reviews. So that's sort of how I come down on it. Obviously, you want both, but I think the biggest impact on the guest experience is the people serving them, which is again why I don't think going to pure automation is a good idea for hoteliers. But yeah, I mean, building a culture of fun, of trust, and of reward. And don't forget accountability. You want good reviews, you incentivize good reviews. You also don't want bad reviews. So don't get bad reviews, right? It's like you want both going on at the same time. But yeah, and you can add in. Here's another really simple way to think about this. If you owned a bar and you wanted to sell more margaritas, the best way to sell more margaritas is to raise the price by $2 and give that $2 to the server. You will sell more margaritas than you've ever sold. Right? So that premise kind of permeates what you're doing. If you have hostels and you have a certain room type that you could upgrade more to, put an incentive on it. Even if you don't want to have to calculate commissions and percentages and tiers, you could just say, look, every one that of those that you sell above their check-in, I'll give you five bucks or whatever, you can make it very simple and add that into that culture you've created for your reviews. It's the same concept.

Michael Russell 37:33

Yeah. I mean, if we're selling beds for 50 bucks and we have vacancy and we have a private room available that we sell for $170, well, I'd rather have someone upgrade to the $170 room if it's sitting there vacant. So all of this is applicable. I don't care what, you know, if you're big or small, I get it. At the end of the day, it's all a ratio. And if you can increase your bottom line through alignment with your team, through better culture, through better guest experience, better reviews, less bad reviews, all of this makes sense for improving the experience and for the bottom line of the hotel operator. So this has been eye-opening. I appreciate this. So, Joffrey, super tactical. I guess to give you an opportunity here before we wrap this up, what's one takeaway you think you want to leave the listener with?

Geoffrey Toffetti 38:17

That you don't have to do it alone. You can, by all means, do everything that I've said, but for a very nominal price, you can have a professional group like us come in and help. And it just stream, it just accelerates the potential. But just do it. Whether you use us or not, look at your business as something of value that there is value to be upgraded into. And things like late checkout are a no-brainer. Every hotel, every domicile in the world should be selling late checkouts. Even Airbnbs don't offer them and they should. Like it's it's a no-brainer and it's just free money, basically. And it's a huge service. So yeah, just believe that you have value and then encourage your teams to sell it. And the other, there's another benefit. When you have a team that's engaged and they're making more money, they don't leave. And you can anchor your culture around these employees. Like our business in particular, our average tenure is over 10 years. We don't people don't quit. Occasionally, we've had to fire someone, but they really don't quit because the culture is what we spilled the whole business around. And we we try to pass that on to our clients too. Is culture is what you do every day as a business. And if you do it in a way that people want to be there, then you're gonna have a long retention. And creating opportunities for a front desk agent to make a little more money, make you a little more money, have more fun with the guests. Where's the downside to that?

Michael Russell 39:39

Yeah, so true. Awesome. All right, Joffrey. So if our listeners want to stay in touch with you, maybe they want to just follow your journey, how can they do so?

Geoffrey Toffetti 39:48

Yeah, so our website is uh obvious. Uh that's www.frontlinepg, like performance group.com. I'm very active on LinkedIn, so they could follow me, they could follow us on. And that's our primary social environment. And I'd love to hear from any hoteliers out there or restaurant owners or both that have a need or question. I'm happy to answer it for them, whether they engage us or not. I'd love the interaction.

Michael Russell 40:13

Cool. Awesome. Well, I'll put all that in the show notes for our listeners. Thanks again for listening to the Hotel Investor Playbook. If you got any value today, share this episode with at least one person that you think will take action on it. We'll see you again on the next one. Aloha.