12 February 2015
Succession planning for the family-owned hospitality business: protecting your family and your business
The hospitality industry has been kind to families over the centuries, providing a good living for many, and significant wealth for others.
Whether your family owns a hotel management company or hotels — involved with one or two small properties or a large chain of hotels — the responsibilities of your family-owned business are as profound as the advantages.
Ensuring that the business continues to operate and provide for the family and others whose livelihood depends on it after one’s retirement or death is important. It is one of the critical responsibilities of the founders and senior management of the family-owned hotel business. Will family members want to keep running the business, and be prepared to do so? Will they want to sell the business? Keep the business and hire outside management?
Providing for continuity and certainty
Business detests uncertainty. It has a bad effect on all concerned, including business partners, employees, customers, vendors and other stakeholders. Succession planning helps eliminate unnecessary disruptions and uncertainties.
Recently, I was interviewed by Brendan Manley, a contributor to STR’s Hotel News Now, about this issue. In his article, Brendan made the point that “The timeline for a change in succession also is critical, because hotels are a 24/7 concern that require constant care and attention. Operators might hope for a quick, clean change in ownership in the event of an owner’s death, while grieving family members might desire a gradual change. Striking a balance between those two attitudes is yet another delicate tightrope one must walk.”
Addressing these kinds of difficult issues in advance, in a succession plan, is difficult to do. But many closely-held business owners embrace the responsibility and get help from experts who can walk them through various scenarios and outcomes.
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