On April 28, 2021, Duetto’s Vice President of Sales for EMEA, Michael Schäffner, shared a Bavarian Weisswurst breakfast with Heiko Grote, CEO of Gorgeous Smiling Hotels, as they talked about navigating through Covid, in the first in our CEO Spotlight interview series.
The conversation was conducted in German. Catch the highlights below or watch the video in German with English subtitles here.
First of all, where does the name come from? At Duetto, ‘Gorgeous Smiling Hotels’ is one of our most favorite hotel company names.
Ultimately it was my father. This is a family-owned business that my father founded in the 1980s. I took over management in 1997 and expanded the portfolio. The "G" stands for "Grote", of course, but at some point, we said to ourselves: ‘No, that can't work, it doesn't necessarily have to be that the name is reflected in the company’. And then, in 2010, our marketing department came up with the idea. What are we here for? We try to put a smile on our guests' faces and that's why we came up with "Gorgeous Smiling Hotels".
Looking back on the past 14 months, tell us about how you reacted to the pandemic. Now you have 50 hotels, with a few thousand employees. How did you manage this?
I already had a bad feeling in February 2020. I saw that the booking behavior had changed a bit. We no longer had the amount of bookings that we had in February in previous years. And then in March, everything became apparent, and I have to pay a big compliment to our Head of Personnel and our personnel department and also to the efforts of all the staff in the hotels, that we realized relatively quickly: okay, we have to reduce from 100 to 0 immediately and put a stop to it. By mid-March, we had the minimum number of staff in the administration, so that in the end we could only work on a daily basis, but all the others were on short-time labor. And also many thanks to the employees, who all complied and said: ‘Yes, we'll go along with it, we understand.’
How do you make such a big decision, to go from 100 to 0?
It was a team decision. I didn't decide alone. We decided to consistently close all the hotels and then wait and see what happens. So it was a pure team decision here in Domagkstraße, at our head office. We said back then: ‘We'd rather pull the plug sooner than have it pulled by a third party. And I think that was the right decision.
How did you, yourself, keep a clear and cool head?
April and May last year we were actually all more relaxed. We said: ‘Okay, now we'll take this as a time-out. We benefit from the tax breaks, from the insurance policies, etc.’. We used April and May for ourselves, personally, to simply slow down again. The weather was actually quite good. Everything was fine.
June, July, and August were positive as well. Everything was excellent. September was also good. I would say that the big depression, also for me personally, came in mid-October and November. The weather was bad and we saw that the second lockdown would hit us harder. And that was truly the case.
I also had bad days and that's why it was always good that we tried not to do this pure home office work, but to always work together here in a small team, because then you can also support each other. That was good for me because Monday was always the biggest disaster for me.
It was really a small team here that supported each other every day and said: ‘Come on, we can do it. We will really come out of this crisis in the way we imagine.’ That was very, very good.
Before Covid, what were your plans for 2020 and beyond? You were already looking to adopt Duetto. What else was on the horizon?
Our plans haven't really changed a lot. In 2020, of course, we opened many hotels that were in the planning and implementation stage. Of course, in January 2020 we had a different forecast for the hotels. That's the way it is.
We have just opened up a new hotel in Kiel in 2021. We will open in Rostock in the next four weeks. So that's what we're trying to do. We know that we have to work with a different priority right now - the forecasts we once had have all been shot to pieces. That’s pretty clear.
We’ve talked about revenue and overheads, such as staffing costs, but what about real estate? How did you manage your relationship with landlords and investors during this time?
We actively sought talks with our landlords, which at the beginning - I have to say - were sometimes very hard. It was completely new territory. We had a rent suspension for April and May. But we knew that couldn’t continue.
Over time, the talks have actually become more intense and also better. Because I think it was also clear from the investor's side - or from the landlord side - that we can't be held responsible for the closure of the hotels. It's not mismanagement, it’s a pandemic.
We said: ‘Let's live through this pandemic together’, and then we will make agreements over the next few years on how to repay the outstanding rents, or the deferred rents. We will talk about it when we know that an end is in sight.
In the end, you make an agreement or say: We'll wait and see what happens.
What are your hopes and plans for GSH in 2022?
We are strongly motivated. In the last 10 years, we expanded, but we didn't take the time for many other things.
We will now focus on the things that we haven’t implemented in the last 10 years simply due to lack of time.
We are thinking about new concepts. We have reorganized and repositioned ourselves in the team, in operations, and also in administration, in order to transport our brands in a different way.
We are now working with Duetto, which we decided on in 2019 and implemented in early 2020. We have also focused more on our online presence.
We are now also trying to target more leisure tourism. This will perhaps be strong in Germany, so we can focus on it.
All this means that we as a team are really taking the time to permanently reposition ourselves.
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