As the Coronavirus pandemic continues to pick up speed in terms of spreading, it is difficult to even begin to estimate its full impact on the world-wide economy. At this stage, it has a very tangible impact on hotels: an unprecedented drop in booking pace, vast amounts of cancellations, and many events ‘postponed’ for the time being. Looking at a great variety of hotel markets in Asia, Europe and the Americas, hotels are now running at close to single-digit occupancies. The hospitality industry is definitely in a “Corona-crisis”.
During such periods, it is vital that hotel owners, management companies and hotel teams on-site continue to be rational. We need to deal with the facts and act accordingly. Hotel teams are running a complex business, trying to achieve the best possible results under the circumstances, maintaining brand standards, retaining and managing talent, and ensuring customers are satisfied. At the same time, owners continue to seek sustainable returns, and to achieve this, the operation needs to adapt to this crisis rapidly.
Through the application of industry best practices and customized tools, we as Asset Managers work side-by-side with all parties involved to identify and then implement a profit protection plan as well as looking at realistic forecasting and productivity enhancements.
How can hotel businesses deal with so called “Black Swan” events?
Basically, “Black Swans” such as COVID-19, SARS, H1N1 or the September 11th attacks are rare events that no one could have predicted, which dramatically alter the course of history, society, and economies. “Black Swans” often create chaos in the short term and are drivers of major change in the longer term. As Asset Managers, we prefer to think about their positive potential and the opportunities they may create.
Therefore, we encourage hotel owners, management companies and hotel teams to start planning as soon as possible to ensure that their businesses remain viable.
10 Best Practices Hotels Should Implement
- Have a very clear revenue management direction to avoid ‘knee jerk’ discount responses to reduced demand.
- Facilitate guest needs for additional hygienic care at all times.
- Planning for adequate staff coverage for essential business activities through appropriate human resource management.
- Safeguarding of employees’ well-being through instituting appropriate control and health measures.
- Managing relationships with suppliers, service providers, and customers.
- Maintaining effective communications with employees on epidemic-related issues.
- Consolidate the crisis management manual.
- Create a cost containment list now to be prepared to preserve the bottom line in case top-line performance is worse than budgeted.
- Build a Profit Protection Plan with the operator, based on potential shortfalls/scenarios.
- Try to maintain the guest experience if at all possible so as to avoid negative guest comments on-line.
Unfortunately, at the time of writing some hotels are already closing and government protection and postponement of financing obligations will be crucial to sustain the viability of these operations.
However, we should remain positive and start looking at how to better rationalise our businesses both from a revenue and from a cost perspective. We need to take into account the fact that some of the current emergency measures may become (semi) permanent in the medium term. Ultimately, travel will return as our industry continues to provide facilities and experiences for business as well as leisure.