The BC and AC of Hoteliering
By Natwar Nagar, Managing Partner at Hotelivate
The world has suddenly changed.
Many of us in organisational leadership positions have suddenly been presented with more time to think, discuss and analyse. As we take two steps back and look at our enterprises with a broad view, we can possibly see things that we would have otherwise missed in our typical day-to-day work lives. At Hotelivate, the firm's partners have been spending these past few days speaking with industry colleagues, trying to arrive at both short- and long-term strategies that may help the sector resurrect and even come back stronger, once this passes. I must admit that my most recent discussions over the last 48 hours with Industry leaders, HR Professionals and Business Managers have been like a silver streak in the grey sky.
Not so long ago, during World War 2, Winston Churchill and his council were amazed by the resilience, cooperation and selflessness of their people, even while the Nazi were busy bombing the city of London. In fact, in every crisis in human history, we have risen to the occasion, extending care and protection to each other. I feel and sense this same empathy today. Nearly all domestic and international hotel companies - along with the owner community - continue to firmly stand by their employees in these times of distress. To be honest, in my 25 years of experience with the service industry, I have yet to see a show of solidarity, an emotional bond, and a sense of commitment that parallels what one is getting to see now. The hotel industry's positivity to fight back, its spirit to re-build and protect its employees, is exemplary. It is with this positivity that I am driven to write this article, with the firm belief that the way we deal with these unchartered territories will determine our success in the future.
Hotelivate estimates that the Indian Hotel industry has almost 200,000 employees on roll (inclusive of the nearly 40,000 contractual/casual labour) across branded/organised hotels. In the current context some interesting facts have emerged, which will be important to build the confidence of the fraternity.
Triumph of Truth
Times like these warrant complete trust and transparency. It's important to discuss the business realities with our employees, share plans for the upcoming days, and create an environment of an open and collaborative partnership. We need to care for and trust our employees, as this will be the single-most important bond that ultimately creates a powerful, energetic culture whose dividends we will reap for a lifetime.
Extraordinary Times, Extraordinary Thinking
To brace the new reality, it is imperative for organisations and leaders to adapt and change their leadership styles to suit the need of the hour. We foresee organisations going through two critical phases:
- Phase 1 will focus on building a survival strategy, to ensure regular and sufficient cash flows. This phase is likely to witness cross border teams/a Task-Force Team across various functions, coming together to create just-in-time strategies and provide solutions to seek new business. This period will foster creativity, quick decision making and a rapid response to cater to the needs of the market. This phase is likely to witness the partial dissolvement of standard operating procedures for most functions. The Task Force Team will work towards measuring each opportunity and taking decisions in real time. This phase will test the true mettle of a leader. Maturity, and a collectively flexible, agile and supportive environment will be the new mantra. The role of subject matter experts will be highly valued, as the organisation will need to be sharper and faster to react to the dynamic market.
- Phase II will emphasise on building for the future. Given the lack of predictability around the containment of Covid - 19, organisations and key leaders need to focus on drawing a plan with a six-month horizon. The larger tourism sector has several vectors, all interconnected and interdependent to a great degree. While hotels & resorts come to terms with the reality of 0% occupancies and no real business on books for the foreseeable future, the humongous losses being faced by the OTA partners, airlines and tour operators will all be in need to be rebuilt on a common thread of honesty and transparency. The industry will have to learn to develop and nurture long term bonds with its affiliates. Common nomenclatures such as market leader, shareholder value and profits will need to change to "Market for all and Survival for all".
It is imperative that once good times start rolling in, the top management prioritise engaging more with the local teams, sharing critical information and being realistic in their expectations. All long-term contracts, relationships, market trends and engagements will need a rethink and rework. Business managers will have to start thinking about diversifying risk and developing alternatives. At the strategic level, all companies should focus on creating a committee or role of Chief Relationship Manager. This role could reside either with the CEO's office or CFO, with the primary responsibility of analysing and fostering collaborative relationships with external and internal stake holders. This role should also be entrusted with the responsibility of identifying and highlighting potential risks to survival and sustenance, without worry of being ignored or penalised. This phase has clearly highlighted the need for dedicated resources who spend their time and efforts in assessing and planning for all contingencies - both financial and human element related.
The new work environment: our Home
As the world embraces the trend of working from home,
the usual practice of running to office may take a pause. Hotelivate had introduced the concept of work from home more than a decade ago; over the years, our team members have mastered the art of self-discipline with no compromise on productive output. With work from home becoming a global norm regardless of sector, employees must commit to being responsible, conscious and focused.
Employees and Management
Our vulnerability in this crisis is leading to the creation of a new ecosystem across most organisations. Companies that stand by their employees in these testing times will emerge on top. Traditional structures of hierarchy will be eliminated, and a new way of life shall govern us in the form of work-life balance, clear communication, flexible approach to work and respect for all. Leaders who do not change shall be forgotten fast. High-level EQ would be the testing ground to qualify to lead teams. On the other hand, employees too, will look at organisations that offer long-term growth with slow and steady progress in life. Brand appeal is likely to scale down in the pyramid. The role of Human Resources will progress from being transaction oriented to having a solid emotional connect with employees. Health and safety shall become a necessity and organisations will need to make it part of their DNA. Social responsibility will become part of our life. Engagement shall be the key word for all departments, especially sales, operations and F&B as we build back confidence and invite people to spend quality time in our hotels.
The role of a Chief Revenue Officer will be critical to business success over the next six months. The role is likely to see a paradigm shift: from being office-based, to a more hands-on, on- the-field role. The focus will be to renew, build and connect with everyone across the world. A personal equation and a bond based on trust will determine the success of this function. Profits alone will not be the driving force; instead, a deep commitment to building long term value will become the foundation of this role, as people seek reassurance and the commitment and willingness to help each other. Sales on the ground shall make a come-back. Concentrated efforts offering flexibility in booking and cancellations will take precedence. Customised packages for families, group and boutique offerings (e.g, room and meal combo) for corporate travellers need to be carved out. Safety and personal hygiene shall be a priority.
Compensation and Payroll
We believe the industry will see a flat year with compensation reduction of 10-15% for the mid-level and 18-25% for senior management. We also think it imperative for companies to take a more cautious approach for business continuity and request for voluntary reduction from employees, as this would enable cash-flow management and allow the companies to prevent retrenchments. This should be done with every hope that organisation shall be able to pass on the benefits back in the form of bonus or ex gratia at the end of the year.
As a firm believer in our industry's grit and resilience, I do believe engagement and positivity should be our mantra in this time of hardship, as we await happier times of welcoming our guests back in.