Industry Update
Opinion Article30 June 2020

Is the Travel and Hospitality Industry Prepared to work with the Pandemic? Part One – Slaying the Beast!

By L. Aruna Dhir, A Hospitality & Feature Writer and Columnist

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Yes, you read that right! There is no grammatical error in the heading. To overcome and outdo the challenges brought to our threshold by the novel Coronavirus, we need to, henceforth, work with and not just in the Pandemic.

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COVID 19 has been unique on several fronts. It is not that we have not faced tough times in the past. From World Wars to the Great Depression the world has battled sharp, knockout strikes. On the medical front, from the 430 B.C. Plague of Athens to the Black Death in the 14th Century, from Yellow Fever to Polio, from Spanish Flu to Asian Avian Flu, from Swine Flu to Ebola to Zika, we have been ravaged by epidemics that have wiped out big sections of businesses and large masses of people.

But in recent memory, no epidemic has buckled us down so badly. And there are gravely strong reasons for it. Almost the entire world is hit by the current Pandemic which has moved from geographical zones to sections of the society. It has served a blow to almost all the businesses bringing the world economy down to its knees.

The havoc unleashed by the Pandemic is staggering. As of 29th June, there are 10,021,401 confirmed cases of COVID-19, including 499,913 deaths, reported to the WHO. The World Trade Organisation (WTO) forecasts a fall between 13% and 32% in the world trade in 2020 due to gross disruptions in life and the economy around the world.

Indeed, the travel and hospitality industry is amongst the worst affected.

With the governments in a bind over dealing with the chaotic devastation all around and with no definite cure or vaccine insight in the near future, it all looks bleak and worrisome.

I decided to speak with three hoteliers and travel experts to gain from their insights and learn from their experience.

Florida-based Kenneth Vincent is a Lama of the hospitality industry. He is the author of the book - So Many Hotels, So Little Time. In his remarkable 49 year career with hotels, Ken started off as a bellboy at the age of 14 and went on to manage over 100 hotels ranging from luxury boutique inns to limited-service properties, large convention hotels to multi-faceted resorts. He also performed consulting services for the State of Massachusetts. Ken formed eight companies, two of which are owned hotels. Having served on the board of directors of several companies, Ken, now, mentors young hoteliers in three countries.

David Ourisman is the Founder of Ourisman Travel and a Virtuoso Luxury Travel Advisor from California. A member of Brownell Travel, David Ourisman's company is one of the significant sellers in the world of Four Seasons and other luxury hotels. David himself is recognized as a leading travel expert in the region and has established a specialization in the luxury hotel segment of the industry.

Jannes Soerensen is the General Manager of the London-based The Beaumont, the timeless and old-world, uber-luxe hotel. Jannes was a Golden Key Concierge (Les Clefs D'Or), who began his career in his native Berlin, before embarking on a professional journey which took him to leading hotels in Paris, Barcelona, New York and London. Jannes has cut his teeth and earned his spurs at such legendary hotels as Kempinski Hotel Adlon, The Plaza Hotel and the Four Seasons George V, Le Bristol and The Connaught. Today, Jannes is recognized as one of London's youngest General Managers of a Five-star Property and has been voted as the Best General Manager in the World (for the second year running). Under the stewardship of Soerensen, The Beaumont rated amongst the top 25 Luxury hotels worldwide, was named as the Best Independent Hotel in the World in the 2019 Gallivanter's Guide Awards for Excellence.

My conversation with the three hotel industry professionals aims at outlining the circumstances at the ground level, putting the issues on the table and offering wise counsel.

L. Aruna Dhir - What is the effect of the COVID catastrophe on the industry?

Kenneth Vincent - The issue has been very tricky because the industry is so diverse. The effect of COVID varies considerably between a limited-service highway hotel, a resort hotel, a convention/business-oriented hotel, and even geographically. The impact on a hotel in NYC and one in Wichita, Kansas is not likely to be the same. Even two similar hotels in NYC will have seen totally different conditions. A hotel near the theatre district will have been hit much worse than one next to a major hospital.

The one thing they all have in common of course is that their normal market has virtually dried up as travel ceased. Occupancy rates in most areas have dropped to 25% and over 40% of hotels have simply closed. Government-mandated lockdowns have virtually eliminated travel by air, car, train, and bus.

With lockdowns lifting, the travel is still coming back, understandably, with a lot of trepidation. Corporate shut-downs have of course been a factor and will continue to be so even after lockdowns are eased.

David Ourisman - The lockdown has led to the complete shutdown of the industry. Destinations have had to simply put the shutter down. Americans cannot travel to Europe, and vice versa. The scene is being repeated all over the world. Many American cities and states, as much of rest of the world, have been sheltering in place and have had to shut down hotels and other so-called non-essential businesses. The entire state of Hawaii has closed its tourism industry.

Jannes Soerensen - When the crisis first hit, forcing very abrupt closures, initially without a government mandate, many in hospitality and travel felt this presented an existential crisis for the industry. Since almost every country in the world was eventually forced into lockdown and once we had time to gather our collective breath, I believe we have begun to focus on resuscitation and revival. So I remain nevertheless optimistic.

The COVID crisis has also exposed how close to the edge many of our staff live! This crisis rapidly threatened the livelihoods of many of the people that are the backbone of our industry. This is something we are seeing in society in general, with our care workers, too. People who are paid the minimum wage live a hand to mouth existence and have feeble pliancy.

Ongoing job security issues will grow as hotels, restaurants and travel partners are forced out of business. It is the people that have always made the difference in this industry and we now need to do everything we can to protect them and their families. Loyalty goes both ways. The health of our employees and our guests is also a fundamental concern and some of us have lost colleagues and friends, and know people who have been very ill.

I think there is a crisis of lack of self-confidence: the industry feels particularly punished in this Pandemic and it is true that it will suffer more than most industries. But there are green shoots and there is hope that opportunities will come out of this, that better practices will evolve and that we will all work in a more cohesive and united way, for the benefit of the planet.

L. Aruna Dhir - What is the paramount leadership role of the Top management in all this?

Kenneth Vincent - This of course depends on what top tier management we are considering. In a 120 room, limited service hotel the top management is the G.M. and he/she will be able to do nothing without ownership approval and more often than not that will be to simply lock the doors.

Top tier management in a franchise company has a few more options. Things like waiving franchise fees and mandated FF&E reserves.

The top management in a management company or ownership group with multiple hotels (and even franchise brands) has not only the role of deciding which hotels to keep open and which to close but also a wide range of employee conditions from corporate staff to new line employees.

Sadly, in all those situations the one common result is that many will be laid off, terminated, or will suffer temporary pay cuts. There is no option.

David Ourisman - Top management is in the difficult position of answering to owners and their financial pressures while simultaneously maintaining relationships with their team, travel advisors, and valued guests.

There are no easy answers. Tough decisions will have to be taken. But we hope that they will be taken with a strong moral compass and high emotional quotient, particularly keeping in mind the lowest common denominator. Yes, it is indeed, hard-hittingly Herculean as the turnaround time for the businesses to come back to the past revenues is very long.

Jannes Soerensen - The role of top management at this time is to stay informed, to communicate and to plan. It is important to keep in constant touch with guests, staff and partners in the industry. It is crucial to maintain the connection and emotional link. Don't hesitate to communicate, even if you don't have all the answers.

Government lobbying under the umbrella of a hospitality association and presenting a united front when it comes to formulating what the industry needs to reopen safely is also a fundamental element of the role. We all need to work together to make this a success.

And then there is the reopening planning. I maintain a small, tight team of executives to manage the building, to remain in touch with the travel industry, to communicate and to oversee the reopening, with new protocols in place.

L. Aruna Dhir - What are the key factors in employee management and employee engagement?

Kenneth Vincent - Well, we can use all the cheerleading words we want. Show compassion, be sympathetic, promise employment as soon as possible, etc. The reality though is that most hotel personnel live paycheck to paycheck and when that paycheck stops coming there are no words or promises that will do much to improve morale. The hardest hit, are those that rely on tips for the majority of their income and they are among the most susceptible.

And that is the segment we must focus on.

When people are worried about feeding their families, paying the rent and utility bills, and possible loss of their car(s) there is only one thing that will improve their morale...money!

In the case of the United States, some hotels have qualified for small business help from the U.S. government. That is in the form of low-interest loans. However, those loans can be forgiven if the loan is used to keep employees on the payroll. Of course when that money runs out then the problem may still be faced. That is also of minimal help to tip employees.

It should also be noted that most of the known hotel brand names don't own very many hotels. The vast majority are owned by others and have a franchise to carry the known name. That is true of Marriott, Sheraton, Hilton, Choice Hotels, Holiday Inn, etc.

So when we are considering what hotel companies can do to keep up the morale of their employees we have to define just who we are talking about.

David Ourisman - During past financial crises, the hotels that bounced back most quickly were those who kept their entire teams on the payroll. Obviously, those hotel companies with large financial reserves have a distinct advantage.

But even smaller ones will have to pencil in permutations and combinations to see how best they can balance out.

Jannes Soerensen - It is important to keep in constant touch with the workforce. We are extremely fortunate because a combination of the UK Government's Job Retention Scheme and the generous support of our owners have meant that we have been able to furlough all our staff on 100% of their wages. So they all feel secure financially and they know they can pay the rent and look after their families.

But their mental well-being and morale is a concern and we have worked hard to stay in touch with our people. Together with my Executive Team, who are not furloughed, we communicate on a daily basis with the staff, wherever they are, and especially with the most vulnerable.

We have set up Workplace (by Facebook) as a forum for interaction and communication; we send regular e-newsletters to the staff to keep them up to date; we have a daily social zoom call at 6 PM that anyone can dial into for a chat; we offer a daily meditation session at 10 AM; there is an active fitness group; we hold quizzes and competitions; there are voluntary training sessions, and managers keep in touch with their staff by telephone and email on a one to one basis. For those that are struggling, we provide access to one to one counselling, should they desire it.

L. Aruna Dhir - Guests are the fulcrum of our industry. What will have to be done to acquire an ideal level of guest-orientation?

Kenneth Vincent - A highway hotel has very few repeat customers in most cases. Therefore they have little need for a sophisticated computer system to stay in touch with the guest. Larger hotels, resorts, and chain-owned properties usually do have a system that tracks guests and thus can communicate with them. A letter or email expressing the hotel's hope for their well being and updating them on planned changes at the hotel would be something that may both, maintain awareness and garner goodwill.

Some of the letters/emails I've seen from hotel companies include heavy discounts on room rates. Those vary up to 65%. Others have stressed their new cleaning standards and the steps being taken to protect their guests and employees. The latter is clearly an effort to override the fear that the Pandemic has implanted in the minds of the travelling public.

Of course, the downside of both tactics could be that it raises the question of why were rooms so expensive before, and why were hotels not cleaning to a high standard before. It is a Catch 22 position.

David Ourisman - Some hotels have found creative ways to stay in contact with their guests. I've seen many interesting emails that delight with film and storytelling, playlists of music, recommended reading, authentic recipes, and ingredients for iconic drinks for which their bar is known. There are several creative and interesting options to keep the relationship alive.

Jannes Soerensen - Be open, be transparent, and communicate. But do not sell. We have been in direct touch with guests that still had reservations, which we cancelled at no charge. We send newsletters promoting London as a virtual destination. We continue to engage on social media. And I am in touch with many guests on a one to one basis, people who cannot wait to start travelling again and to return to the hotel.

We will carry on with this discussion in Part Two where we will talk about the situational crisis, the solutions that can be explored and the strategic thinking that must be put into place.

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