Industry Update
Opinion Article 4 February 2021

Look Down Under to See What’s Ahead

By Larry Mogelonsky, Managing Director Hotel Mogel Consulting Limited

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Married to an Aussie for nearly 40 years, it's given me a more informed perspective on how Australia, and New Zealand for that matter, have faired during this pandemic. Without getting into the statistics, which you can look up on Google on your own time, it's plain to see that many countries in APAC have handled this crisis commendably when compared to those nations in other parts of the globe. And thus, hoteliers should look down under for guidance on what's next for their properties, wherever they are.

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Let's first take a step back and consider two big events in Australia's history that will perhaps give more context for why Australia has done so well, even when compared to other Commonwealth nations that have a similar system of governance as passed down from the British Empire.

Australia has always been a land of 'scarcity breeds ingenuity'. Even before the terraforming efforts of early European settlers, the continent has been always been hostile to stable living conditions. It's about four-fifths desert, with the farmable areas constantly shifting between floods and droughts (now exacerbated by climate change), and home to some of the most poisonous animals on the planet.

Aussies are true pioneers as they've always had to learn quickly to survive to the needs of a given environment or time period. Amongst many other factors, this is perhaps one of the leading undercurrents to explain why this country was the first nation to give women the right to vote in federal elections in 1902. And no doubt this attitude of constantly shifting one's mindset to adapt to the times has played in a role in how well the country has responded to the coronavirus crisis.

Second to consider from the annals of history would be the cane toads. While most of you may recall the joking reference to this event in a classic episode of The Simpsons, it is perhaps the pinnacle of examples of the dangerous effects of bringing invasive species into new ecosystems where no natural predators exist. If you think murder hornets are bad, look back to the intentional introduction of a handful of cane toads from the Americas to the Australian mainland in 1935 as a means of improving the sugar crop. There are now millions of this pest, predominantly in Queensland, and no clear way to eliminate them because their skin contains toxins that will kill most would-be predators upon ingestion.

As this introduction occurred several generations ago, it has influenced Australia's policy towards the environment and, importantly, its people's understanding of the importance of quarantine. Long before COVID-19, arriving in Australia via any airplane always entailed some form of disinfecting spray prior to disembarking as well as a highly detailed questioning of your prior travels at customs. With the cane toads as the age-old push for strong environmental controls (and amongst other factors as before), this has meant that, overall, the current generation of Australians was predisposed to having a better comprehension of the benefits of lockdown heading into the pandemic.

Those two historic precedents aside, one policy that Australia has enacted now is one that every hotelier should consider when mulling over how to strategically reposition a property for the post-Covid world. In a broad definition of its new policy, the nation requires all incoming travelers to quarantine for 14 days at a designated hotel, all at the traveler's expense for a flat fee of $3000 and with no direct contact to the outside world during this period. New Zealand goes a step further by requiring travelers to get a Covid test during this time, with refusal to get tested resulting in a second 14-day stretch of isolation.

With the push to get the engines of international travel churning again, this model may be adopted by other nations as a means to accommodate long-haul arrivals and help get hotels some revenues while still not inviting new localized surges of coronavirus cases. Particularly as many properties situated in larger urban markets (that is, popular arrival points for international travelers) are in dire straits when it comes to servicing debt, this 'quarantine hotel' proposition may present a path to solvency when faced with no other viable options for generating enough revenues to keep the doors open.

Still, it's a double-edged sword. Being known as an isolation center comes with a hefty amount of reputational baggage that's almost irreversible in the public's eye. That is, once you make the decision to start harboring quarantining travelers for a fixed fee in order to attain some more short-term cashflow, you may end up shutting your property off from other sources of revenue because customers from other segments will come to view your hotel as a place with an increased likelihood of infection.

In most cases, this represents a binary switch and not one that should be considered lightly. While it may come to pass that we get out of this craziness without having to adopt the Australian model on a global scale, it is nevertheless one possibility that you should be aware of. And certainly there are other lessons you can learn about hotel management in the post-Covid world from Australia, New Zealand, Taiwan and other APAC nations that have kept their numbers lower than most, so please keep reading and try to learn from those who are faring best.

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