World Panel
Viewpoint13 April 2020

Strategy needs to be ON even when the world is OFF

Hotel Ownership, Development and Management

— 5 experts shared their view

share this viewpoint
Strategy needs to be ON even when the world is OFF
This viewpoint was created by
Demian Hodari, Associate Professor of Strategic Management at the Ecole Hôtelière Lausanne (EHL)
Tim Weiland
General Manager at The Alpina Gstaad

The new normal in the western world may adopt more social gestures already long in place in many parts of Asia, where handshaking is less prevalent and wearing face masks in public has long been accepted as socially wise. We are a culturally diverse industry, and while we probably have not always been the fastest innovators, we certainly know the importance of adapting to everyone's needs on a personal level. This is in the DNA of every hotelier and this must not change. see more

While the current situation certainly leaves the time to work on strategy and long-term plans, I can't help but wonder how many companies are currently ripping apart the projections they had made just 6 months prior to the whole crisis. Flexibility, creativity and a leaner, more dynamic structure will certainly help to recover faster from the current situation, to then quickly find our place in the BC world.

Comment
Anne-Marie Auriault
Founder & Managing Director at Pimlico Asset Management, and Independent Board Member

Even if we cannot predict when the start of the recovery process will be in each country, it should not stop us from making plans and adapt accordingly to a slow rebound. A most likely scenario is a U-shape type of recovery if the virus is contained, and we can start seeing a slow rebound (airlines reopen, diagnostic testing in place, etc.). Having said that, we could also be facing a virus recurrence with slow long-term growth and a muted world recovery (measures are not sufficient and social distancing continue during several months). see more

Business travel is going to be impacted, where large companies will look at reducing business travels to meet sustainability goals and use technology in a more efficient way. However, leisure travel may come quicker, since people would like to get away from their homes if they can still afford some vacation.

In order to prepare the changes to come, hotel owners and asset managers should seek to boost resilience and focus on:

  1. Operational considerations: sanitation, disinfectant, safety, cleaning, social distancing, testing, etc.
  2. Anticipate more alignments between owners and operators when the hotel would reopen, with a new structure of contracts
  3. Manage hotels in a leaner way with new operating models, especially during the pre-opening period
  4. Rethink the fixed cost components to a more variable structure
  5. Innovation and Tech-savvy (infrastructure collocation, digitization, etc.)
  6. Leverage domestic supply chains to support our industry
  7. Work on revenue strategy: plan for domestic leisure segment, since corporate might be a long-haul segment to recover
  8. Anticipate more M&A activities: “the bigger will get bigger “and consolidation will accelerate in the recovery. There is still a colossal amount of capital to be invested in our industry
  9. More importantly, mitigate short term to mid-term cash flow prudently
  10. To conclude, we will keep facing more events like this more frequently. We need to make sure the tourism industry can withstand a future crisis.
Comment
Dominic Seyrling
Director – Investments at Archer Hotel Capital

A lot of different angles could be reviewed with respect to the BC/AC comparison. From an owner's perspective, the current crisis will hopefully benefit us in the long term as we are currently busy 'unfixing' some of the fixed costs of our industry. The most significant factor clearly is payroll. As Europe and the US do not seem to be as successful as some Asian countries in containing the virus we may soon find ourselves in a prolonged period of subdued hotel demand which will put increased pressure on cost containment. Hence, simplistic operating models, select, yet experience-orientated service and technical advancements (having shied away from the hotel sector so long) such as automatic check-in will hopefully become the norm more quickly than would have otherwise been the case.  see more

Setting one's strategy in that direction could reap long-term benefits for all.  

Comment
Alex Sogno
CEO - Senior Hotel Asset Manager at Global Asset Solutions

The big question mark after the coronavirus crisis is, what will be the people's perception? In the short term, the customers and our employees will need to be reassured, with re-inforced hygiene control processes. Also, we expect customers to want more LOCAL: buy products locally made, eat local food, travel domestically... We shouldn't forbid ourselves to be optimistic, as this crisis will also generate lots of opportunities.

Comment
Scott Woroch
Partner and Managing Director, Kadenwood Partners

The longer this lasts -- the lockdown specifically, and then the threat of contracting Covid-19 -- the greater the likelihood that there will be more significant changes in behaviour.  Certainly in the short term, when the recovery does start, large group and convention business will likely be the slowest to recover, as both travellers' willingness to meet in large groups, and corporates' ability financially to support those events will be compromised.  Travelling closer to home -- staycations -- will likely surge, with drive to destinations likely to recover faster than long-haul destinations.   see more

The recovery and health of the airline industry will be a key contributor to hospitality.  The sooner that access opens, and is increased with greater airlift, the faster the recovery will begin in earnest, particularly to long-haul and international destinations.  Governments will be asked to step up, especially with the flag carriers, to support the recovery of the airline industry.  

Finally, hotel companies that are seen as good corporate citizens -- supporting their employees with financial aid and job reinstatement, and supporting their guests with more generous cancellation and rebooking policies -- will be remembered and rewarded.   

 

Comment
Advertisements