Strategy needs to be ON even when the world is OFF
— 5 experts shared their view
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It is completely understandable that most hospitality industry companies are focused on short-term survival right now. World, business and industry conditions require such attention. However, as time passes and we settle into our routines and manage to put out our most pressing fires, it will soon become time for the industry's leaders to look past the clouds of uncertainty hanging over us and take the necessary time to consider how firms need to position themselves once the pandemic crisis has abated and the world returns to normal. Strategy is about the future, and it is a mediator between the firm and the environment. It is what helps us to evolve proactively to changing conditions. Thus, while the crisis will in fact end one day (though we don't as of yet know when), it would be naïve to think that the After Corona (AC) normal will be the same as the Before Corona (BC) normal. New laws, new social norms and behaviors, changes to democracy and governmental intervention policies, employment shifts, and so on will have helped create a new world for people and firms.
The question, therefore, is what will the new normal look like in the AC world? More specifically, how will the decisions, actions and events of today shape the hospitality industry of tomorrow, and what can firms do to prepare for the changes to come?
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).
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:
- Operational considerations: sanitation, disinfectant, safety, cleaning, social distancing, testing, etc.
- Anticipate more alignments between owners and operators when the hotel would reopen, with a new structure of contracts
- Manage hotels in a leaner way with new operating models, especially during the pre-opening period
- Rethink the fixed cost components to a more variable structure
- Innovation and Tech-savvy (infrastructure collocation, digitization, etc.)
- Leverage domestic supply chains to support our industry
- Work on revenue strategy: plan for domestic leisure segment, since corporate might be a long-haul segment to recover
- 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
- More importantly, mitigate short term to mid-term cash flow prudently
- 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.