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

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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)
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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).

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.
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