The past six months of the COVID-19 pandemic has forced companies and individuals to reconsider not only what they do, where they do it, and how they do it, but also why they do what they do (or don't do what they don't do). In other words, it has forced executives to reflect more intensely on both the external environment in which their firms compete and the ways in which they do so. Strategic thinking, management, and implementation have never been more important than now in the hospitality industry as countless firms across the world are fighting for their survival. As Professor Richard Rumelt once wrote, successful companies may not actually engage in strategy work until the "wolf is at the door." In today's COVID-19 world, not only is the wolf at the door, but he is scratching to get in, ready to blow the house (or hotel) down. The question, therefore, is what have you and/or your firm learned most about your business strategy, and what are you doing about it?

John Willcock
John Willcock
General Manager at Macdonald Hotel Windsor

This COVID pandemic has forced us to “rip up the rule book” in a number of ways. Previously held assumptions on how we operate, our business mix and market trends have been reset and we are in the process of setting the strategy for the future, for as I write this the UK is in its 3rd lockdown.

Setting any form of strategy during this pandemic has its challenges for we are in a very fluid, uncertain environment and need to be extremely flexible, being prepared to change our plans at sometimes very short notice. This applies to government-enforced restrictions on business as well as consumer behavior and demand.

Pre-COVID, our business strategy was centered around the international conference and leisure markets, individuals, and tours. Not only have these segments provided zero volume since the first lockdown last March due to travel restrictions, but it is also inevitable that when restrictions are eased, they will not return to pre-COVID levels, at least not in the foreseeable future. This is particularly the case with the international conference market, which is predicted to be radically different now that firms are so reliant on technology to hold virtual meetings over the past year. Executives will question the need to commit to the cost involved in organizing face to face meetings when it can be done virtually at no expense. Individual international leisure is expected to be strong again but it could be a long time before we see this return and tour groups even longer due to social distancing/capacity restrictions.

In the same way, our transient corporate business is not expected to return to the same level as in the pre-COVID days. Many firms now encourage their employees to work from home and the economic impact of the pandemic will surely cause executives to review their business travel expenditure.

With the almost guaranteed absence of international travel and the weakened demand for corporate travel in the short to medium term, we need to target other segments for a bigger slice of the market. The biggest opportunity lies in the domestic individual leisure market. As was proven last summer when hotels were permitted to re-open after the first lockdown, there was significant demand for “staycations” with many operators reporting similar occupancy levels to the previous year. With international travel restrictions expected to be in place for several months ahead, we need to be fully engaged in capitalizing on this demand when we emerge from the current lockdown in Spring and make it our priority market segment. This means allocating significant resources to marketing campaigns that will reinforce this message to our customers. We are also working closely with the local tourism board to promote any events or activities that might appeal to our customers as well as connect with their followers on social media.

With the majority of weddings having to cancel in 2020 due to the pandemic, this has created a golden opportunity for 2021 and 2022. There is a higher demand than ever for weddings, as those couples who have had to suspend their plans for 2020, combine with the standard annual demand we would expect. We are therefore more focused than ever to capture this lucrative market.

In addition to the markets we target, the COVID era also provides us with the opportunity to review how we operate internally, thereby increasing our profitability. The pandemic has forced us to make a significant proportion of the workforce redundant, which has allowed us to restructure the team into one which is more efficient. This has been particularly the case with our food and beverage department, which was running at a loss pre-COVID but overlooked due to the high overall profitability of the hotel. We have now created a food offer more suitable to our business with a vastly reduced kitchen team, enabling the department to run at a profit.

As a result of requiring to close the business for so many months, with zero revenue, the focus has switched to our fixed costs. Every pound being spent is being heavily scrutinized to assess if savings can be made. Some supplier accounts and partnerships are clearly essential for any hotel business even when closed. There are some agreements, however, that may have been set up years ago and have never been properly reviewed since. We have found that there are several agreements that are either no longer required or that do not justify the cost and have since been terminated. This will again put us in a more efficient position when trading picks up and we can maximize our profits.

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