Can hotel industry bounce back? Part I
Correspondent | Friday June 5, 2020 12:51
If the greatest painter of the 16th century Michelangelo di Lodovico Buonarroti Simoni were to be assigned to work on an artist’s impression of the hotel industry, it would be quite telling.
In this coronavirus (COVID-19) era, no doubt there will be a lot of bold, thick and dark brushstrokes on the canvass, painting a vividly grim picture of an industry mercilessly pummelled by the six-month-old pandemic.
Many hues would probably reflect pessimism instead of the evolutionary optimism considered second nature to what appeared to be a glowing and growing global ecosystem. Now, in the face of what seems like an existential threat, a gloomy and dark winter is looming ominously in the horizon for this sector. This bodes bad news for a country like ours where tourism accounts for over 10% of the GDP.
The recent development of hotels in Gaborone’s CBD added value to an industry that was clearly on an upward swing, generating healthy returns for investors and sustaining livelihoods, especially in hotspots like Ngami and Chobe, which have over time evolved into a mecca for tourists.
Only six months ago, hotel lobbies in Maun, Kasane, Victoria Falls, Swakopmund, Cape Town and Zanzibar were brimming to capacity with guests. Now, most if not all of them, are empty and eerily quiet.
The situation has been exacerbated by the global downturn in the travel industry since February 2020. Various key players in the hotel industry have been thunderstruck by the immense adverse effect on a sector that was hitherto quite promising and vibrant. Even for hard-core optimists, a glance at the crystal ball for now only reveals a caliginous mixture of uncertainty and hopelessness. All players are pondering over this question; is this industry going to crack under pressure or will it bounce back?
Just to give this matter an informed perspective, this industry has been hit before. The dip on international travel that was experienced on the back of the 2008-2009 financial crisis resulted in the plummeting of room occupancy rate and a sharp decline in revenue per available room in many hotels, including the top-tier high-end brands.
However, the current after-shock effects of the sustained pressure on this industry patently depict a fragile industry that will always remain vulnerable to epidemics and pandemics. In fact, hoteliers are all in synch on this one fact that the effect on the industry will exceed everything that unfolded between 2008 and 2010.
All operators are reeling from the effects of the unforeseen but ginormous dents on such cash cows as events, conferences and conventions. This has not only hit operational staff who had probably started budgeting for performance bonuses, but also investors who were just on the verge of stretching out their hands to receive dividends.
While this article will not attempt to paint a rosy picture of an industry on a downward swing, seemingly heading full throttle toward a state of wretchedness, it highlights a few things that this sector can work on to survive these confusing and trying times and brace itself for a recovery that might be long in coming.
Apart from saying a prayer, fervently pleading for delivery from the onslaught of evil, there is a lot more that hoteliers can do. The overarching dynamic framework suggested here can be summed up in the following broad strategic imperatives; drafting and execution of an all-encompassing but targeted plan for meaningful engagement of stakeholders, unwavering determination to consistently implement a shrewd and bold plan for conserving the little cash there is, and an awareness and deliberate exploitation of the relief infrastructure set up by the government.
The first of this two-part series will deal with proactive engagement of stakeholders, effective harnessing and development of staff’s skillset, empowerment of executive management and building the confidence of guests. The second article will focus on engaging financiers, the government, HATAB and investors, as well as operational efficiencies likely to be derived through conservation of cash, strategic sourcing and cost containment.
A stakeholder management plan is a must for all hotels that have to come up with initiatives necessary to kickstart practical and rewarding engagements.
It all starts with identification of the universe of key stakeholders and coming up with a matrix that should include operators, staff, guests, investors, lenders, suppliers, the government and HATAB. A decisive strategy geared toward managing expectations of each stakeholder will be pivotal to sustaining hotels as going concerns.
Resourceful staff is an important catalyst to reviving the industry. The current slowdown in business offers operators a fine opportunity to train staff.
A cross-functional approach to training and managing human resources would be essential in order to create a fully versatile and responsive workforce. Exposure to technology is a key intervention that would enable operators to build a staff complement that speaks to its operational needs.
This is not the time for some kind of ivory tower mentality. Executive management should make time to engage staff, challenging them to be creative and asking them to come up with suggestions for improving earnings.
They have to feel that they are an invaluable part of the team and that they are gainfully employed. There are some things that though important are hard to do when hotels are full. One of those things is deep cleaning. Low occupancy of rooms should afford hotels an opportunity to plough some of its human resources into this kind of work.
Rather than rush to lay off workers, a culture of remote working for staff not required onsite should be embraced. Space conserved from this intervention could be used to generate revenue for the hotel through targeted leasing to a carefully selected set of tenants who would add value to the operation of the hotel.
No doubt this period of uncertainty would breed anxiety on some staff members, especially those on furlough. These are the people who would have in the past passionately worked their fingers to the bone in the interest of the business. It would be essential to find ways of motivating such staff and uplifting their waning morale.
Empowerment of the executive management is vital. All hotels with a structure where management responds to the board would not have the luxury of directors of the board being indecisive or taking an inordinate length of time to make decisions.
Agility in decision-making would be crucial going forward. Without necessarily abdicating their role, it would be advisable for boards to consider empowering management to make swift decisions in the interest of their business. Failure to grab opportunities at the right time may reduce some outfits to be uncompetitive followers.
The hotel business thrives on a supportive patronage. It is essential for operators to pay attention to all the important aspects of rebuilding the trust that has been dragged into the mud by the coronavirus.
It would start with building the confidence of potential guests on such crucial protocols as safety, security, sanitation and hygiene. A go it alone mindset would be regressive, hence the need to benchmark and put in place globally acceptable protocols specific to screening employees and guests, social distancing and even masking.
However, it would not be enough for hotels to put in place practical and reassuring measures. They should go a step further to make noise about this, exploiting online platforms to the fullest and coming up with creative ways of reaching out to potential customers as well as those already on their database.
While guests are aware that hotels are in business, they would still be drawn to hotels exhibiting a strong inclination toward accommodating their interests. Hence, hotels should resist the temptation to come up with policies that are not friendly to cancellations, thinking that this could boost their cash flow position. The truth is, such policies may only serve to repel potential guests, result in loss of existing customers and could even earn hotels negative reviews. This is the time for hotels to expend effort on growing their customer base and enhancing their brand, not imprudently destroying it.
Carefully worded and perhaps artistically depicted reassuring communication should scream this positive message, “we are open for business, and your safety is of paramount importance to us”. All operators harnessing technology to enhance their visibility online will in time be rewarded.
The hotels’ websites should revamp their existing Frequently Asked Questions section to address issues that are now at the forefront of the minds of potential customers, even addressing concerns that might seem frivolous. One of the questions potential guests would want answered unambiguously is, “in the likely event of a guest or employee falling victim to coronavirus, what would happen?” A reassuring answer will go a long way in attracting and retaining patrons.
The optimism that surrounds the hotel industry is certainly not misplaced. Of course operators have their job cut out for them. And they should be eager to perform their role diligently if this sector is to survive.
Apart from dealing with financial imperatives that would drive operational efficiencies, the next article will confine itself to engagement of three important players in this industry; financiers, HATAB and the government.
*Paul Batshedi More is a property specialist and motivational speaker
PAUL BATSHEDI MORE*