In these unprecedented times, the travel and hospitality sectors have found themselves to be some of the most severely affected industries in the world.
It is unclear at this stage when restrictions and social distancing measures will be lifted or eased. However, even as these restrictions and measures are relaxed, the impact of the preceding months will continue to affect the hospitality sector.
The sector, which makes up a significant proportion of many countries' economic activities, is facing up to the triple whammy of a general reluctance of people to travel, a deep recession which will impact peoples' and businesses' willingness to spend and distancing measures, such as two week quarantine requirements for any arrivals to a country. It also remains to be seen if hotel conferencing and venue facilities will be as popular as before.
Of course there may also be opportunities to consider. We are likely to see a rise in staycations and, in particular, occupation at hotels and resorts which are situated in rural and seaside locations and those which have plenty of outdoor facilities and activities, such as golf resorts. Ongoing hotel development activity may look to focus on such locations; designing in mind (for example, in terms of technology and increased safety measures) for the new world in which we find ourselves.
Hotel companies have already taken action by furloughing staff, rearranging events and temporarily closing some locations. We have also seen hotel companies requesting reduced rents from landlords, Travelodge being a prime example. In this article we look at what hotels should be considering now while we wait for the unveiling of how the Government intends to ease the restrictions.
Plan, Plan, Plan
If restrictions are eased or lifted without a vaccine or effective treatment, there is a risk that infections will return and further suppression measures will need to be reintroduced, putting the hotel industry at risk for a second time. Owners and operators should be ready to respond to various potential scenarios that they could encounter upon re-opening. Being prepared and ready ahead of time will be key to survival. This includes:
- Putting in place a plan of action to anticipate an outbreak in a hotel or a forced lockdown of a hotel and how to prevent cross-contamination.
- Planning for staff illnesses and supplier frustrations.
- Health and safety policies to include continuous disinfecting of surfaces and deep cleaning of rooms. Businesses generally will need to demonstrate to customers how they have introduced procedures and practices to minimise risk and this will be even more important in the hotel industry. Enhancing the safety and security of staff and guests will be crucial to building confidence and differentiating.Planning for phased openings of hotels and considering whether furloughed staff will need to be re-introduced to work on a staged basis. The continuing support of the government will be important following the lifting of restrictions but, if and when the support measures are eased, difficult decisions will need to be taken on staff levels if occupancy rates remain low. Hotel companies may consider re-training and diversification to help to reduce impact and to retain talent.
Hotel maintenance
While hotels are shut, hotel owners should consider what planned improvements or renovations can be undertaken now to minimise further disruption when hotels are reopened. This of course has to be balanced against whether capital expenditure should be deferred to help ease the loss of income. However, there are some important aspects where investment could be particularly beneficial, including replacing furniture and fittings with easy to clean alternatives and bolstering staff and guest safety measures, for example by installing Perspex screens at receptions.
Tech
Hotel operators will need to consider accelerating the adoption of technology solutions as a way to minimise physical contact. Many hotels have already turned to technology to perform standard functions and they should seek to build on what has already been adopted. This could include contactless door entry, mobile check in and check out, food ordering at the hotel restaurant using a downloadable app on guest's phones and smart technology to allow guests to control lights, curtains, temperature and TVs from their phones.
Again this will be a way to differentiate, but it will also be a sound investment for the long term future if guests' habits are permanently changed as a result of the pandemic.
Terms & conditions
With the possibility of further shutdowns, terms and conditions and booking contracts will need to be reviewed to ensure they cater for closures at short notice. Guests will be wary of paying for rooms upfront so there will be a balance to be struck between attracting guests and protecting the future viability of hotels. Similarly, agreements with suppliers should be reviewed to cover short notice cancellations. Consideration should also be given to the possibility that a supplier may cease trading due to the crisis which may result in losses and having to source supplies from elsewhere. Wider use of supplier frameworks may be an option.
Many online travel agents (OTAs) have already updated their cancellation policies which may impact on hotels' own cancellation obligations. The terms employed by connected OTA's should be monitored. Hotels should consider what the implications would be if a connected OTA ceases trading causing, among other things, a reputational problem for the hotel.
It is clear that the Coronavirus crisis has caused considerable damage to the sector with a number of hotel companies having already entered into administration and former staff facing unemployment. Hotel companies will have to plan, and be prepared, for a number of possible scenarios that may develop as we ease out of the pandemic. Being open with employees on the challenges, taking action quickly and decisively, being prepared to take advantage of opportunities and thinking creatively as to how to operate with minimal costs will help see hotel companies through this unprecedented crisis. Thinking outside of the box has never been so important.
