Let’s keep talking about solutions. What should the hospitality industry do, in light of the global effects of the Covid-19 virus on communities and economies? Where is the opportunity? Whether we are investors, operators, lenders or advisors, how can we as an industry collaborate, plan and act, in order to weather the storm and emerge in a position of strength?
HoCoSo shares ideas and initiatives on how to tackle uncertainty, and develop best practice solutions for different stakeholders in the hospitality industry.
A month ago, I wrote about the coronavirus. The World Health Organisation (WHO) was reporting around 25,000 cases. Roll on four weeks and over 95,000 cases have been confirmed across 79 countries. Global financial markets have responded negatively to the global disruption, to the supply chain, and to travel patterns.
We are in for a bumpy ride, for sure; but as the HoCoSo team was reflecting on previous seismic shifts in our individual careers, we all concluded that there is always upside in every crisis. The yin and the yang, if you like.
In fact, the direct translation of the Chinese character for crisis (危机) is danger + opportunity. So, we have launched HoCoSo CONNECT as a discussion forum, to bring the hospitality community together; to work on solutions; and to support and collaborate with each other.
The forum will focus on three particular areas:
1. Collaboration
The heart of HoCoSo CONNECT is communication, with industry friends, colleagues, clients and suppliers. We are better together. The collective power of different minds and perspectives can trigger ideas and solutions that might not be immediately obvious.
Here’s an obvious one, for example. Operators – resist the urge to drop room rates! You are good at rewarding guests with something more than just points; so is there a package you can offer that includes something your guests might value in this current climate, such as an airport transfer or optional in-room dining? If you’re not certain what resonates with your guests at this time, ask them, get in touch with them, reward their loyalty, exceed their expectations. As part of HoCoSo CONNECT, we are holding focus groups with hoteliers and their customers to gauge sentiment and find creative solutions.
For investors, stakeholder relationships can grow stronger in a crisis. Playing hardball rarely solves the issue of declining returns. Rather, we have seen that pragmatism, transparency and partnership can drive improved outcomes. Explore the full breadth of options – including investment – before removing anything from the negotiating table.
In Asia, for example, hotels have been actively taking advantage of extremely low demand to refurbish assets and to train staff. As part of HoCoSo CONNECT, we are also launching HoCoSo Co-Education, starting with an off-site seminar on management contracts and negotiation theory. For more information or to discuss a bespoke course, do contact us.
As individuals, our challenge is to keep events in perspective. The vast majority of us will be physically unaffected, but we still have a responsibility to play a role in the containment of a virus that appears to be easily transmitted and puts physically vulnerable members of our communities at risk. The cancellation of industry conferences such as IHIF (2,500 delegates), ITB Berlin (160,000 visitors) and MIPIM (26,800 participants) were on the back of Government guidelines and restrictions, aimed at containing the spread of the virus. Extreme measures, in this case, but undeniably responsible, too.
2. Planning
This is also the time for using those roundtable discussions to create a plan of action. In markets with no reported cases and strong domestic demand, this may be to “carry on as normal” for now. In other markets, it has become a major risk management exercise. Given the fluidity of the situation, the plan will change but it should still be anchored on some core principles. The HoCoSo plan is anchored on our answers to these questions: what are our strengths; how do we mitigate our weaknesses; what do we stand for; and how can we create value for our clients and stakeholders?
Above all, business carries on – perhaps not quite as normal – but the industry is resilient and we are adaptable. Projects are continuing, proposal requests are still coming in. We do have some travel restrictions in place, both self and client-imposed.
As a result, we have increased our video-conferencing services to provide clients with an alternative to physical meetings. This is also one of our strengths; as regular video-conference users, we find it the next best alternative to meeting face-to-face. The upside? We can still “meet” and it is environmentally more sustainable than getting on a plane.
So, for hotels that normally target MICE business, a few obvious opportunities spring to mind. With big events being cancelled in the short-term, can they be rebooked for later in the year, in anticipation of containment? Both IHIF and MIPIM have already announced new dates. In the short-term, smaller events are still an option; consider promoting events with a limited number of guests, using break-out rooms as planning/project rooms, boardrooms and/or video-conferencing suites. Play to your strengths and plan.
3. Action
And so we move from planning to action. This period will define the future of many companies and as the saying goes “life is 10 per cent what happens to you and 90 per cent how you react to it.” Here’s our action plan:
- Thoughtful communication – a communications strategy that is anchored on being transparent, sharing information and showing that we are prepared to invest in finding solutions with our clients. See HoCoSo CONNECT.
- Robust analysis – we are monitoring the news, speaking to our networks and analysing trends (particularly of other historical “shocks” to the hotel industry). From a position of knowledge, we shall work with the hospitality community and our clients to explore the full range of opportunities and risk mitigation options so that they can make balanced decisions based on the full picture. We shall try to avoid knee-jerk reactions.
- Bold challenge – we join other esteemed voices in the industry to call for change to the short-termism that has driven many hotel investment models – the epitome of which is heavy price discounting and cost-cutting (often in labour). There are other ways to manage costs, retain talent and enhance team loyalty, particularly in this era of CSR (Corporate Social Responsibility) and triple bottom line accounting (people, planet and profits). Investors, lenders, operators: let’s explore them.
- Strategic investment – we are working on developing new solutions and new relationships to support our future growth. Short-termists lose confidence in our industry at times like this. At HoCoSo, we are pragmatists and optimists. We’ve been here before. Ours is a resilient industry and we are aligned with stakeholders who are influencing the future of hospitality.
- Responsible professionals – we also acknowledge that there is extreme hardship occurring in numerous communities and businesses around the world, as a result of this pandemic. Its effects will be felt for many months to come. So, from our offices in Berlin, Beirut, Zurich and London, we strive to be supportive, rational and responsible.
We live in rapidly changing times and VUCA is the new normal. When we eventually reflect on this crisis, look carefully at who comes out of it stronger. I believe it will be the organisations that are collaborative, creative, decisive, and also play the long game. Act and be part of the solution. 2020 is The Year of Community – let’s keep talking.
