The Great Reset in Hospitality
Our industry has learned to recover from many crises in the past. Whoever is in the business for more than a decade has proven to be resilient and for sure has done many things right to survive until 2020. We have learnt how to cut costs and protect our bottom line in times when guests are not coming to our hotels as usual. We have managed to achieve our budgets in spite of market downturns, rising competition and pressure on the quality scores. So why should the COVID crisis be different? What should the hospitality and travel industry fear in the face of the 2020 pandemic?
The widespread lockdowns imposed by many Governments in spring 2020 particularly hit the business sector of our industry, while the leisure segment got away with just a “slightly” shortened winter season. Usual cost saving measures have immediately been activated and with the financial help of Governments most operators assumed there was no need to worry about their biggest cost, the payroll. It let many establishments in a wrong sentiment that the State will take care of the negative effects of the crisis and therefore - as we see by now - not enough long term cost efficiencies have been introduced. Be warned that Government subsidies will stop abruptly one day. However, that day will be long before the hospitality crisis is over.
PROCESS & DIGITALISATION
It is now high time to rethink our processes and procedures and to further adopt digitalisation to drive modernity and cost effectiveness. If it hasn’t been your CTO or CEO to drive digitalisation earlier, it will be COVID now or you may miss the next heydays.
As an example, gastronomy has taken a quantum leap in the menu presentation and ordering systems and home deliveries have developed far beyond the simple pizza and sushi boxes. Creativity and feasibility have evolved as elaborate menus from five star hotels are now also possible. It seems to be the last call to those who have not yet fully committed to extensive digitalisation, those without creative minds and no courage to try new ways. If you don’t reset yourselves you will be reset. Or simply put: Change or die!
The worst hit by the COVID downturn were those depending on foreign markets due to the worldwide restrictions of travel. It is not the first time we realise that a sustainable market strategy includes a diversification of geographical but also demographical markets. The days are over when our revenue managers are yielding only on the highest contributors to the bottom line. As part of a sustainable revenue management strategy we want to maintain also those channels that are too difficult or expensive to reactivate once the shit hits the fan. But how to explain this to your investors, who need the dollars, now? It is like your investment portfolio, you can run it with more or less risk! As long as it is consciously decided and therefore clearly formulated in the plan, there is no reason for regrets.
SELL & BUY
Not all operators have equally well balanced their short term high yields and their sustainable long term market segments. And not all industry players have understood the radical need to adjust to a severity of a crisis which we have never experienced in our lives. Reason why the hotel real estate market will be growing continuously even if there is hope that vaccines may put an end to COVID in the coming year(s). As usual, a crisis always presents also an opportunity. The best investments are those that are done in a downturn, when the cherries are ripe and easily to be picked from the ground.
Our employees have always been and will always remain the biggest assets of our industry. You can’t argue with this, it’s a fact and in the nature of our people business.
The COVID crisis has freed and will free many more great talents who are up for hiring when the ball gets rolling again. Lucky are those who grab them early thanks to their vision and courage to invest during the hard times. Rebuilding after the reset is required. Not only winning teams but also winning structures, new procedures and processes are necessary in our industry to flourish again!
Are you and your hotel investment ready for The Great Reset in Hospitality?
With the best wishes for a great new start in 2021, health, success and happiness!
Owner & CEO
Swiss International Hospitality Consulting
Swiss International Hospitality Consulting (SIHC) is representing a group of internationally experienced hotel industry experts, specialising in business analyses, performance and change management, hotel investments and tourism developments. Also offering HR solutions, interim Management and keynote speakers.