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​Responding, Reopening and Repositioning: The Hospitality Industry in the COVID-19 Crisis

Published on: 22-Jul-2020

Having weathered the effects of global incidents like SARS and 9/11, the hospitality industry has repeatedly proven its resilience in the face of adversity. As the hospitality industry prepares its return to normalcy, how has its past experiences helped in tackling the impact of COVID-19? How are hotels planning to reopen? And how will they be repositioning themselves in the post COVID-19 world? To address some of these questions, Associate Professor Tan Joo Seng, Nanyang Business School, Nanyang Technological University, Singapore (NTU Singapore), was joined by a panel of speakers on 26 June 2020 for an NBS-initiated webinar to share insights on what the future holds for the hospitality industry.

Structured around ‘three Rs’—responding, reopening and repositioning—the webinar saw the panel of NBS alumni and industry leaders taking questions ranging from price wars to restructuring the workforce. The session commenced with a question from Associate Professor Tan on hotels’ first responses to the COVID-19 crisis. Ms Josephine Chua, Director of Human Resources and Quality at Ramada and Days Hotels by Wyndham Singapore pointed out that a main concern was how their guests and their workforce could feel safe about coming to the hotels. Apart from complying with all the new health regulations, Ramada and Days also ensured that its workforce was trained well to handle new requirements in terms of how they clean the rooms and how they welcome the guests.

Sharing insights from Thailand, Mr Lim Boon Kwee, Chief Operating Officer of Dusit International, noted that from as early as January 2020, Dusit International made clear that the safety and health of employees and their guests was the top priority. Information on personal hygiene and best practices for cleaning, sanitation was circulated and protocols from the World Health Organisation (WHO) and various government bodies were complied with.

In addition, Dusit International also anticipated a major decline in all revenue areas after the first quarter. Consequently, Dusit International quickly decided to stimulate ancillary revenues, adopted takeaway/delivery services and plan for cost containment.

Expanding on this, Mr Michael Ong, Vice President of Development at Pan Pacific Hotels Group, added that looking for alternative revenue model was crucial. For instance, Pan Pacific focused on stay-home notices in Singapore for foreigners and returning Singaporeans to maintain steady business.

While responses differed, all three panellists agreed that good communication had to underlie any action. At Ramada and Days, according to Ms Chua, “getting the senior management together to walk the talk, to be transparent with the employees really helped them to pull through the situation”.

Stating that there is not just one action plan, Mr Ong emphasised, “the key thing is not to panic, put your BCP into action and have open communication so that your staff knows how to deal with the crisis.”

Similarly, Dusit International found that the situation was very fluid. “It’s very confusing with a lot of information. So we have to constantly send out information to all our staff, to all our guests and also to our shareholders to tell them what’s going on,” Mr Lim shared. “Everything is about communication in a crisis.”

Addressing the matter of reopening from an HR standpoint, Ms Chua said, “it is clear additional hygiene requirements, safe management, has become a norm, which means cost containment, cost management, will be something we have to deal with.” Hotels will also have to work on customer confidence and employees’ fears regarding safety issues. In addition, hotels will also have to decide which employee will continue to stay at home and who should be going back to the office.

A major challenge of reopening, in Mr Ong’s opinion, is how hotels can get business. “Hotels need to get ready for when the flights resume as everyone is going to compete on a limited slice of the pie. The key thing is how to plan in such a way that you minimise a price war.”

This was picked up again at the Q&A session, where Mr Ong emphasised the need to be agile. Drawing on the example of China, Mr Ong pointed out, “price wars may be mitigated through differences in your packaging but this needs to be carefully managed and targeted at different regions.” However, it is essential to remember that businesses cannot just compete on price alone. “Hotels should target different market segments, figure out your relative strength and play to your strengths.”

Mr Lim suggested that there is a need to “reassess and relook at every single thing that we have in order to lower our breakeven point as it may take 12–18 months before hotels can reach pre-COVID levels”. Considering how the market is going to respond in terms of supply will help determine if a business should be the first or last to reopen. Dusit International chose to reopen immediately because they knew that domestic tourism, which is allowed in Thailand, will be generally by road and locals are very, very keen to get out of Bangkok. Providing some good news, Mr Lim shared, “so far hotels in Hua Hin and Pattaya are doing very well on the weekends.”

On the issue of repositioning, Ms Chua found that the key is to continue to reskill or upskill your people to make sure they stay relevant. Mr Lim further emphasised the importance of a high-tech and high-touch environment—high-tech to improve efficiencies, high-touch are basically the key touchpoints that every single customer wants. “Robots cannot take over.”

“Optimism is definitely there,” Mr Lim said, “we expect people to travel, COVID-19 or no COVID-19. Everybody wants to travel because they want to experience new experiences. Therefore, hotels need to reconsider the meaning of new experiences post COVID-19. Flexibility will be the new norm and hotels need to rethink and envision a new travel landscape. Group travel will decrease and travellers will prefer less crowded places. Millennials, couples and young families will want to travel a lot more than others and in envisioning the new services and products, we have to look at what exactly is the new traveller looking at.”

“One possibility will be wellness and well-being”, commented Mr Lim. “People are not looking for the normal vacation at the beach but they are looking for something where their mind, their body can be recharged, can be revitalised.”

Beyond the ‘three Rs’, questions from the participants were also addressed during the webinar, with remaining questions answered in a post-webinar session between Associate Professor Tan, the panellists and the webinar organisers. One main concern for many participants was the restructuring of workforce and processes. On minimising redundancy, Ms Chua highlighted that Ramada and Days has been very transparent with their communications. “The business situation has been very openly shared with our employees and employees are very supportive in terms of cross deployment to other areas. In return, businesses should look at programmes that will help employees to diversify into other areas that they have never experienced before.”

However, the speakers agreed that restructuring is or will be an inevitable course of action. While everyone expects recovery in the long run, Ms Chua pointed out that some employees may have to pick up skills that make them relevant to other industries.

Mr Lim concurred, “Restructuring has to happen because every single hotel will need to lower their breakeven point and to do that, you need to lower your head count.”

“Digitalisation will become an important movement,” Mr Ong further noted, thus reducing the need for manpower. Consequently, firms have to consider how they should mobilise employees to retraining or transit them into other industries. Mr Ong said, “Hotel employees are very well-trained for other industries, their language is good, their service attitude is very good and they’re very resilient and can do many things.”

With regards to the issue of learning and training during lockdown, Ms Chua shared how Ramada and Days is gearing up more laptops because most of the operations staff do not have the devices to engage in online training. Ms Chua stated, “remote learning will stay with us and face-to-face training will only be engaged when absolutely necessary.”

This is similarly seen at Pan Pacific and importantly, Mr Ong pointed out, “it has given employees opportunities for cross functional learning, thus breaking the usual silos and allowing employees ‘to look at things more holistically in the future.”

On the question of what shape the recovery will take, Ms Chua found this difficult to forecast, although there is no doubt that tourism and hospitality market will return. Mr Lim, on the other hand, used the term ‘bathtub’ – we will be at the bottom for a little while before we start the uptake, probably taking at least 12 months before improvements can be seen. Mr Ong, however, is of the opinion that recovery is linked to the development of the vaccine. Consequently, a U-shaped curve is possible and a 12–24 month period may be what it takes for recovery.

There were also concerns regarding the return of key hotel features such as buffet lines. Mr Lim believes that buffet lines are going to be phased out in the new norm. “Hotels under Dusit International are already functioning under a ‘modified breakfast’ scheme where the guests will not touch anything. Instead, all our chefs are actually dishing food out to the guests.”

Elaborating on this, Mr Ong added, “hotel design probably will change in the long term, with space planning that is actually quite flexible. You can change the space to different uses, or you can expand or reduce your space.” Ultimately, architecture that is efficient yet flexible will be what is needed in the future.

This issue of space linked to another question on new business models or revenue streams, where Mr Ong suggested the possibility of hotels working with other industries by renting business centres to small start-ups to revitalise the dead space into a revenue generating space. Associate Professor Tan also drew on the model adopted by budget carriers, pointing out that hotels can monetise every single space by offering lobby walls for exhibitions, for example. Providing a different viewpoint, Mr Lim foresaw that the all-inclusive package model will be popular in resorts because people are not willing to go out of the resort. In addition, advance purchase, where customers pay now and stay later, is also a potential revenue stream.

Investments on technological solutions also appear to be increasingly significant. Mr Ong expressed his interest in IT— IT infrastructures to make the whole experience of digital and physical space link into one. On the customer front, Ms Chua acknowledged that there is pressure to bring forward programmes, such as check in/out functions and temperature taking. 

The Q&A session was rounded up by a query on the use of historical data for analytics, forecasting and budget, to which Mr Lim revealed that Dusit International is already using it in all its hotels. “The revenue management software is out there but how do we automate and improve processes that are considered routine and mundane?”

“To retain your customers,” Mr Lim emphasised, “the customer relationship management technology needs to focus on a seamless customer experience from planning, booking, reviewing to the return.”

Attended by approximately 480 registrants from 20 different countries, the webinar was informative and encouraging about the future of the hospitality industry. While businesses are still some way from recovery, a poll initiated by Associate Professor Tan during the webinar indicated that 56% of the participants were quite optimistic about the outlook of the industry in the future. It would seem that resilience, as Associate Professor Tan concluded, will continue to be a key strength of the hospitality industry.

Click here to watch the webinar recording.

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