As the industry prepares for a coming downturn, hoteliers on a panel and in a video said having good employees who create memorable experiences for guests will help keep heads in beds.
NASHVILLE, Tennessee—While the industry isn’t quite sure when the cycle will end, hoteliers know it is coming and are thinking of ways to weather the next downturn.
On the “Downturn preparation: Staying ahead of the curve” panel at the recent Hotel Data Conference, speakers said they are more prepared for the next downturn than they were in 2007 and 2008, and cited having the right people in place as key to making it through slower periods.
Now is the time to look at your company culture from the top down, said Vinay Patel, treasurer of the Asian American Hotel Owners Association.
“Those are the people who will make or break your hotel through the good times and the bad times,” he said.
Christine Herrington, VP of asset management at Park Hotels & Resorts, said hoteliers should have a plan for getting through the downturn and leaders in place to execute that plan.
Having transparent partnerships with management groups to formulate strategies and weigh in on them is important, she said.
Some hotels turn to cutting rates in the face of a downturn, but that doesn’t have to be the case if you have the right company culture, according to Michael Blank, principal at Woodmont Lodging.
If you have the right culture and associates working in hotels to create experiences and bring guests into your hotel, those guests will keep coming back and will be willing to pay your rates, he said.
Preparing for the downturn
The time to start preparing for a downturn is right now, speakers said.
Blank said hoteliers should look at every hotel as if yesterday was the downturn, adding that they should “attack every hotel’s operating margin as if today was the worst day.”
They should be finding ways to get lean, he said, and always thinking about how to save money regardless of the current environment.
Preparation means sometimes looking differently at business opportunities, including looking to third parties to help identify those opportunities, Herrington said.
“When you have operators that look at day to day, it’s hard to think about your business differently,” she said. “It’s good to have somebody come in from outside … to confirm what those opportunities are and outline a path on how to get there.”
Preparing for a downturn also means finding areas of the hotel where costs can be cut, and panelists cited housekeeping as one of those areas.
Herrington said moving to reusable bottles in bathrooms and showers, and incentivizing guests to opt out of housekeeping services are two ways to cut those costs.
Blank said his company is trying to focus more on revenue per available square foot rather than just revenue per available room to find ways to “take space that is just foot traffic and … monetize it so we’re not reliant just on guests in the room, but we capture their spend in other ways.”
One example is putting packs of gum and other items typically found in the gift shop for sale at the check-in desk because “that’s where the customer is, not over by the gift shop,” he said.
“If we can get people spending their money if different ways … those are ways to help buffer in good times and bad times,” he said.
Asked if Airbnb has had an impact on hotels, Patel said the impact isn’t as noticeable today because the markets are good, but the downturn might change that.
“Yes, you see impact but it’s not as painful today because there’s enough demand in the market. When the demand does back off, you’ll see the real impact,” he said.
Airbnb commission rates are around 10% while the online travel agencies are charging 15% to 20%, Patel said. He added he’s not saying hotels should list on Airbnb, but that “it’s definitely a cheaper route than Expedia.”