How the COVID-19 crisis could change independent hotels
How the COVID-19 crisis could change independent hotels
24 JUNE 2020 1:09 PM

Independent hoteliers said the lack of a brand’s marketing, best practices and distribution systems are clearly an impediment during the crisis, but their independence also gives them the opportunity to be nimble and entrepreneurial.

REPORT FROM THE U.S.—While the independent hotel space has long been dominated by the need to sell guests on unique experiences, independent hoteliers now must pivot to selling guests on something else: their safety and cleanliness.

“I think trust, safety and the health of travelers and guests will be the first and foremost benchmark,” said Richard Jones, EVP and COO of HVMG, describing what he believes will be the major change going forward for independent hotels.

Jones noted independent hotels must tackle that burden while simultaneously “telling their own story, promoting it and getting it out there.” That will represent a challenge as all hotels seek to convince potential guests they are clean and safe.

All hotels “are working with the same information, the same guidelines from the CDC or the AHLA and all the various experts and entities to put into best practices,” he said. “You have to take that info, put it into a program and lead (your sales pitch) with that. In our independent hotels, that’s the first thing you see when you go to our websites.”

He said in the effort to get the word out on cleanliness procedures, third-party management platforms become all the more important, especially when working with corporate travel managers and meeting planners who are concerned about safety above all else.

“That’s going to be the biggest box they have to check as they go through an RFP process,” he said. “The large corporate travel buyers—the EYs of the world, those Fortune 500 companies—they’ll be tightly managing their programs,” he said. “And they’ll only stay at hotels that fit that program.”

Independent hotels do benefit from not having to adhere to specific brand standards during the crisis, Jones said, along with not paying franchise fees during a cash crunch or having to foot the bill for ever-growing loyalty programs. That said, the powerful demand platform of brand distribution, and more favorable deal structures, will push more independent hotels into soft brand collections, he said.

“When you were already at 60% occupancy, to pay those fees (for a soft brand) on what you already had meant there had to be an upside in rate and a lot of incremental contribution by the soft brand to justify the costs,” he said. “Now what’s the trade-off? You’re not losing money the day you turn the soft-brand switch, and now it’s the fastest path to getting back (demand).”

Here’s how various experts answered a set of five questions about how the ongoing crisis will change the landscape for independent hotels:

How has the pandemic changed your operational strategy?

Derek Haug, GM of the Hotel Erwin in Venice, California: “It goes without saying that guest and associate health and safety has become our biggest priority. These, along with cleanliness, have always been key areas of attention, but the pandemic has certainly put them out in front. We are constantly looking at ways to ensure that our guests and team members feel safe and secure … we are anticipating everything they will need to feel comfortable during these times.”

Pete Sams, COO, Davidson Hotels & Resorts: “We are laser-focused on creating value for our owners. We have compiled cost-saving initiatives and outlined key strategies throughout each individual business plan by discipline demonstrating adaptation and solutions for direct sales, revenue management, marketing, food and beverage and additional operations. Davidson has kept the entire corporate team intact over the past several months in order to ensure that owners were fully supported, costs were mitigated through our negotiations and relationships with vendors, and plans were developed and executed to ensure the most robust rebound possible for their assets.”

Johnathan Kennedy, area GM of The Ashton in Fort Worth, Texas: “While we have always maintained very high cleanliness and sanitation standards, we have elevated efforts by increasing the frequency of disinfecting in public spaces and focus on areas of high touchpoints in guestrooms. We've re-evaluated all services and offerings and value-engineered items that were not seen as a pillar of the hotel image or reputation. Staffing and purchasing decisions are made daily and controls enhanced. Transient leisure demand is the first to return, so the digital marketing is extremely critical. We're requiring all staff to maintain the updated (PPE) standards at all times.”

David Mariotti, GM of One Ocean Resort & Spa in Jacksonville, Florida: “As with others on the leading edge of our industry rebound, operationally our strategy calls for a firm commitment to elevated standards of sanitization that promotes well-being for guests and associates.”

What long-term changes do you expect to come from this crisis?

Haug: “We converted our lobby restaurant into ‘Erwin’s General’, which is a grab-and-go marketplace featuring locally sourced products, a great selection of California wines, local beers, house-made bottled cocktails, prepackaged snacks, baked goods and all of the beach necessities that our guests might need. We are partnering with local purveyors and creating a community-centric ‘destination’ that will make the hotel a one-stop shop for guests, so that they can check in and have everything they need right here and feel like they are a Venice Beach ‘local.’

“We also find ourselves incorporating and utilizing contactless technology into our guest engagement, including check-in/out, payment processing and remote restaurant ordering. This seems to be the new ‘norm’ and we are adapting where we can.”

Sams: “It’s challenging to make predictions when considering the fluidity and complexity of the situation. We will continue to listen to our guests and adapt to their expectations as they adjust and evolve. In the short term in particular, with efforts to execute physical distancing, there is an even greater emphasis on the quality of each interaction. We expect this emphasis to carry forward.”

Kennedy: “Enhanced cleaning and sanitation steps and processes will remain post-COVID-19. Serious consideration to permanently reducing/eliminating specific service and amenity offerings that are not cost-effective or fail to result in positive margin is in process. Modification of labor efficiency models to include the enhanced cleaning procedures along with increased expenses associated with cleaning products and PPE are in the works and will extend post-COVID-19. Creative methods of reducing touchpoints for guests (such as) removal of guestroom amenities like pens, note pads and even evaluation of guestroom coffee makers are under review for permanent consideration. Mobile guestroom access via smartphones to create keyless phone application so guests can access their room without having to go to the front desk is already in place. Food-and-beverage offerings will continue to be modified to include physical distancing, disposable single-use menus and staff wearing PPE. Valet services will have heightened focus on displaying elevated hygiene standards for guests to be comfortable that their vehicle is safe of the potential virus spread.”

Mariotti: “The crisis has created a heightened sensitivity to the feedback of our guest and associates as it relates to personal comfort in the new COVID environment. As we operate our independent hotels, we must remain vigilant to established robust cleaning standards with an open door to introduce best practices shared across the industry.”

What are the advantages of being an independent property in these circumstances?

Haug: “I’ve worked for both branded hotels and independents and being an independent is certainly an advantage during these times. It allows us to be nimble and reactive. We can move swiftly and make smart decisions that work uniquely for our property. We can strategize internally and put our own personalized stamp that we believe adds in the personalized welcome we extend to our guests, pulling through our brand narrative through experiential services, products and partnerships. When we see something that will make for a better curated guest experience, we do it.”

Sams: “As an independent lifestyle operator, we can be nimble, agile and enhance operations to meet our guests’ evolving needs. We have the freedom and flexibility to be creative in implementation of experiential protocols. Independent hotels are less scripted by nature and allow the opportunity for tailored solutions based on factors such as location, guest demographic and of course, budget parameters. We are using this opportunity to enhance the guest experience through creative touchpoints (i.e. positively influencing the arrival experience and engaging a captive audience while they are standing in line to check in; custom branded antibacterial wipes at valet, etc.). The lack of directives set our independent hotels free to address their individual needs instead of adopting a one-size-fits-all approach to certain issues.”

Kennedy: “Independent hotels are more nimble and do not require approval from brands in order to execute necessary changes due to decreased revenue streams, etc. Decisions are based (on) local needs and demands. Guests’ perception of independent hotels (is) that they are unique and not a commodity. Room rates are not limited by brand perception. Marketing does not have to meet any specific brand approval and thus allows more creativity for independent hotels.”

Mariotti: “The spirit of all independent hotels is one of entrepreneurship. We are often on the front lines of change and this new normal is no different. The advantage of Remington Hotels is the diversity across our portfolio and within the independent hotel division, this stimulates unique solutions to opportunities presented in many different markets.”

What are the disadvantages?

Haug: “We do not have the same reach as brand-direct channels from a marketing perspective and have to rely more heavily on digital marketing, e-commerce, social outreach and PR, peer recommendations, and organic messaging.”

Sams: “The most significant disadvantage is the absence of brand resources and global intel to help guide best practices and protocols. In Davidson’s case, however, our independent hotels received an advantage over other independents as a result of our diverse portfolio and brand relationships. We were and are able to leverage and benefit from that guidance and apply the aforementioned best practices at our non-branded assets.”

Kennedy: “Independent hotels do not enjoy the contributions of the brand system from brand awareness and loyalty programs. Marketing expense for an independent hotel is not as cost effective as a brand as the brand enjoys the leverage of negotiations with agencies due to scale. Branded hotels have the ability to redirect guests from one brand family member to another while independent hotels generally count on direct referrals only.”

Mariotti: “This crisis has certainly presented a few opportunities in the form of disadvantages for independent properties. One that comes to mind is the supply chain for PPE. Again, our approach is always solution-based and using our resources as efficient as possible. In our case, Remington’s procurement team is quick to deploy resources across property lines and deliver to varying products; such as face masks, gloves and hand sanitizers.”

What are you doing to supplement demand until travel returns to normal levels?

Haug: “We are exploring new activations such as extended stay, temporary offices, alternative rewards programs, gift certificates and pre-purchase stays, and adding a creative spin on our packages. For example, we created a ‘Stir Crazy’ package where we offer a ‘Knock-Tail’, which is a craft cocktail box that we knock and drop-off at your door upon arrival, so our guests can enjoy happy hour on their patio, complete with ‘rocks’ (ice) and a tiny umbrella.”

Sams: “We are building creative, value-added packages and experiences that are meaningful to guests. We are exploring more outdoor dining options and innovative takeout programs at our restaurants for those that are hesitant to resume dining indoors. Additionally, we have remained engaged with our customers throughout the pandemic though our various marketing channels. We believe that this sustained engagement has fortified the trust that our customers have in us and through content and programming, will entice them to return as restrictions continue to be lifted and people feel more comfortable leaving home. “

Kennedy: “Our team negotiated with the city of (Fort Worth, Texas) to house specific local citizens needing quarantine while avoiding comingling with other guests. (We) increased the digital marketing efforts to attract more transient leisure guests. We have reactivated our sales team to proactively communicate to clients that our hotel is open for business. (We) maintain social media responses to continually promote the fact that the hotel is open and operating.”

Mariotti: “One Ocean Resort & Spa is an oceanfront property and fortunate to be accommodating summer transient demand from an expansive drive market.

“However, our dining outlet and lounge serve a large local clientele. Therefore, we have converted outdoor function space and tripled seating with social-distanced tables. We hope this change will supplement some of the lost business from groups, weddings and special events in Q3 and Q4.”

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