Leaders from several types of hotel companies talk about how they’re inspiring their teams continuing to pivot their businesses amid today’s challenges.
REPORT FROM THE U.S.—There’s no playbook for effective leadership through a crisis, but hotel executives say it helps to know hoteliers worldwide are fighting a common enemy.
“The last four months have felt like four years,” said John Russell, CEO of RLH Corporation, referring to the COVID-19 pandemic. “We’ve been through 9/11 and that had its challenges. 2008 had its challenges. But this is the first time in my lifetime when we had one common enemy worldwide.”
Speakers on a “Views from the boardroom” panel at the online ALIS Summer Update – Nashville further detailed how they’re approaching leadership through change. Communication and transparency were common themes.
Leadership through change
“I like to lead from the heart then the head,” said Tracy Prigmore, managing partner and founder of TLTsolutions, which facilitates real estate investments and serves as operating partner for hotels among other asset classes. “First, I want to be empathetic and think about what others need from me as a leader. Then I get into my head to figure out where we go.”
That requires calling on relationships and being diligent about communications, Prigmore said.
“We’re a small company and new to the space. This event could have taken us out … but I had a lot of resources,” she said. “I went full-force working with our third-party managers. I had to really focus on our lenders. Then I had to have communications with our investors, because that’s the crux of our business. It’s been interesting but I feel resilient and resourceful in the short term.”
Amanda Hite, president of STR (parent company of HNN), said she’s “being very transparent about what we know, what decisions we’re making and why,” and offered up the advice to consider all angles.
“There is no right answer right now,” she said. “It’s making sure you’re considering every idea, even the crazy ones that you would normally walk away from and think ‘that will never work.’ This is the time you have to think about it.”
Greg Friedman, CEO of Peachtree Hotel Group, reminded viewers of the importance of “being able to be flexible and pivot because it’s a fluid situation.”
“You’ve got to remind the team that there are dark days today, but there’s light at the end of the tunnel and there are better days ahead,” he said.
Tapping into professional networks and educational resources has helped leaders stay on top of the rapidly changing flow of information.
Biran Patel, current AAHOA chairman and partner in BHP Investments Company, said everything from social media to webinars to phone calls with industry friends have gone a long way.
“People have been more than willing to help out to share what’s been successful at their companies and what hasn’t,” he said.
Financing and lending
Getting through day-to-day operations can be a roller coaster, speakers said, given demand changes that shift as COVID-19 numbers change. As hotels continuously look to cut costs and increase revenues, shoring up liquidity can be tough.
“There’s a lack of normal bank debt,” Friedman said. “If someone needs capital right now, they can’t really access traditional bank debt, so it puts pressure on hoteliers.”
Ways of shoring up liquidity like debt deferments and cutting expenses “can only go so far,” he said. He added he believes “another round of stimulus for hotels” is sorely needed, particularly for legacy investments.
Prigmore said she and others are having “a mixed bag of experiences” when it comes to working with lenders, particularly if forbearance is on the table.
“We have one community bank lender that’s been absolutely wonderful,” she said. “I went to them with a full presentation, and they already had a plan for us. They were accommodating and we’ve come up with a plan.”
She said another hotel in her portfolio has loans with a private equity lender, and even though she reached out early and fully prepared, that lender said “absolutely, unequivocally no forbearance.”
Friedman agreed that for the most part, regulated banks up to this point have been good to work with, but especially if the situation draws out longer, their concern grows.
Outlook and forecast for what’s changing
Panelists agreed that some of the recent changes to operations made to boost the bottom line have a good chance of becoming permanent.
“Digital check-in is more prevalent, we see opt-in housekeeping, grab-and-go food and fewer amenities in the room,” Patel said. “Post-pandemic, the guest stay will be determined by what the brands do. Right now, they’re allowing us franchisees to cut back, but afterward, will those changes be permanent or temporary?”
Friedman said “guests are open to the reset.”
“Our industry is pivoting from being high-touch, high-service to more low-touch, low-service as it relates to guests, and we have the ability to reset the guest experience, especially when it comes to some limited-service hotels,” he said. “A lot of those morphed in recent years to provide free breakfasts and lots and lots of amenities. We have the ability to potentially help cut some of the operating costs as we get to the other side.”
Russell said he sees potential for hotels to do away with some extras permanently, like extra pillows and blankets, that can have an impact on cleanliness and be added costs for owners. Additionally, exterior-corridor hotels and hotels with versatile outdoor spaces for meetings and events could find additional profits there.
“I just got back from The Broadmoor (in Colorado Springs, Colorado), and I saw this all in action,” he said. “Guests were accepting of all the changes. They still wanted a great experience, which they got, but they all wore masks and were social distancing. Guests are open to these changes because of safety, health and welfare.”
From a data perspective, Hite said overall U.S. supply remains consistent, though projects in the pipeline are slowing down.
“We still have more rooms in the pipeline than we did last year at this time,” she said. “But there will be projects that don’t get in the ground, and owners put on the brakes for a little bit. Everything under construction will come online, but slower. We do expect all those rooms to enter supply at some point over the next 18 months or so.”
Light at the end of the tunnel?
Hite pointed to recovery in China as a good bellwether for the United States in some aspects. And while some U.S. markets have seen leisure drive-to business return in recent weeks, STR “has seen demand declines in some markets where we’ve seen COVID spiking,” she said.
Patel summed it up by saying “the hospitality industry is resilient. We’ll come out of this as better owners, operators and companies. Keep your head up, keep educated and stay afloat.”