Hotel industry operators discussed the challenges they face and will face going forward due to the ongoing COVID-19 pandemic.
REPORT FROM THE U.S.—The pandemic has led to various unexpected variables for hoteliers, even those who have tried to be as proactive and prepared as possible.
Speaking during the “Operational excellence in hospitality operations” panel of the 42nd Annual NYU International Hospitality Industry Investment Conference webinar series, Jenny Lucas, SVP of operations and learning for Loews Hotels & Co., said the first step for her company before reopening was to survey its regular guests to make sure executives were making the changes they were looking for. But when they reopened, those regular guests weren’t where demand was coming from.
“When we resumed operations, what we saw was a guest that wasn’t our guest,” she said. “So, they had a different set of expectations. Quite frankly, those out traveling first were much less risk-adverse than what we had found in surveying our guests.”
In response to that, Loews executives created a “health and wellness index” and post-stay surveys to ensure they were performing to the best of their abilities.
“We constantly look to move that dial up so the balance becomes that we can deliver service and make people feel safe,” Lucas said. “With safety, our Loews guests will continue to come back to us as they feel like it’s a better time for them to travel.”
Maximizing revenue with restrictions
Jonathan Segal, executive chairman of The One Group Hospitality, said he is proud of how his company’s food-and-beverage operations have been able to pivot to stricter regulations and still maximize revenue.
He pointed specifically to areas where dining establishments were required to limit capacity, and how they’ve redesigned those spaces to get the most people in that they can safely and make sure they’re maximizing their most profitable spaces.
He said maximizing spaces has come down to looking at square footage rather than the existing seating before regulations were put in to place and by prioritizing seated space over bar seating.
“We have replaced say 25 seats at the bar, which is low revenue income from a food standpoint, with many 16 seats that are seated, which is three or four times the revenue,” Segal said. “So how you look at your business is really important. In hospitality, what we need to do in situations like this is absolutely maximize our potential earning capacity, whilst at the same time being able to maintain a reasonable guest experience.”
Hotels facing a talent exodus
Lucas said that one of the long-term negative impacts of the ongoing pandemic is more and more people are looking at hotels and hospitality and deciding that perhaps its not where they want to be now and into the future. And that’s not just limited to people who’ve been laid off or furloughed.
“This is a little bit different than what we saw perhaps after 9/11 or in the past recessions,” she said. “There’s a lot of folks that are questioning the hospitality industry and saying maybe it’s time for me to take a break from it. So we’ve actually lost talent that was working that have gone into other industries.”
In terms of keeping furloughed employees engaged to combat a potential talent drain, Jay Stein, CEO of Dream Hotel Group, said that comes down to remaining in contact with them and trying your best to do right by them.
“Fortunately, we’ve been able to keep health insurance for our furloughed employees,” he said. “We weren’t sure we’d be able to do that and weren’t sure we could convince the other owners that own a number of hotels.”
So far, the feedback Stein has received from those employees has been positive despite the difficult circumstances, which he attributes to them understanding the pain being felt in the industry is universal. But ultimately, he hopes loyalty will pay dividends on both sides of the equation.
“I think when it’s time, many of them will still be available, and we’ll look forward to them coming back,” he said. “But as Jenny said, some of them will have moved on and maybe even switched careers.”
Finding new operating models
While the current environment has more than its fair share of challenges, panelists were asked whether it also opens the door to finding new operating models for their businesses.
Stein said his company has found some success offering day-use at Dream hotels, although he didn’t think it was making a huge difference for the bottom line.
“We have some long-term day-use at a couple of our properties, but it hasn’t been a big windfall,” he said. “We’re still offering it with plans that we can offer it to guests. We tried to market it; at least in the markets we’re in, it hasn’t been a big windfall for us.”
On the F&B side, Segal said restaurants were already facing an inflection point even before the current crisis as the variety of dining options and expansions in food delivery and meal prep services give diners a wealth of choices. He said the response to that needs to be offering a premium experience.
“It’s now talking about enhancing the experience to compete with the opportunity that we can have a really great meal at home for no hassle whatsoever,” he said.