The New Normal
By Dennis Nessler | October 20, 2020
There are many challenges associated with operating hotels in the current post-COVID environment, not the least of which is trying to maintain rate, and a handful of lodging executives detailed how their respective companies are approaching this issue as well as a number of other key concerns going forward.
Speaking during BITAC Operations Virtual Connect 2020, the panelists also weighed in on everything from emerging technology to shifts in consumer behavior, as well as the impact of new cleaning and safety protocols, in a panel discussion entitled “The New Normal: Managing Hotels In A Post Pandemic World.”
Michael Blank, principal, Milwaukee-based Woodmont Lodging, pointed out that the owner/operator’s portfolio is located largely in college towns with major demand generators and “that has been turned upside down.” Nevertheless, he emphasized the importance of maintaining rate.
“It’s requiring creativity that I think the boots on the ground have never had to have before…For us the business is out there it’s being creative to get that business and it’s not using rate to do it,” he said.
Chaitanya Prakash, CIO, Cupertino, CA-based Shashi Group, has observed a “massive cut back” with regards to rates in the northern California area where the company’s portfolio is located. Prakash noted that rates in that area—which is also home to major corporations such as Google—are typically in the $300 to $500 range.
“Our RevPARs have declined somewhere in the 80 to 90 percent range and that continues to be the case. Right now, it’s all about what’s the demand out there and how can we grab our fair share,” he noted.
Robert Habeeb, CEO, Chicago-based Maverick Hotels & Restaurants, also expressed concern. “In this market you’ve got relatively modest demand, especially the urban markets where it’s a fraction of what it would typically be. People just don’t understand the whole rate phenomenon and we’ve had a race to the bottom. People believe discounting is a way to stimulate occupancy and maybe it does to some degree, but it might stimulate the wrong occupancy,” he said.
Habeeb was asked if he saw the hotel industry turning more to the OTAs or third-party sites with business harder to come by.
“We always do during a downturn. When times are good we’re pretty arrogant about where we get our room nights from…We’re going to have to rely on some of these channels for additional guests for the next year-and-a-half or two years,” he added.
Meanwhile, Raj Singh, CEO, Santa Monica, CA-based Go Moment—which provides an automated guest engagement platform for hotels—noted he has observed a change in guests’ travel patterns and believes that could be an area of opportunity, particularly for hotels in drive-to markets.
“Hotel guests are booking last minute at this point much more so than they did pre-pandemic, which means there is a lot more flexibility in the guest stay. If you are communicating with the guest in real time what we’ve seen is our hotels are actually making more money from our product in extended-stay revenue and late checkout revenue that may be not have been possible in more of a flight-oriented travel market,” he noted.
Habeeb agreed. “People are very flexible, it’s a nimble world today and people do make their travel decisions on the spur of the moment sometimes. You have to be a little innovative to capture that guest because people aren’t following their traditional travel patterns,” he maintained.
When it comes to the evolution of technology, the panelists unanimously agreed that the pandemic has brought about more rapid change for the industry.
“It’s really interesting to see the entire industry’s response to the pandemic. It used to just be inconvenient for guests to actually call the front desk or go up in person but at this point it is potentially unsafe…We’re seeing higher engagement [with our Ivy platform] and hotels looking at texting and mobile communication as a must-have for their entire guest population,” said Singh.
“Every time there’s a sea change in the market we’re all trying to anticipate how this impacts the guest. Guests will definitely be looking into the future for contactless wherever they can, as well as texting and these types of media. When you have an event like this that just forces everybody into the rabbit hole,” said Habeeb.
Prakash commented, “if anything the pandemic has just accelerated that change, I think this was inevitable.”
He added that company is in the process of developing an app designed for its independent properties, as well as other interested area companies, that would enable guests to reach out directly for services like food & beverage, housekeeping and valet, for example, without having to call.
“You don’t want to be picking up the phone and making calls to housekeeping or other places; it’s just inefficient in today’s world,” said Prakash.
Meanwhile, the executives have to had to rethink how they approach cleanliness and safety protocols at their properties and the best ways to execute on that.
Prakash noted the company partnered with a doctor out of Stanford University to develop it’s own protocol and has been pleased with the results since reopening roughly a month-and-a-half ago.
“We did sort of go out on our own to figure that out, but that makes the staff very comfortable and the guests very comfortable. So from the guest side you just got to make sure you’re communicating what you’re doing. It has certainly added a layer of complexity,” he said.
Prakash, however, acknowledged that it’s an evolving process. “It looks like a lot of people just want to hang out outdoors except for sleeping in their rooms, so we’re now thinking a lot about how do we do things safely outside,” he added.
Blank pointed out that most of the company’s portfolio is branded and that the mandated safety requirements have been generally well received by guests.
“It feels like there’s the guests that have to travel and then there’s the majority of world that’s traveling because they have to get out of the house. I think that larger segment, which tends to be more leisure right now, is accepting a bit of risk in doing so. They like the eye comfort of seeing the safety measures, but they also are understanding they are putting themselves at risk,” he concluded.