Operational Outlook
Hoteliers Acknowledge Post-Pandemic Reset; Discuss Changes During BITAC Panel
There’s little question that the pandemic has resulted in something of a reset for the lodging industry in terms of operations and a handful of executives recently touted the potential upside of doing things differently.
Speaking last month at BITAC Operations Live 2021 at the Ritz-Carlton Bacara Resort in Santa Barbara, CA, executives weighed in on a number of topics, including labor, technology, hybrid meetings as well as a significant shift in guest services during a panel discussion entitled “Operational Outlook: Management Companies Look Ahead Following Challenges Of COVID.”
Michael Blank, principal, Woodmont Lodging—a Bethesda, MD-based hotel ownership company—noted this could be an inflection point for hoteliers.
“There are very few times where industries can change holistically, I think you’re seeing such a moment with hotels where you’re really having the ability to question everything that’s done in the hotel. Do I need to do this? Do I have to offer this? What do guests want? It’s still very hard to operate hotels today, but we’re doing things we never thought we’d be able to get away with or try and guests are accepting of it,” he said.
Larry Birnbaum, principal advisor, Xenios Group—a consulting firm specializing in hospitality technology and offering guidance to hotel brands—maintained the “question everything” mantra also applies to technology.
“For a long time we said ‘let’s do this because that’s the way we’ve always done it’ and now I see a great deal of willingness for people to question everything. There are a lot of things that can be done with technology and people are now open to the ideas or investigating it. Maybe no one else has ever done it, but no one’s ever gone through COVID either,” he said.
As an example, Birnbaum pointed out that very few devices in a hotel room actually require AC power so there are potential advantages to running everything else off of DC power.
“What does that mean to a developer? We can completely change the architectural design. In the past nobody would be willing to consider that, but now we’re going to question everything,” he said.
Meanwhile, Chris Manley, President, Five Senses Hospitality Management, explained that the Denver-based management company got its start during the pandemic, which he acknowledged presented “a lot of challenges.” However, somewhat surprisingly, he noted that labor has not been one of them.
“I think probably the thing that was most interesting is the amount of talent that’s out there right now. We thought we’d have a tough time hiring a DOS [director of sales] or hiring a GM [general manager] for a small company, but what we’ve found is a lot of management teams did not focus on the culture and careers of their GMs; they didn’t have the support. So it’s been easier to hire really good talent than we thought it would be,” said Manley.
Jeff Loether, President, Electro-Media Design, Ltd.—which provides acoustical and audiovisual services and consulting—spoke about some of the challenges as it relates to group business.
“The lights all went out at once on group meetings and the whole AV rental industry went dark for all intents and purposes. They’re not all going to come back on all at the same time. We’re watching the meeting predictions and it looks right now like 2024 when they’re predicting group business is going to cross the 2019 line. But in the meantime it’s all about hybrid,” he said.
Loether added, “I think that hotels are going to need to learn how to provide the basic AV services using their own resources again.”
Hotels have been plenty of resources at their fingertips when it comes to forecasting tools and annual budgeting, but the panelists cautioned against putting too much weight into any outlooks given the uncertainty in the current market.
“We’ve made a conscious decision to tell our people we’re going to do budgets by the first week in October and we’re going to be done because they are a best guess right now. We are not building into our budgets research from the Delta variants or anything else. We said business is normal and the budget is a guess, but I don’t want to turn it into a full-blown exercise that takes three months because the world’s going to change dramatically,” said Manley, who noted he is more focused on the 90-day forecast.
Blank reinforced the point. “It’s crazy to think that 24 months of history and data points are basically useless. We have properties that are leisure I’m telling the teams to ‘budget down’ for next year, and then we have properties that are urban and I’m saying ‘just guess.’ From an owner’s perspective I’m not putting pressure on the budget process because I know it’s more dartboard than it’s even been. Do what you can, give me a baseline to start with, but I’m not going to hold any of our teams to the budget for ‘22 right now,” he said.
The owners and operators also acknowledged that the industry faces a challenge when it comes to reduced amenities and services within full-service hotels, which has left some guests frustrated as rates have remained largely in tact.
“It’s not a full-service hotel if I’m not getting the service. I think we’re really close to that point, if not already there…I tell my staff do what we need to do so [guests] don’t feel like they’re getting ripped off. If they want the room cleaned every day then we have to clean the room every day. I’m seeing more and more push back because of it,” said Blank.
Manley agreed, pointing out, for example, that some of his properties resumed nearly full breakfast offerings at the demands of the guest.
“They would go to the front desk and say ‘I’m paying what I used to pay but not getting the same thing.’ We haven’t had as much push back on the elimination of the mid-stay clean, but the breakfast is a third rail for our guests,” he concluded.
