Overcoming Operational Challenges
Acknowledging the many changes that have taken place in the wake of the pandemic over the last several months, including working with reduced staff, an increased dependence on technology and implementing new safety protocols, a handful of leading owners and operators were particularly struck by the lack of transparency looking ahead into 2021.
The executives shared their experiences during a panel discussion entitled “Executive Insights: Overcoming Today’s Operational Challenges” as part of BITAC Symposium Virtual Connect 2020.
John Rubino, COO, GF Hotels & Resorts, noted the company is in budgeting mode for 2021 and that it has had to factor in forecasts from many of the industry’s research firms as well as insights from industry colleagues to arrive at an estimate of how much business to expect.
“Of course, it will be dictated by market and by certain hotels but we’re thinking probably 40 percent down from 2019,” he said.
Mark Carrier, President, B.F. Saul Company Hospitality Group, reinforced the point and noted the drop-off could potentially be a “little bit deeper” than even Rubino suggested.
“We’re going to have a slow climb where the first pressure point is maybe late spring. You build a little bit in the summer and the fall gets to be a bit better. I can’t game plan it any better than half of 2019 and 40 percent I think is probably a very reasonable place to be,” he said.
When asked about the issue of rising operating costs, the issue of labor became the focal point as panelists shared their strategies for reducing staff as needed.
“The first thing we all did when we went into this COVID mode is we looked at our associates; we looked to see what team members we need to keep. What we did in many cases is we tried to keep the management team members the best we can, especially the GM. No matter how many associates you have you need somebody to lead the team,” said Rubino.
Rubino also noted the company tried to maintain labor and product related to safety and cleanliness despite the added costs. “That’s one area we didn’t skimp on. We spent extra money on necessary supplies that we would need,” he added.
Mike Nixon, chief development officer and president, Expotel Hospitality, also identified staff as an area of change.
“I think it’s an opportunity for us to maybe reel in some costs that may have gotten a little bit high over the last 10 or 11 years. We’re asking some associates like the GM and salespeople to maybe take on some work that they wouldn’t normally do in the course of the day. More than likely you’re going to see them on the front desk,” he said.
Kal Patel, President and CEO, CrestPoint Companies, further touted the importance of associates being able to fulfill multiple roles for increased efficiency.
“We maintained all of our executive staff, kept all the housekeeping and we really started cross training to help them understand how to run the front desk. It’s actually turned out to be such a great thing because even after COVID we’re going to continue to maintain some of this cross training because it delivers a better guest experience at the end of the day,” he said.
Carrier, meanwhile, pointed out some of the considerable job loss that has occurred as a result of the pandemic on the food & beverage side within many full-service hotels.
“We’ve either closed outlets or brought our outlets down [in numbers] so the food & beverage impact has been pretty significant. Typically when we all look at industry data you’re seeing the occupancy, average rate, RevPAR of the industry but what sometimes gets lost is the very significant amount of F&B business that we do, and the thousands and thousands of people we employ from culinary services. Many of us in full-service hotels have yet to really clear that part of the business back up,” he said.
Furthermore, the panelists acknowledged the impact of new safety and cleanliness protocols on the bottom line but also noted there have been other costs that have been reduced. In addition, they generally credited the brands with providing direction going forward.
Nixon pointed out there are still some unknowns in terms of costs.
“I think in the near term we’re absorbing those costs in an already reduced room cost scenario so the question really is how do those costs show themselves when we get back to a more normal scenario and more normal occupancies? I don’t think we really know that just yet, but I do think the costs are going to be higher,” he said.
“Things are going to change from a cost perspective when you look at what you’re doing differently, but also the other reality is we’re not cleaning stay-over rooms as often as we would have before,” noted Rubino.
He added, “we took the guidance from the brands, the brands were on top of it. We shared what we were learning from each brand with all of our team members so we could kind of kind of create that road map of best practices.”
Carrier emphasized that many aspects of the industry have worked together effectively. “We deal with five different brand companies and each and every one of them took this so seriously. They worked very hard on the front end to provide bespoke programs that all combined often very similar elements. Many of our brands were also participating in the umbrella organization that the AH&LA set up for the entire industry. So there was a collaboration on these issues in a way that was probably historic for our industry,” he said.
There’s no question that technology being implemented at the property level has been accelerated since the pandemic. Patel, for example, noted many of the company’s hotels are new builds and are equipped with blue tooth technology.
“They’re already capable of that so most of the hotels have already started using the contactless and remote check-in process,” he said.
He further noted that Crestpoint did sign up for the early adopters program with Marriott for the self-service kiosk, which they are expected to roll out out in the fourth quarter. “We are going to be one of the test hotels for that,” he said.
Patel added the company also has a couple of properties testing a texting platform so “guests can interact with us without having to pick up a phone.”
Carrier pointed out the company has implemented smart phone menu programming utilizing QR code technology. However, he added it’s been a bit of a process.
“Most folks are just not used to doing that yet, but that technology has advanced and it does create opportunities as well as some challenges. But you can pretty much get touchless with ordering from a digital menu and you can settle right there through your smart phone,” he said.
Rubino, meanwhile, offered a nod to the virtual BITAC event while pointing out the major impact technology can have.
“Look what you’ve done with this conference, the technology to put this conference together has been phenomenal,” he said.
Rubino added, “we were able to set up our whole accounting department to be remote. By using technology we’re able to run our company somewhat remotely throughout this whole process.”
Carrier emphasized the importance of utilizing digital technology but wondered what the overall impact will ultimately be in a changing world.
“I love adapting to technology but what does that do to the fundamentals of our business, which I think is a big thing that we’re all thinking about as owners and operators of hotels. Is the fundamental demand equation changing in the long term around business travel? That to me is almost an existential issue,” he said.