View From The C-Suite
Increased communication with both associates and guests was top of mind among a handful of leading hotel executives when asked what the hotel industry can do better to help combat the effects of the global pandemic.
Speaking at BITAC Symposium Virtual Connect 2020 in a session entitled “View From the C-Suite: What’s Next For The Lodging Industry,” CEOs from brand companies as well as owner/operators also weighed in on current guest sentiment, when group business might return and the prospects of new development going forward.
David Kong, President and CEO, Best Western International, succinctly stated some of the industry’s immediate needs. “We need more business, we need to instill confidence and reassurance in the travelers, and we need help from the government. On all three fronts I think the industry has banded together and done a pretty good job,” he said.
John Russell, CEO, RLH Corporation, also stressed the need for assistance. “The biggest challenge is getting Congress to realize the seriousness that we face today and do something about it,” he said.
Russell further wondered, “what is the new normal? What are we going to look like when we come out post-COVID? I don’t know it’s very unclear, but I know that it will be different. I do think we’ll get back to some sense of normalcy.”
The importance of communication, and particularly expressing gratitude, to front-line workers was a common theme among the panelists, particularly with Mark Laport, President and CEO, Concord Hospitality,
“We’ve got to communicate to our folks more than ever before and thank them for living through this day to day. The cliché has been said often ‘we’ve never worked so hard to lose so much’ and it’s certainly true,” he said, noting that the company has been able to bring back more than half of its 6,000 associates.
David Duncan, President and CEO, First Hospitality, took it a step further. “What I’ve been amazed at is really the spirit of our troops. They’ve had to show agility pivoting to remarkably low occupancy levels, in some markets civil unrest, the cloud of the pandemic and potentially becoming ill from being exposed to it and yet there’s still a really good spirit. Above all it has reminded me why I’m in the hotel business,” he said.
James Carroll, President and CEO, Crestline Hotels & Resorts, noted communication has increased among competitors as well as the industry comes together. “It’s been incredibly impressive to see how competitors have become supporters of each other sharing ideas and best practices. I have never talked to my hard-core competitors as much as I have in the last 6 months as we’ve just tried to survive this together and keep as many people on the payroll as we could. The brands have been flexible and our owners have been absolutely heroic in their efforts to support hotels,” he said.
Of course, the panelists unilaterally acknowledged that any kind of meaningful recovery is not possible without the return of group business.
“We have to figure out how to convince the business traveler to get out and give it a try. I think the unknown is a little bit scarier than the reality and when they get into the hotels they’ll see the effort, they’ll see the work, and they’ll be more likely to go out again. I think it’s about trial and about encouraging folks to get out and give the hotels a try and see how much we’ve done to keep them safe,” said Carroll.
While a couple of executives have observed an uptick of late, they still insist group business remains an uphill climb.
“For the first part of this year once we entered the pandemic cancellations were at a much faster pace than bookings. We are seeing bookings just creep back into the first quarter of 2021. We’re feeling better about the second and third quarter though than the first. I think it’s going to be a haul and only the vaccine I believe will be able to create that pivotal point where people say ‘let’s go,’” said Laport, who also noted that much of the group business they’ve seen thus far has been related to COVID.
Duncan had similar observations noting that his properties have generally seen smaller meetings, such as weddings and social gatherings, as he discussed future booking patterns.
“In the last month compared to the last two months prior to that we’ve seen a dramatic pick up in the latter part of first quarter [2021] and second quarter [2021]; that’s really good news. The reality in that statement is there was basically zero levels of booking in those periods going forward…I don’t think we get real group traction until we have some more medical solutions to the pandemic,” he said.
In terms of new development, the consensus was that new projects are going to be very challenging to complete in the near term.
“Any new construction project is probably not going to move forward unless they have financing already arranged. It’s extremely difficult, if not impossible, to get financing at this time,” said Kong, noting the company’s focus for development has shifted to conversions.
Duncan drove home the point noting the company is working on construction financing for a handful of projects that are in the early stages. “Historically we would get 6 to 8 financing bids for those, but it is a challenge now. We have to get out to 20 folks to get one [bid],” he said.
Laport pointed out that the company is something of the exception as it has some 24 projects currently under construction. “All of those are continuing, we didn’t stop any project that was underway. We worry about when they open as to what will be the phase of this pandemic as they open, but as we’ve seen in past cycles often new does win,” he said.
Laport did later add, “we do have a number of projects that have not gone in the ground and we did, we think wisely, tap the brakes.”
Kong did also point out that it’s actually a good time for new builds in the sense that construction costs have “come down quite a bit.”
Carroll, meanwhile, touted the advantage of renovating during this time. “Renovations right now are the thing to do. We have a tremendous number of owners that were underway with renovations and kept them going or made the tough decision to make money available for a renovation over the next 12 to 18 months. When you think in a ‘normal’ world we’re always looking for what’s the lowest occupancy window of time that we can slide this renovation in so we’re not displacing revenue, well we found it…New beats old, it just does,” he said, adding hotels that give the appearance of being ‘cleaner’ are valued now more than ever by guests.
