Longer-term implications of COVID-19

The implications of COVID-19 on the hotel industry are likely to be profound, beginning with near-term cost containments and potential property defaults to rethinking of operational protocols.

But what are the potential longer-term impacts and changes the industry will witness in the months after the virus calms and business starts to return? Or will hoteliers slip back into bad habits? Here are some insights from hoteliers themselves. 

HOTELS: How will the COVID-19 crisis change the hotel business longer term from an operation, marketing, development perspective?

Puneet Chhatwal, managing director, CEO, The Indian Hotels Co. Ltd., Mumbai

In today’s volatile world, management has to factor in multiple disruptions. For the hotel industry these normally were wars, recession or political developments. To these has been added a new factor – global health issues. Lean times also force us to look at ours costs differently. We will need to streamline operations for higher operational cost effectiveness and efficiencies. Marketing will change with enhanced personalized communication to our guests and other stakeholders. Development is not envisaged to be impacted in the long term, though some government reliefs or incentives are always welcome.

Roland Fasel, COO, Aman, London

Without doubt it has highlighted the complexity of running a global business with a multitude of stakeholders – and add to that an ever-changing and evolving situation. COVID-19 has pushed us to increase our intensity and focus and ultimately the team spirit and comradery has soared amongst all our senior leadership. In addition, we have had so much support and well wishes from our community of Amanjunkies who want to check in on our Aman family across the globe. So many personal friendships and connections have been made within our resorts between guests and staff and that feeling of warmth and genuine concern has been a such beacon of hope in these times.

Laurence Geller, chairman, Geller Capital Partners, Chicago

It won’t. We will slip back to our bad habits because people have short memories and forget. Old people like me who have been through recessions since 1973 know that very few look back at history and, if they do ignore it at their peril because they think they are smarter than everyone who has been through it before. The brands are probably the biggest culprits as they encourage more and more programs and standards without commensurately reducing the more redundant programs. But they are not alone and while admiring energy and vitality combined with creativity, we need balanced fiscal prudence.

Steve Kirby, managing principal, Mumford Co., Buford, Georgia

The amenity creep that requires economy properties to operate with similar staffing as mid-market and upper level are over.

Getty Images
Getty Images

Fernando Rocha, chief development officer, Fibra Inn, Monterrey, Mexico

Much more focus on cleanliness, ventilation systems, even materials used for FF&E.

Michael Bellisario, senior research analyst, Robert W. Baird & Co., Chicago

Leverage levels likely will be lower as recency bias kicks in and developers, owners, and lenders reconsider possible downside scenarios in their underwriting. Lower leverage overall could reduce long-term returns from an ownership perspective.

Chris Stanley, vice president, franchises sales and development, Radisson Hotel Group

Everyone has been speculating for years where the next downturn would come from, no one guessed this. Bad deals will fall through, good deals will continue to move forward.

We need to manager our collective image to avoid ‘bailout backlash’ as the banks experienced in 2009 and beyond. We need to be mindful and remind the teams to stay at home when they are sick, the larger picture is not worth the risk.

My biggest concern is potential company mergers and buyouts, more ‘big boy’ companies will damage the industry image.

Kristin Thorsteinsdottir, vice president of development, Club Med

It will hurt asset-heavy operators hard, so the asset-light model will become even more relevant. It will weed out operators that did not have solid balance sheets.