Hotel Management

The Nature of Crisis

Most of what we’ve learned about the global pandemic has to do with public health. But there’s also much to be learned about our response to crisis generally.

In the hotel business, we tend to think of crisis as a local matter, usually involving a hotel itself or, at the worst, affecting the immediate neighborhood. A robbery, an assault, a burst water pipe, a kitchen fire: all on property. A hurricane, a wildfire, a sanitation workers strike: all affecting the local community.

At the least, coronavirus reminds us that certain crises by their very scope can be multidimensional and call for a complicated response. Within days of the virus being identified, questions began to arise as to contagion, transmission and containment. For better or worse, we live in an increasingly global world, as evidenced by the infection’s spread from Wuhan to Milan to Seattle.

Hotels in these destinations saw their occupancy rates and upcoming reservations plummet, a response that accelerated further as more cases were diagnosed across the globe. Owners, managers and brands all shared in the pain, understanding with good reason that they were coping with a situation that was essentially beyond their control.

The brands responded with empathy and concern. A March 4 update from Marriott International, for example, noted that “the well-being of guests and associates was of paramount importance.” In the same update, Marriott disclosed that it was waving cancellation fees through the end of March in eight destinations, including seven in Asia and one in Europe (Italy).

Nor was lodging the only industry affected. Cruise lines, airlines, tour operators and convention facilities have also borne the brunt of the escalating crisis. If it wasn’t crystal clear before, it’s now obvious that the various sectors of the travel industry are inextricably intertwined. In announcing dramatic cuts to both its domestic and international flight schedules, for example, United Airlines’ CEO noted that “the dynamic nature of this outbreak requires us to be nimble and flexible moving forward.” He could have offered the hotel sector the identical advice.

As with any crisis, hotel managers will want to communicate a consistent message, identify a single spokesperson to help deliver that message and refer media inquiries to the appropriate sources (in this case, the Centers for Disease Control and Prevention and the World Health Organization).

Yet for as intertwined as the various travel industry sectors may be, hotels would seem to carry a special burden, considering all the uncertainty as to how the virus is transmitted. At the core of the lodging experience, after all, is the implicit promise that the hotel you’re about to check into is not only welcoming, but safe.

The Chinese Visitors Who Never Arrived

Untitled design

Five years ago, expectations were high that the travel industry would see a huge increase in Chinese travel to the U.S. In anticipation of such a spike, Marriott International and Hilton Worldwide were among the major hotel companies that rolled out elaborate programs of amenities designed to welcome the wave of Chinese visitors.

The rise of a thriving Chinese middle class with disposable income to spend suggested that hundreds of thousands of tourists could afford to travel outside China for the first time. High on their list of destinations: American cities, starting with Honolulu, Los Angeles and San Francisco and spreading east to Las Vegas, Chicago, New York, New Orleans and Miami.

Arriving at their hotels, these visitors would find welcome letters in Mandarin, Chinese slippers, tea served in authentic Chinese tea pots and other Chinese-themed amenities. All the pieces were in place save one thing: the legion of Chinese visitors failed to materialize, at least not in the numbers projected.

Speaking at the annual Lodging Conference in Phoenix in late-September, Marriott International president & CEO Arne Sorenson noted that the Chinese are still traveling abroad, but they are steering clear of the U.S. His explanation: Beijing, concerned over rising tariffs and other political hot potatoes, is deliberately discouraging travel to the U.S.

U.S. Travel Association data supports Sorenson’s argument. Following seven years of double-digit growth, visitations from China to the U.S. declined by 5.7 percent in 2018, according to the USTA.  The Association called the decline “staggering.”

Thankfully, the rest of the world continues to visit the U.S., suggesting that China’s loss can be everyone else’s gain. Enthusiastic travelers still arrive daily from the United Kingdom, Japan, Australia, Canada and Mexico, among every other country in the world except China.

The travel industry learned three hard lessons from this turn of events: First, it makes no sense to single out one country, when other regions can generate impressive numbers. Second, it doesn’t pay to bet on global politics. Third, always have a contingency plan ready to implement.

Hoteliers also are rethinking the wisdom of making their hotels feel more Chinese than American. The truth is, the Chinese visitors who never arrived probably would have been more delighted to receive baseball caps and popcorn than tea and slippers.

woman with luggage checking in to hotel

Employment and the Next Lodging Industry Downturn

Speculation continues to swirl around the lodging industry regarding the likelihood of a slowdown beginning as early as 2020. Fueled by panels at industry conferences and commentary in the trade press, questions remain as to how widespread and long lasting such a downturn might be.

Given the industry is essentially cyclical, an eventual downturn appears to be more or less inevitable, although the next contraction will follow an unusually extended period of growth and profitability.

Complicating the industry situation is the strength of the national — and even global — economy, along with consumer confidence, employment data and the impact of ongoing trade wars, all in light of the 2020 U.S. presidential election.

A recurring theme at the Hotel Data Conference sponsored by STR this summer had to do with employee recruitment and retention in light of a downturn. While it’s true during periods of expansion as well as contraction, the famous dictum attributed to J.W. Marriott Jr. is especially true during downturns: “If you take care of your associates, they’ll take care of your guests.”

Well-looked-after guests result in higher guest satisfaction scores and more positive reviews on social media, which typically translate into more repeat bookings, increased trial usage due to positive word of mouth, higher occupancy and greater profits.

Consider the challenge of finding and hiring people with strong interpersonal skills. The most promising approach is to seek applicants who consider entry-level hotel jobs to be a stepping stone to a career in hospitality.

Considering that international travelers are likely to remain a reliable guest segment in many markets, downturn or not, it makes sense for hotels to pursue multicultural candidates who can help communicate with guests in their languages of choice.

Providing training is essential to retaining motivated employees because it helps satisfy their desire to pursue a career path. Cross-training is a good option because it not only satisfies the employee expectations but expands their ability to handle new and different tasks on property.

lineup of hotel employees

Confronting the Labor Shortage

When Jonathan Tisch, conference chair of the 41st annual NYU International Hospitality Industry Investment Conference, opened the event last month in New York, he wasted no time in addressing a core issue currently facing the lodging industry: dealing with the country’s current entry-level labor shortage or as he put it, “keeping our talent pipeline full.”

While politicians celebrate reports that this spring’s national unemployment rate has dipped to a 50-year low of 3.6 percent, the dwindling labor pool means hotel general managers are struggling to fill openings across the board.

Agriculture, retail and construction, among the others, also are struggling. Closely tied to recruitment is retention: for every associate who stays on the job and thrives — seeing their job lead to an eventual career path — there is one less vacant position to fill.

As it happens, a number of widely known hotel company CEOs over the years got their start in the industry, working in entry-level positions such as dishwasher, bellman and night auditor.

In his remarks, Tisch offered a number of strategies for coping with the challenging situation. Two stood out: First, he urged hoteliers to make diversity and inclusion is a core goal. If for no other reason, he said they should make sure their teams are as diverse and inclusive as their guests.

There’s another good reason for hoteliers to promote diversity. We’re welcoming more and more international guests. It, therefore, makes good business that hotels offer multilingual staff.

For those who say automation and robotics is the answer to low unemployment, I say that’s wishful thinking.  At its core, hospitality has been and is likely to remain all about the human touch.

Celebrating a Hotel’s Birthday

M&R’s friends and family recently gathered to celebrate the first “birthday” of the Hilton Garden Inn New York Times Square South on West 37th Street in New York. The celebration recalled the exciting and harried first days of opening the hotel one year ago. That event was an unforgettable achievement for the company’s associates and management team.

Hilton Garden Inn New York Times Square South exterior

Hilton Garden Inn New York Times Square South, 326 W 37th St, New York

The bonding and sense of camaraderie that emerged from those first days and weeks among members of the opening team—from the front desk to housekeeping to the engineering staff—will hold the hotel in good stead going forward. A feeling of pride comes with being part of the original team. Even guests pick up on the vibe when interacting with these associates.

Front Desk, Hilton Garden Inn New York Times Square South

Front Desk, Hilton Garden Inn New York Times Square South

The good cheer notwithstanding, I was reminded what an important marker a first anniversary is for any hotel from a planning and forecasting perspective. Because it’s only with a full year under your belt that members of the business team can really begin to get a handle on how successful they’ve been and the challenges that lie ahead.

It’s all about what we call the “year-over-year comps” – an analysis of performance that compares the previous to current years. Now that the team has crossed that first-year line, managers can project next year’s holiday season, for example, against this year’s and make assumptions accordingly. The same applies to the hotel’s performance in January and February, typically two quietest months of the year.

Much has to do with seasonal variations, notably high season and shoulder season. Group nights are another element to factor in. So is the practice of allotting excess inventory to online travel agencies. How much is too much?

Lastly, at a time when dynamic pricing is the order of the day as it is today and rates can vary by the day if not the hour, the year-over-year comps give the revenue management team more data to ponder. All with the goal of generating additional revenue, which can translate into increased profitability.