Book now, cancel last minute: Hotels look to beat Covid-19, reinvent biz

Hospitality may take three years to revive, say hotel chains

Hospitality has been hammered by the pandemic, thanks to a near total shutdown made worse by similar impact on travel and tourism worldwide.

The state of the industry has prompted top hotel chains to predict that revival may take anywhere between one and three years. They also anticipate permanent changes in the services  offered, and see revival driven by domestic spending.

Despite dark clouds, the one saving grace, according to Giridhar Sanjeevi, chief financial officer (CFO) of the Taj Group of Hotels (Indian Hotels Company or IHCL), is that the industry sees reduced action between March and October with festive, and wedding events kicking in between November and February.

“There are signs of life in the domestic economy with IHCL having seen bookings for weddings happen across New Delhi, Goa and Jaipur,” he said. “Within domestic markets, leisure travel will recover faster than business travel, and international travel, much later,” he added.

Others like Accor Group India see occupancy return before rates. Kerrie Hannaford, Accor's vice-president, commercial, for India and South Asia, says that “levels of business in the financial year 2019, which was a very good year, won't be back for a while.” She adds that, historically, each time there has been a stumbling block like the Lehman Brothers financial meltdown or the terrorist attacks in Mumbai, occupancies returned but room rates took a while to recover. In the best case, that may make recovery a medium-term play. Neeraj Govil, senior vice-president, South Asia, Marriott International, says as a fraternity, hotels have to reestablish confidence in travel and brand trust for the world of today. Of Marriott's 124 hotels,  24 are closed with some 60 per cent of its employees  on active duty, Govil added.

Patu Keswani, founder and chairman of Lemontree Hotels, which has 8,000 keys and as many employees, says the overarching focus for now will be on tiding through the next 24-30 months with the assumption that there will be little or no income. “I see domestic travel returning by April 2021, MICE (meetings, incentives, conferences and exhibitions) business by January 2022 and foreign inbound travel by October 2022,"  he said. Lemon Tree recently raised Rs 300 crore through issuance of compulsory convertible preferred shares (CCPS) to its partner, the Dutch Pension Fund Manager APG and has now got board approval to raise another Rs 150 crore through a rights issue or QIP.

 

 

This will provide it with a liquidity cushion of over Rs 500 crore to see it through the next three years. One big change that Keswani sees happening is that hotels will learn to operate more efficiently with fewer staff. Presently, 40 per cent of hotels open run with half their teams. “The future may see normalcy bring two-thirds of the old bench strength back to business,” Keswani said.

Anil Chadha, chief operating officer (COO), ITC Hotels, says it expects a phased opening up of the ‘revenge holidays’. “There is pent-up demand. We launched Welcombreak Staycation packages, which have found favour with guests, especially at ITC Grand Bharat at Manesar and ITC Rajputana in Jaipur,” he said.

Hannaford says he is looking at flexi staffing, multiskilling and clustering of roles alongside introducing part timers and professionals entering a second innings of their career. There will be fixed-term contracts and more delivery workforce, based on the ever changing business requirements.

Meanwhile, there's a unanimous vote about what can help. Food and beverage takeaways and delivery is likely to be a permanent fixture and is offered by most already. To ensure foolproof sanitation, players like IHCL use a three-sink washing process whereby they wash in one  sink, soak in certified sanitizer in the next and then rinse in the third again before preparation. ITC, on its part, operates ISO 22000 Food Safety Management quality accredited microbiology labs at every hotel to monitor food standards, and delivers in a foolproof carton-like box that presents little chance of contamination once packed.

Other fillips can come from staycations, as well as the WFH or 'work from hotel' concept, says Govil. “Smaller summits and meeting bookings are happening at hotels for the IT sector,” he says. While revenues for those may be small compared to room nights, they do serve in keeping customers connected and engaged, he said. For the most part, brands see their current expansions on track. IHCL plans to keep opening one hotel a month, Marriott has at least half a dozen hotels on track to open as do Accor, and others.

Ultimately, what will give the customer the confidence to return?

Chadha says health, safety and hygiene will be critical for guests when deciding on a hotel, along with integrating best of technology in hotel operations for low or contact-less services.

Laundry, for example, can always be dropped off in a box but using technology to know when it can be picked up without contact makes the difference. The trick lies in making sure it is good business sense. Sanjeevi says the trick is to revamp processes while using digital cost structures for transformation. “We hope to achieve profitability at lower occupancies and are revamping our revenue cost lien so that we don't have to go back to 65 per cent occupancy before we are profitable,” he adds. While there have been no layoffs, the company will however look at renewals of contract workers on a case-by-case basis, IHCL officials added. Until there's more visibility on a vaccine or business positivity, the entire industry is going to be holding its breath.