COVID19 Guidance on Emergency Response Decisions

Financial Relief

The most critical first step, if not already taken is to project our expenses for the next 90 days.

This requires contacting the lender and asking for some type of relief. A forbearance letter requesting a 90-day period of no payments is a good first step and additional requests for relaxed debt-service coverage ratios and others are logical as well. Ensure that your request to the lender includes your commitment to the hotel, a new forecast for the balance of 2020 and history of your guest service scores, quality assurance reviews and a reminder of your timely payment record.
Vendors can be very forgiving if we have been loyal and current with bills and might be able to provide services at a discount if you continue to use them now. Utility services have not been tested in this environment, but it is worth a try. All in-house contracts should be reviewed. Landscaping and trash removal, copiers and any services must be scrutinized. We must prioritize vendor payments and reach out to national providers for deferred payments.
The most difficult part of this is the layoff of staff. They must fully understand that there will be schedule reductions and furloughs or layoffs. If we are able to keep their insurance intact with hopes that they can return to work relatively soon, they will be grateful.

Operational Efficiencies and Alternatives

The Financial Relief will be what's dictates our operational scope for the next 90 days. But here´s a couple of alternatives .

We can reduce the size of the hotels by closing off a wing or floor, saving on utility consumption, staff services and supplies and completing maintenance work that is difficult to do when we are full.
Housekeeping services can be offered to guests on a request-only basis.
Contacting guests in advance to ensure that they are still planning to travel is prudent.
If all else fails, there will be a need for rooms for those who test positive for COVID-19, but are not ill, those who have mild cases and if that market is not appealing, there are the homeless who really need shelter before the weather warms up.

2) What should Hoteliers be focusing on right now for what's coming…

Many leisure travelers still have the same purchasing power as before and are simply not able to use it due to travel restrictions. This means sights should be set on the future, i.e. the second half of the year, when this crisis will hopefully have passed, and people will be taking the leave they accumulated during this time. Due to the degree of uncertainty, hotels will have to be more flexible than usual when planning, strategizing and budgeting.

In regions where hotels are not forced to close but suffer from low occupancy, the key is not to slash rates but rather to right-size them to match the reduced demand and stay in line with the comp set. Creating attractive package rates which focus on added value, staycation offerings for local segments, alternative ways of monetizing F&B outlets via take-away and delivery, offering paid parking to the public or having creative day-use offerings can raise much-needed cash at this time and attract guests post-crisis. Also, promoting relevant offers now, such as airport transfers in sanitized cars, show hotels react to the situation and want to make their guests feel comfortable even in this difficult time.

For hotels facing cancellations due to travel restrictions or mandatory closure, offering vouchers or attractive rebooking options instead of cancellations and refunds is a way to keep on-the-books business. When groups cancel, sales must make a note to follow up for re-bookings once business picks up again.

It is imperative to keep up marketing initiatives. This can be on the hotel’s social media accounts, with the help of staff sharing on their own channels or via suitable influencers or media outlets. By finding ways to maintain a public presence and sharing how a property is going through this crisis, both branded and independent hotels can stay at the front of their audience’s mind and get their share of bookings once demand begins to grow again.

Which segment is likely to Recover First?

It’s likely that domestic corporate will be the first segment to recover aftertravel restrictions ease. The domestic leisure segment booking both via OTAsand direct channels will follow. Looking at how the situation is currentlyunfolding, international business will take the longest to recover.

How will OTAs will react to the Crisis?

Given that both domestic corporate and leisure will recover first, we are expecting OTAs to focus their marketing efforts on these segments for theremainder of 2020. However, considering that the situation is still unfoldingand developing differently across various markets, we still need to wait forprecise data to be published by OTA partners.

Today, flexibility with cancellations is key. What is the best practice when itcomes to cancellations and will this crisis impact guest expectations in this areain the future?

"Industry leaders have set the standard of refunding guests for canceled staysdue to force majeure. While this can cause cash flow problems for hotels, especially with no new bookings coming in now, hotels should follow thisexample as guests currently have no choice but to cancel. Looking forward, being flexible and courteous with guests now will ensure they have a positive experience and will return once travel restrictions ease.

There is a possibility that demand around cancellation policies will change as aresult of the current situation. Travelers may have become more appreciative of refundable rates, so hotels will have to keep a close eye on booking behavior in the future to see if and how it shifts. Will cheaper, non-refundable rates still be popular? Will guests be willing to pay more for the security of being able to gettheir money back if they need to rebook or cancel? For the corporate segmentand groups, will there be a demand for revised conditions? As demandrecovers, hotels will have to keep these questions in mind and adapt theiroffering to evolving guest needs."

How will COVID-19’s potentially devastating impact on airlines affect hotels?

As of now, it is hard to know how quickly airlines will resume normal operations. For markets especially dependent on air-travel this means added uncertainty. When forecasting and creating long-term strategies, this is something that must be considered.

What should hoteliers focus on while their hotel is shut down or facingextremely low occupancy to keep busy and be ready for when business picks up again?

"For one thing, it is crucial to stay informed about what’s happening in yourmarket and globally. Use a business intelligence tool and tap into the datasources available to you to get detailed, current information. If you are interested, you can reach out to OTA Insight’s team on LinkedIn and requestinformation on 40 markets globally which they have made available for free.

Hotels still welcoming guests should focus on making them feel as safe as possible in this situation. Show them you are there for them and take theirconcerns seriously. The extra time you have now gives you the chance to tackleprojects you’ve previously put off. This can include brainstorming creativeideas for post-crisis promotions, cleaning up your system, researching and testing new tech tools, conducting or designing staff training and working onyour online presence (including your website, social media, etc.) to be ready to increase traction when business picks up."

COVID-19 Impact on the Hospitality Industry

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