As European Chapter Head of the International Luxury Hotel
Association and founder of Global Asset Solutions, which provides current hotel asset management for 70+ hotels worldwide, Alex shares his insight into optimizing operations and capital efficiencies of hotels to drive revenue and investment returns for owners and investors.
What are the most important lessons you have learned over the last year?
The pandemic has been very different from any other crisis I have experienced. Operators’ corporate layoffs have had a significant impact, resulting in limited support for hotels, and lots of owners are left to handle the situation on their own.
In saying this, operational teams on the ground were outstanding, finding creative ways to deal with issues as they arose and cut costs.
We had to adapt the business models frequently and forecast well as the demand was so volatile and differed depending on destination. We also had to reinvent revenue management as there were no previous events to compare data. We also had to challenge most insurance coverage, and we took legal actions to protect hotel owners’ interests.
In terms of segmentation, MICE business has changed, we’ve realized that we need to offer a combination of online and offline platforms, and the business traveler will take time to return. Some will not due to online video conferencing and hybrid models. Looking to the near future, we need to be ready to benefit from revenge spending for leisure while keeping the current lid on expenses. Our objective is to come out of this crisis with better profit margins for all our hotels.
What do you think the recovery will look like?
Hopefully, the summer will be good for resorts in Europe. Vaccination is well underway.
City hotels will take longer to recover due to the lack of business travelers, but also the fact that it is doubtful we will see non-European travelers before 2022.
I am concerned about Brexit, especially for the UK side. Many are already disappointed by the results, and it is just the beginning for the hospitality sector.
How are you helping hotels prepare for the return of travel?
We have created Sales & Marketing plans for the shoulder seasons and allocated additional Sales & Marketing funds to recover faster. We have also created sales plans for each department to boost cross- selling and up-selling with the limited demand. We also created a training program for Human Resources to set up new rules and elevate service. Additionally, IT software is being assessed and reactivated or updated where necessary. In this area, ownership needs to take additional control and monitor the operators further. Furthermore, we will keep a close look at corporate recharges and commissions. When starting our asset management assignments, it is always a source of issues when a hotel is not appropriately monitored.
What advice would you give to hotel owners in such an unpredictable market?
- Get support from professional asset managers, whether you have an independent hotel or branded hotel. There is very little support at the moment from the brands, and their team will take time to rebuild, whatever they say. Proper supervision of your asset will pay back at least ten times its cost. We see this with all our hotels, there are no exceptions, and we have more than 70 hotels globally with multiple operators. Ownership cannot just rely on the management’s good intentions; the teams must be supervised carefully.
- Similar to a CapEx reserve, create an operational reserve as there will be ups and downs, and liquidity will continue to be an issue.
- Maximize government support.
- Control payroll in advance, using forecasts (even weekly forecasts in housekeeping or F&B) to adjust the team… don’t wait till the month is finished to see the damage on the P&L.
- Hoteliers must follow the local sanitary regulations but be creative with these covid restrictions. For example, if the restaurants need to stay closed, transform hotel rooms into dining rooms to serve your guests. One room = one table. This is ideal for business meetings, and room service is allowed.
- Set up the ground rules now to focus on owner interests. It will be too late if you wait.
- The recovery strategies must be orchestrated by ownership and asset managers. Lay down the foundation to thrive in the aftermath of this crisis. Be ahead of your competitors and boost profit recovery. Take control now, not later.