Mathias gives us an insight into the thoughtful process behind their reopening strategies and the creative initiatives they have put in place to reduce costs and take care of their staff.
What is the status of your hotels? How many have you been able to re-open?
My region includes our UK portfolio as well as our two properties in the ski destination of Megeve, France. Our three UK hotels were mandated by the Government to close on March 24th. This was a difficult situation but understandable in view of the progress of the virus in the country. As a result, our hotels furloughed many employees with the support of a Government subsidy through the Job Retention Scheme. The scheme will stop at the end of October but has allowed many UK businesses to weather some of the impact from temporary closures.
Four Seasons Hampshire in the English countryside was our first resort to re-open this summer and has been very busy with an increased uptake from our domestic market. August looks very strong as British holiday makers have decided to trade overseas destinations for staycation, away from cities and virus epicenters. Our hotel in Park Lane London just re-opened on August 17th and our Ten Trinity Square property is currently looking to open in early September. Most luxury hotels openings in London have been staggered. Our feeder markets, which are mainly international, have been severely impacted by travel restrictions and while there is little travelling to London our hotels’ occupancies will suffer. In London, we currently predict low occupancies for the months to come but at the same time it is important that we show our guests that we are open and ready to provide a safe and superior service delivery. Our team has worked extremely hard to deliver an exceptional service experience and there is a palatable sense of excitement displayed by our employees!
Our private Residences in London, located at Twenty Grosvenor Square, stayed open during the pandemic and the impact has not been as severe as in our hotels. Many additional sanitary measures have been adopted to make the Residents feel absolutely safe. This is our absolute priority.
Our two Megève properties are seasonal, so one hotel re-opened for the summer season and is doing fairly well. Numbers are much lower than in previous summers but there has been a growing interest in countryside destinations offering a respite from big cities and an opportunity to enjoy fresh air in a luxury destination.
From a global perspective most of our Four Seasons hotels worldwide have re-opened with various levels of activity. The pandemic has touched different parts of the world in so many diverse ways and local measures have influenced hotel re-opening decisions across the globe. What we know is that recovery will take time, and 2021 is expected to be uncertain.
How are you cutting costs while still following COVID sanitary requirements?
I prefer to say that we are adjusting costs to adapt to the business downturn. The cost structure of our hotels across the world are very much dependent on business levels. As a result, a successful hotel must be able to flex its costs, without compromising the guest experience. While we are reviewing our expenses on a daily basis, we also want to continue to deliver a luxury experience, which is highly personable and customized.
Of course, with less rooms occupied and lower business traffic the importance of labor management is magnified, and hotels will re-organize themselves accordingly. Hardship provides an opportunity for creativity and different thinking. It allows us to revisit the way we work and the way we operate and it will naturally force our hotel leaders to become better business managers.
Additionally, we work very closely with our various partners and suppliers who have provided us with a lot of flexibility. Close vendor partnerships will allow hotels to revisit their contracts and make sure that they fit the new normal. It is important to be able to show a lot of vision and flexibility at this time. Cost reduction is not an end, it is a response and as such it has to remain adaptable and agile.
As for COVID sanitary requirements they require costs which are not debatable or avoidable. Four Seasons recently launched “Lead with Care”, an enhanced Health and Safety program in partnership with a renown international medical institution. This program allows our hotels to deliver a safe environment for our employees and guests alike. It is vital that we show our commitment to health and equip ourselves with the correct procedures and tools in order to foster trust. We are a service business and caring is very much part of our DNA.
How have you restructured your staffing in anticipation of fluctuating guest levels to stay in budget?
Staffing costs are obviously the main expenditure of our hotels. The structure of those costs varies greatly from country to country and is dependent on local labor laws. First of all, the approach to labor is very much influenced by those laws. In a business very much driven by personal service and human touch it is certain that lower levels of business will in many cases force hotels to restructure in order to survive. In many of our hotels we do not anticipate business levels to catch up with historical levels until 2022 at the earliest, therefore each labor decision has to be sustainable.
Restructuring remains a balancing act, and one has to understand the cost of parting with employees and the cost of recruiting those employees back when business levels increase again. Those are very difficult times for human beings. Restructuring labor is necessary to maintain our hotels in functioning order for years to come, but it impacts personal lives. It is exceedingly important that we recognize the sensibility of restructuring measures. Morale needs to be maintained because through positive morale comes service excellence too.
Another creative approach is to in-source functions that historically would have been outsourced, such as overnight cleaning. If you have quality employees who are ready to work, it makes sense to provide them with those opportunities. The quality is very much maintained, the morale of the staff is protected, and in many cases, there are costs savings to be made to. Re-organizing the way we work is paramount to success.
What markets do you think will recover more quickly?
This is a very difficult question to answer because the pandemic has impacted many countries in so many different ways. Some countries that repelled the virus very well early on now see flares of resurgence. I think that the recovery in our city hotels may be slower than in resort destinations, because it will take time for guests (including groups) to feel safe in cities again. With the uncertainty of potential case resurgences or new lockdowns, cities are exposed. Hotels and resorts located in the countryside or in remote locations will be more attractive, and currently we see an increased surge of domestic holidays in remote parts.
The US market is obviously very important to London and to many of our European hotels. To date, the spread of the virus in many American states has severely impacted the influx of US customers to our region. In that sense however the US and Asia (particularly China) have some advantages in the sense that they have a greater draw of domestic business than Europe has (Europe is still quite fragmented and very dependent on overseas tourism). For instance, we have seen some good signs of recovery in China coming directly from domestic travellers.
I see two phases of recovery. The first phase will focus on domestic travel and staycation, and our sales teams will need to look for new local markets. The second phase will continue to be dedicated to our feeder markets. We know that the US and GCC customers will come back, and when they do, London and other capitals of the world will recover; the question is when?
We just need to be ready to weather the storm until travel confidence is restored. It certainly will take time, but our wonderful industry will prove its resilience once more.