Russell joined HVS in 1995 and was appointed managing director in 1996, becoming chairman in 2012. He has received a Lifetime Achievement Award from HOSPA, the hospitality professionals’ association, in 2011, and the ‘Hall of Fame’ Lifetime Achievement Award at the Hot.E hotel investment conference in London in 2017. He shares his thoughts on the long term effects of the pandemic and strategies to survive.
What long-term effects do you think will be felt as we emerge out of the pandemic?
There will be a change in demand for travel fuelled by lack of confidence, fear of having to quarantine, fear of further lockdowns, and the inherent fear of losing money if bookings have to be canceled, plus reduced availability of flights. The cost of flights is also likely to rise as fewer air slots are available, however, in the long-term, people tend to forget the past, they move on and travel is a strong habit.
In the short-term demand for out-of-town staycations will boost occupancy in those locations. Hotels in city centers will suffer as long as social restrictions exist, for example currently in London, Manchester, Edinburgh, Liverpool in the UK.
Impact on business travel and MICE demand is likely to be long-term largely because companies will be less inclined to pay the expense of travel, especially for short duration trips, and habits have changed as technology has improved and people are used to Zoom calls, plus the fear of mixing in large groups of people is likely to last for some time.
Even once a vaccine or a treatment is widely available, corporate travel is likely to have shifted a bit, as people have discovered the versatility of online meetings on an unprecedented scale, and some smaller, less strategic meetings that could have generated travel before Covid, might now instead be replaced by a virtual meeting.
It might take a while for cheap flights to return in significant ways, which might prevent people from traveling in the way they did before – this might change the dynamics of markets that were reliant on the more price-sensitive demand.
Markets that have experienced tourism saturation in recent years such as Barcelona, Venice, and so forth, might want to put in place strategies that allow them to depart from volume-driven models – again, potentially diminishing travel opportunities for the most price-sensitive.
Hotels have a unique opportunity to embrace becoming a ‘hub’ for the community, for corporate or social meetings, big and small, if they market themselves well. Office floor space reductions might mean companies ‘let go’ of all or some of their meeting space, going back to hotels for this, and the F&B spaces in hotels might find a lot less external competition, and the advantage to present themselves as more secure spaces, thanks to professionally implemented cleaning protocols.
There will be different hotel lease structures, the inclusion of force majeure and pandemic clauses in all agreements, exclusion of pandemics from all insurance cover, minimizing of contact and wearing of PPE in F&B, etc., stricter booking procedures for track-n-trace, more expensive air travel costs and less air travel.
Booking time frames will be shorter and there will be greater flexibility. The market is adapting to flexibility in terms of booking, with larger MICE (meetings, incentives, conferences, and events) gatherings looking for ways to plan around progress-stopping world events like pandemics. Individual travelers are enjoying the free cancellation policies and the deals available to travel last minute. Some of these may stay in the future.
Experiences that don’t require direct contact with hotel staff will gain popularity. Apparently some of the hotels in Dubai that had robotic concierge staff as gimmicks were highly praised in these times. While this is pretty niche, hotels that can provide service and experience without direct staff involvement might prevail due to a lower cost of human capital.
Is this the end of the buffet? Probably not. Several sources say that Covid will end the buffet, but people quickly forget the past. I think that we will see that buffets are here to stay, just because they require less staff and can provide cost savings.
We will see skeleton staffing with flexible hourly contracts and staff that can accommodate multiple roles. While this might not work for every hotel, assigning multiple roles to a job would most likely reduce staffing costs.
Restaurants will increase the distance between tables, which is a positive move overall as some places in London were getting unpleasantly cramped. There is a difference between a stimulating environment and being packed in like sardines.
How are you seeing the recovery in different markets?
Domestic markets will recover quicker while those relying on international travel and large meetings faring worse. Travel will be localized, and variable, with a preference for resorts and the countryside or suburban hotels over city centers due to greater space.
Hotels across most European markets have seen green-shoots of recovery over the summer, driven largely by domestic demand. However, this varies according to local Covid restrictions and infection levels. The minute further restrictions are announced hotels experience high levels of cancellations.
Regions with strong local leisure demand have done well. Regions with more of a leisure market have done all right and will probably recover before those which have a more corporate market.
What are the successful innovations that are working right now?
Free hotel rooms for couples or groups who take dining packages, and leaner staffing structures. It is hard for any hotelier to be successful unless they are benefitting from forces outside of their control such as embassy or university contracts that fill rooms with stranded individuals or key workers.
Self-check ins and all these new tools which limit contact are also picking up and are likely to remain in place when they assist in cutting costs.
Reworking your space by letting guest rooms as offices, or meeting rooms being let to schools, for them to have more space with the students. Defer to outdoor gym facilities rather than indoor, weather permitting, and repurpose rooms for a long-stay.
Staycation!!! A huge push for this is needed in London. Create exclusive deal packages with hotels or local spas, as well as surrounding restaurants. London will continue to suffer until international air flights resume and/or theatres reopen and major concerts can be held.
Room service from surrounding restaurants, similar to Deliveroo but the hotel gets a cut instead of Deliveroo. Less buffet breakfast seems to be working from a cost and speeding up service perspective, though this is not really an “innovation.” As I said earlier, I do expect the buffet eventually to return.
Instagramable features in the lobby. People have so much more time to sit on social media or pay more attention to it, so eye-catching gimmicks can work to bring people in.
Spicing up their websites. Again, with remote work, more people spend time on the web. A better website experience can make booking easier. It’s not just about having a site that looks good, but not letting design overrule how easy it is to find information.
Targeting new markets – letting rooms out by the day for working (e.g. Accor), and setting themselves up for small, one-to-one meetings as office workers are now holding smaller meetings outside their offices. Hotels need to consider the layout, service, and table style that suits this demand.
Gearing up more to attract the leisure market, particularly the domestic market, which is not as lucrative, but there are currently lots of offers and promotions available – two nights for the price of one, five nights for the price of four, free breakfast, free wine with a meal, etc. Engage with domestic demand via social media and marketing platforms and price accordingly. Many upmarket hotels in London seem to be running these sorts of offers.
Greater use of technology to reduce risk of contamination, for example, remote check-in/check-out, easy online booking, online payment, control of room features like air conditioning, blinds, and lights via a handset, which is easier to clean. QR codes are also now being used more.
Demonstrate clear health & safety protocols. No in-room service, anything required should rather be left outside the door and reduce the number of touchable items in the room, for example, cushions, blankets, leaflets, menus, information packs, leaving only items that can be easily cleaned. Mark everything cleaned with a sticker, sealing the room to demonstrate it’s been thoroughly cleaned.
How do hoteliers prepare for an uncertain future?
- Continue to build consumer confidence with stringent Covid health & hygiene measures
- Cut costs without reducing standards
- Reduce staff – employees used more flexibly
- Partial openings, i.e. some rooms remain closed longer term
- Consider repurposing some space such as serviced apartments / long-stay lets / front-line workers
- Negotiate with owners/landlords – maintain a line of communication
- Be flexible and be prepared to consider new markets and new ways your space can be used
- Be realistic – it’s not going away any time soon!
- The mantra at the moment is restructuring (if yours is not a luxury hotel), otherwise concentrating on cash control over the short term.
- Diversification of source markets (e.g. not all US or Chinese visitors)
- Diversification of consumer mix (e.g. not all business or MICE)
- Penetration of local markets (these don’t go away, so if you can generate demand for local business or local patrons to F&B, they will hopefully support you in hard times)
- Flexibility of staffing/reducing excess in the payroll
- Regular customer contact to keep the hotel top of mind
- Experience and locality; create a memorable aspect of the hotel