Taking a multipronged approach in its response to the coronavirus pandemic has helped Hospitality Ventures Management Group adapt to the challenges posed during the year and position itself for growth in 2021.

Falling back on their experience in previous downturns, the leadership team had to make some tough decisions as the pandemic began in early March in the U.S., HVMG President and CEO Robert Cole said. The company held an emergency executive team meeting to figure out how it would handle the crisis internally and across its portfolio of hotels. HVMG also held daily leadership team calls for the first few months of the pandemic to talk about any changes, receive feedback from associates and discuss revenue strategies, health and safety, and owner updates.

It’s one thing to just take a cost-cutting approach, but it’s another to balance it with the understanding that this will affect employees and their families as well as guests, he said. On top of that, the company had to take health and safety issues into consideration.

“You’ve got to have a balanced approach as you make decisions, because you only have so many levers to pull and, quite frankly, you also have to recognize what levers not to pull,” he said.

The overall objective was to conserve cash knowing that HVMG was headed into a difficult time with pressure on liquidity across its hotels and owners, Cole said. To achieve this, the company took an aggressive approach and, within the first 10 days after that executive meeting, moved salaried associates to hourly, with flex hours, where possible; moved some employees, including salaried ones, to part time; and laid off hundreds.

Along with cutting labor expenses, the company reviewed expenses and resource requirements at each property, said Richard Jones, executive vice president and chief operating officer. One of the benefits that came from this was learning how to optimize staffing levels at hotels to meet the peaks and valleys of demand, he said.

Knowing its properties would be operating under challenging conditions for the next 12 to 24 months until the recovery took hold, HVMG made some short-term changes to address immediate needs while also allowing to revisit and redesign the operating model for each hotel going forward until demand returns, he said.

The leadership team took a top-to-bottom approach when reviewing expenses, eliminating anything that wasn’t essential. Third-party services were either handled in-house, deferred or eliminated. The company worked with partners and vendors to negotiate, renegotiate or end service agreements to cut the cost or defer it.

“That added up to a pretty substantial savings, especially in the worst part of the pandemic in April and May when we really felt the most of it,” Jones said. “Going forward, it’s really reset the bar as it relates to what is essential and what is the most efficient way to get things and how we are going to do business differently and better coming out of it.”

The company’s efforts paid off as its hotels ran a gross operating profit margin of 27.2% from June to October and managed to keep expenses at about $15 per available room less than the industry average, Cole said. The portfolio was getting more than its fair share of revenue per available room index. Only one of its hotels temporarily closed during the pandemic, and that was because it was part of a dual-branded property.

In June, the company internally rolled out what it called HVMG 2.0, Cole said. HVMG wanted to learn from the pandemic what permanent changes it could make to turn a negative into a positive from operational, organizational and cultural standpoints.

Through these strategic imperatives, the company wanted to determine what future business models should look like across its hotels, Cole said. Leadership has also focused on data, business intelligence and analytics, going so far as to hire a vice president of analytics and chief strategy officer dedicated to improving business intelligence. HVMG is also looking to grow its portfolio of 46 hotels with 7,390 rooms.

Another change made was launching RevEx, short for revenue excellence, for HVMG’s revenue services and revenue platform, Jones said. The company is conducting a review of how it handles its sales, marketing and revenue management services and how it delivers those to its hotels to figure out how to improve them.

Hotels have to be prepared to deploy resources differently to meet demand as it returns, he said. Leisure travelers dominated demand in 2020, and that will likely be the case for the foreseeable future as the industry waits for group and corporate business to return.

“Our ability to win the game is going to come through beating the competition and being the best at generating top-line revenue,” he said.

The HVMG team will be watching for opportunities in 2021, said Mary Beth Cutshall, executive vice president and chief development officer. Assets will become available this year, likely through rescue capital or a traditional sale. The company is in a good position to work with strategic partners to leverage its operational and underwriting experience.

“There’s a lot of value we can add to our strategic partners, whether it be knowledge about a brand or market or street corner,” she said.

The company reported 20% growth in 2020, meeting its historical growth percentage over the past 10-plus years, she said. This year HVMG expects the same growth, if not more, through portfolio transactions, partnerships with another group or single transactions.

“We’re very excited about the year to come, and we know there’s a runway here,” Cutshall said.

The company also took over management of two InterContinental Hotels Group-branded properties in Killeen, Texas, that were in receivership.

HVMG regularly looks over its portfolio to determine if it should pursue an exit strategy, a recapitalization strategy, or some combination of the two for some of its properties, Cole said. There are a couple of properties it is marketing now and will consider marketing, but the company overall expects to be a net buyer because values are down and prices are discounted compared to before the pandemic.

“If you don’t have to sell today, it probably doesn’t make a lot of sense to be a seller,” he said.