OSLO, Norway — Staff shortages have been a key talking point as the hotel industry maneuvers out of the COVID-19 landscape, but it will be the quality of staff that makes the difference in hotel performance in the next three years, experts said.
Speaking at the recent Hospitality Sales & Marketing Association International Europe event, Paul Proctor, vice president, commercial, Europe at IHG Hotels & Resorts, said hotels that gained first-mover advantage, even ones that opened just a week before any market loosened coronavirus restrictions, have seen genuine performance improvements.
“If you look at revenue recovery, where hotels stayed open, that had a positive impact. … Overall, [that] is around rate, but actually it is around building base,” he said, adding sales staff have been critical in converting inquiries and providing service.
Jonathon Liu, director of revenue and marketing strategy at GLH Hotels, said this represented a big opportunity for his company's Central London hotels.
“We kept a lot of our hotels open for sales and then would upgrade our customers to the open hotels, so there was always a feeder of people coming through who they could trust to come in and book, so when we do actually open our hotels for stays we already have that base,” he said.
Amanda Elder, chief commercial officer at Kempinski Hotels, said that's not a possibility for all hotel firms.
She said in some markets, hotels were forced to repeatedly close and open due to changing government regulations.
“That was not about rate. That was about occupancy,” she said, adding some guests just simply did not realize a hotel was open.
Rooms might not have been open at every stage of the pandemic, but often hotels had some form of business operating.
Elder said if rooms were closed but food and beverage outlets and spas, for example, were open, commercial officers and revenue managers needed to look at alternative performance metrics.
“As commercial leaders, we need to be able to talk in all those, as I refer to them as, slightly different languages,” she said, mentioning alternative metrics such as total revenue per available room and gross operating profit per room.
She said every space that can be generating revenue should be.
“Whether that is shop space, whether that is re-purposing a certain area or a beautiful suite that now can be a meeting space and you can get much more for it," Elder said. “What I find very interesting is where commercial also understands the language of quality. We talk a lot about our quality index. We benchmark against the very best in the industry. As a luxury provider how do we continue to say we are that? And how do we prove that?”
Liu said his firm’s Hard Rock Hotel London became the “highest-grossing Hard Rock in Europe in a matter of four months," adding that much revenue has come from government and medical business.
Proctor said anything connected to the wellness is providing revenue opportunities.
He added the whole notion of travel now is wellness, for many about simply "being in a new space, a restful space.”
Likewise, bleisure — the blending of business and leisure — is an opportunity to upsell and connect with guests.
“They’ve booked a business trip. How do you then make a connection to get an extended length of stay knowing they have a higher propensity to want to do a bleisure trip?” Proctor said.
Liu said there is also opportunity in forming partnerships with attractions and theaters that result in revenue-sharing commercial agreements.
Holding Rate
The panelists all said dropping rate is foolish.
“There is no real point. … Demand will not be driven from raising or lowering rate, just because COVID is the real reason they were not traveling, and to get in some ugly war with our great competitors in any of our cities simply did not make sense,” Elder said.
With markets often capping occupancy during the pandemic, there was opportunity to have fewer guests, a better guest experience and rates that could be increased, the panelists said.
“Broadly speaking, there is still liquidity, and people still have cash,” Proctor said.
“Hotels have put caps on inventory to ensure that instead of sweating as much as they could out of the rooms inventory they had, [they] could make sure that the guests who are paying those premium rates for leisure are indeed being looked after, because there is extremely strong evidence that returning mid- or post-pandemic, if that stay is a great stay, clean, safe, that is going to buy more loyalty from an end user than any loyalty program can do,” he said.
Liu said a focus on quality led his firm to keep some hotels closed and move staff to provide better guest experiences at open hotels.
“We’ve been able to keep our rates where they need to be and build on that,” he said.
He added no cuts were made at restaurants, because in a city such as London that would erode any experience.
The three chief commercial officers agreed the pandemic has eased communication between departments.
“Revenue management absolutely cannot be any sort of department separated from the rest of the arms of the commercial decision making. They may be the ones that … whether it is the data, the insight … to cut through that noise to come to one version of the truth. There has to be that central data set that everything refers to,” Elder said.
Liu said that amid staffing cuts, the company focused on retaining those who were making critical commercial decisions.
“Because they had the relationships, and to protect that and to bring customers back as we saw the upswing was very important,” he said.
Liu said GLH has boosted its marketing team knowing that it would be people who got the company to the other side of the economic damage caused by the pandemic.
Elder said there has been movement of such staff between regions, not just between hotels.
“We discovered how much expertise in one region loved to share knowledge and work with expertise in another.
“It has disintegrated barriers. … It was incredible what has been achieved in the two years by allowing that cross-functional behavior. We are just so small, so much smaller than many other companies, and it was very possible to do that,” she added.