No event has challenged the hotel industry’s focus on cleanliness and profitability like the COVID-19 pandemic.

Upholding these commitments while responding to the challenges presented by the pandemic will require ongoing collaboration between all parties in the hotel industry, including owners, major brands, operators and industry associations. The industry has developed new enhanced cleanliness guidelines based on guidance from the Centers for Disease Control and Prevention, from the American Hotel & Lodging Association announcing the “Safe Stay” program and from operators such as Marriott International launching cleaning protocols. As a result, the focus of hotel owners has shifted to working with operators to ensure compliance and establishing consumer trust as the priority. However, implementing these new protocols generates new costs during a time when hotels are struggling to break even. How can operators ensure a safe stay in a cost-neutral way?

There is an opportunity to reimagine the operating model to deliver new cleanliness protocols while generating net savings. Developing and implementing optimal standards is the key to establishing trust with travelers and more efficient operations to realize permanent savings.

Many hotels are operating at business levels with a customer mix they previously have never experienced. Customers have new, specific expectations and changing preferences in the “contactless” era. Therefore, it is more important than ever for the hotel industry to modernize standards and services to efficiently deliver on those expectations. Hotel owners are committed to working with operators to structurally redefine the operating model to exceed guest expectations and create long-term efficiencies.

A recent survey conducted by the Global Business Travel Association reported that nearly 80% of travel managers found hotel sanitation communication campaigns were effective. As travel managers return to hotels and participate in hybrid meetings, delivering on the assurances made in the commitment to clean is a top priority until vaccines and therapeutics are available. Marriott recently hosted its “Connect With Confidence” event at The Ritz-Carlton, Tysons Corner in McLean, Virginia, to demonstrate its “Commitment To Clean” meeting and event protocols. The event was a collaborative effort to demonstrate that travel can be enjoyed in a safe, sophisticated way and be cost-effective.

Cost-effectively delivering on new cleanliness protocols will require a commitment to redefining the operating model. The pandemic has forced the adoption of “contactless travel” as the CDC recommends physical distancing measures. Changing customer preferences are creating efficiencies, such as declining stayover service while still maintaining cleanliness standards. Developing new standards and understanding new guest expectations will require enhanced communication among owners, brands, operators and especially travelers.

Recovery from the bottom of the pandemic in the second quarter of 2020 was driven by the swift reaction of hotel owners and operators. Owners, brands and operators created protocols that met CDC guidelines, with the goal of making hotel stays as safe as possible for guests and cost-effective for owners. To validate the premise of whether operators can ensure a safe stay in a cost-neutral way, Host Hotels & Resorts’ asset management and in-house analytics teams collaborated on a study to verify that new cleanliness protocols were in place and developed a measure to ensure new costs were offset through operational efficiencies.

Based on the result from a sample of 80 hotels, the study concluded the new cleanliness protocols increased costs and contactless customer preferences generated operational efficiencies. The review of the expenses determined most new costs fell into three rooms departments buckets—operating supplies, guest supplies and laundry expenses. The impact of these new cleanliness costs was measured by comparing these expense lines on a per-occupied-room basis year over year. The analysis revealed changing customer preferences for contactless service yielded efficiencies in excess of new cleanliness costs, creating a net savings for the new cleanliness protocols. As occupancy returns, cumulative tracking of the net impact by hotel owners will be paramount to avoid “cost creep” and to ensure permanent cost reductions.

Directional results indicate contactless stay efficiencies have more than offset the cost increase associated with revised protocols. The savings, according to the analysis, improve every quarter as hotels reopen. The measure will improve over time, as upfront costs for dispensers, signs and other supplies will decline in the future.

The net impact of delivering cleanliness protocols was incorporated in the 2021 budget review, with the expectation that savings would continue as business levels improve. The savings are part of the near-term goal of achieving breakeven and the longer-term goal of generating higher profitability at lower levels of occupancy.

The key near-term priority for hotel owners is to work with operators to continue to access all potential sources of demand while minimizing expenses and reducing hotel cash burn. By enforcing the cleanliness protocols, hotels expect to establish trust with travelers and build confidence with both business and leisure guests. Operational efficiencies are only valuable if they are not done at the expense of travelers’ perceptions of cleanliness. Continued directional net savings and improving cleanliness scores demonstrate that efficiently delivering new cleanliness protocols can be a path to generating higher profitability during lower levels of occupancy.

John Robinson is a senior business intelligence analyst at Host Hotels and Resorts, responsible for assisting in property and portfolio level financial analysis.

Hampus Streiffert is a manager in asset management at Host Hotels and Resorts, responsible for a portfolio of seven hotels.

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