Hospitality at the cusp
Timmy Kandhari, Founder & MD, Sapphire Professional Services, suggests steps to be taken once the covid situation improves.
If one is a hotel owner in today’s times, one is wondering where does one stand not only for today but also for the foreseeable future. The past few years have shaken off the glory of the past in every which way whether as a great location, a superbly crafted edifice, excellent service record or the reputation for excellent culinary skills.
The rampaging virus with attendant lockdown restrictions have brought many a thriving business to its knees leaving it weakened both in capacity to sustain and hope for the future. This is true for not only India but also hospitality businesses across the world. Where does it go from here is a question many must have asked or must still be debating; whether you are a single owner or a hospitality company having many such establishments? How does the business give itself hope and lift itself out of this morass?
The answer to these questions is neither easy nor without risk as the virus is very much there and its mutations continue to surface even as we start to put the pieces together. However, there is one fact which plays to our favour, viz. is the human being's intrinsic need to travel. One may have witnessed temporary stoppages earlier too, perhaps not at this scale, but it has always come back stronger than ever before.
Therefore to presume it will not happen again is perhaps our shortsightedness. The evidence is already available for as the world opens, the first desire is for travel. The overflowing hotels in India in the hills or the overflowing beaches in the west in the summer or the full pubs for marquee sports events are evidence enough that hope is alive and kicking.
However, celebrating our renewed hope by booking more than capacity allowed, overcrowding and generally discarding virus appropriate behaviour can be a recipe for disaster. So travel is welcome by whatever the name ‘Revenge’ or ‘Normal’ but norms need to be maintained and the onus lies on Governments, state or central, the hospitality owners and finally the travelling individual.
The business of hotels is critically dependant on three things. The first and in many cases the most important is the 'asset' itself. Its location and by that one means not only the scenic location but factors like access, whether its in the business district, if its a business hotel or for that matter close to the tourist locations. Location gives it the identification and character which then is embellished to make it the destination it should be.
The other two critical areas, both commercial, one always looks at on a continuous basis is the occupancy rate and the Average Revenue per room (RevPAR), for this gives the hotel its revenue potential though in some ways linked to its location. Location of the property is a decision not easy to reverse or change but something one needs to live with. The other two i.e. the occupancy and the average revenue per room are indices which are dynamic and would ideally be happy if one or both took an upward trend always.
This expectation has taken a hit in the last two years with the lock down having hit very badly. We also do know that occupancies except in spurts and starts are not likely to recover for sometime till the situation normalises or we have significantly vaccinated population who are willing and able to travel. Further, if the average revenue per room is the only variable left to play with then there is limited room of manoeuvrability as rising rents will affect affordability. Therefore as an owner or manager of hospitality enterprises, one is in a sort of a jam at the moment.
The positive which holds in one’s favour is the intrinsic desire and need to travel despite digital possibilities of communication. Therefore one needs to sustain till the virus is in control or the vaccinations have improved substantially. One also knows that the pent up demand along with the normal demand will happen sooner rather than later. Therefore then what actions do we take to be ready? My take is as follows:
- Due diligence of the properties to settle and make the guests stay comfortable. Do not mean large capital investment
- Active participation through associations with the local government or state authorities to make the travel hassle free and also risk free so that we do not have to go into a lockdown state. Sacrifice occupancies for a small uptick in rates for safer travel experience.
- Find alternative sources of income specially with small weddings and tying up with hospitals as well as state authorities as quarantine centres if required.
- Restrict costs for the necessary and if it means shutting down some services then do the same. But most of you already know that.
- Implement virus appropriate behaviour as well as rules to the maximum with cleanliness as well as safety as the mantra
- Look and create protection for your employees. They are the biggest assets.
The best thing about time is that it changes. One knows that situation will improve and one will perhaps do better than the pre-covid levels. The key however is not only to beat covid but also bring up a hospitality sector which is better, more resilient, with better amenities and where people would be protected as well as feel propelled to give their best.
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