The Imperative to Change

A bigger threat to our industry is the closed and claustrophobic thinking that has repeatedly allowed external actors to disrupt us and suck out value. It is critical that we wake up and change our old ways.

The hospitality sector is amongst India’s oldest and most mature industries. Perhaps that’s the reason it has been stuck in the old paradigm, even as the world around has been rapidly changing. Given that hotels and restaurants deliver services in real-time, it’s important for them to follow standard operating procedures (SOPs) in order to achieve consistency in guest experiences. Most likely, it’s this process-orientation that makes the industry so rigid and resistant to change, sticking to the traditional way of doing things.

While in most sectors, fresh ideas and innovation are generated by the young blood, in our industry, right from the hotel schools, we teach and train the students on conforming to the established norms and practices. Any non-compliance is frowned upon – there is always a specific way of doing things and everything else is considered wrong. Whether it’s at the front office or in housekeeping or any other function, we focus on developing an army of workers that is meant to keep their brains and creativity out when they enter the hospitality industry.

Once they start work, this disciplined approach is further reinforced. Almost all hotels have stringent hierarchies and clearly defined methods of doing stuff. Deviations are dissuaded and questioning superiors is considered hara-kiri. Even in food production, where originality and invention can blossom, adherence to norms is enforced and everyone is required to stick to the standard recipes that have been established.  

It’s only after years of service and gradual movement up the hierarchy to an executive chef position that someone actually can become entitled to make any alteration or innovations in the menus. Effectively, the entire burden of imagination and creativity falls on the shoulders of the top man (sometimes woman, but rarely), who by that time, has probably spent decade or two in obeying the rules and is now suddenly expected to change stripes and become a visionary.

It’s the same story across all functions and departments in hotels. Risk-taking is discouraged and failures severely punished.  In such an environment, there is no room for divergence of thought or scope for challenging the status quo. Naturally, the hospitality sector remains chained to its conventions and refuses to adapt with the times.

As a result, the industry has been repeatedly disrupted by external players, who’ve identified and seized the opportunities, creating immense value for themselves at the expense of the hotels and restaurants that stay fettered to their shackles. The Online Travel Agencies (OTAs) did this a decade or so back, capturing a huge chunk of the revenues from the hotels permanently while our sector failed to recognize the revolution in telecommunications and Internet technologies, accompanied by changing customer trends and preference for ease of online bookings.

More recently, players like Zomato, Dine Out and EazyDiner did the same to restaurants. Not only did they start capturing fat commissions, but even managed to extract debilitating discounts from desperate players in an over-crowded and highly fragmented industry.  Food delivery companies have continued this trend recently, with each such wave of innovation coming from the outside and grabbing chunk of value from the hospitality industry, cutting margins for the players that actually do all the hard work of investing, building and/or operating the hotels and restaurants.

Even as the hotels and restaurants were licking their wounds inflicted by the tech players, these virtual strangers to the industry struck at the heart of the hospitality business by getting into core operations as they launched cloud kitchens. Without the burden of buying or renting prime real estate, they were able to undercut the incumbents, capturing both the economies of scale and scope. To make it worse, their analytics engines were able to convert the traditional restaurant’s customer data, including tastes, preferences and buying patterns into powerful market intelligence and snatch business from under the noses of their own partners who had unwittingly exposed their customers to such onslaught and meekly surrendered their data to these digital companies.

Long before the current pandemic and the associated lockdowns caused mass-scale distress across the entire hospitality industry, it was already under seize by the disrupters like Airbnb, Oyo, Vrbo, Treebo, Fab Hotels, and other such aggregators who had built huge businesses and out-valued the biggest hospitality groups in the world, often without even owning or operating a single room.  

The extent of how ridiculous the situation had become can be seen from the fact that tech-players like Oyo were picking up rooms from hotels with a fat commission built-in, and then re-selling the same rooms at discounted prices, effectively making the hotel owners/ operators compete with themselves. It was always going to be a lost war for the traditional hotels as their own direct sales channels were more expensive while they were funding the aggregators discounting through commissions and other distribution-related pay-outs.

The root cause of all these disruptions is nothing but the fact that while the hospitality industry destroyed the creativity of its people, the Silicon-valley inspired companies rewarded risk-taking and applauded failures as learning opportunities. While the hospitality industry was infatuated by tracking and monitoring its processes, the new-gen companies were driven by passion and their vision to change the world. Even as our industry beat our young blood into compliance and submission, others were discovering ways to gainfully tap into the fresh thinking and ideas across their organizations, irrespective of the age, experience or position in the hierarchy. Our tunnel vision was never going to succeed against the out-of-the-box intellect that was being nurtured by these companies. We simply failed to move and adapt with the times, becoming dinosaurs, which now face extinction with the cataclysmic strike of Covid-19. 

Despite the bloodbath, our industry will certainly survive the coronavirus crisis, though with huge casualties as hundreds and thousands of hotels and restaurants will go out of business. But a bigger threat to our industry is the closed and claustrophobic thinking that has repeatedly allowed external actors to disrupt us and suck out value. It is critical that we wake up and change our old ways.

We are amongst the few industries that has an entire education system behind it with specialized courses and degrees on hospitality. We need to cultivate this young talent coming out of hotel schools and unleash their imagination and originality. We must allow them to challenge the old conventions and create their own path. It’s not the stodgy old management, but the ingenuity and inventiveness of the young blood that will provide the inspirational and visionary leadership that is required to continuously reinvent and reimagine our industry. The imperative to change could never have been stronger as our very survival depends on it.

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