Adapting the Hospitality Operation for the New Normal

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October 26, 2020
Org
David Chestler

Rethinking the Traditional Hospitality Organization
Since March, we have stayed as close to home as never before in our professional lives as COVID-19 spread and the world sheltered-inplace. Today, the world slowly reopens, with starts and stops, with virtually every region continuing to struggle with different health and safety guidelines and political leadership.

The cost to human lives has been tragic and the immediate and long-term impacts to our industry are still being calculated. But no one is betting on a V-shaped recovery, even with a vaccine.

However the recovery ultimately progresses, the industry must envision new operating models; operating models that are focused on completely new traveler expectations and most likely much leaner corporate organizations. The operating models will require even stronger collaboration across the hospitality vendor community and create the opportunity for even greater innovation as we begin to define our “new normal.”

Over a year ago I joined a firm focused on supporting asset owners, brands, vendors and their investors. The firm came together to bring our unique perspective to the market. Almost immediately, the pandemic required us to bring new thinking to an industry decimated and with little demand. Regardless of the pace and nature of the recovery, operators recognize that they will not be returning to a state of “business as usual.” And one immediate issue is rethinking the traditional hospitality organization.

Traditionally, we think about the complicated matrix of owners, management companies, asset managers, branding organizations and franchising operators with the disciplines necessary to operate at the chain, group or property level. Few of these have not been impacted by significant furloughs, cancellation of non-strategic projects, or elimination of certain hotel services. Simultaneously brands, with a leaner and remote staff, have had to invest in new customer journeys, incorporating contactless guest service, clean initiatives, and as importantly the critical guest communication strategies.

While the corporate organizations have already been forcibly reshaped, property organizations are also being challenged to operate more effectively in the new normal of a post-pandemic recovery. The challenge will not just be organizational. To be successful, decision-making will need to be fully aligned to minimize waste; the right technologies deployed to automate tasks; reduced services and offerings that won’t detract from a positive guest experience; management and employee agility to navigate a highly variable or modest demand environment.

SHORTER PLANNING HORIZONS
It is very unlikely that any businesses’ 2020 operating plans included contingencies for the pandemic. And arguably, it makes little sense to make long-range business plans even today.

Properties need to re-align which metrics that matter the most now and who owns the forensic analysis to understand the drivers (e.g. conversion by source and customer types, retention, NPS, etc.). Implement a 30/60/90-day planning cycle, with a tactical focus on the next 30 days. Long-term decisions can be reviewed on a 30-day cycle. Promote a “fast-fail” culture. Experiment, succeed or fail and try again. While not all properties may now have access to advanced data analytics, a property team can identify broad metrics to measure the success of different promotions and other initiatives. Measure only what truly matters. Focus on short-term goals to manage through high variability periods while optimizing revenues and reducing stress on property staff.

ZERO-BASED BUDGETING
With shorter planning horizons, property finance leads should also consider applying the principles of zero-based budgeting (ZBB). In one sense, the pandemic has almost forced a ZBB process onto all businesses - justifying all expense items from a zero base (and not from a historical period) and providing a business case for those expenses. That expense-business case alignment is critical to the re-opening process.

CORE AUTOMATION
Recognizing that there is no room for “nice-to-have” technologies, operators still must make appropriate investments in solutions and infrastructure that directly tie to core re-opening strategies.
These include:
• Automation to support remote staffing such as home-based agents
• Virtual solutions such as telemedicine (RingMD, AXA) to support duty of care and increase coverage of guests and employees
• AI guest engagement chatbots (SP Square Systems’ “Jeanie”, ALICE, others) which offer a contactless solution to numerous guest service requests
• Improved secure networks with more robust Wi-Fi and 5G enablement

OUTSOURCED/SHARED SERVICES
Certain functions are non-strategic or are better suited to shared-services model or consolidated above-property solution. In many cases, these functions are provided by brands, management companies or delivered by regional groups. Operators should review if these functions have a strategic necessity to be managed at the property level (often depending on size of the operation, whether a part of an affiliate organization, or independent, etc.).
If not, these tend to be immediate opportunities for expense or efficiency improvements:
• Legal Services
• HR/Payroll
• Digital Marketing SEO/SEM
• Loyalty Program Management
• Information Technology
• CRM
• Healthcare/Hygiene Inspections, Protocols and Training

A NEW CULTURE
Success in the “new normal” will require a new culture. Notions like fast-fail, ZBB, and especially work from home are not the typical vernacular of a hotel property. Indeed, our industry has for the most part operated well within the traditional silos of F&B, marketing, revenue management, front office, etc. But the very nature of travel and the guest experience has changed, and perhaps the change is more permanent than we imagined back in March. A vaccine for COVID-19 may not end social-distancing requirements or the need to have a healthcare executive on company payrolls. Remember that COVID-19 is simply a pandemic that followed the more contained outbreaks of SARS and MERS.

To that end, an ability of a property’s organization to remain agile, for staff to work across silos, to adapt is essential. For example, the willingness for management to break from set annual goals and objectives to evaluate staff in their traditional roles and focus on the new measures of success – measures that may be outside a team member’s stated “division”. In much the way successful software companies rapidly develop solutions, management can consider creating cross functional “pods” to develop and test new ideas – where each member has an equal stake in the business outcome, regardless of level.

However properties decide to move forward, it will require a combination of new-thinking, a willingness to think strategically, but plan for the short-term, an understanding of what metrics really matter and which technologies will be critical to support a leaner organization.


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