Summer is a magical word in the hotel industry. Summer 2020 though, will have an entirely different air as the hospitality industry continues to brave the widespread challenges and financial impacts of the first global pandemic in a little more than a century.
Are these hard times? Of course, but the hospitality industry is no stranger to rebounding from devastation, even something as significant as COVID-19. In the early 2000s, hoteliers managed through the impact of 9/11. As we did then, the industry will rise above the challenges.
At this stage in COVID-19 response efforts, it’s all about focusing on short-term and long-term creative solutions. Let these proven recommendations help guide you as you navigate COVID-19’s financial implications:
1. Develop a Detailed Impact Timeline and Pursue Relief
Industry relief measures are still being rolled out. Thus far, relief has largely been handled on a case-by-case basis. Whether industrywide relief measures are eventually put in place or not, diligently documenting a timeline of the financial impact on each of your properties will allow lenders and entities providing potential relief to assess your situation quickly and offer assistance.
Start from the beginning. When did stay-at-home orders go into effect in the geographic regions where your properties are located? When did conventions and corporate events begin to be canceled? When did tourist attractions in these areas close? What furloughs or layoffs were needed and when were these implemented? With so many applying for relief, thorough documentation will help to ensure a prompt response.
2. Communicate with Suppliers and Vendors about Agreement Amendments
Most supplier and vendor partners understand the current landscape of the industry and are willing to work with you to ensure a healthy, long-term relationship. The problem is that some don’t even think to reach out and pursue amendments to their current partnership, they just end them. That sort of action will most likely bring a host of challenges in the months ahead. The relationship between vendors and hotels is a symbiotic one—they want the other to survive and succeed during these challenging times. Be prepared to offer ideas for what might lessen your financial burden, but also benefit their business in the future, such as adding a few months onto your commitment. Define scenarios that will provide positive outcomes for both parties.
3. Put your Vacant Spaces to Good Use
Occupancy is down and meeting spaces have become unusable. Use this as an opportunity to build some goodwill in your community. These efforts may even be helpful for the relief appeal you will most likely need to pursue, if not now, later. Reach out to your city and county officials, local nonprofit organizations and other entities that may be able to use these spaces on a complimentary basis or even a reduced rate. Participate in your community’s COVID-19 response efforts and share your “in this together” spirit across social media or via public relations. This positive narrative will encourage other businesses to join you in helping to do their part. We are all in this together, and these times call on us to join forces and help where we can.
4. Be Transparent and Share your Current Situation with your Investors or Lenders
Being transparent during this time is more important than ever. You are certainly not going to be the only one experiencing a financial impact. Know that they are aware of the negative effects on the hospitality industry and your business. Be steadfast and honest. Many lenders are very willing to work with you as long as they understand the situation and the lines of communication are open. Keep in mind that they are invested in your success and may have some options for you.
5. Review Low-Performing Amenities and Repurpose Those Spaces
This is where we really start identifying long-term solutions. Now is a good time to assess which amenities are providing you low value and require high maintenance fees. Pools, hot tubs, gyms, onsite restaurants—how are these reimagined during a COVID-19 era? How many guests used the pool before the pandemic? How many will likely use it moving forward? Explore new functions for these spaces that may lend themselves to the times.
6. Explore Automation as a Cost-Saver
Starwood Hotels & Resorts introduced Robotic Butlers back in 2014 and it’s likely that this trend toward automation will be a new reality in the post-COVID world. Remote check-in may not have seemed like an optimal idea in the past, but in these times, it could be a creative way of reducing guest contact and alleviating staffing costs. Hoteliers seeking out innovation during this time of change in our society will secure their position in the industry for years to come.
7. Expand Where You Can
This is a buyer’s market. Those who are well-positioned may be able to use this period of time to expand their portfolios. This may be the perfect opportunity to invest in a new property or brand. Seek opportunities that make financial sense.
So let’s take it back to that earlier sentiment about summer. While summer of 2020 may not mean the same things as it has in years past, it will stand for resilience, teamwork, creativity, problem solving and strength. It will define the hospitality industry for years to come and allow it to bounce back better than ever.
Rahul B. Patel is managing partner of Patel Gaines Attorneys at Law and a member of AAHOA.