In times of uncertainty, leadership can often be the ‘X-factor’ that sees an organization succeed. As the current situation unfolds, the hospitality industry needs leadership now more than ever. Great leaders balance the considerations of their staff’s morale with the realities of the business and find creative solutions to meet the obstacles before them.
Don’t Panic. Plan.
“The Great Recession taught all of us to be prepared for events you can’t control. Don’t panic!” says Tom Corcoran, president and CEO, TCOR Hotel Partners, “The mortgage crisis did not cause overbuilding but did cause a decrease in demand. The most important lesson is to have low debt levels to withstand the decrease in revenue. The ten years have taught us that demand came back stronger than ever.”
The most important thing a leader can do right now is to remain calm. Consider that while short term revenue may be affected, your best bet is to consider the long term play. A short term drop in ADR may help with vacancies now, but you’ll spend years trying to climb back up to the level you’re at now. Instead, make the long term play. Invest in your marketing, stay top of mind and reach out to your database of guests with compelling packages and promotions.
To Succeed, Be Agile
Agility gets a lot of play in the tech world these days, but it’s just as crucial for a hotel to be agile and respond to changes in demand. In any downturn, the most important thing you can do is react quickly and make adjustments as circumstances change. No one has a crystal ball that can see the future, which means your competitors are in the same position you are: trying to keep up with changing times. This is an opportunity. You don’t need to be the most agile business in the world, just be a little more agile than your competitors. For example, taking a look at your direct booking channels should give you the data you need to focus in on your most cost-effective channel (for hotels, usually email) while understanding which channels are underperforming can help you put invest in the right places to boost your business.
Lead. Others Will Follow
More than anything else, your team needs a leader right now. They’ll be frightened by the onslaught of media coverage, by the changes in occupancy, by the uncertainty of the future. That’s where great leadership comes in. Great leadership doesn’t translate into boundless optimism. Too much optimism can blind you to the realities of the decisions you need to make and alienate those below you who are on the front lines and remain concerned.
Instead, be pragmatic. Engage your staff with practical things they can do to help the situation, from improving hygiene practices to taking different marketing approaches. Be realistic and forthright in answering questions.
There Will Be Winners and Losers
There’s no sugar-coating this. Change can be painful. This situation is no different. There will be winners and there will be losers. The losers will be those who overreacted or weren’t adaptable or who over-relied on OTAs to try to fill rooms. The winners will be those who adapted to the change with an eye toward their long term prospects.
When Cornell University studied the winners and losers from the great recession, they found that those who spent more on marketing wound up winning in the long term. To quote the study, “The results of this study show significant differences between winners and losers when measured by top-line indicators (Average Daily Rate [ADR], RevPAR, TRevPAR) and profitability (GOPPAR and NOIPAR). Winners were also found to spend significantly more on marketing than losers.”
When the downturn hit, the winners were planning and positioning themselves for the inevitable return to business as usual. Ultimately, the market will recover just as it did after the financial crisis or the SARS outbreak. And when it does, the winners will be those who invested in strong long-term assets and continued to nurture strong relationships with guests who have stayed at their hotel.