A paradigm shift in hotel operations

Last Updated
15 April 2020
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Jeff Weinstein, Editor in Chief of HOTELS magazine, talks to David about the paradigm shift that will have to take place within hotels when they start to resume normal business. He believes the need for some kind of distancing will remain until such time as a vaccine is widely available. This will require a significant re-think of operations, resulting in technology playing an even greater role than before, and in F&B becoming more limited.

Jeff also expects consumers to look for security, safety and comfort, requiring big and small brands, alike, to pivot their messaging and demonstrate a greater sense of humanity and care.

TRANSCRIPT​

START AUDIO

David Keen 0:08
Hi, this is David at QUO. We’ve worked for the last 20 years with many of the world’s best known travel brands. During this unprecedented global crisis, our world of travel has changed, possibly irreversibly. This series will see us speak with many global leaders to understand how they see the future of travel.

David Keen 0:43
Jeff Weinstein editor in chief of HOTELS magazine from Chicago. Welcome to The Future of Travel. Thank you, Jeff for joining.

Jeff Weinstein 0:52
My pleasure, David Thanks for having me.

David Keen 0:55
Jeff how’s things in Chicago.

Jeff Weinstein 0:58
It’s Tuesday morning, I think. Every day seems to now blend together. It’s a beautiful day, a beautiful morning here. You wouldn’t know that the hotel world was on fire! But it is.

David Keen 1:12
How do you feel that, both locally in Chicago and Illinois and more across the US, the depth of crisis in the economy is beginning to surface?

Jeff Weinstein 1:28
Well, it’s kind of a conundrum. The stock market is just opening this morning. Everybody’s talking about first quarter earnings being, you know, just terrible, but the market is trending up this morning and over the last week or so, there’s been a big rebound in the market. And the IMF came out with a statement this morning talking about the deepest recession since the 1930s is ahead of us. But we’ve got a market that’s, kind of, I don’t want to say bullish, but it’s hanging in there. That is not the case for hotels. Occupancies are mostly single digits. For those that are open, there are still a lot of hotels, open, but occupancies are very weak.

David Keen 2:19
Across the whole country, Jeff?

Jeff Weinstein 2:21
Yeah, pretty much across the country for you know the big markets: La, Chicago, New York. You know they’re suffering heavily— furloughs everywhere—and a lot of people are out of work in the business. And everybody’s kind of looking for that, you know, that moment where they can kind of see the light. And I’m not sure we’re seeing it yet. There’s a bit of a battle now going on between the White House and the state’s governor. The White House wants to open for business in maybe six weeks—early May. The governors are kind of fighting back saying, you know, “We don’t feel that might be the time yet.” They think it might extend, maybe, through the end of May—I don’t know—or longer.

Jeff Weinstein 3:12
It’s hard. It’s really hard to get clarity and with that lack of clarity comes a lot of uncertainty from travellers—business traveller, leisure travellers—who are staying home. And when they’ll get back out, is anybody’s guess. Business travel will likely come back before leisure. But again, timing to be determined. You know, yet to be clear here in the States. That’s for sure.

David Keen 3:43
When travel does come back and business and leisure to come back—from the people that you’re talking to in the US and around the world—are you getting a feeling of everything’s going to be different? Are people realising that there is a new reality?

Jeff Weinstein 4:03
Absolutely. Everybody is grappling with how to come back. And I think a lot of it has to do with operations—that need for some sort of distancing will remain. I think until we get a vaccine, until everybody is really confident—and that’s probably a year off, maybe sooner. Let’s hope so. Once business comes back, slowly but surely, how a GM manages his team and manages guest relations is going to—it’s going to be a new paradigm. At least for the near term, you know, maybe for a couple of years until we really get past this.

Jeff Weinstein 4:53
You know, at the ACE Hotels and the Hoxtons and all these wonderful social brands, you know, I don’t know how much people are going to want to hang out side by side, and have coffee and work on their laptops. So that’s going to change the paradigm.

Jeff Weinstein 4:53
And I think operational procedures are being reconsidered. Technology will play a greater role even in luxury. And F&B is certainly going to be more limited. So there’s a lot to be figured out, and I don’t—you know they’re going to find their way once they get back in business and people start checking into their hotels again. I think they’ll figure it out, kind of as they go, but certainly a level of distancing is going to be the new reality. That whole idea of lobby social that has been so pervasive over the last couple years—you know, what’s going to happen there?

David Keen 5:53
Philosophically, you and I are old enough and long enough in the tooth to remember several crises that have happened –both in Asia, in Europe and in the US, over the last 25 plus years. During the crisis, we always say, oh I recall that we willalways say, “It’s not going to be the same when we come out of this.” This time it’s different though, no?

Jeff Weinstein 6:26
Yeah, I agree with you. You know, historically, we’ve had very short memories. After 911, I was amazed how quickly business came back. How strong it was—so fast. This is a different animal. And again, I honestly believe that business will come back. The way we’ve known it, but I think it’s just going to take that much longer, and that vaccine is going to make all the difference. Once everybody gets inoculated,—and it’s going to probably be mandatory. When they had polio here in the States in thethe 40s and 50s, everybody lined up and took their shot. And it really, you know, we need something like that to create confidence.

Jeff Weinstein 7:12
Until then, there’s going to be you know a fair amount of intrepid this out there that people are going to hesitate, they’ll be more staycations there’ll be fewer conferences, you know, and they’ll adapt. But the industry will adapt. Unfortunately, not everyone is going to make it. Especially owners who are not as liquid as they need to be or less leverage than they’d like, you know, there’s going to be some trading that’s going to take place. It’s gonna be unfortunate for some owners. But the big brands I think will make it through. Their liquid enough. They’ll hang in there. They’ll get through this.

David Keen 7:54
So many questions, Jeff, but you just mentioned ‘Big Brand’. As you’ve heard me say and we’ve been talking about it over the last week 10 days during the podcasts. I’m talking about the bridge between the analog age, and the digital age, and I’m using the virus as the bridging point or —the recession, I guess, and the virus—as the bridging point. You mentioned just before the the big brands, and we’re talking about a new reality and a new normal with reference to both loyalty—and initially loyalty—wouldn’t big brands come out the same way as they’ve gone in?

Jeff Weinstein 8:42
Not near-term. Everybody’s looking for security, for safety, for comfort. Does a big brand stand for that? I don’t know the answer. They certainly stand for loyalty because people love to collect their points, and send their parents to Hawaii for their 50th anniversary with all the points they’ve collected. Big brands stand for standards and then and a surety of what you can find from one city to the next. Whether they’re going to stand for comfort, I think people are going to be looking for something they really trust.

Jeff Weinstein 9:31
Brands give you certainly look you know that that extra amenity but I don’t know if how much that stands for trust, so I’m guessing their messaging is going to—and I know it already is—evolving, so that they can, you know, tell the guest that, “We’ve increased our hygiene. We are being vigilant about everything related to your safety and security and your health.” So that’s going to be the message change from the big brands to make sure that their guests don’t go somewhere smaller or don’t come at all. But eventually it will change. Eventually it will go back.

David Keen 10:15
It’s interesting that you say that. I’m not convinced. I believe that that—and as I as I’ve said to you there’s a very long tale in this—and nd in that long journey, in that long tale, I think that’s as you’ve quite rightly acknowledgedm, there are going to be some that clearly do not survive. But those that survive, it seems to be percolating already to the top of those, as you’ve kind of indicated, of those with purpose.

David Keen 10:51
The consumers—the travellers that are able to travel, they have a massive supply to choose from. There’s very limited demand and a huge supply. So it is our belief that the brands that are nimble enough to develop purpose, and portray purpose and deliver purpose through experience, are those that are going to survive. I’m not sure that—I don’t know but—the question is whether the big brands can deliver that and be nimble or agile enough to do so.

Jeff Weinstein 11:30
I don’t know that they, many of them have brands with, you know, quote/unquote ‘purpose’. Honestly, there are very few brands out there that have that level of purpose, that level of humanity, that level of care.

Jeff Weinstein 11:56
And maybe that creates the new opportunity. Maybe some of these properties that are gonna have to turn, are re-imaged to be one, you know, that’s more about care and taking care of people in a way that is, you know, different than what we’ve experienced, and I don’t want to say that Marriott doesn’t care, and Hilton doesn’t care. Both of those particular companies have great leadership, and I think actually, the industry will benefit from the leadership of the likes of an Arne Sorenson or Chris Nassetta, because they’re smart enough and strong enough leaders to realise how they need to message different and how they need to go to market differently and show more care.

Jeff Weinstein 12:49
So, it’s going to create a new opportunity, because I agree with you. People are going to look for comfort. They’re going to look to feel really good and safe and warm in a hotel environment going forward. So either it’s got to go beyond the message. They have to deliver. It’s not impossible to do it. But there’s going to be a shift in operations to reflect that. There has to be.

David Keen 13:14
Right, and I think, to the point of Arne Sorenson, no one in the entire hotel industry has delivered in the way that he delivered his speech to his teams to his employees. It was about two weeks ago that that video speech was the most emotive empathetic, caring message of almost any leader we’ve had in a long time.

Jeff Weinstein 13:40
That touched me like nothing has touched me in my 25 years of covering the hotel industry. You know he was honest and real, and we need more honesty in reality, you know that’s what the customer wants. It’s quite clear how obvious everybody is responded to that video it’s the whole industry is like, that was a magical moment.

Jeff Weinstein 14:01
So we need more of that. We need more of those magical moments, and it can be done. It’s hard when you have a huge system. It’s really hard to pull that off but that’s the direction we need to go. But going back, I honestly—you know—we all have short memories in this industry, and I think, you know, it’s going to take two years maybe. But I believe the industry will come back strong, and a lot of the ideas and concepts that were being delivered over the last couple of years, they will come back. And a lot of the way the hotel industry has been transforming itself over the last five years ten years, all of those ideas will continue to grow. I believe it. I think, you know, people will get comfortable again. It’s just going to take a while longer than we want.

David Keen 14:49
I think that’s very fair and I tend to agree. I think the extent of change may be greater. On a similar subject, if we think about the OTA, and I’m fascinated to hear your opinion or what you’ve been hearing on how this crisis may or may not affect the OT. Remembering again that the consumer is king, that they’re going to be looking for purpose, they’re going to be looking for different elements in our, or different attributes of a hotel before they before they choose. Do you think that’s going to affect the OTA business?

Jeff Weinstein 15:29
Um, you know there’s been some—some consumers have been stung, you know, with refunds and the like that were booked through OTAs. So I think they’ve had some bad PR the last month that I don’t think that they can overcome that simply. But every time I hear a CEO speak or an industry leaders speak, they say “This is, you know, our opportunity to reset and show less reliance on OTAs, and bring business more directly.” And, you know, that’s great. In fact, we’re just assigning the story right now, where we’re reaching out to the revenue managers of the world, to the hoteliers who are who are preaching this opportunity.

Jeff Weinstein 16:22
I want to know how they’re actually going to do this. How does that look? How do you bring your owners back and say don’t give as much inventory to the otas. This is our opportunity. I don’t know how they’re going to operationalise that. I’m very anxious to find out how that how that was going to turn out. You know, an owner that’s dying for business still hanging on by a thread is going to take any opportunity they can to fill a room. So how the brands, or how smaller hotel companies are able to get more direct booking through a message to the consumer other than you know the little bit they’ll save by booking. You know the extra amenities they’ll get by booking direct. I’ll be very curious to see how that plays out. We’re going to start reporting on that this week, and we’ll probably have a story on it, you know, probably by the end of the month, about the way forward to potentially reset the relationship between hotels and OTASs. I’m not quite sure that I have the answer yet.

David Keen 17:41
Fascinating. Yeah, I sense that that’s a huge story–

Jeff Weinstein 17:46
Yeah, it is a big story.

David Keen 17:49
— that’s going to unravel over the next few months. And remember, we’re only five-and-a-half weeks in. You know, we’re talking about fundamental shifts in our industry, five-and-a-half weeks into a crisis that frankly can—will extend. I mean things will open, but they’re not going to come back for three, four, five, six months and, or as you say, unless there’s a vaccine created even even more quickly.

David Keen 18:20
Jeff we’ve been talking for a while. I want to ask you one or two more questions. Development in the US right now, I mean, we’re seeing in Asia, no curtailing so far. Not much slowing, a little bit of a pause, but not much slowing in development of new products. What are you seeing?

Jeff Weinstein 18:43
Projects that are, you know, far enough along are going to get completed. New development, new deals getting done here, it’s going to take a while for it to ramp up—you know, it will ramp up. I expect you’ll see more trading than new deals getting done. It’s an opportunity for the brands to capture some new, new properties that are, you know, going to drop out and find new ownership and the brand might change hands based on the new ownership.

Jeff Weinstein 19:25
Smaller select service deals can still get done. You know, the banks are going to be very reticent. There’s not a lot of lending that’s going to go on in this space for a while. So it’s, it’s pretty abrupt. And I don’t know, I think maybe within six months, if everything starts keeps trending and this thing calms down, I think, lenders will start to maybe open up the purses a little bit. And the new deal flow will slowly start coming back. But right now, unless it’s shovels in the ground, I don’t see much new being announced, that’s for sure.

David Keen 20:11
Jeff, last question: We are, after all, in the service industry. When we talk about hospitality—yet Marriott’s furloughed 75%. Hilton’s done probably about the same. Everyone else is getting rid of as many people as they know how to get rid of, or at least laying them off or laying them low or whatever it is. We’ll start this change where we come back. We’re talking about much greater technology. Are we looking at a fundamental shift in the way we’re going to deliver services and industry?

Jeff Weinstein 20:48
Hopefully it’ll be gentler and more caring. I think people who have been furloughed are going to run back to their jobs when they feel safe. Just to have a job. Unfortunately, a lot of people—the line level people—are really going to be suffering through furloughs because they might not have as much in the bank as the corporate office or the owner. So I think they’ll come back—they’ll run back to work when they can. And it’s going to be up to the managers, the GM, and you know brand leadership to motivate.

Jeff Weinstein 21:34
I don’t think it’s going to take too much to motivate people. I think they’re, you know, just simple human contact again is going to be a motivator. Again, if they feel safe and they feel they can—you know with a bit of a distance maybe—but you know still face-to-face. That’s going to be a huge motivator for anybody, you know, just to get out of their houses and back, you know, into the world and face-to-face meetings.

Jeff Weinstein 22:04
That’ll motivate hospitality workers. Hopefully the people who are working in this industry are in this industry for a love of service. I know that’s not always the case, but in a lot of cases I’d like to kind of, you know, feel that way about this business. And hopefully a lot of the people who are giving service, who have been service providers in the hotel industry will do it even more empathetically and more genuinely, and be thrilled to be back to work.

David Keen 22:41
Jeff Weinstein, editor in chief of HOTELS magazine, and one of the great sages of our industry: Jeff, thank you so much for being on the future of travel,

Jeff Weinstein 22:53
Wow, thanks David for having me. Good luck to everybody out there, and look forward to seeing you, David, soon.

END