The litany of statistics cited by Jonathan Tisch to kick off a New York University-sponsored panel discussion among hotel CEOs was a grim reminder of the devastation COVID-19 has wreaked: seven in 10 hotel rooms empty; 70% of hotel employees furloughed or laid off; US$500 million in room revenue lost per day; US$510 billion in total hotel revenue losses by yearend.
The situation is humbling – a word used by many of the hotel CEOs who joined a virtual check-in and placeholder for NYU’s International Hospitality Investment conference, which has been rescheduled for November. The university’s Tisch School of Professional Studies hosts the longtime annual event.
Tisch, chairman and CEO of Loews Hotels & Co., hosted the panel, which included: Keith Barr, CEO of IHG; Sébastien Bazin, CEO of Accor; Mark Hoplamazian, president and CEO of Hyatt Hotels Corp.; David Kong, president and CEO of Best Western International; Chris Nassetta, president and CEO of Hilton; and Arne Sorenson, president and CEO of Marriott International.
Yes, 2020 is on track to be the worst year on record for hotel occupancy, Tisch said, but “the pandemic has reminded us of how connected we actually are,” pointing out the need for leadership, collaboration and shared sense of responsibility.
“To move forward we need widespread and regular access to testing; health and safety guidelines on how we can safely open and operate our businesses; liability protections for businesses that follow proper health and safety guidelines; and we need to find ways to stimulate demand by incentivizing people to travel again, of course, when it is safe,” Tisch said in kicking off the event.
He noted that recent protests in the U.S. reminded the industry that “events are out of our control, and they can greatly affect our businesses and the men and women who work in them, all of whom deserve to be treated with respect and dignity, whatever their background, race, nationality or preferences.”
Signs of recovery
Many of the CEOs cited business upticks despite underlining that it will probably be 2022 before hotels return to occupancy and revenue levels of early 2020. And they acknowledged that the past three months have been “trying beyond anything any of us could have imagined,” according to Nassetta, who said he was focusing on keeping a steady hand on the wheel and keeping employees looking forward. “They need to have hope, they need to see a light at the end of the tunnel, and it’s our jobs to give them that.”
Hoplamazian described the decisions to furlough employees as torturous and painful, particularly at a time when “we have to acknowledge that there is a lot of pain and suffering in the world,” referencing recent U.S. protests.
“It’s been an emotional roller coaster for me and probably all of us,” Sorenson said, adding that while it was occasionally difficult to avoid despair, the industry was attempting to mitigate the damage, including collectively advocating governments for help with, for instance, better unemployment insurance and financial support; helping hotel owners, many of whom are small businesses; communicating frequently and being transparent with employees and owners; and “holding out a path forward, some strategy, some hope” that the despair can be left “firmly behind us.”
Still, there is optimism: Kong and others cited tremendous pent-up demand for the leisure segment, driven, literally, by road trips. But without a vaccine, he said, as business rebounds slowly and videoconferencing becomes ubiquitous, “conventions will take years to recover.”
Barr said IHG’s Six Senses hotel in Vietnam was at 80% occupancy with local tourism, but that in the U.S., peak nights – to the extent that it’s a “peak” – have been Tuesdays and Wednesdays, signifying business travelers back on the road. Nassetta added: “We are double the occupancy we were at the bottom. Sadly, that’s still not a very high level of occupancy” (from 13% to about 25% to 30%).
Bazin pointed out that the recovery in Europe would not be in “drive-to” but “train-to” locations, particularly as the EU opens its inner frontiers to regional travel.
But he emphasized that trusting the local market teams would be key. “I really believe it’s a time to reset your own organization,” he said. “Now is the time to be bottom-up.”
With the global pandemic, Tisch asked, will some brands become unviable, and will new brands grow out of different traveler expectations?
“We’ve been asking ourselves this question,” Barr said. Brands matter now more than ever when it comes to safety and hygiene standards, but what does the guest experience look like with buffets, restaurants, bar and spas?
Nassetta phrased the question another way: “Is everything we’re doing really necessary? Not every brand will make it to the other side, but many will adapt to new customer needs and to the owners’ desires to drive efficiencies.
“The brand that is most important is Marriott Bonvoy,” Sorenson said, referring to the company’s loyalty program. “It’s the umbrella brand that is the direct relationship with the customer that shows Marriott will deliver a range of experiences, for location, costs, business or leisure.”
Every company represented on the panel is “in the business of getting fees from owners,” Bazin said. “I think clients of ours want us to move away from something that’s too generic” and more authentic and purposeful, he said, citing 25Hours and 21c.