One year of lockdown, good takeaways for hospitality industry

3/8/2021

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Holistic cost management, accelerating cost saving measures, increasing hygiene levels, cashing on the new revenue streams are some of the takeaways for the hospitality industry from the Covid-19 pandemic, hospitality and management experts said.

Experts also said that the hospitality industry should look at digitisation of its processes and transferring risks to others.

It is going to be one year since the Covid-19 nationwide lockdown was clamped last year.

"The industry is looking inward on costs. While the city hotels are struggling, holiday resorts are doing well," T. Nataraajan, CEO, GRT Hotels & Resorts told IANS.

The period saw many hotels first resorting to pay cuts and followed it up with job cuts.

The hotels sent out top officials in each department and ran with those remaining or hired new at a lower cost.

"Cost cutting should not be like slicing a part. The philosophy should be holistic cost management. The cost management may involve some initial investment which will give additional revenue over a long period of time," Sriram Seshadri, Founder and Managing Partner, Disha Consulting and formerly Partner and Managing Director, Accenture India told IANS.

Concurring with him, Prakash Jayadevan, General Manager, 167-room Trident Hotel part of the Oberoi Group said that permanent cost savings in the hospitality industry occurs only in the plant.

"We have converted our diesel boilers to liquified petroleum gas (LPG) powered one resulting in cost savings. Similarly, by installing a heat pump, the boiler heat is used in our laundry services," Jayadevan added.

According to him, the property has started buying more wind power and also installed solar power modules to reduce its power costs.

On managing high salary costs Seshadri said that hotels can look at overseas airline industry where the pilots are paid a higher sum during busy season and a lower sum during the lean season.

Nataraajan said that employees who hailed from the Northeast regions and have gone back during lockdown have not returned back. But that has not affected operations as the business has gone down.

Seshadri said, the hotels should also look at transferring costs and risks by outsourcing.

"Pandemic is not a recurring nature and business interruption policy covering pandemic lockdown risk could be a good business for insurers. The hotels should also look at transferring the business interruption risk to an insurer," Seshadri said.

Even for international hotel chains, the long lockdown due to the Covid-19 pandemic was new as SARS and other infections were there for a short period overseas.

"So, there was no text or blue book available to follow," Jayadevan said.

Home delivery became a new revenue model for many star hotels during the pandemic period.

"We will continue our association with Swiggy and Zomato. The one issue is that the per bill size has come down as compared to the size of dine-in bill," GRT Hotel's Nataraajan said.

Some hotels had developed their own food ordering App and delivered their dishes at customer homes.

According to Seshadri, business hotels will be the first one to get hit and last one to recover in the case of any economic meltdown.

As part of the recovery mode, business hotels have to sign-up good deals with corporates with innovative pricing. Their recovery may be much faster if the travel and visa restrictions are lifted, said Seshadri.

Hotels catering to the leisure travel segment may take time to recover as hygiene factors will be at the top of a holiday travellers mind.

"Post pandemic people will prefer a hotel with good hygiene levels. The hotels have to carry on confidence building measures. They should also look at self or peer certification as to their hygiene practices," Seshadri remarked.

Trident Hotel has appointed a dedicated Hygiene Officer to ensure that the prescribed standard operating procedures are followed in the property, said Jayadevan.

"Hotels have incorporated the anti-Covid-19 safety measures in their standard operating procedures. The banquet business is slowing picking up in Chennai. Corporate travel is expected to increase post March," Yangya Prakash Chandran, Founder and CEO, Crossway Hotels and Resorts told IANS.

The hotel segments that are doing well are the resorts and those located near big cities owing to pent up demand and the absence of other destinations.

"But this will be a short term phenomenon till work from home mode comes to an end and avenues like overseas tourist destinations, shopping malls and others reopen fully," Seshadri said.

Agreeing with that view to some extent, Shiv Bose, General Manager, Sheraton Grand-Chennai Resort & Spa, a beach resort said that over a period of time the domestic travel will pick up.

"The business for the property as a whole is good now. We have touched 90 per cent of the pre-Covid-19 levels," Bose told IANS.

The other hospitality segment that was not largely affected is the time share properties as they would have collected the capex upfront from their members while guests will continue to check in, Seshadri said.

Source: IANS

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