Hotels see ‘workable margin’

WTTC

The decision to allow hotels in England to open from 4 July using reduced social distancing measurements gives them “a workable margin’, HOSPA CEO Jane Pendlebury said.

Shares in Whitbread and IHG, both listed in London, rose on Tuesday’s announcement.

Pendlebury said: “Having a definite opening date means hospitality can finally see a way forward – with the relaxation of the social distancing rule a huge relief for hoteliers and others in the industry.

“The uninitiated may see a hotel room as sufficiently socially distant (notwithstanding the cleaning logistics), but the situation is far more complicated than this. Without the ancillary services which people expect, such as the restaurant, bar and spa, hotels are going to struggle to attract custom once the novelty of simply getting away post-lockdown wears off.

“Reducing the social distancing measures then will have a huge impact. To outline the difference it makes, revenue management modelling suggests that two-metre social distancing, which effectively creates a four-metre diameter, reduces restaurant revenue to as little as 7% – a non-viable return given the factors involved.

“This changes considerably though as the distance is reduced. The proposed 1-metre distancing, equating to a two-metre diameter of space, allows for around 45% of revenue. While this is still a huge reduction, if hoteliers and other restaurateurs are creative in their approach, they can work to increase those margins by implementing a variety of measures. This, at least gives them a chance to head in the right direction, enabling the opportunity to develop a workable service.

 “Of course, safety is paramount and our priority is opening safely, for both guests and staff, but this offers the industry, if not exactly an open door to a return, then certainly a workable margin. No doubt there’ll be muted celebrations in hotels all around the country as we look to start moving forward again.”

The comments came as a study found that customers would look for venues to go above and beyond the safety measures encouraged by the government before they would book a break.

The report, from the Safe to Trade Body, reported that 56% of customers were unsure or lacked the confidence that the government’s guidelines would ensure their personal safety, let alone that of high risk or shielding friends and relatives. Half of respondents (51%) were yet to be convinced that the guidelines will protect those deemed high-risk/shielding.

Nine out of 10 respondents would choose one venue over another if it clearly showed it conformed to, or surpassed, government safety standards; 94% of consumers would like to see industry experts advising on venue safety practices and 89% of guests would like to see outlets going above beyond any government advice, to provide maximum protection.

Mark Flanagan, CEO at Shield Safety Group, which administrated the Safe to Trade Scheme, and who heads up the Scheme’s Governance Board, explained: “The hospitality industry has been significantly impacted by the COVID-19 pandemic. Over the next six to 12 months businesses in the sector are going to have to re-think how they engage with and reassure their loyal customers if they are to quickly start to regain lost revenue, as well as reassure both colleagues and customers.

“It’s clear from the Safe to Trade insight report that consumers don’t trust the government to go far enough to ensure their safety. If consumer confidence is to be supercharged and customers are to come back through the doors in serious numbers, then the industry is going to have to grab the bull by the horns and demonstrate that restaurants, pubs, bars and hotels are Covid-safe spaces. Consumers are demanding more and the hospitality businesses that will win, in the ‘new normal’, will be the ones that listen, respond and make the customer feel safe.”

 

Insight: Enter the brands and, in what has become something of an cleanliness arms race, the reopening of the hotel sector around the world is set to be the latest test of brand loyalty and the different flags have been eagerly showing off their masks, perspex shield and robots.

How much of this is theatre designed to reassure and how much has an actual health benefit is unclear at this stage, but a reassured guest is a happy, repeat guest. Operators have sought to reassure this hack that there won’t be extra cost for the owners - they can wield bulk-buying power and think of the time during the stay when guests won’t want any cleaning staff in their rooms at all. It should even out.

As we heard at Hotel Optimisation earlier this month, there will be some guests who, mystifyingly, blow the whole thing by asking for more cleaning, but they are unlikely to be the norm. But with fewer-than-expected guests likely to turn up, the current thought is that the customer is always right. And the brands will prove their worth and bring them in.