In the latest in a series talking to members of the sector during the COVID-19 outbreak, Julie Rey-Gore interviews Peter Heule
What is your immediate priority at the moment?
Most important for each company working in operations now will be looking at a healthy cashflow position. This is what we have been securing in the first couple of weeks of COVID-19 entering Europe. Next to that we have been analysing our opening plans of new assets and reviewed all of our existing lease contracts. Here it is all about sharing the pain between all stakeholders. Knowing this crisis will have an end it is key to maintain strong relationships with everyone involved in the European expansion of Yays.
Our key stakeholders are our staff members. As occupancy levels dropped across Europe it is key to keep them involved as well. We have set up a good communication plan and now have weekly webinars with all staff members to answer on all their questions in these insecure times.
What is your hope for the hospitality industry in a post COVID-19 world?
First of all my hope is that the hospitality and travel sector comes out better and stronger after this crisis. The essence of travel will remain for people to meet family and friends around the world, to learn about new cultures, visit undiscovered places. People will travel more conscious and I personally think that especially the life style concepts and the budget (hostel) concepts will recover quickly as demand picks up again.
Each crisis also gives room for new and innovative concepts to arise. I will be looking forward to see these concepts popping up around the globe. The concept that we created with Yays will definitely see more competition as serviced apartments will be more resilient in in troublesome economical times. The advantage of a hybrid model will result in more investments in these types of Real Estate developments.
And finally I expect now more than ever that institutions will continue to invest even more in these resilient business models as well as in to business that tap in to sustainable hospitality and travel business models. Important in this is that I think that governments will play a more important role in these developments as well, knowing that the COVID-19 crisis will be over at some moment in time, but the climate crisis that was already started a long time ago will most definitely not be over any time soon.
In countries where social distancing is being enforced, how many properties do you expect will be kept open for use by the state? And how many in general?
This differs hugely per country and city. In Amsterdam for example we have social distancing enforced in public areas, restaurants and bars are closed for now, but all hotels are allowed to be open. For March around 70% of all hotels in Amsterdam closed their doors (Yays remained open during the whole period). But I expect around 80% of all hotel to be open by end of April.
Over the course of March I saw some great collaborations between hotels and governments and hospitals. In Paris we were able to accommodate medical staff and in Barcelona we assisted the Municipality in giving homes to the ones in need. In all cities we could support the international travelers that were trapped in one of our destinations, because of the simple fact they could not travel to their country anymore.
How many staff have you been able to retain and what jobs have you found for them?
At this moment we have been able to retain all of our staff. Essential as Yays still has a growth strategy. When the crisis comes to an end we need to be up and ready to get our operations up to speed again. Our development team will also be ready to review opportunities that arise across European markets.
The operational staff still has to service the guests we have in house as our occupancy levels are still around 25%. Some locations even have occupancy levels that are on the level of expectations before this crisis. For the apartments that are empty we are doing the maintenance that we normally would do end of the season. Some of our assets have never looked as sharp as they look today. That said we still have to be on the watch for loosing focus in daily operations. For that reason we have also set up several training programs via online webinars to keep staff involved and take the opportunity to improve their knowledge and skills.
How effective has state aid been for retaining staff? And helping owners?
Retaining staff is important but also challenging in these times. The solutions that different governments give are helpful but definitely not enough. In the Netherlands the government set up a system that covers 90% of your payroll if you lost 100% of your revenue. If you lost 50% of revenue you are covered for 45% of your payroll and so on. The revenue loss is based on the revenue of 2019. If like Yays you are a growing company and opened assets late in the year 2019 there is no comparison to be made and the company is not supported.
Each of the landlords that we work with is treating this crisis all differently. Some are institutional and are understanding and supportive. Some are small investors for which the income of the asset is their only (pension) income. As we have long standing relationships with most of our owners we have come with good term and aligned interests to come out of this crisis together.
When all this has passed, how easy will it be to open the shutters and start trading again?
As we have not shut down our operations I would expect going to full operations will not be that difficult.
Do you anticipate a rapid or gradual recovery?
I foresee a first quick recovery in 2020 to occupancy levels of 40-60% driven by domestic travel. Hopefully we see (European) air traffic step up quickly. Important to see is that European train operators are forecasting to be at 50% of operations by June and 100% by August. I would expect a full recovery in 18-24 months from now.
And any permanent changes to operations?
We will have an even stronger focus on the Yays concept; an apartment as your hotel room and home where you can cook, enjoy quality time with friends and family and no big open spaces for breakfast and meetings. The 3 pillars of Yays will remain and are even more essential as before this crises: people will have the need to meet friends and family and travel together. This is why Yays foccusses on one-bedroom and two-bedroom that offer space for people travelling together. Unlock the neighbourhood; we strongly belief in the neighbourhood plays a key role in our concept. Our restaurant is around the corner and our bar is at the end of the street. By having this approach we do not compete, but we support and are part of the local economy. And as third: feeling at home. We believe that our apartments should offer a comfortable place to stay no matter if you stay for two nights or for two months. At Yays we want our guest to feel like a resident more that a tourist.
And any changes to how people travel which you can envisage?
Especially in the first half a year people will choose the save options. Less flying, more flexible traveling by car and cab, not being in crowded places. Interesting to see if the bike will and can take a bigger position in cities as public transport is known to be crowded. With social distancing continue to be important people will look for alternatives. People will travel more domestically and search the more rural destinations. Over the longer time I would expect people to create a bigger interest for nature and tranquilly destinations. Corporate travel will decline especially in the first months as people are now used to work from home.