Four months ago, the team at T-Y Group & Harbor Linen convened a panel of experts from across the hospitality and travel industry to discuss new business trends triggered by the global coronavirus pandemic. (See our original articles, Part 1 and Part 2, for a report on that discussion.) So much as changed since then — and so rapidly — that we thought it was high time for another meeting of the minds.
Attending this (online, socially distanced) session were:
- Elizabeth Blount, President, UNIGLOBE - Travel Designers
- David Cohen, General Manager, InterContinental David Tel Aviv
- Kim Gorton, President & CEO, Slade Gorton & Co, Inc. (food manufacturer/distributor)
- Nikhil Nath, Founder & CEO, Knowcross (hospitality management software)
- Chris Nelson, President, T-Y Group & Harbor Linen (hospitality linens manufacturer)
WHERE ARE WE NOW?
With hospitality businesses in various stages of reopening — depending largely on their type of customer and location relative to COVID-19 hotspots — reports were somewhat mixed. For all of our participants, business is still significantly below the same time period last year, with revenues down anywhere from 50% to 80%. Layoffs, furloughs and working from home are still largely in place.
Hotel occupancy rates are fluctuating in step with COVID-19 case levels. David Cohen reported that in countries such as Israel, Germany, Greece and Cypress, there was an increase in April and May, but the numbers slipped again in June. These uncertainties — as well as the costs of adding sanitation equipment and procedures — have forced businesses to keep their spending on supply inventories and building maintenance to a minimum. With fewer reservations on the books, "it's a cash flow issue," he said.
In the leisure travel sector, the public seems to be adopting a wait-and-see position. This is especially true in the U.S., said Chris Nelson.
"When the economy is bad, vacation is the first thing Americans put aside. For Europeans, it's the last thing."
Although a vaccine is our best hope for a return to pre-pandemic travel volumes, many people won't trust the first iterations that will be rushed to market. As David Cohen remarked, "they'll probably wait for version 2.1 or 2.2."
For the time being, vacation travel is primarily of the road trip variety. Chris Nelson sees regional destinations such as Nashville and Myrtle Beach gaining in popularity. And RV travel is gaining swiftly in popularity. "RVs and RV parks are booming right now" he says.
David Cohen concurred that travel in Israel is now driven by staycations, even for drivers. Because of border closings, people can't even drive to neighboring countries. In the UK, Nikhil Nath says, country hotels are fully booked for July and August, though city hotels are doing less well.
In business travel, Elizabeth Blount sees her clients "consolidating their spending into fewer brands that they trust to adhere to cleanliness and safety standards." Trips are also more thoughtfully — and centrally — planned, so that one trip with multiple objectives replaces multiple trips.
Blount also pointed out the ongoing challenges of business travel right now. Airline service is still way down, which makes it difficult to book or change flights. What's more, employers of business travelers face dilemmas. "What is the company's responsibility if the traveler gets sick? What do they do about employees who don't want to fly because of personal health risks?"
Food service businesses are struggling to recover. Kim Gorton explained that the break-even capacity is 60%, but restaurants are now operating at just 25%. Back of house staff also must be retrained in social distancing and safe food handling to locations all over the property, not just in the kitchen and restaurant. On the wholesale side, inventory backlogs are causing prices to drop. Slade Gorton's June sales volume was only 5% below June 2019, but margins are half what they were then.
IS THERE ANY GOOD NEWS?
Nikhil Nath made an interesting observation that's been reported from several countries, though not yet statistically studied. He said,
"Those who are traveling have already decided to accept the risk. So when they get to their hotel, they want full service and all the amenities. They want to sit by the pool, and be served by people, not robots."
This may be a good sign for a resurgence of hospitality business, though of course not an excuse to skimp on precautions.
There are more hopeful signals from several of our participants. UNIGLOBE has received new business from companies that need a travel expert to help them optimize their travel in accordance with new financial and procedural limitations. Knowcross has doubled the salaries of its tech staff as hotels demand new automation processes to ensure social distancing and sanitation. T-Y Group is receiving inquiries about antimicrobial fabrics and pillow/duvet protectors that can be washed after every guest.
WHAT'S BEING DONE TO SURVIVE THE DOWNTURN?
The executives in the meeting all agree that the key to business survival is to spot windows of opportunity and pivot your business to take advantage of them.
Kim Gorton is reducing investment in retail and focusing on the new needs of the restaurant industry. As low touch models will be necessary for the foreseeable future, food delivery will come in the forms of meal kits, frozen foods and other packages that reduce the need for contact outside the home.
Nikhil Nath believes hotels will never be exactly as they were before the pandemic. "The days of 'let's stand around filling out forms at reception for 10 minutes' are gone for good," he says. Staff will be reduced, and those that are left will have to do more with less. Despite technological barriers, the pandemic is the push they need to implement automated systems that manage everything from the front desk to food services to housekeeping. His company is already at work creating (and delivering) those systems.
Knowing that hotel guests want and expect sanitary measures in place before they will consider staying there, T-Y Group & Harbor Linen has ramped up production of tech fabric bedding as well as amenity items such as in-room hand sanitizers. Their health care business has remained stable. Chris Nelson also mentioned the possibility of new customers in the RV rental arena, since that travel sector is booming.
WHEN WILL WE GET BACK TO "NORMAL"?
Here again, opinions varied, showing how much uncertainty about the future everyone in the hospitality and travel industry still feels. We asked, when do you think business will return to pre-pandemic levels?
Chris Nelson emphatically stated, “it is doubtful that we will ever return to the pre-pandemic past… nor should we want to… we can and will do better to serve our customers to make their guest’s stay more comfortable and meaningful. If we as industry do that right, I can see occupancy levels reaching pre-pandemic levels in mid-late 2021. David Cohen says it won't be before 2022. Elizabeth Blount's business travel customers are planning for 4th quarter 2020 or 1st quarter 2021. "They're road warriors," she said. "They're not going to wait forever."
Kim Gorton believes the food service industry will never be the same. "I don't think the other shoe has dropped yet," she said. ""Large brand failures are coming, as well as smaller independent restaurants."
WHAT WILL THE NEW NORMAL LOOK LIKE?
It's clear by now that some changes will be permanent, or at least they'll last for several more years. Our participants discussed some of the industry's emerging — and fading — trends, and steps they're taking to implement them.
Sanitation of guest room and public spaces was a hot topic. Chemical disinfectants and hand-held UV light devices are now standard procedure for cleaning surfaces. David Cohen also mentioned that his hotel uses an ozone machine to recycle and clean the air in guest rooms.
Hotel rooms will be minimalistic in style and content. "Only the bare minimum" of linens and amenities will be supplied in guest rooms, said Cohen, "because it all needs to be washed."
Encasing pillows and duvets in antimicrobial covers is proving to be a practical solution for these items that aren't so easily laundered. Chris Nelson said that T-Y Group and Harbor Linens is also offering reusable zip-locked plastic bags for items such as spare blankets and robes, which will assure guests that they have been sanitized.
Food service trends will be toward simpler menus, dishes that use fewer ingredients and multiple menu items that use the same ingredients, said Kim Gorton. With the elimination of buffets and bar service to maintain social distancing, hotels and airport lounges will convert to selling pre-packaged meals.
Technology that enables touchless service will be integral to the new guest experience. Hotel check-ins or restaurant bill payments can be done entirely by smartphone. Room cleanings can be more efficiently scheduled —and more accurately monitored — than with a human supervisor. Nikhil Nath sees a permanent reduction in hospitality business staff as a result. Theoretically, the costs of acquiring the software and training staff to use it will be offset by savings on payroll.
An unfortunate casualty of the pandemic has been the "green" trend for eco-friendly products and processes. Packaging is now more important than environmental concerns to customers who want to avoid contact with the virus. Additional packaging will be seen everywhere from take-out meals to sanitizing wipes dispensers. As T-Y Group's pandemic-targeted slogan says, "Clean Is the New Green." Kim Gorton believes it could be up to a decade before environmental sustainability efforts in the hospitality industry regain their pre-COVID priority status.
It's important to publicize the safety measures that businesses have put in place. "The more people know," said Elizabeth Blunt, "the more comfortable they feel."
NEED HELP WITH YOUR HOTEL BUSINESS REOPENING?
Chris Nelson states that his company is here to help,
“T-Y Group & Harbor Linen are ready to support you with new offerings that stand up to more rigorous sanitation procedures, in-room amenities suited to full sanitation between stays and disposability after each guest checks out, and a wealth of experience in implementing new laundering schedules.” He continued, “at the very least, we are here to listen—over the last few months, we have pretty much heard or seen it all—we may be able to share a story, idea or suggestion. We are all in this together.”