The impact of the COVID-19 crisis on the travel and hospitality industry cannot be underestimated, but most hoteliers passionately believe it will recover with time. After all, people will always want to explore the world, relax or reconnect with friends and family. And it is this need that will help businesses in this space to turnaround.
Sudeep Jain, MD, South West Asia, InterContinental Hotels Group (IHG) is confident that this economic recuperation will gradually unfold, although he is unsure how long it will take to put this crisis behind us. Understandably, the recovery will not be linear across markets and much depends on how vaccination programmes are managed across different countries, including India.
“Due to factors such as further easing of COVID-19 restrictions, pent-up demand, confidence in clean initiatives such as our IHG Way of Clean programme and of course, positive news around the vaccine, we have seen a gradual improvement in consumer confidence,” Jain stated. This resulted in an increased overall occupancy across IHG’s portfolio in December as compared to previous months; a trend that continued in January 2020 as well.
TURNING A CORNER
But not all was hunky-dory for the brand over the past 11 months. As COVID-19 posed unprecedented challenges to the travel industry, many IHG hotels around the world, including India, ran at the lowest occupancy levels ever seen, and others had to temporarily close their doors.
Through these grim times, Jain maintained that the strength of the company’s business model and the speed and effectiveness of its actions, helped it support all its stakeholders. These included its guests, hotels, owners, colleagues and communities. “As the midlong- term prospects of the sector continue to remain strong, we signed five hotels in SWA, across our brands and opened three new properties in 2020, despite various challenges posed by the pandemic,” he proudly claimed.
Despite best collective efforts to protect its hotels and teams, the severity of this crisis led the company
to take some difficult decisions. In August 2020, IHG’s Chief Executive, Keith Barr, announced a 10% cut of its corporate staff as revenue and profit kept sliding. Jain called the decision of furloughing or letting go of colleagues an unfortunate issue faced by an entire industry. “With this in mind, we launched a ‘Stay in Touch’ programme in different markets to keep us connected with those colleagues who were unable to work at this time; in the hope that we can welcome them back as demand returns,” he ruefully stated.
In the current circumstances, the business environment has changed significantly, redefining the traditional concept of hospitality. To serve its guests in the new context, IHG believes it is important to train its entire workforce extensively across all hotel operations to adapt to the new normal. Hence, it outlined extensive operational guidance on health, safety and cleanliness and changed to hotel SOPs for all existing employees and new recruits. This included introducing clear PPE standards, rolling out training and certification, installing front desk shields.
“We continue to take every precaution possible in accordance with global health authority advice and local laws,” Jain declared. “We also encourage our teams to be intuitive with our guests and determine the level of engagement and brand experience they are seeking on an individual basis. Some may want to have limited to no contact while others want the same level of engagement they were used to before, with an added lens of our brand experience.”
FLEET-FOOTED MOVES
As a business, IHG continues to focus on guest safety and on ensuring its owners are in the strongest possible position to exploit the recovery opportunities. “Signs of demand returning in different markets, with occupancy steadily improving from a historically low base, continue to be encouraging,” Jain opined.
He explained how the company’s response to the pandemic has proven that it can be more agile, decisive and customer-centric. At the very start of the crisis in China, IHG became the first international hotel group to announce a cancellation policy for the region.
The efforts of its crisis response team there set standards for how it has gone on to support guests, owners, colleagues and communities in SWA as well. “As new challenges arose, we met them – not in months, but in weeks or days. Multiple teams worked together to rapidly establish PPE supply chains, virtual training and new cleaning protocols. We removed thousands of brand standards, organised owner fee relief packages and protected loyalty members,” Jain elaborated.
Looking beyond this crisis, the company is making progress in other business areas, leveraging its tech capabilities. This includes enhancing the contactless experience for guests, bringing its brands to new markets, and creating more sustainable stays.
Jain stated that all of this will be adapted into the business for the mid-long term. “Of course, we will continue to monitor and progress these areas of the business post-recovery as well,” he added.
CAPITALISING ON RECOVERY
IHG has around 5,977 hotels globally with approximately 8,89,582 rooms and 4 lakh staff. This massive size lent it an inherent advantage during the business recouping period as compared to many standalone hospitality brands, something that Jain acknowledged.
“As a global hotel chain we have been able to leverage the benefits of our scale and strong branded systems, which enabled a quicker move to recovery. With close to 6000 hotels in our global portfolio, we share best practices and adapt them for relevant market. This allows us to move fast and bring the right solutions to our partners,” he stated.
Additionally, when consumers are seeking reliable and safe hospitality options, IHG’s fresh take on its ‘Way of Clean’ programme successfully propelled a gradual return of guests to its hotels across India. On a global level, Jain said that since launching the IHG Clean Promise in May 2020, the company registered a strong rise in positive guest comments on social media around cleanliness. More broadly, its Guest Satisfaction Index was at net positive throughout the first half of 2020, outperforming competitors and getting better every month.
“Additionally, our ability to continue investing in our brands, technology and loyalty offer has meant we have historically grown market share during a downturn, and we expect to do the same again now. We have already seen conversion activity start to increase, with owners of quality independent hotels looking to IHG, following their confidence in our response to the calamity globally and in SWA. We are also continuing to grow with existing owners who have valued how we have supported them throughout this
crisis,” Jain disclosed.
BONDING WITH OWNERS
For the first time in several years, hospitality leaders are in an all-out aggressive mode. They are simultaneously trying to grab the same business opportunities; which means identifying fresh assets, working with new owners, opening multiple properties or cost optimising existing ones. Gaining an upper hand in this hypercompetitive environment is no cake walk and Jain is well aware about this.
“While we are actively pursuing new business and are in discussion with existing and new strategic owners, we believe that we are well positioned to capture the right opportunities as they arise. This is given that a significant number of our owners and loyal guests have valued how we have supported them throughout the course of the pandemic and have appreciated our immediate and consistent response to the evolving situation,” he clarified.
IHG currently has 39 operational hotels in India and 43 in its pipeline. The Holiday Inn brand family forms over 65% of its portfolio, along with signature luxury and upscale properties in gateway cities with InterContinental and Crowne Plaza brands respectively.
The hospitality major plans to continue expanding its footprint with a similar mix. “Additionally, we are in active discussions with strategic owners to debut new brands from our global brand portfolio in SWA, including voco, Hotel Indigo and Kimpton,” Jain added.
“We endeavour to be an outstanding partner to do business with, in every aspect of our business, and we believe this is the best way to gain an upper hand at any point in time.” The Holiday Inn Brand family, comprising Holiday Inn and Holiday Inn Express, will continue to remain at the center of the company’s
growth plans. These brands have worked extremely well for the Indian market, which is primarily driven by domestic tourism. With an attractive brand proposition in line with market demand and a low cost of development, both make for an attractive investment choice for IHG owners, which might be a priority for many at this time.
FOCUSING ON THE POSITIVES
While everyone is talking about the economic disadvantages of the pandemic, few identified the potential it hid. IHG is one of them. In addition to prioritising guest safety, it bolstered its IHG Way of Clean programme with initiatives like ‘Meet with Confidence’ for its meetings and events space. Moreover, it is deploying new technologies to enhance guest experiences whilst making them feel safer as well. It has also implemented technology to provide its owners more access to real time data.
Jain said that sustainability is yet another opportunity, something the brand has been committed to ensuring. “As we respond to this crisis and shape a recovery from the most challenging year our industry has ever faced, we do so in a sustainable way that recognises the many environmental and societal challenges that existed before COVID and will persist afterwards,” he stated.
He added that the company now has science-based targets in place to drive a focus on reducing its greenhouse gas emissions by 2030. “We are also being thoughtful in more everyday actions, such as offsetting unavoidable PPE waste in our hotels by moving more guestroom items to request-only, using digital newspapers, and analysing how the guest experience can evolve positively for the future,” he emphasised.
RETHINK TO REVIVE
With business volumes at an all-time low, hotels across the board are rethinking how to utilise their existing space or reprogram contemporary concepts. This could include charging for amenities or replacing buffets with a la carte menus. However, they have to be careful that this is done without disrupting existing operations or interrupting guest experience.
Jain stated that at the peak of the crisis, IHG adapted its business to include relevant offerings that enabled it to stay connected with guests and cater to their evolving needs. One of these initiatives includes accommodating their needs for a convenient and safe workspace. This is especially for those looking for a break from working from home in an environment that feels as safe as their home.
“This initiative enabled us to lease out rooms and unutilised spaces to companies for creating their workspaces and in return, generate incremental income for our business. We have also successfully leased out our big outdoor and lawn spaces by partnering with event management companies, leading to additional income for the hotels,” he specified.
The hotel chain is, likewise, working closely with new revenue centers such as food delivery portals across its hotels and has managed to gain market share in that space. It started its own F&B takeaways concepts, which has been successful across its properties.
Jain said that the company looked to expand its hotel services beyond the hotel space and opened outlets e.g. bakery and confectionary shops, in key residential hubs to generate additional revenues. “Our overall
F&B contribution in the total revenue is expected to increase by approximately 5% in 2021, and the restaurants and bars contribution is likely to increase by almost 8% over 2019 levels,” he added.
Contemporary times have compelled hotel brands to be innovative in their thinking and dynamic in their
adaptability. IHG believes that if it can do this, it will be well positioned to meet the demands of guests now and in the future as well. Such a flexible continuity plan will help it weather any sudden disaster in the future, since it will hardly be a stranger to challenging times.
