How to cope with the economic slowdown
The hotels let us listen in on their survival strategies and come up with some interesting solutions to stay profitable.
At a high-profile marketing event, in a small break between all the buzz that is part and parcel of such ventures in the hospitality industry, a marketing associate of a luxury hotel told me, “The auto industry is really down an now we expect the domino effect to singe the hospitality industry. Ultimately, when people get tight-fisted about spending the two industries that take the hit is auto and hotels.”
While this doomsday prophecy may be a bit exaggerated, the the general economic slowdown and the collapse of Jet Airways has resulted in chaos in India’s buzzing airspace. Among the domestic hospitality chains, Indian Hotels Company (IHCL) reported INR 571 crore revenue from operations for the quarter ended June, as against INR 564 crore a year ago, posting a 1% rise in its standalone results. The Oberoi Group suffered a 14 per cent decline in revenue from operations to INR 289.63 crore during the quarter under review from INR 334.96 crore in the previous corresponding period on a standalone basis. ITC Hotel’s chief executive Dipak Haksar claimed that the first quarter has seen the softening of demand in the MICE business, mainly due to elections, but claimed that August showed promise. In Kerala, hotels have reported losses due to the fear created by the flood situation, while Jean-Michel Cassé, CEO for India and South Asia at AccorHotels has blamed the Indian elections and the closure of Jet Airways for the decline.
General managers, hotel managers and directors – sales and marketing across different brands tell us how they are coping.
Sushma Khichar, Hotel Manager, Aloft Bengaluru Cessna Business Park
As we are located in the business hub of the city, we do not foresee our business getting affected to a great extent. However, every hotelier should take steps to counteract the situation by determining exactly when the downturn may hit. We need to work on targeting the right customers, leverage on customer loyalty programmes, create special packages and maybe even lower the prices if required. We have introduced innovative concepts, products and loyalty strategies.
Reuben Kataria, General Manager, JW Marriott Hotel, Bengaluru
We are vigilant about how the business will perform over the approaching winter months and in the first quarter of 2020. The slowdown buzz has made us far more proactive and agile. Brick walling existing clients and being far more proactive in acquiring new ones could hold the key to dealing with the situation.
Victor Chen, General Manager, Le Meridien Goa, Calangute
Reports from the hospitality industry suggest that Goa has seen a decline of 9 per cent over the last year in occupancy and a resultant RevPAR decline of 7 per cent until July this year. The results in August are not encouraging as well. Fortunately, at Le Meridien Goa, Calangute we have overcome the slowdown by getting a bigger share of the pie. Our sales, marketing and revenue teams have been aligned to our ‘soft market strategies’ and are working closely on different channels of bookings and business partners. There is a lot of focus on cutting waste and energy conservation, which accounts for one of our highest costs. We have introduced value proposition packages for the rooms as well as for F&B to encourage sales. Hoteliers should offer value to guests to encourage spends.
Sujeet Kumar, General Manager, Sheraton Grand Bangalore Hotel at Brigade Gateway
One of the first action points from the consumer during an economic downturn is to minimise non-essential travel, be it for business or leisure. The pace in the business is slower when compared to the previous years. Also, the aviation industry has left a negative revenue impact for inbound and outbound travel from countries such as Sri Lanka and the US, to name a few. The Marriott Group has worked on several means and measures to rationalise spends and attract more spending. We are incentivising group arrivals and catering business. Value-for-money offers are being promoted at various touchpoints. The team has also launched ‘Weekends at Marriott’, which is an initiative to improve weekend business at the Marriott hotels. The industry needs to promote destination travel to attract more bookings during the economic slowdown and target leisure customers to compensate/offset the slowdown from the business segment since there is always a market for leisure travel.
V Prakash, Director – Sales & Marketing, Hyatt Regency Pune
The major reasons for the slowing down of economy are a declining growth in private consumption, a tepid increase in fixed investment and muted exports. How bad the slowdown has hit the hospitality industry varies from market to market. In markets such as Mumbai, we have not yet seen any major decline. The economic slowdown is generally a cyclical issue; but if it is a structural one, then it may take some more time to smoothen out. The F&B space drives the reputation of a hotel, and innovation as well as exciting activations will drive the popularity of a hotel. At Hyatt Regency Pune, we anticipated the slowdown and took precautionary measures ahead of time. Our coping strategy is: Be innovative, keep a close eye on the market, better equip ourselves to deal with the changing guest needs, and gear up to raise our service standards. Nurturing our relationships with the companies we work with, encourages our guests to put their trust in us.
Subhankar Bose, General Manager, Renaissance Bengaluru Race Course Hotel
We have begun a dialogue with our vendors from across different departments, particularly the ones with high volumes, to bring down the cost without hampering the quality and negotiate the prices for a specific period. One of the major expenses is energy consumption and we have begun exploring renewable energy. We are also identifying individuals who are good at multitasking, thus cutting down on hiring. Hoteliers can take a closer look at a client’s itinerary to collate as much information a possible on their travel plans to make bookings in advance. Closing deals for big-ticket events such as concerts, seminars and exhibitions in a proactive manner will go a long way in securing business. Also, look at different avenues of revenue when major verticals at a hotel take a hit, for instance leveraging the F&B segment and identifying potential platforms to focus on a catering business, social events and the restaurant business.
Victor Soares, General Manager, Radisson Blu Goa
An economic slowdown wouldn't last long if proper steps are taken. Besides, I don’t think people will stop consuming or travelling. Survival strategies include offering lucrative discounts and packages to guests, and staying in touch with the younger generation and understanding their taste. It is also important to focus on price-sensitive customers. I see an uptick during the festive season; that is the time for family travel. Collaboration with airlines and creating pocket-friendly offers without compromising on the service standards is the key.
Ravi Rai, General Manager, Hilton Mumbai International Airport
Recent data from the Foreign Tourist Arrivals reveals that between January to July, FTA grew by about 2.1 per cent as compared to last year's growth of 5.7%. We are focusing on how we can better utilise the resources available. With great planning and collaborative working, the hospitality industry will be able to face the obstacles. Retaining our customers and offering them experiences will go a long way.