In most parts of the world hospitality businesses are about to clock up a year of being in crisis mode and every one of those 12 months has felt like a 3-minute round facing Mike Tyson. We have reached however the phase of recovery. With a vaccine roll-out well underway, the hospitality industry can now see a light at the end of the tunnel. Businesses are now faced with determining which combination of hooks and uppercuts will best lead them out of crisis. How will our business be relevant for the ‘new normal’? How do we future proof ourselves against future crises? How do we renew our company’s offering, our purpose? What have we learned, what good things have emerged from crisis? Who is still on board the bus, who needs to get off, who do we need to bring on?
One thing is certain – any hospitality business expecting to emerge from Covid-19 operating and behaving in exactly the same way as pre-crisis is doomed to failure. No matter how large the cash reserves a company may have, or how fantastic a product it has with a fully retained team, there are simply too many economic and marketplace variables for things to have remained the same. How businesses respond in the next eighteen months may determine their long-term relevance.
At HoCoSo we have identified five key areas that are top of mind for hospitality operators, owners and stakeholders as they look to position themselves for strong recovery. Katharine LE QUESNE, Managing Director, HoCoSo, reveals the importance and need to properly assess Strategy and Growth.
The pandemic has changed how individuals and organisations do business. It has catapulted us to a new level of digitisation, automation and remote working. Some of these changes will be permanent, others are still evolving. What we do know is that companies have had to restructure almost every aspect of their business. For all of us in hospitality – investors, operators, Governments and advisors alike – this has either derailed or profoundly changed corporate strategy from what was signed off pre-pandemic.
As we start to map a route out of the crisis, it is time to prioritise, update and communicate a new post-pandemic corporate strategy. And what does that look like? There is of course one formulaic answer here. It depends on geographic location; and whether target markets are in the survive, regroup or recovery phase.
Cash preservation has been paramount; with limited sources of demand, the options for many hospitality businesses have been pretty stark – close and hunker down, or innovate to work within Government restrictions. Extended stay hotels in particular have become the new “golden child” of hospitality. They have come out on top of the hospitality asset stack, as stranded guests, essential workers and what travellers there were, have all favoured them for their in-room catering facilities and “home-from-home” offerings.
As the roadmap out becomes clearer and the relaxation of restrictions on social interaction and travel becomes more certain, attention turns to assessing the business: how the organisation performed in crisis (and take advantage of this opportunity to improve crisis management protocols); what has changed internally and externally; and what might be the implications for the business. There are multiple approaches of doing this, all of which are anchored on obtaining and analysing feedback from all stakeholders and industry observers. This is not a finger pointing exercise. It is about developing an objective, realistic and accurate picture of the organisation’s competitive position today and where management wants to take it. It is also an iterative process. The impact of COVID-19 is triggering changes to how we do business in ways we do not yet fully comprehend.
Looking to the future: where and how does the company want to compete in tomorrow’s market? And is its purpose as a business still “fit for purpose”? The strategy will need to factor in that: according to medical experts, COVID will be around in one form or another for some time to come; the climate crisis is a priority and new legislation is being introduced in the short-term; and there is immense innovation occurring as a result of the acceleration in digitisation, automation and remote working. This may be the time to evolve the business offering. HR, Sales & Marketing, Technology, Finance and Operations will all need to be aligned with that new journey.
And what about growth and shareholder value? For so long, the big driver of shareholder value in the hospitality industry has been pipeline growth. Given the climate crisis, prioritising new unit growth at the expense of all else is rapidly falling out of favour with investors and guests alike. Sustainable growth is not a new buzz word but it is firmly an imperative inside and outside the boards room. As new legislation and regulations related to climate change are progressively introduced internationally, markets are going to favour the developer, operator or investor that gets on top of this opportunity early. For evidence look at Brookfield, who snapped up Mark Carney, former Governor of the Bank of England and a leading advocate of green finance initiatives, to be its Head of ESG and Impact Fund Investing.
More than ever, the strategy needs to be built on lessons of the past, the corporate infrastructure of the present and not just the trends of the future but the needs of the future.
Katharine Le Quesne is Managing Director of HoCoSo
She leads HoCoSo’s co-created solutions for next generation hospitality with a focus on markets undergoing explosive growth, regeneration or disruption.
With a particular expertise in strategic reviews, due diligence, development strategy, destination resort development, and financial feasibility, Katharine has worked extensively on luxury and lifestyle assets, new concepts and asset repositioning. She also undertakes litigation-related work, including acting as an Expert Witness.
The future for hospitality, after a year of darkness, is beginning to look more hopeful. However, in order to be able to stand with hands aloft in victory, once the bell sounds at the end of the twelfth round, businesses still have a hard road ahead. We would do well to heed Winston Churchill’s advice to “never waste a good crisis.” Consumer habits will dictate the rise of new concepts, products and experiences; investor sentiment will drive more purpose-led growth strategies; technology will enable and encourage greater productivity, consumer experience and profitability; operations will be run more efficiently and by a multi-skilled workforce; organisations will be leaner and fitter and will be led by leaders who demonstrate a more inclusive and empathetic leadership style combined with an ability to flex and shift at short notice. Those that ultimately emerge victorious will be those who put every part of their business under the microscope and look at how to best reinvent, innovate and improve themselves, in order to retain a meaningful customer proposition and competitive edge.
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HoCoSo are advisors with a difference.
We create tailor-made and innovative solutions for clients’ hospitality-led projects by bringing together the optimum team of sector specialists.
Jonathan Humphries, Chairman and Owner of HoCoSo, and his direct team specialize in the extended-stay, co-living, and hotel-alternatives hospitality market; luxury, lifestyle and boutique hotels; and resort developments in Europe, the Middle East and Africa (EMEA).
Our strengths lie in the following core services:
- Product & Concept Creation, for portfolio & individual asset developments.
- Strategic Development Projects with a focus on new-market / new-concept business expansion planning, operator selection, market and financial feasibility studies.
- Transformative Asset Management for brand re-positioning, asset re-evaluation and concept re-structuring.
- Hospitality Education for companies and academic institutions, with a focus on bespoke course development, training and teaching.
- Workshops, Keynotes and Conference Moderating for boards, leading international conferences and incubators.
During the covid19 crisis, HoCoSo launched HoCoSo CONNECT, an initiative aimed at bringing the industry together to brainstorm and collaborate; HoCoSo CONVERSATION, a podcast channel encouraging the discussion with thought leaders from around the globe, for the hospitality industry; and, in collaboration with Atlas Coaching and Cervus Leadership Consulting, we also launched the Hospitality Resilience Series , a combination of online events, insights and discussions aimed at helping build your personal resilience and inner immunity.