InnFocus Summer 2021

We have just completed a year that has been
unprecedented. It has re-written the goalposts
for so many things, especially for the hotel and
other service industries where people are the
main ingredient in what we offer. This article
is about the lessons we should take from the
past 12 months and how we can go forward
with better tools and insight.
Our business is built on three pillars. They are
the guests, the colleagues, and the money, or
as some would call the third pillar the financials,
or even the owner. When we think about pillars,
we naturally incorporate the idea that they are
even and capable of holding their own share of
the burden and the success of our hospitality
enterprise. I am going to explore how the three
pillars fared in the last year, how
they may recover, and how they
can be stronger in the future.
Pillar 1 – The Guests
First and foremost, let us start
with the guests. Without guests,
our business is a non-starter, and
it goes without saying that we are
ready to welcome them back so long as we can
all do it safely. How we welcome them back is
the question and at what price? Average rates
have fallen by 30% on average and occupancy
by over 50% compared to the pre-COVID
norms in Canada. That is a whopping 70%
when expressed as RevPAR. When guests
start to return in significant numbers, what will
they pay?
Some forecasts put occupancy at above
50% for the full year of 2021 and average rates
off by 15-20% from 2019’s stabilized range. In
BC in 2019, we had a record year with an ADR
of just under $200 and occupancy of 70%,
equaling a RevPAR of $139. If we use this as a
base and apply the forecasted occupancy and
rate reduction, we’re looking at 2021 RevPAR
in the $80 - $90 range. This is obviously an
average and many will fare better mainly
because of location and business mix. None
the less that means our collective measure of
what guests pay us will take a 40% haircut
from 2019 levels.
We all know that getting a strong room rate
and occupancy takes time, momentum, and
a healthy market. Losing it happens literally
overnight. Now more than ever it’s critical to
have solid revenue management intelligence
Investing in and developing
our people is what hospitality
is all about.
and practices in place. Relying on experience
and market knowledge is a serious gamble with
very unattractive odds this time around. If you
don’t have a credible revenue management
strategy in play with the proper tools, you’re
going to come up short-changed. Penny-wise
perhaps, but definitely pound-foolish.
Pillar 2 – The Colleagues
The second pillar is the colleagues. I think we
have really shot ourselves in the foot with this
one. Investing in and developing our people is
what hospitality is all about. Our industry trades
long days and hard work for recognition and
advancement. How many people reading this
article can say they came to the hotel business
because they wanted and planned to. If you
are like me and most, you came for a summer
and stayed a lifetime—managers, leaders, and
colleagues alike.
What we have done this time around is really
going to cost us dearly in the long run. Letting
go, furloughing, and laying off our employees
at every level for more than a year means they
are gone. They have left the stage, and who can
blame them? If we did not do all we could to
keep them and help them during the last year,
then shame on us.
I know for many of you, this stings
and that would have been a luxury,
but I think it all comes down to choice
and priorities. Mortgages and debts
can be renegotiated. I have been
working with an independent hotel
in Western Canada for the past three
years. During the initial part of the
pandemic, revenues fell by 75% and
that meant negative profits for many months.
But their commitment to their staff was the
number 1 priority. Why? Because the business
will come back. We can rebuild our markets
and some think relatively quickly because of
demand (it’s still there). We cannot do the same
with people because the supply available to
hospitality is extremely limited.
The labour supply was already on empty
in many markets because of legislation and
demographics. Now with COVID, we will have
even fewer candidates to choose from. But
InnFocus 21