TravTalk India Online Magazine
‘Hotels in the age of social distancing: Where are the robots?’ was the topic of discussion for the second session of TravTalk Digital Conclave, which saw industry experts discuss the changes in the post-COVID era in hospitality and the best way forward for them.
Nisha Verma
The digital era is here to stay! In India, it came to the masses slightly earlier, when the government announced demonetisation and most Indians had to resort to e-payments. Such is also the belief of Dilip Puri, Founder & CEO, Indian School of Hospitality (ISH), who claims that demonetisation changed the way Indians spent money, now digitised to a great extent, and now is the time for e-learning. “The trend is creating a new social habit in Indians—consuming online learning. In terms of industry perspective, there is going to be a massive shift towards mandatory branded online learning for the workforce in hotels. If there is anything the industry can do to support its people, it’s to encourage them to build upon this habit and upskill themselves. The new normal is going to be different. Technology will continue to change our world in different ways. In hotels, we were used to saying, ‘high-tech leads to high touch’, but now we are trying to imagine how high-tech would lead to low touch or no touch. I would urge hotels to encourage and invest in their people, to upskill them to meet the challenges of the new normal,” he says.
For Mandeep Singh Lamba, President – South Asia, HVS ANAROCK, this pandemic has impacted us like nothing else before. He claims that social distancing is absolutely alien to Indians, and it is now going to become the new normal. “Customer behaviour is going to change and hotels will have to adopt to the new positioning that we need to have inside our hotels. The hospitality industry is very resilient and almost cyclical. We’ve had disruptions every few years, but this time the difference is in the way demand has plummeted. In earlier disruptions, the supply was coming, and it became very difficult for the industry to come back quickly. However, this time, I estimate that the industry would bounce back much quicker, as soon as there is a reduction in the cases and we see a treatment or vaccine available. However, there are going to be some permanent changes in the industry, both in terms of operations and design. This is perhaps not the last time that we are seeing a disruption of this kind. We all need to be better prepared next time around,” he says.
Jatin Khanna, Market Vice President – North India, Bhutan and Nepal at Marriott Hotels India, on the other hand, believes that there is still not a definitive new normal. “Today, one of the biggest problems for our industry is that we need to bring confidence back in our customers. Whenever demand bounces back, we need to ensure that our customers have complete confidence and faith in our hotels and brand in terms of safety. Today, it’s a work in progress for everyone. When it comes to technology, we couldn’t have been at a better stage than today and it is the only positive which is coming out of this phase of our lives. The next wave of hotels’ renovation will have too much of technology and design embedded in it. I believe that social distancing and technology will have a huge positive impact on our industry. We are a people-first industry, and technology is going to cut down on the mundane or low-level jobs, which will bring more efficiency to our people and help them create better guest experiences. Future leaders of the industry should work towards creating a balance between robots and human guest interaction,” he shares.
High on technology
With technology making headway in hotels, people now would be careful in handing out credit cards at the reception of the hotel. Lamba says, “The payments will continue to happen through credit cards, but we are going to have a contactless check-in and check-out over the phone. The guest will have the bill sent on the phone and he won’t have to present the credit card to anyone on entering the hotel. There are going to be permanent disruptors and I believe that it is now the death of the front office, as it will not be required any more. One can do all these things online very safely. Guests would have all the RFID stuff on their phones, and everything can be done from smartphones. The front desk, including concierge, will get converted into perhaps a contact centre, which can work from anywhere. You can dial a number if you need assistance in something you want to do, but certainly these are some of the long-term changes at least I see will happen going forward,” he believes.
However, putting all these systems would require investment. Khanna explains, “Operational expenses would certainly go up. Depending on the facilities, anywhere between 175 and 250 touchpoints are there in the guest’s journey while staying in a hotel. To sanitise all those points and to keep the guests safe, hotels are going to invest, and there will be a lot of other operational expenses which will be there. I am sure that with time, these expenses would probably become a part of the P&L. Hence, there is all the more need to drive efficiency and invest in the future, which will make sure that we keep on bringing down our running cost, and as and when we all settle down, our P&L look similar to what it was pre-COVID. And, if not, there is not a huge debt.”
Puri shares that many hotels have already started working with technology or proximity software. “With our loyalty programme, we wanted to recognise our platinum guests in and around the lobby, allowing us to go ahead and personalise their stay more. In terms of policing in hotels, they need to understand the health condition of a customer and see if social distancing is being maintained. Technology would begin to take this over as well. Not only will the guests be thermally scanned and checked while entering a hotel, but there would be technology that would also allow hotels to recognise a guest’s health condition, like what the Aarogya Setu App is doing. How technology is going to play out in this new normal is going to be a very significant factor in how hotels operate in the future, whether they are new hotels, existing hotels or hotels under renovation,” he adds.
Impact of low inbound numbers
Lamba claims that they have around 11-12 million inbound travellers and around 26 million outbound, which is almost 2.5 times the former. Hence, he says, “We should look at converting these 26 million outbound travellers into our guests, as they will be looking at alternate destinations within the country. I think the industry would look at domestic business, which is going to be a saviour. It is going to be a slow process and would wake up people to a new category in hotels. The first 12-18 months are going to be difficult. It’s going to take the industry three years to reach the numbers we had towards the end of 2019 and beginning of 2020. Hence, domestic business is key. We have 180 billion domestic visits taking place through bus tickets, train tickets or airline tickets. Even if a miniscule 0.5% can be converted for our hotels, that’s a significant number of people who can come to our hotels. It is going to happen, and we are going to target domestic travel especially for the upper upscale or luxury hotels, where international travellers are over 50% of their target.”
Sharing the corporate business perspective, Khanna says, “Today, corporate hotels have around 65-70% Indian nationals. I think that while it will take around 2-3 years for us to reach pre-COVID occupancy, the domestic consumption would really play out. However, there will be more changes happening. Along with that, hotels will have to do a lot more product improvement and process improvement. In terms of pricing, we need to be patient. Let the machine rule the pricing instead of getting pricing run by emotions, so that we probably will not have such a huge debt where it will take us years to come back to the same price as before COVID.”
Homestays and other guests
In this scenario, smaller enterprises, including homestays, might be jeopardised. Lamba says, “In the short term, homestays are going to take a beating as everyone’s concern is going to be safety norms, which will be a little challenging for homestays and they are going to be stressed. However, once the vaccine is out and this will be behind us, they will come back because people do want to get the local experience. It is not the end of this industry, but it will be a pause.”
Talking about the processes required for walk-in guests, he says, “I don’t think we are testing enough in India for everybody to have a test certificate saying they are COVID-negative. Hence, walk-in guests would follow the same protocol as in-house guests. They will be thermally scanned at the entry and follow the same norms as everybody else. There might be pre-registration for those who book in advance. There will be very little contact. Guests would walk into the hotel, go straight to the front desk to pick up their envelope for the key card, which will be lying ready, and go straight to you room. We might be seeing self-check-in kiosks in hotels very soon. Ultimately, even walk-in guests will be able to use their mobile phones to check-in.”
However, would the safety procedures allow leisure guests to roam around the hotel, pool and spa freely? Khanna answers, saying, “If you have proper safety procedures in place and you are following guidelines, whether it’s in the spa or pool, there is no harm. It’s very important to note that at some point, hotels will get patients who could be COVID-positive and have stayed and checked out of the hotel. It will happen despite hotels being on a standstill during lockdown. Hence, we need to look at all the safety and hygiene procedures. Also, hotels need to decide if they want to open everything or they want to contain or manage the crowd. They have to manage business, manage crowd and still create good experiences.”
Rates and legal liabilities
According to Puri, those with a longer runway of cash flow and working capital will survive this crisis. However, he says, “India has already tasted the big institutional private equity players, and the Merger & Acquisitions (M&A) space is going to get very active in the immediate post-COVID scenario. When it comes to rates, the revenue managers today must understand how to package rates. The smarter they bundle and package the rates to put out the offering, the better they can make the customer see value. Those are the rates which are going to work. There is owner pressure to fill the rooms and lower the rate, but no machine is going to tell you that. Today, hotels can force a guest to take transport, claiming it to be a part of their safety and health requirement. One can immediately start packaging things like that. Whether it is branded or unbranded hotels, if one doesn’t have the runway to manage cash flows for the next 12-15 months, they will be in stress.”
Lamba, on the other hand, says, “I think, one of the issues that is going to come up even for corporate travel is that companies globally would have to insure their executives when they travel. There is going to be some rebooting of insurance and liabilities, which now hotels will start looking at carefully. Based on learnings from across the globe, there would be a change in how hotel assets are going to be insured in the future, but I think there is going to be a whole new focus on disruption of business, what qualifies as disruption of business when you are getting your insurance done; public liabilities; what happens if something happens inside your hotel to a COVID patient or when somebody contracts an illness.”
Survival mode
Claiming that revisiting SOPs is one of the positives of COVID, Puri says, “The moment these new SOPs can be institutionalised permanently, hotels would begin to see more efficiency coming in. There is a need to keep the
survival mode on.”
Khanna claims, “We need to be smart as to how we need to calibrate operations and hotels for future.”
Forecasting trends, Lamba shares, “Hotels are going to see some big pain this year because occupancies are going to drop by almost 30-35% for the year and RevPAR is going to drop by almost 60%. The optimistic view is that it will take us 2 years to recover, while the pessimistic view is that it would take us four.”
Domestic weddings on the cards
“We conducted a sentiment survey and realised that one of the businesses that is on everybody’s books is weddings. Those bookings are still there and a lot of them continue to come. There are many international weddings which have been cancelled because of COVID, but those weddings need to take place and they will now take place in hotels. However, the numbers will be far reduced. Hence, weddings which were supposed to have 300-500 people, will now have 100 people. There will be guidelines for the banquets. Indian hotels are going to be equally competitive on weddings because that’s the business they want. Lastly, instead of inviting 500 people together, people might have 4-5 functions of 100 people each. That could be a nice corollary to that, and more functions could mean more business,”
– Mandeep Lamba
“The reduction of wedding size might become a strain on friendships and relationships, as there will be some people not being invited. We are going to see big social changes in terms of relationship dynamics. One of the concerns with the industry is the amount of capex that will be deployed now to meet the new norms. Whether one is installing thermo-scanners or doing things with technology, I hope that firstly the industry is making sure that such a capex becomes part of the P&L. I think the final new normal would be that weddings will come back in full swing and distances will become smaller again between people, and it will again become a habit,”
– Dilip Puri
“I don’t think weddings are moving out of India as of now. Today, having 10 weddings coming out of Delhi or North India and going to Thailand is very difficult because the consumer behaviour has still not evolved or finalised as to where they want to go. The sooner our industry starts taking steps in the right direction, the more confidence it will give our consumers to stay within India. The biggest fear today is not just about travelling, but what if one is travelling and gets stuck at the destination because of a lockdown over there or the requirement of quarantine in a location with 500 people. This is going to evolve with time,”
– Jatin Khanna
Education should be a priority
“There is no better time than now to get your education, because there are no jobs in this industry as experts are predicting that recovery might take 1-3 years. This is the best time for young people to start their education and spend time in college. There could be no better opportunity for people to experience the changes while getting educated, so that they are far better prepared and skilled to meet the new normal, which will come post the recovery. If there is ever an opportunity to start attracting good talent into our industry, it is now because we can now educate them for really what is going to be the new normal in the industry. Also, There is no better time than now to encourage your people to go and get themselves upskilled and relevant to the future world,”
– Dilip Puri
Supporting travel agents
“Both travel agents and hotels have existed for decades. As much as any hotel wants to have customers dealing with them, we are going to co-exist in the space. We will always work with the travel agents. They cannot be pulled out of the guest’s journey,”
– Jatin Khanna
Repurposing of hotels?
“There will be stress, and there will be owners with a fair amount of debt on their books, who are going to feel the heat in paying back their EMIs and principals. We might see some hotels being repurposed. I think hotels would start looking at every other real estate asset class. There are talks about looking at hotels to be converted to hospitals, because we realised that we have a fairly poor infrastructure in hospitals with COVID pandemic that has struck us, and there is merit perhaps in getting some of these converted into hospitals. There could be other repurposing also on the cards, and they can be made into office blocks, co-living spaces or student housing, etc. All of this is going to be a reality going forward,”
– Mandeep Lamba
