Philip Gebu’s thoughts…Hospitality businesses appeal for bailout (2)

0

…what they can do to prepare for COVID-19 recovery

In this COVID-19 moment when hospitality businesses are so much in need of a bail out and following the President’s directive to the Finance Minister to make available a GHC 1 billion stimulus package to support businesses, an economist, Dr. Lord Mensah, is urging the government to direct its incentives to critical sectors of the economy such as agro-processing.

He cautioned that even though players in the hospitality and tourism industry are asking for support, injecting funds into those areas may not yield immediate results. Speaking to citinewsroom, He argued that even though he is not against the hospitality industry, there is the need to quickly revive areas that have seen the biggest shocks in order for the ripple effect to be felt in other areas, the government must critically assess which businesses to support.

Well I disagree with him because tourism has been the driving force for many developed economies and creating employments for millions of people. Countries like the UAE who where so dependent on oil, have today turned to tourism and have ripped the economic benefits.  Last year, we know the economic gains we derived from the Year of Return and I believe the repealing effects are still been enjoyed today. If we are to see tourism as a non-essential industry and relegates it to the background, we may not be helping our economy on the longterm. A bail out today must be shared equally.

“There are some areas that even if you give them the subsidies or some sectors that even if you give them the subsidies, they won’t get patronage as we speak now… now we are distressed as a country and areas like hospitality, hotels are not key sectors to touch now when it comes to providing stimulus package”.

The above fact is true because the borders are closed and the airlines are grounded. That is the main reason why the tourism industry needs more of this stimulus package. Should a man who is broke now yet had been helping his family in the past be left to die because he is down financially and may not make money anytime soon? When he is left to die, how can we resuscitate him in the future? The harm would have been done. However, if he is supported to survive in time of distress and knowing he is an asset to the family and when his predicaments improves, he will continue to be of support and even do more, we must not leave him to die. I’m being philosophical but that is the reality. However, to my industry players, as they wait for a stimulus which may not be able to solve all their challenges because government may have other priorities, I outlined some research facts of what they can do to support their businesses until there is light at the end of the tunnel. Yes, there will be light at the end of the tunnel, but until then the fire must keep burning.

Below is a continuation of what they need to do;

5.Discounting or dropping rates will not help you in any way, even if you think it might be a good idea.

Remember that you are not alone and that if all drop the rates, recovery will be painful and slow. As a reminder, during the 2008 financial crisis, it is commonly accepted that, even if demand was showing clear signs of recovery after 6 to 8 months, the ADR took over 3 years to come back to pre-crisis levels. All because a majority of hotels decided to drop their rates. But that impacted the market for everyone.

6.Showing understanding with your customers will be key.

Not saying you should pay everyone back the money they may have paid you, but certainly showing flexibility and allowing for postponement, even on previously non-flexible rates.
I was amazed to still see advance, non-refundable, rates available for booking in major cities in Europe yesterday and today.

7.Your customers are as lost as you are and most will appreciate you keeping in touch with them.

Packaging deals, upgrades on first visit or added value proposals will go a long way in helping also your customers feel better, whilst allowing you not to cut too deeply in your future profits.

 

8.Your staff will need support.

Some of them are at home, some of them will man the proverbial fort. They will need attention and support in the weeks and months to come. They will need to reconnect or stay connected. Organizing virtual team meetings, virtual coffee breaks and regular information sessions will be an excellent idea. Our company decided to have a start of the week and end of the week informal meeting. With our consultants scattered all over Europe and the world, we have noticed this does boost morale.

9.Even if visibility is difficult at the moment, now is the time to think about recovery scenarios.

Who will come back first, what rates/packages are best suited for these, etc We know the domestic/regional markets will pick up first and the more distant markets will come later. How will that translate into your action plan?

10.Look around and see what is happening elsewhere.

70% of the hotels in China closed during the peak of the pandemic in that country.  Now many of these businesses are reopening including hotels and many things have changed. It’s obvious that many things will not be the same in the Ghana and the whole word. Hoteliers need to begin planning into the future and look around how the changes taking place in China will also impact on them and the need to prepare.

11.Apart from involving your team in the solution, what are your plans for motivating them and keeping them interested.

Now is the time for them to possibly embark on a personal development scheme, follow online courses and gain new knowledge.
Will you, as their employer, be in a position to support them financially? Maybe not now, but you could agree with some employees to reimburse their education costs in the future when business is back on track. We all know that in normal trading periods, there is very little time nor appetite to have staff develop themselves.
Now is also the time to ask your team how they see business developing after Covid-19. I am convinced that in normal times, staff members do not have enough time or opportunity to think together with management about solutions, about new products, new ways of doing business. Why not include them in discussing the possible solutions? It is also a perfect moment to educate your team members about the situation of the business, the challenges and the opportunities that may lay ahead.

12.Many hoteliers and restaurateurs are facing huge fixed costs.

At this stage not much can be done it, but this could be the trigger for looking at costs and thinking very actively about how to transform fixed costs into variable costs, especially for the phase where the business will not yet be stable.
Simpler said than done, I agree that staff costs are most certainly the biggest issue that the majority of businesses in our industry are having to face.
Working with temp staff is probably a little bit more expensive, especially if you go through an agency, yet you only have to pay these costs in relation to your activity.
Some of staff costs are semi-variable, insofar that you need a minimum number of people to man a department, regardless of the business.

Philip Gebu is a Tourism Lecturer. He is the C.E.O of FoReal Destinations Ltd, a Tourism Destinations Management and Marketing Company based in Ghana and with partners in many other countries. Please contact Philip with your comments and suggestions. Write to[email protected] / [email protected]. Visit our website at or call or WhatsApp +233(0)244295901/0264295901. Visit our social media sites Facebook, Twitter and Instagram: FoReal Destinations

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here