'Innovation is not quarantined'
4 pillars for essential business sense and recommendations to implement right now.
As John Matson, Managing Director from VoyagerHQ said last night on their first virtual pitch night, sitting at home leads to either boredom or planning and action for the future.
Most industries are hit hard, very hard by the Covid-19 virus, particularly for the hospitality industry, my industry. All the wonderful people that make business and leisure trips a success are affected economically and emotionally. Counting the days till when we are allowed back on the streets and set our minds to our vacation goals, we all so desperately need and look forward to.
Desperate times need desperate measures. Now is the time to get the team together and plan for alternative ways of revenue, slimmed down business models, or streamlining customer delivery. This requires time, innovation and most certainly investment. In all this mayhem the most important thing is to keep the team together and focused, where possible. I know employers are doing everything they can to survive in these difficult times, and I would like to share some findings or pillars and recommendations that will help plan and implement for the future.
Important to know is that our Hospitality industry, just like many other industries is going through economic life cycles. In a healthy organization these economic turnpoints are forecasted or calculated, in Hospitality this happens every 7,3 years. This can mean a lot of things of course, like are we as good in customer loyalty in a soaring economy, as we are in a downturn? The factors affecting this cycle are supply and demand, tax systems and policies, consumer confidence and naturally the availability of capital. A good example typical for our industry are incremental profits. These are profits that grow, while costs remain more or less the same. In most of our client cases, and certainly the large corporates, this is not always the case. More people are hired, unnecessary investments are made, technologies are built rather than outsourced and much more. Good or bad, hard to tell I would say, but we know the direct result of a downturn; people are the first to suffer because they are the highest cost, employee lay-offs, loss or reallocation of skilled staff, and consulting and marketing budgets slashed. So, what happens next, what is the focus, how will your company or organization hit back once the economy picks up? What happens to your brand, has it changed, is a different marketing approach needed to win back the loyalty, are your strategies infinite and many more questions arise.
Four pillars of successful strategy
1. People & Communication
In hard times like these, communication is extremely vital. Internally your employees need to know what is going on, how flexible management and leadership goals are, and the employees need to be fully aware of the situation. People are traveling emotional containers and each one has a different reaction, from panic, to sleeves up. My suggestion is to create groups with different goals, whether that is sustainability, marketing, vertical or horizontal growth, cost saving & streamlining or revision of technology. Remember this does not apply to a turndown only, preparing for this economic cycle is most important. Branding, marketing and company strategies are no longer written in stone, and have not been for a very long time. They need to be infinite, move around consumers, people and stories and data. In the mean time within the teams, you as leader can clearly define the stakeholders, by skillset or performance as those will be the ones that will continue to grow in your organization.
2. The P&L
The operational flexibility and responsiveness of your business can be seen in your profit & loss statement. Your reaction to supply and demand, flexibility in staffing, procurement and outsourcing are clearly reflected in how your business is run. Typically a hotel runs on 9 months success and the remainder at a loss, or at least on the limit. What is the buffer (yes there should be one, as most hotels have grown revenues on average with 3% year on year since 2009), what is the loyalty of clients, what successes can you measure in the P&L. I often question success as it’s measured by the annual results. Can you pinpoint a dip, or a peak in business, what caused that and will it repeat itself, can you avoid the dips or make the peaks happen again. These troughs and peaks must lead to a change in strategy, to enable incremental profits, as mentioned before. In a downturn there is no better time to educate people, whether that’s viral or in teams.
One mistake to make is to scrap marketing efforts, in bad times the need for continuous communication with loyal clients and ensure you attract new business once the market picks up is vital. Revising the marketing or branding strategy in the current global lockdown, is not only a need, it’s a must. Consumer behaviour will change as a result of any movement on the cycle.
There is data available, whether it comes from within or outside the organization. Measure it, analyse it and use it to implement new strategies. There are numerous solutions out there, available right now that can streamline your business, increase your rates, improve purchasing, staffing, communication just to name a few. It might also be a great time to change over completely to new systems, and get rid of the dusty old server in the basement.
Data driven decision making is paving the way for a healthy future. And remember the consumers, they are certainly not shy to admit their expectations.
Driving customer loyalty, that’s what your brand and operation should be all about. I cannot spell out enough how Innovation should be a key pillar in your organization. Ideas are found within your own surroundings, they inspire and often can be implemented when planning, action and a sometimes a budget follows. I believe that what we have started seeing in the last years, is the boutique style design and concept development. That’s not enough, people, marketing, sales, and operational strategies need to be flexible and transparent. Loyal customers no longer believe you, they believe friends, family, referrals, influencers and there your story needs to be strong and captivating. Learning from failures and success of other industries is key. Affiliates and co-ops are more powerful than ever, and finally innovation is dead when risks are not taken.
When your hotel, restaurant or hospitality organization wants to learn more and have detailed questions feel free to ask. Preparing for the economic cycle will keep your business strong. The Mocinno team mission is to ensure that our beautiful hospitality industry will always thrive and that people will continue to live and love travel with passion.
Sources: HotelTechReport, FT, Deloitte, Skift
www.designhotelsupplies.com – Procurement for Hotels
Start- ups initiated by Mocinno
www.hotelovate.com – The hotel technology search engine – launching 2nd Quarter 2020.
www.local-treasures.com - Booking personalized travel