Hoteliers with select-service properties can prepare for when demand jumps back up by reconsidering their operating models and sales-and-marketing strategies now.
Our hospitality landscape is being transformed daily as the nation and industry come to grips with the novel coronavirus pandemic. Profound economic and social impacts will play out for months and, perhaps, even years.
However, in these early months, we are seeing continued lodging activity in different parts of the nation and for distinct asset classes. In particular, many select-service properties, traditional and extended-stay, especially in secondary and tertiary markets, are achieving meaningful room nights from distinct demand drivers. Some of them we are familiar with, and some are newer.
Examples include many of those designated essential workers, such as railroaders and truckers, who are still working their customary trans-regional routes, and employees at food distribution centers, whose numbers are being ramped up. Medical workers are choosing or being directed to stay at hotels close to both major medical centers and local hospitals to reduce travel fatigue or to stay isolated from their families.
Notably, the industry has responded. Hilton, Marriott and American Express, for example, have pledged to donate 1 million hotel rooms for front-line medical personnel responding to the pandemic. More than 15,000 hotels have joined the American Hotel & Lodging Association’s Hospitality for Hope initiative.
In addition, lodging is needed for National Guard, the U.S. Army Corps of Engineers and other governmental workers who have been mobilized to combat this emergency, as well as workers attending training sessions for expanding industries such as trucking, food distribution or medical equipment manufacture. Colleges and universities, state government, research facilities and other essential industries also have individuals who need temporary safe lodging.
Adjusting on the fly
In these scenarios, many select-service properties are being operated according to their intended models in respect to reasonable staffing; space efficiency, including having less square feet of common areas requiring deep cleaning or utility expense; and overall expense reduction compared to other asset classes.
Sales directors are reaching out to these new and expanded guests, including by use of virtual tours of a property to prospective groups. Staffing approaches at select-service properties can include consolidation of management at nearby properties and cross-training of personnel. A maintenance worker can fill in as night auditor. Housekeeping supervisors can pitch in with cleaning chores and front-desk response. The move to the digital key and texting with guests also expands staff resources and helps with social distancing.
At extended-stay properties, guests tend to favor shopping for groceries and preparing meals in their rooms, which helps with costs and labor for the already limited food and beverage services at these hotels. Most select-service properties will also have refrigerators and microwaves in rooms, allowing guests to reheat take-out food or prepare simple meals. At a time of reduced occupancy, traditional select-service properties will also offer rate incentives, including “two-rooms-for-one-price” offers.
As select-service entities make any initial staffing adjustments, property and asset managers have begun financial due diligence, which includes calculating alternative operating revenue projections, appraising available lines of credit, making proactive contact with lenders and ownership groups and exploring SBA loans, payroll protection programs and other governmental support. This is also the time to review property security, insurance coverages and work with local government on possible freezes or rollbacks of property taxes.
Going forward, depending on local and global market forces and the rate of resumption of commerce across our nation, asset managers may explore adjustments to a property’s financing stack and, further, negotiate with the brands regarding fees.
In addition, operators will need to be alert to signs of market resurgence and have plans in place to regrow occupancy and rate. Most observers agree that premium select-service properties are likely to do well when the hospitality industry comes back. Select-service will allow those with pent-up longings for travel to treat themselves close-to-home at reasonable costs.
Let’s stay united
Most importantly, we must remain in constant, meaningful communication with our management, team members, key vendors and communities. This is the time for regular emails, newsletter and video conference calls to honestly portray the evolving situation, maintain organizational solidarity and encourage new ways of sharing ideas.
Our training, asset and property management systems, organizational culture and sense of personal dignity have prepared us for this challenge, however unwelcome. If we keep our wits about us as well as our values and passion for caring about others, we will prevail through this unprecedented time in the best ways possible.
Mark Ricketts serves as President and COO of McNeill Hotels. Prior to joining McNeill Hotel Company, he spent the last seven years serving as vice president in the Realty Management Division for Goldman Sachs in Irving, Texas. In his capacity, he provided hotel asset management oversight for a portfolio of more than 300 properties, spanning 10 brands and 27 flags. Mark has nearly 35 years of experience in the hotel industry. He previously worked as vice president of asset management for Equity Inns, Inc., a publicly traded Hotel REIT based in Germantown, Tennessee. Prior to Equity Inns, he served as the vice president of hotel operations for Memphis-based MASTER Hospitality Services. In his role, the company received the prestigious “Partnership Circle Award” from Marriott International. He was recently named to serve on the Hilton Home 2 Suites Owner Advisory Council (OAC). In addition, Mark has served on the Hampton Brand Operations Council since 2000 and was a past member of the Hyatt Place Operations Advisory Committee. He previously served on the boards of directors for both the Memphis Convention and Visitors Bureau and Memphis Hotel & Lodging Association from 2000-08.
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