Panelists on the “HICAP 6x8: Recovery top of mind episode 2” session gave their thoughts on recovery in the Asia/Pacific region, which will require cash flow and government and bank cooperation.
GLOBAL REPORT—There’s a lot that’s top of mind for hoteliers in the Asia/Pacific region when it comes to recovering from the pandemic, sources said.
Choe Peng Sum, CEO of Pan Pacific Hotels Group, speaking on the “HICAP 6x8: Recovery top of mind episode 2” session hosted by the BHN Group, said retention of staff is what’s most important to him right now. He added that “cash is king” to keep companies afloat during a crisis as recovering is not easy.
“The management of cash flow, to have a positive cash flow … can make or break a company. Once the debt moratorium clears in about 60 days … you can see a lot of issues … especially with owning companies,” he said. “So we set up a war-room team made up of the best just to go through scenario planning, week after week going through to make sure we have the right financing done, the line of credit as well as a positive cash flow.”
The recovery won’t happen fast, especially in cities such as Bangkok and Singapore. He said those cities need inter-regional travel to happen because “domestic is no good.” A recovery in these areas could take three to six months, he added.
Hilton corporate changes
Hilton announced last week that it would lay off approximately 2,100 of its corporate employees around the globe.
When asked how these changes affect his region, Alan Watts, president of the Asia/Pacific for Hilton, said the company has “tried to hold on to some extent to make sure we know as much as we can possibly know before making bold and drastic decisions.”
“You want to make bold and drastic changes hopefully once,” he said. “You want to get your business focused and refocused on the task at hand, but the reality for all of us is cash is king and restarting our engines and juicing demand is important, and our owners are going to lean on us heavily for marketing spend; they’re going to lean on us heavily for distribution. And we like other companies are not going to be able to do that if the majority of our cash is tied up in labor costs.”
Costs had to be taken out to “swing behind owners and help induce demand,” he added.
When it comes to communication and working with clients, Faez Jumabhoy, managing director and real estate sector head for CIMB Group, said banks have been proactive throughout the crisis.
“Our governments are very proactive,” he said. “Our governments came out and said let’s look at giving interest moratoriums; let’s look at giving principal moratoriums. Don’t forget all of the Asian countries went through a very, very drastic recession in 1998, 1999 period … so it wasn’t a shock to our system, it’s just that we had to remember what we did in the past and we had to accommodate for that going forward.”
He said there was a lot of cooperation from the government and the banks to look at client’s portfolios “and in some cases, come up with additional funding … to help them through this period.”
Hotels have had to change from an operational standpoint, and there’s been a lot of talk about contactless experiences, said Robbert van der Maas, president of Artyzen Hospitality Group.
“I still stick to my guns when I say it is all about experiences,” he said. “Hygiene, cleanliness, local standards in terms of safety, etc., I think across the board has become a commodity in terms of our deliveries. How we differentiate, how we attract the business and service the business will always be through (experience).”
Technology should be a seamless solution to providing an experience, he added.
When asked if there have been any big changes across the legal landscape in Australia, John Stawyskyj, partner at law firm Ashurst, said Australia has done a good job of flattening the curve and maintaining the economy through the pandemic. He said Australia will be positioned to come out of it.
Stawyskyj said the hotel industry has benefited from Australia’s JobKeeper Payment Scheme as it has subsidized the payment of employees.
Amendments have also been made to the foreign investment regime where the threshold has been reduced to zero “so every investment in all real estate requires a government approval process now,” he said.
Kevin Colket, founder and CEO of Global Hospitality Investment Group, said the U.S. moves fastest in terms of transaction and development pace compared to other parts of the world.
“The lenders clear things off their balance sheets, they sell nodes at discounts and typically people are buying paper first at a discount, and then it takes three, six, nine months for the equity to actually make its way out,” he said. “I would say generally, there’s always a lot of activity in the U.S., but bids are generally 20% to 50% down from pre-COVID-19 values.”