Businesses merely surviving COVID-19 will not be enough for long-term success, says IHG’s Kenneth MacPherson.
DUBAI, United Arab Emirates—A thorough focus on doing the right thing by guests, staff and owners over the long term is critical to any hotel company’s emergence from the pandemic, according to a senior management executive at InterContinental Hotels & Resorts.
Speaking at the online Arabian Hotel Investment Conference, Kenneth Macpherson, CEO, Europe, Middle East, Asia and Africa at IHG, said 2020’s challenges have reinforced the notion that management and staff have the privilege of inheriting a brand and the responsibility to hand it over in a better state than it was found.
Macpherson said that responsibility’s nexus currently lies in communications, hygiene and reputation.
“Be very upfront and open about the challenges. We are engaging in how we describe the seriousness of it all, understanding what it is we have to do and taking the right decisions for the long term,” Macpherson said in conversation with moderator Nick van Marken, managing director of business advisory Van Marken Ltd.
“Our primary role also has been and is about caring,” Macpherson said.
He added that hygiene is a brand standard, and the one that has become most important.
“Scale does give us an advantage. We can check the embedding of these standards and monitor what guests are saying about those standards. And we have data analytics. (Hygiene) is not a marketing campaign.
And in this climate, one negative review will have a much greater impact than it might have before,” he said.
Van Marken referenced a new media term “hygiene theatre,” in which hospitality providers merely go through the motions of COVID-19 cleanliness.
Macpherson said this would be a severe error, with a company’s long-term future now being based on the reputation it receives or adds to during the crisis.
“The approach we have taken has reputation at its core. What I mean by that is that when we reopen hotels we have to be really clear of the confidence to book and the confidence to stay, where every experience is one guests feel safe in,” Macpherson said.
“There also needs to be a balance between continued delivery and the financial situation of owners,” he added.
Reputation also will be gained by operators, he said, by a definite recognition of the enormous challenges faced by owners who have very low levels of business, sometimes even none.
“We are helping owners with short-term relief in regards to fees, and where we have a significant management stake, working closely on things such as (gross operating profit) management and working on how efficiently everything works to the bottom lines—staffing, procurement, energy,” he said.
“The spirit of all of that is that we deeply believe in the long-term success, that our reputation is everything and that we have an obligation that our owners are successful,” Macpherson said, who added he thought that when demand does come back, hotels will be run more efficiently.
Macpherson said China is providing a great deal of the optimism for the future of the industry.
He also recognized many other markets are in far different places in terms of controlling the virus and kick-starting the economy,
He said in China, September’s occupancy will be above 65%, with every hotel in IHG’s portfolio open.
Macpherson even sees the tentative renewal of corporate travel and “road warrior” business.
“That gives us great hope,” he said. “Seeing business travel picking up, and while midscale brands globally are weathering this better, we have also seen upscale hotels do well. The Chinese authorities did get the virus under control, which allowed them to get right behind economic activity.
“There is a long term beyond the short-term pressures we’re facing,” Macpherson said, mentioning his firm’s Holiday Inn-branded portfolio showing great traction currently.
Governments have acted differently, he said, some such as New Zealand being very strict, while others, notably in the U.S. and Europe, being looser.
“There is a terribly difficult trade-off between public health and the markets. In India, cares are very high, but there is an emphasis on getting the economy back running. The general feeling is that (globally) markets are finding ways of reopening,” Macpherson said.
“The expectations are for international travel to move back quickly, but not in the short term,” he added.
Local indications in the online conference’s virtual base, the United Arab Emirates, are that one of its state airlines, Emirates, will soon resume its 100 destinations and the renewed emphasis behind Expo2020, which now will take place in 2021.