Nassetta: Owners must fully embrace sanitary standards
 
Nassetta: Owners must fully embrace sanitary standards
27 OCTOBER 2020 8:13 AM

Some of the world’s largest travel firms understand the need to build confidence, trust, compliance and partnerships, and executives said if that message is deprioritized or not genuine, guests could look elsewhere.

RIYADH, Saudi Arabia—With the worst operational and revenue shocks due to the COVID-19 pandemic hopefully behind the travel industry, now is the time to build innovation, trust and confidence, according to CEOs of two of the largest global travel companies.

Speaking during the online conference Future Hospitality, Chris Nassetta,* president and CEO of Hilton, said those sentiments will go hand in hand with customer appetite and owner cognizance.

“As wonderful as it is for Hilton to have great hygiene protocols, that, too, is broadly for all the industry,” Nassetta said. “Our customer base has been supportive of what we are doing. People don’t go places they are not feeling safe.”

He said historically, Hilton always has kept its brand standards to a high level, which is necessary in a portfolio that is 70% franchised.

“We have very sophisticated systems in place in how we manage standards and keep franchisees to those systems,” he said. “We make sure procedures are followed. Our people are out, and we’ve had incredible success as most (owners) are compliant now as they generally always are do.

“People understand that unless they do this, as even if revenues are off, they might not have any revenue at all.”

Nassetta added it only takes 3% or 4% of the network not to comply before customers move away from the entire brand.

“In the longer (term), (the crisis) will change how we approach standards, to newer higher levels, and I suspect most of that will stay with us and in a way that are not a cost burden on ownership,” he said.

Government policy for good or for bad is hindering businesses getting back on their feet, panelists said.

Arnold Donald, president and CEO of Carnival Corporation, said he is hopeful on 1 November that the U.S. Centers for Disease Control and Prevention will allow passenger cruise ships to resume sailing in and out of the U.S.

“We have started (cruising) in Europe, with limited sailings,” Donald said. “In the U.S., no one will be completely ready (on 1 November). We are anxiously trying to work together, and also we have to pair up with destinations, each of which has their protocols.”

Donald said by his guess it would be 30 to 60 days before his company sailed out of the U.S. after the ban is lifted.

Peter Greenberg, the panel’s moderator and travel editor of CBS News, said hotels have been able to pivot first but that there are currently “74 separate items on that list” of CDC compliance requests from the travel industry, including from airlines, cruises and hotels. Until the regulatory business is sorted, consumer confidence is unlikely to come back.

Stimuli needed
Both Donald and Nassetta agreed government help in the U.S. for both their segments has been little or nonexistent, which was not the case for the airline industry.

Nassetta said he has been to the White House on several occasions during the crisis, bending the ear of the President, the Vice President, the Secretary of the Treasury, anyone who would listen.

“At no time was that help for Hilton, but first for the industry’s people,” Nassetta said. “The main problems are helping with unemployment insurance, then on liquidity, which for us, with our many small owners, is critical. Now it is very much a liquidity crisis that will soon turn into a solvency crisis.”

Nassetta added he hoped a deal would soon be reached to help the industry after the 3 November U.S. presidential election.

“It is important to have continuity so as when we are ready to go, (owners) can keep people employed, and it will get tougher as we move into the fall, with leisure dropping,” he said. “Business travel is picking up a little, but not much.

“And six to nine months in, lenders are saying, nope, can’t do any more. It will be harder on our owner community as we move into the fall as their discussions with lenders will become more difficult. The next three months are critical.”

Donald said his company has not received government help, and did not expect to.

“There has been some in the (United Kingdom), Germany, Italy, and basically we’ve had no revenue, and we have to keep the ships running, a high cash burn,” Donald said, who added a huge early cost was the repatriation of some 80,000 team members, with many of their countries refusing to take them back in, which added to the expenses.

“Yes, it was the right thing to do, and we have raised liquidity in the last few months, all done virtually, I should add,” Donald said.

Meeting up
Nassetta said he is encouraged by Hilton evolving in the meetings and events’ business.

“We have a full-suite approach as to how to have meetings and events, as we get used to what will become the new norm. The question is how to take the capacity we have and make it work in the world we have,” he said.

Hilton put on its first major event in the week before the conference, a hybrid event that saw 100 people in a ballroom at the Hilton McLean Tysons Corner in Hilton’s home of McLean, Virginia.

Nassetta said the firm is learning quickly how to allow guests to congregate safely.

“More data, therapeutics, hopefully a vaccine and more understanding of COVID-19. Customers are moving forward, too, although Europe is moving back a little,” Nassetta said. “It is baby steps to getting people out there.”

Donald said science is being adopted to allow alignment between all those steps.

“We’re not quite there yet, but we know we need to control the risk by controlling the environment,” he said. “Take theater. There is spread-out eating in the shows, but then you put on a third show, not two, and it works without getting rid of the social experience.”

Both executives emphasized communication is key to winning consumer confidence:

  • Nassetta: “We’re not stimulating people to come to our hotels if (those hotels) are not safe.”
  • Donald: “We have to be transparent in what we are doing, and then word of mouth will spread the message that cruise ships are safe.”

*Editor’s note: Hotel News Now is a division of STR, a CoStar Group company. Chris Nassetta serves on CoStar Group’s Board of Directors.

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