Hotels are preparing for reopening after the crisis. (Photo: Unsplash)

Re-opening hotels after the crisis will likely be very similar to that of the opening of a new hotel, both in terms of investment and coordination required, writes Robert Suga of HAM Independent Hospitality & Tourism Advisors.

As the crisis caused by COVID-19 is hitting tourism and hospitality businesses particularly hard, owners and operators are doing their best to plan for the uncertainty ahead. While some hotels are mandated to be closed, some are still holding on to operating with single-digit occupancies.

In this current situation, owners and operators have a number of strategically crucial tasks ahead of them, in order to best assess their situation and to protect their cash flows and asset value. As professional hotel asset managers, we are aware of the complexities of such an assessment and are ready to support hotel owners with a crisis management plan, which covers two main areas.

Settling in for the downtime

As hotels are either mandated by governments or forced by the economic realities to close, cash flow has to be brought under control and due diligence has to be carried out on the available options going forward. Our approach is to work with management, legal and tax advisors and map all the possibilities while keeping the owners’ interest as a top priority. When preparing for a downtime, we focus on the following:

• assessing the feasibility of closing or keeping open
• creating multi-scenario cash flow forecasts, depending on when a reopening could take place
• managing payment terms with suppliers to enhance liquidity and salvage working relationships
• communication with guests and OTAs, negotiating cancellations
• reporting to lenders and investors, keeping them up to date
• following changes to payroll and labour-related legislation
• assessing the terms and attractiveness of government relief packages

Preparing for the reopening

While it is difficult to make predictions on how long the corona crisis and government-mandated restrictions will last, hotel owners and operators must prepare for the eventual reopening.

Currently there are a number of plausible scenarios for the economic recovery after the crisis, however, from a tourism and hospitality perspective it is highly likely that guest needs and travel patterns will change. There are therefore both economic and qualitative aspects which will have to be taken into account before the re-opening.

As hospitality advisors with extensive experience in hotel pre-openings, we are aware of the cost and effort required to coordinate such an effort. Re-opening hotels after the crisis will likely be very similar to that of the opening of a new hotel, both in terms of investment and coordination required.

Re-opening costs for hotels will likely be as high if not higher than keeping hotels closed during the crisis. It is exactly for this reason that owners and hoteliers must have a strategic plan backed by forecasts ready for deployment.

Hotel owners should develop pre-opening plans and make sure that the budget is as streamlined as possible, that money is being spent where it makes the most impact. Critical areas include re-employment of employees, sales and marketing costs and adapting to future traveller needs. Among others, focus on the following points:

• creating a pre-opening action plan, team and a pre-opening budget
• managing employee retention and re-employment
• adapting business model for a post-COVID-era tourism
• adapting to low contact operations
• upgrading housekeeping standards and procedures