Expert’s Voice: The five stages of (hotel industry) grief
Denial, anger, bargaining, depression and acceptance – Gert Noordzy, chief operating officer at The Experience Resorts, discusses the reality of selling hotels in the post-Covid world.
Macau is six months into the Covid19 crisis, and the Special Administrative Region has fared remarkably well, with only 46 cases and zero deaths to date. Of course, the casinos remain empty for now, as border crossing remains subject to access restrictions.
Currently, I am not able to leave town. Ferry services between Macau and Hong Kong remain suspended. The HKZM Bridge is only an option for Hong Kong residents and requires two weeks’ quarantine upon arrival in Hong Kong. The border between Macau and Zhuhai is closed for non-PRC passport holders.
In February 2020, my estimation was that I might be able to start regional travel safely around October. Based on the global situation, I have revised this expectation to February 2021. Short intercontinental business travel will remain unrealistic and impractical for another 12 months, in my opinion.
This has required a mindset adjustment, of course, and I have set mine accordingly. However, what has struck me is a certain ongoing level of complacency and denial vis-à-vis the crisis in our industry.
The most recent example of such denial was a Norwegian cruise company, which was the first to resume sailing since global cruising stopped in March. It is now dealing with a Covid outbreak, and the ship has been put in quarantine. The CEO of one of the top 10 global hotel companies anticipates recovery through local and drive-to travel. But if these hotels are located in states, regions or countries that reopen too fast, it remains wishful thinking and not plan-driven, based on events and developments that suggest that the crisis is abating.
As most new hotel projects in the pre-opening phase have been put on hold, the focus and nature of my activities have shifted to education and managing the acquisition process of distressed assets for a number of clients. Despite the unfortunate and harsh economic reality, expectations on sales prices still appear to be in 2019 BC (Before Covid).
We observed that the psychology of current sellers of distressed assets closely resembles the five stages of grief: Denial – Anger – Bargaining – Depression – Acceptance. In one such acquisition process, we have gone through the first two stages over a period of four months, and have now entered stages three and four.
- Denial: “We had the resort evaluated by professionals last year. It’s worth double your offer! What crisis?”
- Anger: “Your offer is insulting! How dare you! We will go with another buyer…”
- Bargaining: “Let’s talk about this. How about/what if… The crisis will be over soon!”
- Depression: “This crisis will never end, we’ll never be able to sell the resort…”
- Acceptance: “All right, since the market is not getting better, we have a deal, let’s sign the contract.”
Whether at a personal or professional level, the five stages of grief are about realigning with reality and resetting your expectations in such a way that you will not be disappointed again.
A number of international event organisers insist on organising in-person industry conferences. One such conference was originally set for Q1, has been postponed twice and is now on the books for Q4, with no sign of being moved into the virtual space or cancelled, even though the host city mandates a 14-day quarantine period, which is expected to remain in force until year-end. I am not sure what is driving this. It could be either the five stages of grief or unrealistic shareholder expectations…
The current crisis resembles the Spanish flu, not SARS. The director of the Macau Government Tourism Office stated recently that “Macau’s reopening to international tourism should only happen in the second half of next year”. Time to accept reality.
I have set my mind on a marathon of non-travel and intend making further good and different use of this ‘lull’. Bottom line, there is hardly a single problem in life that cannot be solved by better expectation setting…
Happy (delayed) hotel openings!
This is an edited version of an article that appeared on HOTELSMag.com.
Chief operating officer at The Experience Resorts