Interview between Fabrice Collet, CEO B&B Hotels and Vanguélis Panayotis, CEO MKG Consulting. The time of a confined coffee (Le temps d'un café confiné), return on the Coronavirus crisis and its impact on the B&B Hotels group. Video of the interview in available in French.
How were those first few weeks?
"It was very hard psychologically because the goal of a hotelier is not to stop welcoming people, stop serving breakfast and have empty hotels... It was complicated because we had to do something we had never done before. No one has ever had to do what our generation is doing now. [...] It causes real problems, a hotel is not meant to be closed, there is no metal shutter you can pull. [...] There's also something positive, it was an extraordinary group effort with an absolutely sublime will, commitment and dedication from the teams."
Crises reveal the level of mutual support and solidarity within the group, in your case it was revealing
"Yes, it's not a myth. It's something I think is specific to the profession as a whole, you're not a hotelier by chance. You're a hotelier because you naturally have the values of hospitality, solidarity, conviviality and strong human relations. [...] At B&B there is also a strong attachment to our values, our brand and our history. This has produced extraordinary results. [...] It has been done with the same impetus throughout Europe, with courage and commitment."
You have a pan-European vision of the hotel industry, can you share with us your observations on the different situations?
"From a time perspective, the virus developed at different times. The epidemic started in Italy and we weren't aware that it would happen in France. [...] Even so, our Italian colleagues alerted us. Then it spread to Spain, France and Germany. At first there was a relationship of time with always a bit of disbelief, thinking that what was happening to our neighbours would not happen to us. [...] Today we are all affected in the same way with two nuances. The first one is Spain, where the government has taken an arbitrary decision that hotels must be closed, while elsewhere hotels are closed on a case-by-case basis. [...] In France, properties are closed on a case-by-case basis, but it doesn't make sense to keep a property open at Disneyland Paris at the moment. Anyway, in France, the freedom to operate is respected."
The German case is also interesting, not confinement but social distancing, does this have any effect on activity in Germany?
"Yes, there are concrete effects. In Germany everything is allowed except what is dangerous, whereas in France everything is forbidden except what is indispensable. [...] A concrete impact, the occupation rates, although they're as low in Germany, are twice as high as those we have in France or Italy."
This keeps the business going, but is it profitable or does it just prevent closures?
"No. Profitability, I think that's not the point anymore. We are in a business where there are fixed costs and our fixed costs are around 40 to 50% of OR and we are very far from that. So we are no longer in this debate at all. On the other hand, a hotel is not meant to be closed. Our staff would rather get up in the morning to greet a few guests than stay home and wait for nothing to happen."
What is your vision of the support implemented by the different states?
"Overall it seems to me that all the countries have reacted in the same way with their own deadlines. Almost everywhere we have seen partial unemployment schemes set up, they differ a little from one country to another, but overall this is the norm. We have also seen state-assisted loan systems being set up. [...] Almost everywhere there is also a reflection on how we can help companies to get through this difficult cash flow situation by deferring or even cancelling charges. [...] Everywhere today there is at least a consensus on the fact that companies need to be helped with these immediate cash flow issues, but there are also nuances from one country to another. [...]."
How do you visualize the recovery scenarios?
"It's a huge question with several stages that we have absolutely no control over. Will the European economies return to activity levels comparable to those of 2019 or will we have entered another world? [...] Another subject that I also don't control is the duration of the health crisis and how little by little we are going to let people start travelling again. Will we see a V-shaped scenario with a very rapid rebound? Or will we see an L-shaped scenario with a slower rebound or a W-shaped scenario with a relapse? We're expecting a slow and progressive climb, but we'll learn as we go along what's going to happen.
On the other hand, there are elements that I hope to be able to identify, which is the need for people to travel. I am certain that at the end of this crisis, some behaviours will change. We will ask ourselves about telecommuting [...] we will ask ourselves about travelling around the world. [...] there are also things that are deeper, the need to travel, to share, to meet each other will not disappear."
Once the phase of return to normal is over, volumes should not vary too much, but the motivations for consuming hotel service will probably change.
"Experiencing confinement allows us to realize that meeting face-to-face makes the discussion more lively and dense than behind a screen. I think people are going to start travelling again, probably in smaller, more intimate settings and on business trips. I fear that we are all financially impacted by this crisis and that tomorrow's travellers will be looking for savings. For me it's a source of hope [...] because that's exactly what B&B Hotels is all about."
The crisis of 1993 was a starting point for restructuring the market with new concepts, in particular standardized chain economy hotels. The sector is resilient, particularly the budget hotel sector. Do you think we will regain our resilience in the sector, all other things being equal compared to other sectors?
"I believe so, because we are responding to an essential need. [...] I also believe that we will no longer be able to offer the same service. Tomorrow we will have to provide our customers with extreme assurance on the health aspects. Kind of like what happened in the airline industry after 9/11 when we had to reassure customers."
There were no more planes after 9/11, then passenger volumes came back and were exceeded. You have to be able to create a shock of confidence
"Yes, and yet, you don't go into a plane today like you go into a mill, which was the case before 2001. We are controlled [...] and we have integrated this and the desire to travel is such that it has not prevented the flow from continuing.
Air travel is also more flexible with plane tickets on the phone, for example. This crisis will force us to reinvent our business
"Of course, maybe at some point there will be a health passport and a hotel registration card with gates that will read the documents instantly. I'm afraid, however, that the recovery will first take place through temperature readings, document checks and somewhat lengthy processes, but this will be necessary for everyone's safety. For 10 years now, we have been saying with conviction that the hotel is a place for socializing [...]. It may become a place of distancing for a while [...].
On a medium-term scale, all recovery plans are on a national level to get national economies moving again. In the travel sector, in France it is mostly French people who travel, including on business. 60% of the hotel supply is budget hotels in France, which is a strong driving force in the sector. Do you think it will be the first sector to start up again?
"Yes, for those who will be lucky enough to go on holiday, the question will arise as to where we are going to go on holiday this summer. Clearly, travel to the other side of the world is likely to be compromised, and I also have my doubts about charters to resort destinations. For health reasons I think we will have to travel by car, maybe by train under strict conditions. Basically, I do not think this is bad news because it will help to boost the French economy. There is an engine which is the engine of the leisure and business hotel industry which is very powerful. It is above all a domestic engine, at B&B 85% of our clientele in France is French etc... We are a national player which is an aggregation of national players. There is something very powerful, it is going to start up again and it is going to boost our economies. [...]"
We often talk about consuming French but tourists don't know how to "book" French, at B&B you have a very strong link with your customers who know how to book directly. Will this crisis bring about changes and encourage people to book French?
"It is to be hoped, a consumer is someone who is looking for three simple things: a good quality/price ratio, simplicity in the offer and security. We need to be able to be very simple and as simple as OTAs. One remark, when you book directly on B&B, you can generate an automated check-in, ideal for the respect of sanitary conditions. This is not possible for legal reasons when booking through a third party. [...] "
You develop the "econochic" concept of leisure and business, the borderline is becoming more and more tenuous. You have on your side a real will to tell a story to the actors of the leisure industry.
"Our customers who travel with us on business are the ones who come back to us for leisure and family, so we always talk to the same customer. The next step will certainly be the summer season. We will then have to prepare for the return to school with our business clients. We want to welcome them, reassure them. [...] we will put in place health controls [...] we have a series of procedures that are coming in to ensure that our hotels are the safest places on the planet [...] Obviously we need to reassure travelers [...] it's up to us to make sure that we can demonstrate that there is no risk here."
In China's budget hotels, you see air purifiers, the human genius is to adapt to situations, the fundamentals that people need to travel, to discover, they need human contact. If you adapt, there's no reason that demand won't go up.
"We will find solutions as always, we are used to it in France, we have food safety standards that are exceptional. We're going to have to develop the same thing on the cleanliness of buildings, on virological hygiene. We are going to find, we know how to do it, we are culturally very gifted in France to set up efficient processes and to have them controlled. We are currently discussing with virology experts, with certification companies to set up processes, to demonstrate them and that this is not a promise but a guarantee".
Already signed up? Already signed up? Already signed up? Already registered? Login here!