Can hotel-restaurants recover from a digital, health, and economic crisis? A tribune by Pierre-Frédéric Roulot, CEO Jin Jiang Europe CEO Louvre Hotels Group.
Over the last decade, the hotel and catering industry has undergone a destructuring process that has redefined the sector’s value chain in a profound and creative way. The steady growth of tourism and related activities has fostered a smooth, Schumpeterian-style digital transformation: the HCRs (Hotels-Cafés-Restaurants) managed to survive and adapt to the new technological environment. In fact, the industry successfully withstood the digital storm, with hotel-restaurants investing in design for a renewed customer experience and in technology for more flexibility and, above all, to reconnect with their customers.
What doesn’t kill us makes us stronger, as the saying goes. True, but digital technology has proven more beneficial to the platforms acting as intermediaries between customers and market operators, for they have yielded commissions of up to 30 % of the sales turnover. Unsurprisingly, the platforms are increasingly profitable at the expense of receptive agents. As a result, customers who once wished their own homes were as modern and comfortable as a hotel room now long for quite the opposite. Indeed, the hotel and catering industry – fourth private employer in the French economy – is an investment-guzzling business. HCRs must constantly stay abreast of new, costly concepts and trends in compliance with fast-changing regulations so as not to disappoint their guests with outdated facilities.
The COVID-19 health crisis has brought the industry to its knees in just a few weeks. Worse even, what was once a happy journey has turned into a dangerous expedition. Beyond the expected recommendations on the health front, we need to reconsider our approach to hygiene and cleanliness: who would have thought that a UV lamp could become as indispensable as a hair dryer in a hotel room? Beyond the negative impact of closures on economic growth, this unprecedented crisis is exaggerating and accelerating the trends already at work and upending the tourism industry in many ways. Lockdown is spawning new aspirations and behaviours. The “stay-at-home economy” that has emerged from the shutdown of shops, restaurants, and public venues is impacting the way we eat, stay fit, and keep ourselves entertained. Distance as we knew it is now a blur; indeed, social distancing measures mean that more and more people pay remotely, have their meals delivered – even at their hotel, a first – and favour local getaways (staycations, holidays near you, etc.). Our heightened sense of vulnerability is a collateral effect of the pandemic as we find ourselves besieged by a health crisis that affects all of us, the global economy, and the entire world.
The economic downturn shadowing the health crisis is dealing a cruel blow to the hotel and catering industry. One thing is certain: HCRs will need time to recover from the shock. It will be a while before international travellers visit France again, as congresses are being postponed and many will most certainly turn virtual in the near future. After 30 years of steady growth, the tourism sector is now facing a recession year with a slim hope of recovery in 2021. The upswing recovery phase, in the aftermath of the 2009 crisis, lasted 5 years before the hotels were back to their former profit levels. How long will it take this time?
But let’s look on the bright side and learn from this crisis to get back on track as effectively as possible. First of all, we must realise that the tourism sector is not an endless source of income. We need a Tourism Plan. Let’s face it, France had it easy for quite some time, there was no call for a policy on the matter. But what was once true is no longer so – things have changed. We cannot boast about being number one in the world and at the same time count the visitors who are just passing through our country. We need a proactive policy to support a sector that represents 7 to 8 % of GDP and 2 million jobs. France needs its cafés, restaurants, and hotels to thrive in order to remain influential on the international stage.
Beyond financial considerations, the recovery plan must be commensurate with what is at stake. The government has taken effective crisis measures with the leadership of the Secretary of State, the Inter-ministerial Tourism Committee, the long-awaited Tourism Plan, and Atout France, a body that brings together (almost) every agency promoting France as a tourist destination.
We all need to take a step back from the usual competition inherent to our trade and resist the temptation to outwit one another in the media. We must join forces to deal with this unprecedented crisis in the most sustainable manner, for the sake of our corporations, and above all to reassure our customers that staying in our hotels is perfectly safe.
There is no sense in having a safety label for every brand. Reassurance need to be horizontal, across the entire value chain from the arrival at the airport to the hotel room, including the taxi ride. A chain is only as strong as its weakest link. A vertical approach is also essential, with trade-specific measures taking those most at risk into consideration. Once again, solidarity and unity are key. Singapore has set a great example: industry stakeholders and the government have adopted a charter that translates as a free certification label to help rebuild confidence.
We need to follow suit with a label that warrants compliance with the health and safety standards of hospitals and healthcare centres. It must align with each step of the customer and employee journey and set precise guidelines in terms of cleaning (dry steam cleaning to kill all bacteria and germs, next-generation disinfectant products, updated cleaning and inspection protocols, etc.) and equipment (antibacterial bedding, air purifiers, eco-friendly materials, and so on); in addition, it must conform to the officially recommended barrier measures (spaced out furniture, new check-in and check-out procedures, updated catering offers, etc.).
The return to “business as usual” for the hotel and restaurant industry will be gradual while we adapt our establishments to the new circumstances over the coming weeks.
Yes, traveling will resume; yes, the tourists will come back; and we, hoteliers and restaurateurs, have a major role to play, not only to quench our customers’ thirst for travel and exciting experiences, but also to give the French economy a new lease of life. We are at the forefront when it comes to supporting and developing local tourism; as such, we must focus on boosting territorial activity, through local and regional offers in France and Europe, to encourage car-friendly trips near home. By reassuring our French customers with flexible and great value-for-money deals that are also health and safety compliant, we will effectively meet the economic and social challenges that our country must now face.
A sustainable economic revival will entail the strict application of the recovery plans combined with an unfailing unity among the key players on the ground. The restaurant and hotel managers are determined to rise up to the challenge – and I know they have what it takes to succeed.
Pierre-Frédéric Roulot, CEO Louvre Hotels Group