BUSINESS BEYOND COVID
MARC WACHSBERGER: No price wars in tourism sector, and no buffets either
Safety and hygiene protocols, essential after the lockdown won’t be enough, with responding to clients’ new needs being key
In the Business Beyond Covid series, CEOs and other business leaders and experts in their sectors look to the future after Covid-19. What effect has the pandemic and resulting lockdown had on their industries and the SA economy as a whole? Which parts will bounce back first and which will never be the same again? Most importantly, they try to answer the question: where to from here?
Once they open, the hotel and conferencing industries are going to have to adapt quickly and effectively to retain the interest and loyalty of new and existing customers — and they’re not going to win the game by indulging in price wars but rather by responding to guests’ new needs.
Significant changes will have to be made to accommodate the new norm of social-distancing, even once the pandemic has run its course, because people — restaurant guests and conference delegates alike — are going to be hyper-aware over the potential spread of other diseases, and are going to avoid crowded places.
Conference venues that can offer spacious, well-ventilated meeting rooms will be the preferred choice. This greater focus on spacing may mean that economies of scale previously made possible by large crowds cannot be reached, making events slightly more costly to host.
Venues that offer meeting rooms that display the same spaciousness and ventilation will be popular among businesses that have chosen to close their formal offices down in favour of remote working, and who still seek safe, comfortable and well-serviced meeting facilities.
This hyper-awareness of cleanliness and spatial distancing means that the days of the buffet and salad bar are over, as people expect a more hygienic approach at every touch point. We have been experimenting with ways to bring healthy food served quickly and safely to our guests without compromising our high standards, using technology.
For example, is anyone actually going to want to touch a menu that’s been through who-knows-how-many hands before theirs? Our hotels have already started shifting away from menus in favour of guests being able to order room service on their own mobile phones. This means they can even order ahead of their arrival at the property, with the meal timed to arrive just after they’ve reached their suite.
We also anticipate business travel stays to be longer than before, as executives are likely to choose the longer drive to a different SA city for business rather than risk flying — or if they have to travel before flights are opened. This means they’re likely to set up more appointments to make the longer trip worthwhile, and once non-business travel restrictions are lifted too, they could well take the family along and enjoy some vacation time after their work is done.
Indulging in a price war once travel restrictions are relaxed may yield short-term cash flow, but it certainly will not lead to long-term survival
However, beyond these operational trends my biggest fear is that the hotel sector will embark on a price war when hotels will have a stock surplus — particularly until inward-bound international travel is allowed. Even once travel is allowed there’s likely to be a period of resistance to travel locally and abroad as a result of financial constraints, international travel quarantine periods, and the now ingrained caution resulting from Covid-19.
A price war will do untold damage to the sector, and it will take hotels — groups or independents — years to recover before being able to return to sustainable pricing levels. Indulging in a price war once travel restrictions are relaxed may yield short-term cash flow, but it certainly will not lead to long-term survival.
SA needs to get back to work if we are to achieve herd immunity and emerge from the current economic crisis. If the infection rate spikes in August, we can start returning to a semblance of normality thereafter.
I believe the government has handled this crisis very well to date — we had to lock down to gear up to battle the coronavirus and its consequences, but our borders and the economy need to open up for us to survive, and to stop price wars in the tourism sector.
While some countries, such as New Zealand and Mongolia, have mostly avoided Covid-19 by locking down borders early, they face the next challenge: they’re not going to be able to open up to the tourist markets on which their economies depend for fear of another wave of infection.
New Zealand Prime Minister Jacinda Ardern is promoting local travel, with the islands’ residents encouraged to explore their region — she’s even gone as far as suggesting a four-day work week to encourage people to take long weekends to travel and boost the country’s economy.
There are merits in this idea, but the truth is that the SA tourist industry depends significantly on inbound tourists for income, not least because the vast majority of our people simply cannot afford to travel for leisure, or within the kind of price range that makes a meaningful contribution to GDP.
As a country, SA tends to live hand to mouth. While so many industries and companies, like ours, have done everything that we can to insulate our staff and our business from the effects of the lockdown and alert levels, we need to do everything we can by September this year to get as close as possible to the operational levels we were at in February.
With some flights set to open for business travel during June, it’s likely that business travellers will start making hotel bookings again soon, and hotels need to be ready for them, offering so much more than the safety and sanitisation standards required by regulation.
Under the current conditions it’s stressful to leave the safety of your own home, whether you’re going out for groceries or out of town on a business trip. Sanitised sanctuaries, where every element of every space has been carefully thought out and addressed, are going to be the venues of choice for business travel in what remains of 2020 and beyond.
• Wachsberger is MD of The Capital Hotels and Apartments.
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