Lessons learned from the 2008 recession more valid now than ever

Is it possible, that if we viewed Covid-19 as a forced recession and applied the lessons learned from the 2008 recession, that we just might be able to save the ship?

When realistically looking at the Covid-19 situation and the aftermath, are we really facing a massive unanticipated recession? Could the lessons learned from the 2008 recession benefit us post-covid? In this time that we are facing stringent bans on international and inter-provincial travel, coupled with high supply and low demand, could the lessons Hoteliers learned from the 2008 recession stand us in good stead?

Let’s take a look at some of the feedback from Hoteliers after the last big recession in 2008.

Your biggest strength is your brand

One of the reasons companies like Audi made it through the previous recession with flying colors is, because they stuck to their guns. They focused on what makes their brand exceptional, attention to detail and the quality that is synonymous with the brand. The truth is, the best brands will always outperform the competition. Remain relevant to your stakeholders and true to your core values.

Has your hotel brand ever been maximized on even before COVID-19…

Face reality and implement the right measures incredibly fast

The worst thing we can do right now, is to hesitate in the hope that things are going to improve. Actions drives results and sitting around doing nothing will result in nothing later!

The reality is, it’s not going to get better anytime soon. In actually fact, its most probably going to get much worse before it gets a little better. Implementing cost saving initiatives swiftly and firmly right now, will put you at a distinct advantage. When the rest of the market, after hesitation, start cutting costs, you will be already be focusing on the top line, which will help gain market share and increase revenues immediately when demand returns.

We are in it for the long haul, getting employees to take extended leave or working half weeks in order to preserve their jobs, in not realistic. It’s going to be a long time before it’s business as usual and the tough decisions need to be made now, there is no way around it. But, keep in mind not to make any cuts that will poorly affect your biggest stakeholder, the guest.

Mange short-term pressures while keeping the long-term perspective

It’s going to get rough. It’s a fact that from optimally staffed departments to the CEO that everyone is looking at for direction, tensions are going to run high and everyone is going to feel the pressure in the short term.

Having a Master and Commander at the helm of the ship, ensuring the crew that there is better weather ahead, is going to be crucial. The saying that it’s always darkest before the dawn, could not be more true right now.

This is time for leaders to keep a cool head and keep the focus on the future. If we except that markets are cyclical, then every downturn is followed by an upturn. We just need to ensure that we are still around to ride this new upturn to make up for the horrible losses suffered.

We need visible leaders that communicate

We have learned this lesson in the midst of the corona outbreak and the subsequent lockdown. As a nation we were desperately calling out for leadership that is visible and communicating a clear message to the people.

We require the exact same thing, from the CEO to the GM. Now is not the time to hide behind the desk. It is now more important than ever that leadership in our establishments are visible, but also send out a clear message, that they are visibly in control of the situation. Staff is painfully aware of how dire the situation is, it’s not necessary to start each shift with emphasizing the state of affairs or to threaten job security. Staff need to be informed about the stages moving forward, changes being made, but also to be put at ease, motivated and focused on the end result.

Its further equally important to keep a good relationship with owners and investors and keep a clear line of communication. You can’t have a significant drop in RevPAR and not have a direct impact on the profit for the owner. Everybody needs to be kept on the same page!

Surround yourself with strong leaders

As with the recession of 2008, we have already seen a lot of layoffs on the management structure and we are sure to see a lot more of this in the weeks to follow.

Cut the ones that “manage by excuses” and keep the leaders that is solution driven. We need less managers and more leaders. This will be key to the emotional and mental health of your staff.

You now, more than ever, want leaders with their eye on the prize and the ability to effectively steer your team with steel focus and determination. A leader that will get down and dirty and lead by example – our industry leaders have forgotten how to do this and now that the seas are very rough are not willing to do that!

 Pick a top team that is committed and willing to roll up their sleeves and work shoulder to shoulder with the soldiers in the trenches. This is the time to look at quality over quantity, look for potential and invest in those leaders. We require strong leaders that the troops would follow into battle.

Look for your top revenue generators, whether it is top-line revenue or bottom-line savings. Key during this period, keep an eye out for operational staff that is able to reign in the budget at zero expense to productivity and cost to your guest.

Adapt your product to the new market reality

We have seen this time and time again with economic and political upheaval. When consumers get nervous, they reign in spending.

As an industry we have lost pricing power as our guests has broadly lost wealth. The time has come to stick two fingers in the eye of convention and start being innovative. We will have to relook our product offering as nothing in terms of pricing would have a impact on the business. Overprice and you wont get the business, under price and you wont cover costs.

Consider every opportunity and start thinking about efficiency. Start looking at combining roles and find new creative ways to generate business. Guests are getting more discerning where they spend their hard-earned money and for this very reason, Hotels need to pay closer attention to guest reviews or start introducing Guest Review Tracking Systems and start swiftly acting on rectifying these issues directly raised by each guest.

Effective communication with guests will also be critical in the future, the unknown stimulates fear and if this can be eliminated the entire guest journey will be more positive from step 1.

We need to change the way we respond to guest reviews. Wouldn’t it be refreshing if even half of the reviews Hotels receive, are responded to with a “We heard you, and we have fixed/made the necessary change”. Instead of the standard, “Thank you for your review, we will look into it”.

Companies that made it successfully through the last recession, are the ones that were not afraid to be innovative, despite the crisis. These companies looked at reducing costs and came up with new initiatives, even if they paid the short-term price on revenue.

Will you be able to survive without innovation or will you be just another number in the report that states how many businesses collapsed as a result of this COVID-19 recession.

Author: Peter Koegelenberg

TrevPAR World – Operational Data Specialist