7 truths about the hotel industry the pandemic reminded us are real
Truth # 1: Trust in the future
Back in March 2020, we knew our reaction to the pandemic would define us. We could never be certain of the outcome of keeping our doors open. We were entering entirely uncharted territory, but one thing was certain: if we closed, our income would be zero. Once a hotel is closed, even temporarily, cash flow dries up entirely. But the building itself still requires maintenance and other basic services, which must be paid for.
Our decision has proven correct. Hotels in Africa that have stayed open have done better, overall, than those that chose to close, and have seen a positive cash flow. The travel industry has rebounded from numerous past crises, and we strongly believe we will bounce back this time too – but with fresh and innovative perspectives.
Truth # 2: Hospitality affects more than only hotel owners
In 2019, the hospitality industry – and, more specifically, the travel and tourism sectors – accounted for more than 10% of global GDP. Additionally, one of every 10 jobs was within the sector, representing more than 300 million jobs globally. As an industry, we have yet to really innovate with a view to contributing to the “social good”, a crucial measure of positive ingenuity. Our future should be dictated by the desire to impact communities positively and to support everyone’s efforts to succeed.
Truth # 3: Individual hotels matter – without them, there’s no team
We are committed to supporting local entrepreneurs across Africa, who have worked tirelessly to establish their hotels, and for whom our distribution channels, established network and procurement platforms could be a lifeline as they work to sustain their businesses.
With that in mind, we launched Radisson Individuals, a brand that allows hotels to maintain their individuality and their autonomy, while still becoming members of the our global family. Purely an affiliation brand, the brand helps upscale independently owned and operated hotels with an existing management platform in place.
It connects them with our global network and distribution systems, sales and marketing initiatives, economies of scale, and bargaining power with online travel agencies and procurement. The goal is to specifically boost revenue, so no property improvement plan is required, and hotels that join can either keep their brand or switch to one of our core brands.
Truth # 4: Local will always be lekker
Post Covid-19, recovery will continue to be fuelled by domestic tourism and local business travellers. Based on previous crises, we believe that leisure travel will recover more quickly, especially travel that involves visiting friends and relatives in combination with business trips. In response to families and solo travellers seeking incentives like discounts on guest rooms, free upgrades, added value and booking flexibility that allows for free cancellation, businesses are paying special attention to hotel offerings, too.
This is why we launched our Hybrid Solutions, for example, for business travellers, which includes Hybrid Rooms and Hybrid Meetings, in more than 50 hotels in Europe, the Middle East and Africa, with more rolling out this year. While aimed at businesses, these offerings can also be utilised by locals for smaller events or, in the case of Hybrid Rooms, as a productive and quiet workspace away from home.
Truth # 5: Sometimes it pays to be outside of the big global tourism hubs
It’s true that our hotel occupancies for the southern hemisphere’s summer months varied greatly from hotel to hotel, and location to location, with the added difficulty of predicting which countries would open up for travel, and when. Various key feeder markets (such as the US) are also not making it onto travel lists. At the same time, however, our sub-Saharan Africa region has been more resilient as a travel destination than Europe throughout the global health crisis and remains so as we move ahead in 2021.
Truth # 6: Health and safety is non-negotiable
Safety is a priority for everyone, and we can all accept that travellers all over the world will continue to be much more aware and careful. We’ve implemented the highest possible safety and hygiene protocols across all of our hotels in partnership with SGS, one of the world’s leading auditing and commissioning companies, who have assured us that the protocols we have in place can assure a safe stay for all of our customers. This helps to reassure our guests and reduces the risk of any further spread of Covid-19.
Truth # 7: A financial reset can spark new opportunities
As with all systemic market shocks, the Covid-19 pandemic offers the opportunity for a reset, a chance for the hotel finance market in sub-Saharan Africa to start again. That means optimising the capital structures behind hotel developments and avoiding inappropriate over-leveraging of hotel projects.
We were one of the first hotel operators in Africa to have a dedicated equity fund, the Afrinord Fund. Although now fully committed to key our hotel projects, the experience and knowledge still sit within the team, who believe there will be real opportunity to get things right by leveraging new creative funding solutions.
As vaccines are rolled out and the market begins to emerge from lockdown, with more opportunities to start again, there is plenty of hope for the hotel industry’s future. At Radisson, we believe we can get through this, together, and emerge stronger in the end.
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