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Learning From SARS, Looking Towards Hotel Recovery: One Beijing Hotel Shares Experiences

For many hotels located in Asia, Coronavirus is not the first virus to have proliferated and affected the industry. Looking back to the SARS crisis in 2003 can help give hoteliers some ideas of the road to hotel recovery.

We invited the General Manager of Legendale Hotel Beijing, Mr Jinzhi Xu, to share his experience working during an epidemic and his advice for managing hotels during the current coronavirus crisis.

Beijing Skyline

As a hotelier who worked through SARS in 2003 and witnessed the pain in the hotel industry, what are your thoughts on the impact of the coronavirus?

After the highest infection point of the epidemic is over, the industry will gradually recover. At this time, I hope that the hoteliers seize every opportunity to acquire customers and stay open instead of closing. As consumption picks up, hotel occupancy will continue to rise.

The first market area to recover will be business travelers who are required to travel for work. Although the occupancy will not be high, it will be a good start and the beginning of a positive trend. Then, through a succession of guests staying in the hotel, you will be able to win public confidence that you are following guidelines of how a hotel should operate post-epidemic.

At the same time, the demand for domestic tourism will also represent a large part of the market for hotels. In the summer season, family trips will provide a high volume of guests to the hotel. Scenic or rural locations will be top on people’s list, due to the fresh air and less dense population.

How should hotels market their property in order to seize opportunities during the recovery period and look to the future?

Market traffic will not recover quickly and in order to compete for bookings some hotels may begin to fight a pricing war. I personally do not advocate such practices because it not only destroys the balance of the entire market but also damages the hotel’s original customers. After a price reduction hotels will need even more time and require even more work to return to the original price.

I believe that after the epidemic, every hotelier should treat the market more rationally. Therefore, hotels may want to explore original customer groups and concentrate on developing local business, as locals will be the biggest market after the crisis.

Forbidden City Beijing rooftops

The epidemic has completely changed hotels’ 2020-2021 financial strategy, how should they adjust?

If the cash flow is not enough to support the regular operations of the hotel then in order to cope the hotel needs to consider whether to seek help from the owner, or even negotiate with the bank to launch the corresponding plan, such as negotiating a credit line.

After safely navigating the cash flow, hotels need to think about budget adjustments. According to a study conducted by the American Chamber of Commerce Shanghai, 24% of respondents believe that company revenue will decline by 16% or more, so the personal forecast of the hotel industry revenue decline will be more than 16%.

Therefore hotels need to minimize budget loss as much as possible and strengthen economic collaborations privately, or with the government, to accelerate the market recovery.

Shiji data

A big thank you to Mr Jinzhi Xu, in summary, the key takeaways are:

  • The first market area to recover will be business travel
  • Scenic or rural locations will be top on peoples list
  • Some hotels may begin to fight a pricing war, but this is not advisable
  • Locals will be the biggest market after the crisis
  • After safely navigating cash flow, hotels need to think about budget adjustments
     

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