ARNE SORENSON
President and CEO, Marriott International
Interview by Rosanna Caira
What were the immediate impacts felt by your company when COVID-19-mandated closures came into effect in March?
The impact we felt was unprecedented. We were forced to close nearly 2,000 hotels around the world, furlough thousands of employees and develop entirely new cleaning and food-and- beverage protocols. Our immediate concerns were supporting our associates, sourcing cleaning supplies for our hotels and closing our corporate headquarters. This all occurred in the span of weeks.
What strategies did you put in place in early days and how did they evolve as the lockdown stretched on?
From the start, the pandemic required us to raise our already demanding cleanliness standards to an even higher level. We moved quickly to create a Global Cleanliness Council, consisting of in-house and outside experts in food-and-water safety, hygiene and infection prevention and hotel operations. The council is charged with developing a new generation of global hospitality-cleanliness standards, norms and behaviours for our properties around the globe.
We’re rolling out enhanced technologies at our properties, including electrostatic sprayers and the highest classification of disinfectants recommended by the Centers for Disease Control and Prevention and World Health Organization to sanitize surfaces throughout our hotels.
We’ve also implemented additional protocols. There are more hand-sanitizing stations throughout our hotels, hand-sanitizing wipes in rooms and signage reminding guests to maintain social distancing in our lobbies and elevators. We offer intensified housekeeping services between guest stays to give guests greater confidence about the cleanliness of their rooms at check in. We’ve encouraged contactless check-in and mobile room keys where available and require associates and guests to wear masks when in the public areas of our hotels.
How severely was your development pipeline impacted by the pandemic?
Owners continue to show great interest in our brands, particularly in Greater China, which contributed nearly one-third of deal signings in the first half of the year. The entire Asia-Pacific region accounted for roughly half of all signings. Owners in the region are taking a long-term view on the market. At the end of the second quarter, we had signed 30-per-cent more deals in Asia Pacific than we did in the first half of 2019.
The pace of signings has not been as robust in other regions around the world, largely due to the lacklustre lending environment and owner uncertainty. But we’re having productive conversations with owners and franchisees who want to move forward. Some are hoping to see lower construction costs in the weaker economic environment for new builds, while others are interested in conversions to our brands.
How many units is your company planning to open in the next year?
Our pipeline totalled approximately 510,000 rooms at the end of the second quarter, with more than 230,000 rooms under construction or around 45 per cent. The pipeline is one-per-cent lower than at the end of the first quarter, with the slowed signings and a few more projects than usual put on hold.
While construction activity has resumed in most parts of the world, we still expect some openings will be delayed due to slower construction timelines and supply-chain issues related to COVID-19. There’s uncertainty surrounding future worldwide-rooms growth, but given current trends, we could see net-rooms growth of between two and three per cent in 2020. The final result will depend a great deal on the way the pandemic plays out around the world in the remainder of the year.
Have you changed your leadership style in the wake of the pandemic?
As a leader, I knew back in January when we saw the first impact of COVID-19 on our hotels in China that extraordinary times were ahead. We would have to be nimble — responding with speed and boldness to tackle the vast array of new challenges brought on by the crisis. My guideposts during this time have been three simple tenets of leadership: listen, empower and communicate.
Listening is so critical. The depth of this crisis is so great that we must get the input we need to understand the crisis and our options for dealing with it.
Empowerment is equally important. This isn’t a time to be a micro-manager. In a crisis, leaders have to empower their teams and trust them to get it right. When you’re confronting a global crisis like this one, you’ve got to move fast. That means your team needs to be empowered. Let them make decisions. And stand by them.
Finally, this crisis has been an important reminder of the critical role of communications. Communications today must chart a direction for
the future and a sense of hope. Our associates need to be encouraged that better times are ahead.
How has working from home changed your approach to communication?
I’ve always been a big communicator — with our associates, our owners and our guests. But during this crisis, I thought it imperative to be even more visible, especially with the most-difficult aspects of our challenges. The more difficult the decision, the greater the need to explain how the decision was made, the factors that went into it and why. That’s translated into creating more longer-form emails and videos for associates than usual. One recent video ran for 11 minutes. It was long, but I can’t think of a more important time to share information about where we’re headed as a company.
Has COVID-19 changed your approach to event standards within your hotels?
We’ve made a lot of changes in the process of re-thinking the entire event experience so our guests and meeting planners can connect with confidence. To help meeting planners, we’ve introduced digital tools, available on MarriottBonvoyEvents.com, to assist them in visualizing room configurations, contactless registration and catering solutions — among other things — so they can create successful socially distant gatherings. Consultations, pre-convention meetings and site tours can now all be conducted virtually and adapted to include hygiene and safety briefings.
Our guests can expect changes, too. Events will be smaller as we try to accommodate social distancing according to local laws and government regulations. Where possible, outdoor spaces will be utilized. There will be more frequent and in-depth cleaning of high-touch areas such as elevator buttons, doorknobs and handrails and hand-sanitizer stations will be provided throughout meeting spaces. There will be more pre-packaged meals and canned and bottled beverages at events and coffee breaks may be staggered. Every event will differ, but safety and hygiene always will be top of mind.
Which of the COVID-19-related changes hotel brands have had to implement are here to stay?
The entire industry is making adjustments in our cleaning, hygiene and food-and-beverage protocols. We won’t be able to accommodate large crowds for a while at our bigger convention hotels in the way our guests are used to, but we’ll find new ways to bring people together safely. Some of us will turn to digital keys and other technology to help provide social distancing. Many changes are on the way. We can adjust, but at the centre of what we do must be the safety of our guests and associates.
How do you see the next two years playing out?
The desire to travel, collect experiences and to get together has not diminished in this crisis. Already, the industry is beginning to see people begin to resume leisure travel, primarily at drive-to destinations. That will be followed by domestic air travel, then international and finally group. This recovery is being led by young people who are not only more adventurous, but have a greater need to get back to their engaged lives, whether that’s to grow in their careers, to learn and explore or just get out of their homes. So many life events have been postponed — weddings, vacations, anniversaries. There is no virtual replacement for that.
SEBASTIEN BAZIN
Chairman and CEO, Accor
Interview by Rosanna Caira
What were the immediate impacts felt by your company when COVID-19-mandated closures first came into effect in March?
This health crisis has been a sudden and unprecedented shock for the hospitality industry and the world at large, with closed borders causing the number of international travellers to fall by a billion worldwide. In April, about 90 per cent of Accor’s hotels were closed for business. Those are unprecedented numbers. Encouragingly, we’re now seeing the first signs of recovery and a steady increase in the number of our hotels re-opening their doors: up to 81 per cent — 4,000 hotels — at the end of July. RevPAR has also started to improve since June.
What strategies did you put in place in early days and how did they evolve as the lockdown stretched on?
Since the lockdown was first implemented in France, working from home has become the norm for headquarters’ employees, and this is still the case for the time being. We’re going through a global and unprecedented situation, but I must say, I’ve been blown away by the reactivity and the energy the teams have deployed to face these new challenges.
Solidarity remains key, especially when our employees and partners struggle with anxiety and uncertainty. To support those who are facing dire financial difficulties, we’ve decided to allocate $70 million, (i.e. 25 per cent of the planned dividend) to the ALL Heartist Fund. This COVID-19 special-purpose fund has already been helping more than 30,000 beneficiaries worldwide and will remain a long-term project to accompany and support employees affected by the crisis.
All over the world, solidarity initiatives followed one another. In France, Accor has decided to make its services available to frontline medical staff, to all people engaged and mobilized in the fight against the spread of COVID-19 and to the most-vulnerable populations. We launched the CEDA platform — Coronavirus Emergency Desk Accor — a support platform created to centralize needs.
Most of our hotels around the world have also undertaken local initiatives to help the communities they operate in — by preparing food parcels or care packages, by sewing masks, donating soap to improve sanitation in communities that are most vulnerable and by providing accommodation to frontline healthcare workers.
Regarding our clients, we have to reassure them and let them know it’s safe to come back after the lockdown. In order to provide guests with greater flexibility during this unprecedented period, ALL — Accor Live Limitless — has extended its cancellation policy and ensures its customers the possibility to keep their benefits related to their status and points.
With the vital support of its hotel owners, Accor has implemented additional and stringent hygiene measures to ensure the safety and well-being of guests and employees in each of its destinations. Accor’s ALLSAFE label has been developed with the support of Bureau Veritas.
Has the government has done enough to help the industry through this crisis?
In France, we’ve always maintained strong relations with the government, given our structure and geographical distribution. In view of this crisis, public affairs has taken on a whole new dimension and government relations vary depending on the country you operate in.
Dealing with governments during this crisis has been vital for both sides. They very quickly understood the fundamental importance of our industry and the social and cultural importance it plays in the 21st century. In France, tourism represents more than 300,000 businesses of all sizes, eight per cent of GDP and our country remains the world’s leading tourist destination in 2019, with 90 million visitors. We were very quickly able to work well with the French government and I would like to thank them for this. With the entire profession and its players, we have worked together to establish an ambitious health protocol.
How severely was your development pipeline impacted by the pandemic?
The pipeline is fundamental to our future growth, so there’s been no interruption. Accor’s development strategy is long term and well balanced; we’re focused on consolidating our industry-leading position, moving into new growth areas and increasing our market share so we remain strong for years to come. Even amid this crisis, we’re still signing new hotels: there have been 12,000 new rooms added to our portfolio during the reporting period, which now puts the whole group at 5,099 hotels and 748,000 rooms. We’ve had some notable openings, such as the Mövenpick Phu Quoc and the Hôtel Perle d’Orient Cat Ba – MGallery in Vietnam in June, the Fairmont El San Juan in Puerto Rico, the Pullman Sharjah in UAE, the second greet hotel, at Marseille airport in France, plus the Tribe Paris 17 Batignolles coming soon. This is important work and we won’t shy away from it: our pipeline stands at 206,000 rooms, which equals 28 per cent of the current portfolio. This all comes back to making sure Accor is strengthened when it emerges from the difficult times we are seeing right now.
Have you changed your leadership style in the wake of the pandemic?
I am incredibly proud of what our brilliant teams have achieved amid the unknown, demonstrating their commitment, adaptability and energy. The crisis has reinforced our values of taking care and being welcoming, of diversity, of resilience and of generosity and I am proud of leading such a team.
The current crisis is different than anything we’ve faced before and we must recognize this has been the toughest moment in our lives. At Accor, humanity is our core value, so, how to support them through these difficult times has been vital.
Transparency is key when it comes to communications and interactions with employees. I have no fear of talking about the uncertainty, doubts and emotional impact the crisis has had on me. This is in my nature.
What measures have you been putting in place to make sure guests are (and feel) safe to come back to your properties?
The hotel industry has shown extraordinary reactivity and guests rightly expect us to place safety and health at the top of the agenda for them and our employees. We’re doing everything we can, from providing hand sanitizer and masks to enhancing cleaning protocols. We’ve already set up some of the most stringent cleaning standards and operational procedures in the world of hospitality with our ALLSAFE label. This is a certified commitment to guests that they can be safely welcomed back. This differentiation is key for our guests. We’ve also partnered with AXA, as discussed earlier. So, safety will stay top of the agenda for us.
Which of the COVID-19-related changes hotel brands have had to implement are here to stay?
Stringent cleanliness and safety protocols will remain in place for the foreseeable future [and] COVID-19 has acted as an accelerator of trends on several fronts. There has been a distinct acceleration in the use of digital technologies such as contactless digital check-in and keyless room access. These technologies, which limit physical contact at different touchpoints — reassuring our guests and employees — also contribute to offering a more seamless and convenient travel experience.
Finally, COVID-19 has accelerated existing consumer trends and evolutions in terms of client experiences, undoubtedly changing the way people travel and consume. We’ve found people are seeking out more authentic and meaningful experiences — in particular, through connecting to locals and local communities. We believe the demand for these experiences is here to stay.
Are you confident in the future of the hospitality industry?
I strongly believe the desire to travel has remained intact. The question is whether this desire will be expressed in the same way. On the ground, our hotels and hoteliers have an essential role to play in terms of responding to the new needs of our guests, such as the need for increased hygiene-and-safety measures and the growing desire for personalization. We also need to continue to innovate and offer new services to our guests. If we can seize these opportunities, there’s no reason why we should not experience the growth of the hotel sector.
How do you see the next two years playing out?
About 75 per cent of global hotel revenue is domestic and does not depend on airlines. Our wide geographical spread and diversified portfolio means we’re well-placed to cater to travellers when the lockdown measures soften, especially as they will most likely want to stay close to home. However, there’s no room for complacency. Our objective is for Accor to emerge from this difficult period stronger, with a leaner business model and higher ambitions. We remain alert because we know the environment will remain difficult for some time and the recovery will be progressive.
ELIE MAALOUF
CEO, Americas, InterContinental Hotels Group
Interview by Rosanna Caira
What were the immediate impacts felt by your company when COVID-19-mandated closures first came into effect in March?
In March and April, hotel occupancies fell to historic lows in the 20-per-cent range. During the summer, occupancies climbed up to 40 to 50 per cent aided by “drive-to” business and the summer travel season, successful efforts to contain the virus/ease lockdowns and business travel returning. We’re seeing resilience and higher occupancies in domestic, drive-to, non-urban markets as the summer wraps up. In Canada, for example, we’ve seen recent occupancies in the 70s and 80s in some hotels in Mont Tremblant, Quebec and
Huntsville, Ont.
What strategies did you put in place in early days and how did they evolve as the lockdown stretched on?
Early in the COVID-19 crisis, we moved quickly to update operating procedures at hotels with new health-and-safety protocols and introduce training and resources to help protect frontline hotel colleagues. We’ve also kept our guests at the front of our response, giving them the flexibility needed by continuously updating keeping our policies — eliminating cancellation fees, introducing flexible booking options, updating our loyalty programs — and keeping them informed about our safety-and- cleanliness efforts.
The vast majority of our 5,900 IHG-branded hotels globally are independently owned businesses that employ 15, 20 or 50 people. Supporting our owners during this unprecedented crisis has been a priority — we’ve done this in a variety of ways, including quickly introducing temporary fee reductions and deferrals, adjusting operating standards and negotiating improved terms on their behalf with 140-plus suppliers.
We advocated on behalf of our owners with governments and elected officials in many markets for government actions protecting owners and jobs. In the U.S., the CARES Act, with the support of the hospitality industry, helped many small businesses retain staff and, in Canada, we’ve worked closely with the Hotel Association of Canada (HAC) to lobby the federal government on legislation to help with the recovery of the tourism sector. In fact, Jonathan Lund, our regional vice-president for Canada, sits on the HAC board as Chairperson and has been communicating with owners across Canada opportunities to petition for relief programs. These efforts continue, and further assistance will be needed to help bridge our industry to the next stage of the recovery.
Finally, while cleanliness and hygiene has always been important to IHG and our guests, it’s now clearly at the top of our lists. At IHG, we had already established the IHG Way of Clean program, developed with Ecolab and Diversey, to thoroughly clean hotels with hospital-grade disinfectants and procedures. As part of our response to this pandemic, we’ve enhanced this program with COVID-19 best practices in consultation with experts from the Cleveland Clinic. This includes efforts highly visible to our guests, such as the use of technology for contactless check in; additional cleaning in high-touch and high-traffic areas; offering housekeeping only on-demand; adding hand-sanitizer stations throughout properties; and requiring face coverings for both guests and colleagues at all of our hotels in the Americas. This approach also extends to food and beverage, with increased room-service offerings and grab-and-go options versus buffet. This is all backed up by our new IHG Clean Promise — guests can be reassured their room will meet IHG’s high standards of cleanliness. If not, the hotel will make it right.
As hotels begin to re-open, what do you expect business to be like in the fall?
Fall marks the beginning of the next stage of the recovery and we’re seeing signs of this recovery in certain segments. IHG’s model is very resilient with a heavy weighting in the Mainstream category (brands such as Holiday Inn Express and Staybridge Suites) that are well-suited to meet leisure and returning business/business transient travel in industries such as construction, tech, healthcare and entertainment. Our typical business traveller is the ‘road warrior’ and they tend to come back first, as in past downturns.
When I think about industries that depend on travel day-in and day-out, many come to mind — housing is one, where U.S. home sales are at a 14-year high. You can’t transport lumber, windows, roofing, appliances or furniture via Zoom. You need these items shipped, delivered and installed, leading to travel. We’ve also seen similar activity with other industries, such as with a large healthcare tech company that has recently put teams back on the road to handle needed upgrades to hospital systems, and multiple film and TV productions that were closed down at the start of the pandemic that have re-started in a “sequestered environment” — we’ve booked thousands of room nights across multiple hotels for short-term dates.
The long-term recovery across the industry will depend on medical solutions such as vaccines and treatments, and available rapid-response testing. We’re speaking with our largest corporate planners and travel managers and have kept them updated with our latest efforts, enhanced cleaning standards and operating protocols in order to give them the confidence to book and travel with us.
The fundamentals of our industry remain strong — the world’s population continues to grow with the middle class expanding and a global GDP which will resume its growth. These two secular drivers together have consistently led travel and tourism to new highs and people have an inherent, intrinsic desire to travel, connect, and explore. COVID-19 has reminded us how important travel is and how much we miss it — it will come back.
How severely was your development pipeline impacted by the pandemic?
We’re in a strong position across our current real estate and our development pipeline. We’ve worked with our owners to re-open hundreds of hotels that were forced to temporarily close due to COVID-19 and more than 95 per cent of our hotels are open globally.
At a high level, development activity is continuing, albeit at a much-reduced pace. Many of our owners are entrepreneurs who undertake both the day-to-day running of the hotel, as well as development work. They’ve been spending their time on managing through this crisis and optimally running hotels currently open.
Even in this environment, owners and guests believe in our brands and we’re still opening hotels and signing deals. In the first half of 2020, we opened more than 90 new hotels —including the first avid hotel outside of the U.S. in Fresnillo, Mexico; the largest Candlewood Suites in the world on Fort Gordon in Georgia; and new EVEN Hotels in Denver and Chicago. Further, we signed 181 hotels (the equivalent of one per day) including approximately 100 for the Holiday Inn brand family, as well as significant signings for our newest brands avid hotels and Atwell Suites. We’re also seeing encouraging pockets of activity in upscale and luxury with the first signings for voco in the Americas and new signings for the InterContinental brand in Fiji and Italy. We had ground breaks every month in every region for IHG around the world — nearly 50 in the second quarter alone.
In Canada, we have nine properties scheduled to open before the end of the year. We’re also breaking ground on two new properties in Ontario, including the first avid hotel in Canada and a new build 200-room Staybridge Suites near the Toronto Airport.
While we expect COVID-19 will continue to present some challenges for development, we’re moving forward and seeing our owners work hard to overcome and adapt. It’s worth noting that in the Americas, around 80 per cent of hotels which were slated to open this year, and had construction paused, have now seen construction resume. In Greater China, nearly all projects are back under construction, and in EMEAA (Europe, Middle East, Africa and Asia), around 70 per cent of projects have now resumed.
How has working from home changed your approach to communication
We’ve always worked closely as global teams, but in this pandemic, we’ve had to do more to stay connected. This includes a wide variety of virtual platforms, which we’ve all learned to use, to replicate as much as we can the close in-person engagement we had before COVID-19 We have also significantly increased the large and small meetings and listening sessions we’re holding with colleagues and owners to remain close and act as quickly as the circumstances have moved and have adopted new practices that we will likely keep post-pandemic, including working in smaller pods and creating agile working groups.
I’ve tried to maintain the relationship with our hotel owners and team members by visiting and working from our hotels a few days a week. I enjoy being on-property with our team members as we manage in this environment and I look forward to returning to in person engagement and getting out to see more owners and hotels in the near future.
CHRISTOPHER J. NASSETTA
President and CEO, Hilton
Interview by Amy Bostock
What were the immediate impacts felt by your company when COVID-19-mandated closures first came into effect in March?
We’d been watching COVID-19 since the end of 2019, when it started to impact our China business. Learning from what our teams there experienced, we were able to act quickly to protect our guests’ and team members’ health and prepare for the business impact of the unprecedented standstill in global travel. Like the rest of our industry, we quickly experienced record-low occupancy rates around the world in the early days of the pandemic.
What strategies did you put in place in early days and how did they evolve as the lockdown stretched on?
Sadly, I’ve been through many global crises during my career, from the dot-com bubble to SARS and the Great Recession, so I have a kind of playbook for these events. My crisis-response strategy has remained consistent over the years — in any situation, you have to first protect your people, then protect your core business and last but not least, prepare the company for an eventual recovery. As soon as we understood the significance of the pandemic, we moved quickly to ensure our hotels were following rigorous cleaning protocols and had the protective equipment they needed. I personally met with members of the U.S. federal government several times to advocate for relief for our team members and owners, knowing they were feeling the impacts of the pandemic most acutely. Ultimately, we wanted to be as supportive as possible for our Hilton family.
In addition to looking out for our team members and owners, we wanted to be part of the solution for our communities, which is why we partnered with our owners and American Express to offer one million room nights free of charge to frontline medical workers battling the virus across the U.S. We also partnered with World Central Kitchen to provide these heroic guests with fresh, healthy food to keep them going. And I was so proud of our hotels around the world, who jumped in to create local partnerships to help distribute needed food and medical supplies to their communities.
As hotels begin to re-open, what challenges are you facing at the corporate and property level?
Health and safety is our top priority in our hotels and our corporate offices. Everything we’re doing is designed to protect our guests’ and team members’ health and safety, while providing the exceptional experiences our customers expect when they stay with us. We’re closely following public-health and government guidelines at our hotels and in the select corporate offices that have started re-opening around the world. These procedures are in addition to the standards set out by Hilton CleanStay, which go above and beyond baseline requirements for cleanliness and hygiene. We developed Hilton CleanStay in consultation with RB, the maker of Lysol and Dettol, and Mayo Clinic, to give everyone who sets foot in our hotels — guests and team members alike — the peace of mind they need when travelling or working.
How have you changed your development strategy?
We’re continuing to focus on growing our pipeline, building on our relationships with new and existing owners and developers. Our global network offers the support and resources that are particularly attractive to owners in this environment, and our teams are leaning into conversion opportunities around the world. While our growth rate will slow a bit in the short term due to the impact of the pandemic, we’re confident we’ll continue expanding our global portfolio and return to pre-pandemic levels of growth over time.
Hotels, as a whole, target international audiences. How do you see this changing post-COVID-19?
Our marketing strategy will evolve to match the current climate and our customers’ needs and expectations. We know people are staying closer to home right now with drive-to markets seeing higher occupancy rates, and our marketing efforts reflect this shift. As travellers start feeling more comfortable venturing out — and the health impacts of the pandemic subside — we anticipate international travel will gradually return, and we’ll be ready to adjust our strategy to meet customers’ needs.
How has working from home changed your approach to communication?
From the outset, I knew it would be critically important for our global teams to hear from me and get the latest updates on how our business — and the industry at large — was faring. And I knew that working from home would make it harder to keep up our teams’ close connections. Since March, I’ve been sending weekly emails to our team members, joining town-hall meetings across the business and sending videos when I can. In times like these, people want to know the leadership team has a steady hand on the wheel and is confident in the future — and that’s exactly where I’ve been focusing my communications.
What measures have you been putting in place to make sure guests are (and feel) safe?
It goes without saying that health and safety are top of mind for everyone right now. That’s why we’ve pioneered a new standard of hotel cleanliness: Hilton CleanStay with Lysol protection. This initiative — created in collaboration with RB and in consultation with Mayo Clinic — builds on our already rigorous on-property hygiene standards and cleaning protocols to ensure our guests and team members feel safe and protected at any of our 6,200 hotels worldwide. In addition to focusing on high-touch areas in public spaces and guestrooms, we’re providing an extra level of protection by literally sealing guestrooms after they’ve been cleaned — you break the seal and walk into your room.
And we’re leaning into the digital offerings our guests love, such as digital key and the other features on the Honors app — digital check in and check out — for a seamless, technology- enabled experience that still feels welcoming.
Which of the COVID-19-related changes hotel brands have had to implement are here to stay?
We’re seeing the pandemic accelerate existing trends, such as using technology to provide contactless options or offering hybrid event solutions to our meetings-and-events customers. We had been making investments in our technology infrastructure years before the onset of this pandemic, so our guests were familiar with our Hilton Honors app and the ability to check in, choose your room, use digital key to unlock your room and check out, all seamlessly from the app.
It’s going to be a long road to recovery for the hotel industry. How do you see the next two years playing out?
I’m an eternal optimist and unsurprisingly think that the future is bright for our industry — and the data we’re seeing so far backs up my opinion. While we’re experiencing a lot of change right now, I do believe that in two years, we’ll be largely back to habits we had prior to the pandemic and will be seeing recovered levels of demand. Ultimately, people crave human connections and they want to get out and see the world. Nothing can dampen that spirit permanently.
