Jonathan Lund of IHG Hotels and Resorts talks about the lingering effects of the pandemic and how it’s shaped the hotel industry

Rosanna Caira: How has the pandemic affected you in both your personal and your professional life?

Jonathan Lund: It’s been an interesting time, personally and professionally. I’ve had to learn to do things a little bit differently. I’m not sure I knew how to use Teams or Zoom before, but I certainly know now. When I think about the way we do business, we’ve had to spend more time listening and making sure we understand what’s really going on out there to be able to develop a plan to best support our owners and our hotels, because the needs changed. It was important that we stayed very connected to our hotels all the way through this pandemic.

The challenge personally was finding balance — workdays don’t seem to end when you’re located at home, they kind of blend into dinner time and after dinner. From a personal well-being perspective, just making sure that you’ve got things in check. Certainly, I’ve spent a lot more time with my family than I have before and that’s been a wonderful experience — I’m glad I found out they actually really do like me.

RC: How did you find balance while working at home?

JL: I’m a terrible one for waking up and starting to send emails at ridiculous times of the morning. But I think it’s really important that you try to schedule yourself in a way that you can conduct your business during normal workday. IHG has been very good about trying to help us through that, because the risk is you blend into the weekend and you blend into the evenings and that’s not good for you overall — it eventually burns you out and you’re not at your best. You need to have a sharp mind to be able to do business these days and if you’re not, that’s not going to help anybody.

RC: How has IHG’s U.S. business performed compared to its Canadian counterpart?

JL: [Canada has been] two or three months behind the U.S. and generally, 10 or 15 points behind in occupancy. Businesses is back [in the U.S.] for sure.

RC: Tell us about IHG’s new brand, Avid, and what distinguishes it compared to the other brands.

JL: Avid is very interesting. It sits just below the Holiday Inn Express and from a build cost point of view, it’s very attractive. It has a very attractive labour model that makes it operate very efficiently. In testing, we found this is a very attractive brand for the road warrior that wants a good quality experience, but doesn’t need all of the extras that you’d see in many of the other brands. We’ve only had the brand around for a couple of years and it’s really taken off — we’ve just opened our 50th property.

RC: How is occupancy these days at IHG properties?

JL: Nationally, and I don’t have the numbers in front of me, butI think we’re around 40 to 45 per cent or so. January was particularly slow. It’s hard to keep track of it because there’s not a lot on the books — this is very much a last-minute business. We always thought business was last minute prior to the pandemic, but it was nothing like it is today. Currently, as people are starting to anticipate this relaxation of mandates and things, all of a sudden, we’re seeing tremendous pickup and lots of inquiries for groups and meetings. But it really depends where you are — if you’re on the East Coast, it’s a little slower; if you’re in a downtown location, it’s a little slower. B.C. has been strong and if you’re in a resort location, it’s strong.

RC: How do you, as an operator, move ahead, when you don’t know what that moving ahead looks like?

JL: We’ve got a bit of a sign. First of all, we can see what’s going on in the U.S. Secondly, we can see what happened to us last summer, and we really did have a pretty good summer last year. Trends are hard to read because things are so last minute. But what we’re encouraging our hotels to do right now is get ready, because you can’t do things at the last minute anymore. You can’t buy supplies last minute, you certainly can’t find people to work in your hotel at the last minute. And many of the people that we’re bringing into hotels now haven’t worked in hotels before so you’ve got some training [needed] to get them ready. We’re encouraging hotels to think ahead, look realistically at what you think is going to be on your books and start planning for it now. Because time is running out and we know that it’s going to come back very quickly when it does.

RC: I would assume that a lot of the return of travel will focus initially on the leisure segment, but how do you see the business segment being impacted?

JL: Teams need to get together. I was at a team meeting a couple of weeks ago and it was fantastic. Everybody realized how important that part of our work is. Hybrid is always going to be here and many companies, including IHG, have come to terms with the fact that at a corporate level, there’s a mix of, working at home and working in the office and, and that will have some effect on some of downtown markets. But corporate travel is going to come — it just may not turn on quite as quickly. By the time we get into the fall, you’ll start to see a more consistent [uptick] and hotels have to re-figure out their market segmentation, re-figure out who those customers are and how can we best meet their needs.

RC: Do you see the introduction of premium rates for various options that you’re choosing?

JL: Certainly, it’s important to be giving a lot more choices to customers in terms of what it is they want. But I’m glad you mentioned rates, because rate is such an important piece of how we think about the future. Because when you think about the owner’s financial viability today, their cost structure is different to what it was two years ago, it’s more expensive to have to get labour. Supplies are more expensive. Financing is more difficult to get and can be more expensive. Insurance has gone through the roof. And so, when you think about the break-even point for a hotel, it’s different today than it was two years ago and we have to be able to drive top-line growth with a rate that supports the operation and supports the financial viability of the hotel. So certainly, we’re going to be supporting our hotels to find ways to maximize that opportunity.

RC: Moving forward, what support is the industry looking for from government?

JL: There’s three things really. We’ve got to be able to survive this pandemic — we thought the pandemic was over a couple of times already — and the government subsidies have been absolutely critical to keeping the lights on in many hotels. In fact, when the Hotel Association of Canada did a study, it found 15 per cent of members say they wouldn’t be able to stay in business without extended and expanded government support. And 47 per cent are taking on more debt over what they’ve already taken on, just to stay in business. So, there is a need to continue to provide some government subsidy money. We just got to the end of the first quarter and the existing subsidies are coming to an end. We’re looking for them to extend into the summer with the belief that if things improve, then hotels aren’t going to need the help.

RC: Labour is huge problem for hotels and we’ve seen an exodus of thousands of people leaving the industry and whether they will return remains to be seen. What can we do differently as an industry to keep
them here?

JL: When you say, will they return, we’re in the process of making calls now and some of those people are no longer there, they’ve already moved on to something else. So that is the reality that we’re facing. When I started out [in the industry], it felt like a family at the hotel — there was a culture where people really supported each other. And I think we’ve got to make people feel like that, again. When it comes to wages, you’ve got to be competitive and I think we’ve made a lot of changes in the wage structures at hotels, partially because we haven’t had a lot of choice — we have to be competitive, we have to be fair and we have to provide the right kind of benefits to our employees. But, you have to have people that want to work in our business. In the last year, the hotel schools have had a lack of an enrollment so we’ve certainly got some building to do.

RC: When you look at the short-term future, what are you looking at in terms of expansion of the IHG brand across Canada?

JL: We’re back to growth — we never really stopped growing. We’ve been opening hotels all the way through this pandemic and certainly we’ve had great signings across the company — globally, we’re up. We also have some new brands, such as vignette, which is a soft brand, which is very attractive. We’re certainly looking to grow in the luxury end of the market. So, lots of opportunity, lots of signings, lots of development, lots of interest, despite the fact that it’s probably a little more expensive to put up a hotel today than it was couple of years ago. When you think about financing costs, supplies, lumber, steel, — all have gone up significantly. And then just general inflation on operating supplies, it certainly is a challenge. But it’s not getting in the way of people looking to grow and develop our brands across the country.

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