NEW YORK—Industry leaders were optimistic about the recovery during the “View from the C-Suite: Brand Leaders Discuss the Road to Recovery,” a virtual conference sponsored by The Wall Street Journal and Smart-Hands by Minibar Systems. It was moderated by Christina Trauthwein, editor-in-chief of Hotel Business and InspireDesign, which hosted the event in partnership with NEXT Events.
The panelists discussed some of the ways they have worked with their franchisees to help weather the storm. “At the onslaught of the pandemic, we realized that it was going to be really bad, so we immediately launched a fee reduction program where we reduced our royalty fees by half and reduced all the other marketing fees and various other fees,” said David Kong, president/CEO, Best Western Hotels & Resorts. “We also increased our loyalty program compensation and postponed the PIPs and a lot of other requirements. We recognize that things are going to be very different, so we have to change a lot of standards.”
Scott LePage, president, Americas, Wyndham Hotels & Resorts, said that his company worked to help franchisees preserve capital. “We’re being very careful and conscientious about how we’re moving forward… We looked at every opportunity we could to help out our franchisees every way we could—defer fees, waive fees and then provide the information they need to get through and understand what’s going on out there in the industry,” he said.
He said that communication with franchisees was an essential component to helping them. “So much is changing so rapidly out there. There are lots of municipal and government mandates and directions that are coming out. Even just understanding COVID-19 and the status of the industry itself, we’ve worked very hard to stay in touch with our franchisees and all of our owners to make sure that they know what’s going on,” he said. “They’ve got a place where they can bounce questions off of us and get advice and guidance on how to handle even the everyday challenges that are coming up.”
John Russell, CEO, Red Lion Hotels Corporation, agreed that communication is important. “I think the key is communication—really understanding what our franchisees need and want,” he said. “…We’re in this together, we’re a family. These are our partners. And yes, we’ve done fee deferrals and we’ve done 12 initiatives to help them financially with liquidity. That’s a key thing. Helping them with understanding what AHLA and AAHOA are doing—giving them some guidelines to communicate with them is essential.”
He continued, “We’re on the phones daily with our franchisees. I personally try to do a brand all-franchisee call at least once a month. I also personally talk to franchisees every day, I’m sure just like the rest of [the brand leaders]do. To me, communication is No. 1, understanding what they want. We can’t give everything that everybody wants, but we can listen to everything everybody wants to try to do.”
Jim Alderman, CEO, Americas, Radisson Hotel Group, said that the industry’s willingness to share best practices is beneficial. “The greatest thing about our relationships with each other in the industry and our industry as a whole is that we’re very open,” he said. “I’m sure that other brands have come out with some things where we’ve looked and said, ‘Hey, that’s a great idea.’ And it’s not like everything remains proprietary. You don’t see soda companies sharing their recipes. That’s the best thing about our industry: the ability to knowledge share with other great leaders.”
John Cohlan, CEO, Margaritaville Holdings, gave an example of that camaraderie. “[Our brand] is experiential, and I figured that if you want to get good intelligence on how to do this, talk to Disney,” he said. “And so I know the new CEO of Disney Hotels, Bob Chapek, and I called him up when all this went down and his first response was, ‘You know what? We’re all in this together. I’m putting you in touch with the head of our Disney re-imagining on how you imagine the new world.’ And they opened their book and shared all of the different ways they were dealing with putting in these new protocols.”
LePage pointed out that in times like these, brands matter. “As brands are reaching out, we started our #EverydayHeroes campaign to recognize the first responders that are out on the front lines,” he said. “We’ve had hotels make masks and donate food to their local communities. And those moments are really what tie consumers to the brands that are out there so that they feel good about doing business with them, so that they’re ready for the recovery, so that they’re looking forward to it.”
He pointed to the success that many hotels experienced over the Memorial Day holiday weekend, which in some cases had higher than 90% occupancy. “[It] meant that we had stayed in touch, and it meant that our consumers were out there waiting for that and looking forward to getting back in touch with whatever vacation they were looking for,” he said. “Much of it was local travel, so I think those local efforts really pay off—[it’s about] making the brand be present during whatever’s been going on in their lives and showing that we’re supporting them through that. So, I think one of the things we’ve seen through this spring is that brands are incredibly relevant and couldn’t be more important to where we’re headed.”
Kong agreed. “A brand has a lot of resources and has the know-how and experience to help a typical hotelier in surviving this kind of crisis,” he said. “The resources come in many different forms: in the form of a financial relief and a form of sharing the know-how and updating the guidelines for operation. And you talked about maintaining relationship with the sales clients or the loyalty program guests. The brand does a far better job than most hoteliers can do on their own. We have a whole big salesforce whose job really during this crisis is to maintain constant contact with our clients because people remember that you call them during a difficult time.
He continued, “This is how we continue to help our hotels: by keeping up with our sales efforts. The pandemic has affected industries in different ways. Some industries are actually doing extremely well, and being in tune with the market and staying in touch with those clients really helped put heads in beds at that time of need. So, I agree with everything that’s been said. I think the brand is vitally important. The crisis demonstrates that.”
While the topic of government help in the form of PPP funding has been widely talked about, Radisson’s Alderman called for governments to protect business owners from frivolous lawsuits related to COVID-19. “You’re not going to be able to prove where you picked up COVID-19 unless you never left your hermetically sealed container and went to only one other place and somehow you transported there,” he said. “So I’m not sure that you can ever prove exactly where you pick this up and nor can we have a cottage industry develop around somebody suing our franchisees or owners—so that just can’t happen. The government has got…to come up with some sort of hold harmless tort reform on this because our industry won’t survive if everyone’s allowed to sue the eight places they just went because they think one of them has deep enough pockets to pay them.”
Kong agreed with Alderman. “The fact of the matter is there are a lot of unscrupulous lawyers out there that were just looking for a chance to sue and they hope that the hotels will settle, although the case itself will have absolutely no merit and probably not even be worthy of trial,” he said. “They are betting on the hotels coughing up $5,000, $10,000 in settlements because it would be cheaper for them.”