Palm Holdings’ expertise in hotel and restaurant development, construction, management, and commercial real estate has enabled the company to transform hospitality ventures across the globe through its landmark development projects in the United Kingdom, Canada, India, and the United States.
With over 20 years of experience in the industry, the company’s Vice President of Revenue, Ryan MacDonald, has dealt with his fair share of challenging situations, from 9/11 to the 2008 financial crash, and the SARS outbreak. With all of that experience comes many lessons learned, lessons that he was able to apply to Palm Holdings’ portfolio of 23 hotel properties as they looked to navigate and operate through the pandemic.
In this hospitality industry webinar, Ryan will share some of those lessons he’s learned while dealing with other challenging market conditions. We’ll discuss how he prepared his teams through different stages of the pandemic, and where he is focusing his energy heading into the future. Ryan will also discuss what he sees as the “poor decisions” other hotel operators, managers, owners, and brands have made, based on his best practices and insights, and what hotels and their management groups do to prepare for the next challenging situation.
Ryan has been in the hospitality industry for over 20 years, with a strong focus on revenue management, sales, and operations. During this time, he has worked in increasingly challenging positions, ones that demonstrate initiative, ability to work effectively under pressure, creativity and most important of all, new ways of generating revenue while maintaining a high energy level, customer satisfaction and exceeding company standards and goals.
Lessons learned while dealing with challenging market conditions
Ryan has worked through major challenging times in history such as 911, the 2008 financial crisis, SARS, and now the COVID-19 pandemic throughout his career. Ryan explains what life was like in the hospitality industry after 911 occurred. He said, “travel just halted. Everything just came to a standstill and people didn’t know what was happening and new restrictions were being put in. A lot of revenue management philosophies were still kind of new, because, let’s face it – hotel revenue management is kind of the new kid on the block but the airlines have been doing it for years. We’re slowly starting to catch up. So when things like that would happen, everybody’s first reaction, unfortunately, was to go into panic mode and be like, ‘Oh my G-d, what are we going to do to sustain business? How are we going to get through this? Do we start doing more stuff with OTAs?’ There really wasn’t a push on brand-direct or loyalty programs or things like that. So as an industry, back when these things used to happen, we would look to third parties. We would give our inventory and better rates to Expedia or Booking.com or Priceline. Don’t get me wrong, everybody has their fair space to live in the hospitality industry but, when we started doing that and heavily discounting rates it took the industry years to get back to where we should have been. Whereas if we had to kind of hold rates and not panic and do the race to the bottom, because I think everybody went for a heads in beds mentality, rather than looking at sustainability. I think that was one lesson that we’ve learned and if all these things that have happened over the years.”
Ryan then went on to say that room rates still haven’t fully recovered to pre-911 levels even in the pre-COVID pandemic era of 2019. “We’re still climbing to get back because we dropped so low when those things happened. I remember at some properties that I was working at, like during SARS and things like that, we were putting on ‘buy one room and get your second room for $1’. We were doing some crazy guerrilla tactics to get things in. Because we all went into panic mode, it’s taking us forever to get back to where we should have been whereas if we had held rates and you normally you get your 3-5% rate increase for inflation, year over year, we’re just slowly bridging that gap to where we should be.”
Did the pandemic have similarities to 911 in the race to the bottom for rates when air and business travel halted?
Ryan answered, “I’m going to say no. I think as an industry, we’ve learned from the mistakes we made in the past, and I think that we got smarter when it comes to rates, especially our public-facing rates. When it comes to group, military, and hospital rates – yes, we were more flexible and we were putting some special qualified offers out there, but we were not dropping our bar rate down to a minimum and we were not running heavy promos on the third parties to try to do that race to the bottom. I think, as an industry, we are coming out of this a lot better than we did in previous instances because again, we’ve learned from those mistakes and I think we all knew that if we did this again we know the repercussions on how long it took us to try to build right back up. We can’t go through that again.”
How Ryan prepared his teams through different stages of the pandemic, and where he is focusing his energy heading into the future.
Ryan explained that “as an executive team every morning we would do a huddle call, which we’re still doing, just to kind of recap the previous days. Lots of open communication with our hotels. Before we would jump on and try to do something, we would always contact our GMs to get their feedback to contact our salespeople at the hotels as well, to be like ‘okay so we need to pivot and now try to go after this group of business’ or ‘we need to try to look after this piece of business.’ We were pivoting our group, and more so corporate strategy, quite often, as compared to our retail public-facing stuff, because let’s face it, there wasn’t a whole lot of transient business coming in during this era of the pandemic. Yes, we jumped on to some of those promotions where we were encouraging people to buy $100 worth of travel vouchers and we’ll give you $200 for travel in the future for when things reopened. We were also trying to educate people to book brand-direct as well because we heard about some of the nightmare stories that people had when they needed to cancel reservations because of the pandemic and were trying to go through third parties. It was taking days, weeks, months to get refunds or they were only offering like a travel voucher for the future, whereas anybody who booked brand-direct – it was easy, it was done, it was cancelled and your refund was put through. So, I think coming out of this we could see a shift of more people coming brand-direct as compared to third parties just because of the customer service issues and the way this was handled when people had to cancel or try to change travel plans.”
Compared to 911, what was the main theme or challenge that the 2008 financial crisis issued for the industry?
Ryan stated that no one was travelling because no one had money and corporate travel came to a halt. People weren’t working so the leisure market went down compared to 911. During 911 people still had the funds to go travel but there were more travel restrictions so people were a little more cautious. The financial crisis was completely different because no one was working, people were losing their jobs, companies stopped doing big conferences so that was another unfortunate race to the bottom for rates as well. It also gave way to new amenities and services that were implemented to help refocus on driving revenue. Many are things that are commonplace today like spas, room service, internet fees, parking fees, and gift shops in hotels.
What are some “pandemic revenue ideas” that you think are here to stay?
Ryan said that their main idea was looking at different distribution streams to get their product out there and in front of the limited market. They listed properties on Airbnb and even put ads on Kijiji for monthly rentals. The second one that he believes is here to stay is text message marketing. It’s crucial when communicating with younger generations and for offering information and being transparent about safety and cleaning protocols.
What were some of the stress points and opportunity points from the SARS outbreak?
The SARS outbreak was more market-driven, according to Ryan. He said that his properties on the East Coast and in suburban areas were still doing quite well and didn’t see the same level of an impact compared to hotels in larger hubs like in Toronto or Vancouver. Ryan continued, “we had to pivot our strategy and the strategy was changing every five to six weeks because when something new would come out with SARS then we had a pivot to go along with it. But one of the big things with SARS, again as an industry, I think we started to drop rates to the bottom in certain markets. We were going for that, ‘oh, well if we lower rates we’re going to pick up more business and we’re going to be able to stay afloat, which now we know was not the case.”
“Poor decisions” other hotel operators, managers, owners, and brands have made based on Ryan’s best practices and insights.
Ryan explained, “the biggest thing that I’ve seen, and I know I’ve mentioned it a few times already, is that rate drop to the bottom. We’ve had quite a few hotels in our markets that were undercutting 20%, 30%, 40% below where the rest of the market was priced because they were going for that heads in beds mentality. Now that things are starting to bounce back in their certain markets, it’s really hard for them to grow at that rate. When they were charging, say, $59 in last time this year and now they put their rate up to $159 – guests are like ‘well, what’s the deal, it’s still the same product and all the policies are still in place for cleanliness.’ So, it’s a harder thing to swallow, and we did see some of our competitors play heavily in the third party market. Don’t get me wrong, we still made sure that our content was up to date but we were not getting heavily involved in those deep discounts, because again it’s just going to take forever to bounce back.”
What are the lessons Ryan is taking away from this pandemic?
Ryan stated, “definitely operational stuff at our hotels. Again, because we were going into a labour shortage and all that kind of stuff. I’m definitely looking back to make sure that we weren’t overselling more rooms than what our hotels could handle so that we could still service that guest in a way that they’re going to come back. Guests were still expecting the same expectations and, unfortunately, sometimes you don’t have enough people in to clean the rooms but guests aren’t expecting that. If they’re buying a room from you they’re expecting the same level of service. I think in hindsight, maybe adjusting our inventory at the hotels so we’re not selling the full 100% inventory we’re selling 60% of it. So that we don’t burn out our staff that have been with us through the pandemic because again, without them, we still wouldn’t be here because they’re the ones that got us through the pandemic. Collaborating with our staff definitely made it a success. So I think looking back on it, we should look more on how it affects the hotel operations, and how that’s going to impact the guests because again that’s going to impact right online reviews, repeat customers and all that kind of stuff that’s going to give you a residual revenue, down the road.”
This engaging webinar was one for the books! To listen to even more details from Dave and Ryan’s conversation and to listen to the audience questions listen to the webinar HERE.
As a reminder, Micrometrics believes that businesses should create more meaningful connections with the people they serve by enhancing face-to-face interactions and creating connections with guests at scale. Our hospitality clients leverage powerful messaging automations to improve customer experience and operational efficiency at their properties. You can learn more about us at https://www.micrometrics.com/hospitality/