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The effects of the coronavirus are being felt in all sectors and industries. But the tourism sector in particular is being hit hard. Not only are quarantine regulations paralyzing entire countries, such as Italy, France and now Germany. But also that it is becoming increasingly impossible to travel to other countries.
The USA announced that it would not receive any more travelers from Europe as of Friday night. Things are no better in other countries either. The borders are being closed and strict quarantine regulations are causing travelers to stand still.
This therefore hits not only hoteliers hard, but also tour operators and travel agents. But what is the right response in times like this? We asked how travel agent Claudia Schimmel (Azzurro Travel Agency Karlsruhe) and hotelier Claus Kuhnhardt (hotelier Waldhotel Eisenberg) do.
Hotels should be aware of this when it comes to coronavirus
The best thing to do is to keep calm first. Before you complain about sales and a drop in workload, you should make sure that employees and guests are in absolute safety. The good news is that the political quarantine orders severely restrict the transmission of the disease.
Make sure your employees know how to protect themselves.
Your employees don't need masks, but they do need to wash their hands as often as possible. Also use disinfectant when needed and avoid touching their face. When disinfectant is provided in every room, it reassures your guests.
Stay up to date with the latest official information about the coronavirus. The best source is that Ministry of Health. The Ministry has set up a page specifically for this outbreak, where all updates and daily situation reports are available.
We would be very welcome to see a rapid improvement in the situation and the decline of the corona virus so that our situation does not worsen any further!
Waiting is no solution
You should do that now!
Checklist for hotels — we recommend these measures
guests: All guests who still have an existing booking should be informed by telephone, e-mail or newsletter about the current opening hours, hygiene measures, cancellation policies and, if applicable, the date of reopening.
Announcements: Publish the latest information about the situation in the hotel in front of the hotel entrance area, on the website and on social media channels.
marketing: Switch sales channels such as websites, Google Ads, social media ads and print advertising to summer. In Google Ads, you should make sure that you don't buy keywords related to corona. In addition, my recommendations are to turn off Google Display ads, as it appears very often on pages with “Corona.” I would continue to advertise on social media.
I would also try my CPB to constantly check and check whether it is changing drastically.
Flexibility when it comes to cancellations: Make the cancellation conditions for upcoming bookings flexible and customer-friendly. In doing so, you are very accommodating your potential guests despite great uncertainty and creating trust for a possible new room booking.
Pricing: Stick to your price and rate management. As a result of price dumping and a panic reduction in room rates, economic damage increases. As soon as demand increases again, it makes more sense to draw attention to yourself through upgrades and additional services.
State aid: To help you bridge the upcoming liquidity gap, you can apply for short-time work and the KfW corona loan.
An improvement in the overall situation. I think there have been a lot of cancellations in the last few days due to the hysterical situation in the media. Unfortunately, it is difficult to estimate how serious the coronavirus really is. We do everything in our house to ensure that guests and employees are optimally protected. The most important thing in the current situation is that we help hoteliers reduce the spread of the virus through high hygienic standards.
Protect workers and guests
- Implement regulatory guidelines — if in doubt, too thoroughly
- Clean and disinfect all surfaces and furniture in hotels, restaurants and offices
- Equip all workers with the necessary protective equipment (gloves, respirators, disinfectants, etc.)
- Pay attention to developments and what other hotels and companies are doing
- Develop a communication plan to inform guests of future safety concerns
- Always communicate transparently with your employees and guests
Model development with stress tests (risk analysis)
- Outline macroeconomic developments and check their influence on your own sales and profit expectations
- Design extreme downward scenarios — it is uncertain what negative effects Covid-19 will have
- Plan key operational actions
Do the stress test: 3-stage development
Prepare yourself for loss of revenue
- Look at the situation from the guests' perspective — what do trust, loyalty and market power look like during and after the crisis?
- Proactively contact your guests and inform them about your processes
- Conduct targeted customer management
- Try to take specific measures to curb revenue losses
- Develop a clear pricing strategy to maximize profits in the short and long term
- Invest your resources in profitable and promising business areas and alternatives
- Open up profitable revenue opportunities in the short term
- In the long term, attack is the best defense!
Stabilizing the situation in the new status quo
- Secure the supply chain against work technology disruptions
- Talk to your teams every day to identify risks early
- Build a supply chain
- Create emergency plans for all areas of business (hotel, restaurant)
- Adjust your operating hours and increase your online activity
Plan spending to ensure liquidity
- Outline the future cost structure: automated, variable and crisis-resistant
- Optimize your cost structure in the medium to long term and work out your current costs
- Reduce unnecessary costs
- Timelease liabilities with suppliers, if possible, to remain more flexible
- Define milestones for reinforced measures
- Always keep an eye on your liquidity and balance sheet
Possible scenarios and countermeasures
- Plan how you can outperform your competition and come out of the crisis stronger
- Generate a sustainable, relative cost advantage when demand falls
- Prepare for setbacks and recovery
- Continue necessary investments to remain present on the market
- Prepare yourself for further sudden changes in customer behavior
- If there is an improvement, be sure to invest as quickly as possible in order to gain competitive advantages
Stress testing: assessment and first steps
How do you apply for short-time work (KUG)?
The best thing to do is to keep calm first. Before you complain about sales and downturns in utilization, you should ensure that employees and guests are in absolute safety. The good news is that the political quarantine orders severely restrict the transmission of the disease.
On Friday, 13.03.2020, the Bundestag approved reductions to short-time work allowance. Companies should be able to use short-time work allowance even if only 10 percent of employees are affected by the loss of work — instead of a third as before. The social security contributions should also be reimbursed to them in full by the Federal Employment Agency (BA).
However, exact details of the implementation are not yet known here. In principle, short-time work must first be registered with the employment agency:
https://www.arbeitsagentur.de/datei/anzeige-kug101_ba013134.pdf
And then apply here:
https://www.arbeitsagentur.de/datei/antrag-kug107_ba015344.pdf
You can also find further information directly on the employment agency website:
https://www.arbeitsagentur.de/news/corona-virus-informationen-fuer-unternehmen-zum-kurzarbeitergeld
If you are considering applying for KUG, we recommend that you first contact the Employment Agency directly and clarify any open questions and legal requirements by telephone.
Information about the KfW corona loan
Despite all precautions, it is inevitable that the coronavirus will have an impact on your business results. More and more companies are canceling their business trips and private travelers are postponing their vacation.
Through KfW, it should be possible to receive short-term liquidity assistance.
Since it is not possible to apply directly via KfW, you must contact your house bank if necessary.
For more information, visit the KfW website:
https://www.kfw.de/KfW-Konzern/Newsroom/Aktuelles/KfW-Corona-Hilfe-Unternehmen.html
How do I communicate with my guests?
Despite all precautions, it is inevitable that the coronavirus will have an impact on your business results. More and more companies are canceling their business trips and private travelers are postponing their holidays.
But that doesn't mean that you have no control as a hotelier! With such a large number of travelers, you must have the advantage of dealing with the coronavirus correctly and observing important hygiene measures. Here are some things you can do to reduce the number of cancellations.
Inform your guests early
Use pre-stay emails today to draw attention to security measures. It doesn't matter if the overnight stay only takes place in weeks. You need to work on all future bookings today and try to keep them.
Send emails before guests arrive. They're a great channel for proactively communicating with guests who are already planning a stay at your hotel. Explain here what you are doing to ensure guests' hygiene standards. (template below)
Flexibility with your cancellation policy
In the current crisis situation, no one will book non-cancellable rates. It is advisable to adjust your flexible rate so that the customer has the option to cancel up to 2 days before arrival. This gives guests the security of not being held back at their expense in an emergency situation. Furthermore, the potential guest feels in a comfortable situation, as they can cancel their booking when given the opportunity. However, if the situation improves soon, he will accept the booking.
Inform your guests on your website
Create a page on the hotel's website that lists information about hotel hygiene measures. Everyone is aware that in the current situation, every hotel complies with high hygienic standards and safety measures. However, open communication of the planned measures gives the guest a certain level of security.
No discount promotions please
With discount campaigns and price reductions, you are not doing yourself any favors in the current situation, as this means the utilization cannot be increased and also the ADR Rate and the RevPAR sink. You're more likely to put yourself in an even more difficult financial situation. In a crisis situation, no one will be eager for bargains and loyal regular customers will also book at normal prices. Instead, you should try to create an incentive for potential bookings through upgrades and additional services. After the last economic crisis in 2008, there was a drastic reduction in the average average daily rate. It took the industry a very long time before it was able to reach pre-crisis rates again.
Email to guests template
This template can be used as a pre-stay mail for an automatic message from your CRM system or in the message templates from booking.com or Expedia can be used:
Dear Max Mustermann,
Due to the difficult situation with the corona virus, we would like to inform you about the current situation in our hotel.
In addition to our previous hygiene measures, we are taking further health and safety measures to protect our guests and employees:
- The entire housekeeping staff cleans/sanitizes the guest rooms every day
- All public areas are now cleaned daily with additional disinfectants
- Hand sanitizer is available in all restrooms
- Staff have been trained to prevent the spread of the coronavirus and are acting accordingly when dealing with guests
If you have any further questions, please do not hesitate to contact us
Thank you so much for your trust.
Interviews with various industries
We met with various industries and talked about the current situation.
Travel industry — Claudia Schimmel (employee at Azzuro travel agency)
How are you feeling the effects of the corona virus?
Our travel agency is centrally located in Karlsruhe city center, in the middle of the main shopping street. On the one hand, we notice that fewer people are traveling in the city center and are also coming to our office. Our booking volume is at an absolute low point. We have never had as few bookings as in the last few days. Customers are uncertain and even we cannot provide guaranteed travel information. The situation is very uncertain and is changing daily. It also doesn't matter whether the travel destination is within or outside Europe.
How are you counteracting the downward trend?
It is extremely difficult to convince potential customers of the current situation. This is because customers neither call nor come by spontaneously and inquire about the options.
However, we are lucky with some tour operators who offer free cancellations should there be restrictions due to the corona virus. This means that the booking can currently be completed and the cancellation can be carried out until shortly before the start of the trip. The customer is then refunded the full purchase price. However, as a travel agency, we go empty-handed and do not receive a booking commission in the event of a cancellation.
What are you hoping for in the coming weeks?
On the one hand, it is positive that the organizers impose flexible cancellation conditions, but we only benefit from them to a limited extent. If there are no commissions, we earn nothing and our office falls by the wayside. We therefore need more support from organizers and politicians.
We would be very welcome to see a rapid improvement in the situation and the decline of the corona virus so that our situation does not worsen any further!
Hotel branch — Claus Kuhnhardt (managing director of Waldhotel Eisenberg)
How are you feeling the effects of the corona virus?
The entire sector will have immense economic losses. Many hotels have closed completely or reduced their business operations to the bare minimum. Due to the rapid spread of the virus and political decisions, normal hotel operations are severely restricted. It is now important to consider well-organized crisis management. The cancellation rates are almost 100% and due to general uncertainty, there are no new bookings. It will now be important to keep liquidity reserves as stable as possible.
How are you counteracting the downward trend?
Turnovers are not expected. Employees are the most valuable asset and soul of a hotel business. It will be important to ensure the monthly salary payments of employees through short-time work. We also try to reduce energy costs to an absolute minimum. We will also check whether it makes sense to apply for the KfW loan for the corona crisis. Investments must be postponed.
What are you hoping for in the coming weeks?
It is difficult to make a forecast. We can only hope that the situation stabilizes.
How can Happyhotel support you during and after the corona crisis?
happyhotel helps to analyze the most important hotel KPIs. As a result, you don't simply make future decisions based on gut feeling, but based on data-driven facts. You can analyze sales, utilization figures and cancellation figures during the corona crisis in detail and use them for strategic and operational measures for future planning. Furthermore, happyhotel recognizes an increase in demand early on and optimizes your prices. As a result, you are optimally positioned even after the crisis and won't miss out on any sales.
conclusion
The coronavirus is hitting the tourism and hotel industry unexpectedly and hard. The most important thing in the current situation is the absolute safety of employees and guests. There is now some direct aid for hoteliers, which should be applied for immediately, such as short-time work and the KfW corona loan. Furthermore, as long as the hotel is still open, strict hygienic measures should be observed. It is also particularly advisable to implement federal and state decisions immediately so that the protective measures for the spread of the virus are effective. Despite this acute difficult situation, it is still important to be a good host. This means informing potential guests about the current situation and bookability at any time. Marketing activities should also be focused on the summer. Although it is not yet foreseeable whether conditions will come close to normal again in summer, short-term advertising measures are currently not effective. With the help of an emergency plan, risk analysis and a stress test of your own company, strategic measures can be taken that can be implemented operationally if the situation worsens and worsens.
