Group 5
One of the key takeaways from the session is that businesses should view uncertainty as an opportunity to increase the efficiency of their business processes. It is important to look beyond the business and be different from other competitors during the pandemic. Many hotels in Singapore shifted their focus to attract locals who are interested in staycations and came up with good business solutions to manage their cash flows and optimize revenue. Some of the hotels experienced the best gross operating profit as they were only operating 300 rooms with minimal staffing and they managed to save on electricity bills. It is important for hotels to be adaptable and be quick at what they do when dealing with uncertainty. The Singapore Government has been supportive as they not only utilised hotels to accommodate stay-home notices but also gave out subsidies. This made sure that Singapore’s hotel businesses could survive through the pandemic. Some hotels came up with work packages where employees can work in isolation outside of their homes and staycation packages for birthday celebrations. Many hotels focused more on leisure customers especially those who are tired from staying at home and wish to gain some holiday experience. However, a conference hotel will not be able to target leisure customers due to its built-in infrastructure where there are more meeting places and fewer leisure facilities. Hence, leisure customers will not be their priority. Opportunities and gaps can be filled in terms of processes. The accelerated adoption of technology has also increased the problem-solving and efficiency of businesses.
Furthermore, during uncertainty, it is important to focus on reducing loss, and staying flexible and agile, because markets are shifting all the time. This can be tackled with the use of technology as technology creates a faster response to new market changes and it helps to improve traditional companies at a much faster pace. In the past, technology used to be an enabler but it is the core of businesses now. Data is gaining a lot of importance in today’s society and utilising data enables companies to be more forward-looking. Creating micro-level data can be very useful as well, with the emergence of new micro-segments in companies. Micro-level data allows companies to reinvent and adapt to market changes such that in the event new market changes occur, new updates to data will be activated. One of the speakers also shared that technology in silo will be very inefficient, hence, it is important to link technology with other solutions like customer relationship management, media and information. Improving interfacing also allows companies to operate more efficiently by simplifying processes. It is also noted that the hospitality industry is slow in adopting technology as an enabler because it is a customer-focused business. It has many layers of systems, hence, it needs to connect these systems together. During the pandemic, restaurants and hotels started launching their own mobile applications, taking delivery orders and implementing loyalty points. While the pandemic has been disruptive for the industry, it has been disruptive in a good way as it allowed the hospitality industry to introspect and be open to change.
It is also important for Singapore to learn from its overseas counterparts and generate more revenue through creative means like thinking out of the box. Although the government has provided substantial support, hotels should not be too reliant on government grants and businesses from stay home notices. For instance, some revenue management experts shared with us how hotels in other countries in Europe and the Middle East came up with innovative ideas to cope with the pandemic. Many hotels were quick to improvise, bringing ideas such as daycation packages for pregnant ladies or selling ice cream at the hotel lobby. Hence, to adapt to the fall in tourism, they capitalised on domestic demand and the needs of various domestic customer segments. In addition, they actively benchmarked other similar hotels in the industry to introduce new ideas and packages.
As the number of international travellers coming into Singapore decreased drastically, hotels have to think of other creative ideas to generate revenue, as their main source of revenue (hotel room bookings by travellers) has dwindled down to a record low. Uncertainty in the economical climate, coupled with the closure of international borders, prompted hotels to turn to the domestic market to get their share of local demand. As such, many hotels shifted their focus from hotel room revenue management to total revenue management. This ensures that hotels generate sufficient revenue as a whole to remain afloat during the pandemic. Hotels have come out with creative ideas to utilise space as well as resources by providing services that were not provided before the pandemic. The emergence of cloud kitchens and hotel food deliveries came into play during the pandemic. This allows hotels to generate cash flow from the provision of Food and Beverage (F&B) services. For such alternative usage of hotel space and resources, inter-departmental collaboration and cooperation are crucial to support and enable such initiatives to be implemented. Overall, it is imperative that hotels see the importance of relying on alternative sources of revenue and be quick to adapt to changes in order for them to survive and pull through this trying and uncertain period.
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Group 6
Our group’s guest speakers on the topic of uncertainty were Limin Cheng, Director of Revenue Management at Raffles Hotel Singapore, and Vikram Malhi, co-founder of ZUZU Hospitality. We had the pleasure of speaking with them to hear their thoughts about dealing with the uncertainty brought about by the COVID-19 pandemic.
Communication
Having constant and open communication was highlighted as one of the key strategies when dealing with uncertainty. Uncertainty, whether caused by the pandemic or not, will result in sudden changes in outlook and direction. It is important to keep communication open so that the whole team has a clear sense of agenda and direction. Using centralized technological tools will help in disseminating information more efficiently and promote effective communication, especially when the closure of borders makes it difficult for people located in different countries and territories to physically meet one another.
Additionally, Limin shared about the importance of unity in the leadership team amid uncertainty. Sending conflicting messages to the staff members may confuse and even cause them to lose confidence in the leadership team. Hence, the leadership team needs to be united and provide a clear sense of direction to its employees, to instil confidence and maintain morale during periods of uncertainty.
Likewise, communication with the customers in the hospitality industry is equally important. Poor communication with customers can give rise to anxiety and confusion, which may be detrimental to the company’s brand and image. Thus, the company must maintain an open communication channel with their customers, so that their anxiety can be better managed amid the regular changes and uncertainty brought about by the changing rules and restrictions.
Finding alternative revenue strategies
During times of uncertainty, the usual playbook may have to be changed to adapt to the changing circumstances. Thus, traditional methods of generating revenue may no longer be relevant, especially during a pandemic that imposes restrictions on international travel, which imposes a need to find new revenue sources.
For instance, the pandemic resulted in people not being able to travel overseas, which gave rise to a new trend of staycations. Limin also shared about how domestic travellers are different from international travellers, as domestic travellers are more likely to use the hotel facilities such as restaurants, spas, and pools. This has allowed Raffles Hotel to earn revenue from other sources through cross-selling of other services within the hotel, instead of relying on the room rates, thereby boosting its revenue from alternative sources.
For Vikram, who has mostly been working with smaller hotels, he shared that the pandemic has put pressure on hotels to rethink their operating model. His company has seen an increase in the number of clients interested in implementing revenue management, especially from smaller hotels that have never operated with one before. Vikram also shared the importance of survival and small hotels rely on competitive pricing to attract customers to their hotels.
Looking beyond traditional sources of data
Traditional methods of forecasting involved using past booking data to generate an estimate of the number of potential arrivals on a particular day. However, periods of uncertainty will make such forecasts less accurate, and hotel managers need to be creative in finding and using data to improve forecast accuracy.
Both Limin and later Tracy shared their experiences with using data to better predict arrivals. Amid the uncertainty, the currency of data is even more important, and there is a need to identify and discard data that are no longer relevant in the current circumstances. Both macro data, such as the vaccination rate of the country, and microdata, such as the business mix of individual hotels and Google Analytics, are new types of data that hotel managers make use of during the pandemic.
It is also interesting to note that in this era of big data, managers will have increased access to new types of data that come at a much faster pace. This would potentially change the way hotels perform revenue management, capture more market segments, and better customize their service offerings to the individual customer.
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Group 7
With the onset of COVID-19, a lot of historical data had become irrelevant. Ensuring robustness in forecasting data involved being outward and forward looking to understand booking trends in the future. Looking at other external forms of data such as industry recovery indexes in different markets and incorporating data analytics and marketing analytics is also important in dealing with uncertainty. Additionally, we should also be kept up to date with new developments within each market, to adjust our expectations of potential short term demand shocks. For example, demand shocks occur whenever PM Lee addresses the public about Singapore’s Covid-19 situation and reveals about the government’s future changes in the Covid-19 policy. We also learnt about revenue management in other industries such as the early childhood industry, and how we could apply similar concepts of revenue management from hotels and airlines. For example, relevant concepts such as capacity management in terms of staffing and functional spaces.
With uncertain times, the importance of being adaptable and agile given the constraints a hotel/restaurant or company faces to stay relevant and differentiate themselves from the competition. Companies need to focus on their business values, whereby they learn to leverage on their strengths and create competitive advantage. This is especially important since when Singapore opens its borders, hotels would be competing for the same customer base. Hence, hotels would need to learn to differentiate themselves by leveraging on their core competencies to attract customers, while staying true to the hotels’ underlying values.
Lastly, amidst uncertainty, it’s important to be purposeful and strategic in capturing opportunities. During this pandemic, many of the revenue managers had spoken about the sudden change in main revenue sources and target customers. With the outflow of expats and tourists which led them to turn towards focusing on capturing new untapped opportunities in domestic markets by innovating new services. However, we learnt the importance of caution and proper planning before implementing such ideas. An example highlighting the importance of planning was when one of the revenue managers had mentioned a new initiative his hotel had implemented, which was to set up tents for guests’ birthday parties. However, the initiative was not planned properly and the cost required was much higher than they had expected. Some key takeaways in capturing these opportunities include balancing creative new ideas for customer value while ensuring profitability , proper operational execution to ensure sustainability of long term creative solutions as well as tapping on changes in customer’s acceptance towards stricter cancellation policies. Furthermore, key methodologies such as managing anxiety and understanding customers through qualitative and quantitative research are important in setting goals and processes to navigate through uncertainty.
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Group 8
During our roundtable session, our group had the privilege of speaking with Judith Cartwright and Kamesh Shukla for our discussion on uncertainties. Our key learning points are summarised below.
- Presence of Uncertainty
In general, uncertainty is always present in the hospitality industry. Examples of uncertainty that can catch managers off guard would be natural disasters and of course, the recent pandemic.
- Approaching Uncertainty
When facing uncertainties, it is essential to future proof our strategies. We also have to remember to stay true to our brand and avoid deviating from what has been established and built over the years. We should not lose hope and faith in the market. With regards to the uncertainty brought about by the pandemic, we should not allow the pandemic to cloud our judgement in order to better identify opportunities and build resilience amidst the crisis.
- Look for Opportunities Amidst Crises
There are always opportunities in crises, hence it is important not to be overwhelmed by the uncertainties, and to prevent challenges from clouding your judgement. Instead, look for and uncover unexpected opportunities that would help tide over the uncertainties and re-establish yourself. For example, during the COVID-19 pandemic, there were numerous micro sub-segments that emerged and new niche areas that hotels could access, such as staycationers, drive-cationers, pet-cationers or even work-from-mountains, work-from-seas. Demand for room service also increased rapidly due to the increasing priority for personal space. This is further supported by the increase in demand for business class in the airline industry. Even amidst other crises such as natural disasters, opportunities can present themselves. During an earthquake where the hotel building was damaged, the management took the opportunity to renovate the hotel using insurance payout.
- Data and Uncertainty
Data is an important tool to deal with uncertainty. However, historic data, seasonality-related data are no longer relevant, especially in the current pandemic landscape. This is contributed by the fact that managers are now more focused on short-term goals. However, this does not mean that data has become irrelevant. In fact, because of this period of uncertainty, data has become increasingly complicated and gained a lot more importance. For example, to provide value to your customers, especially with the rise in new micro sub-segments, more personalised solutions are needed. This is where data can point us in the right direction.
- Pricing Strategies
Another interesting point we learnt in the discussion was pricing strategies in times of uncertainty. Typically, for many businesses, the first instinct would be to lower prices or to engage in price wars in such challenging times. However, we learnt that when your maximum capacity is greatly restricted, there is no reason to make the cheapest, entry-level options available. Of course, this also leverages on the ability of your sales and marketing team, who needs to be able to find clients and partners to fill your hotel.
- Technologies Used to Deal with Uncertainty
Technology has shifted from being an enabler to becoming the core of revenue management. There has been more emphasis on the use of real-time data and social media, as pandemic restrictions tighten and face-to-face interaction is reduced.
- Conclusion
From our discussion, our group gained valuable insights into the uncertainties that revenue managers face, especially during our current volatile times, and how to manage these uncertainties. We definitely learnt a lot more about the different opportunities that could arise from challenging times, as well as how data, pricing strategies and technology continues to impact the hospitality sector.