UK hospitality businesses are likely to be currently focussing on how to deal with the effects of the coronavirus outbreak, but now is also the time forward thinking business leaders should be looking beyond – to their plans for recovery. There is little doubt that the coronavirus presents a significant challenge for the entire world. The numbers are staggering, and the news updates overwhelming so it’s little wonder that global markets have been rocked and senior business leaders are treating this as their new highest priority.
It is only right that everyone’s primary concern is with preservation of life and it is encouraging that early scientific and anecdotal evidence is that the huge majority of those infected will make a full recovery in a relatively short space of time. However, the number of confirmed UK cases has just passed 100, and sadly one woman in her 70's, who tested positive and believed to previously in ill health, has died. Despite there
being around 17,000 flu related deaths in the UK each year it’s easy to see that it is fear rather than purely facts and numbers that can have such a significant impact on the way we live day to day and on how businesses perform. I have worked in consumer industries such as hospitality and retail for over 25 years and experienced periods of severe disruption from “natural causes” like this in the past. In 2001 Foot and Mouth Disease (FMD) had far-reaching impacts beyond farming and food e.g. it is estimated that our tourism industry suffered a £3bn impact in that year with a similar cost to our public sector.
Post the 2001 FMD outbreak impacted businesses struggled to adapt quickly enough to a new world of changed consumer habits and so prolonged their losses.
Of course, there are differences regarding the coronavirus, however, 2001 FMD is proof that widespread fear in humans will drive widespread changes in their behaviours. Some of free will; some forced upon them and not all conducive to the on-going success or even survival of many business sectors. We have every reason to be confident, not complacent, that this virus will be controlled, and normal service may then resume. As hospitality business leaders are likely to already have “disaster management” plans to deal with the outbreak I would like to urge those same leaders to start planning now on how to return to thriving profits post the outbreak as I believe the UK hospitality sector will see significant growth post this awful period but it won’t be easy and senior leaders will need to be ready in order to capitalise.
1. Trust Your People:
Your culture is already built on trust and you can prove that your leaders at each level have trusted relationships with their teams so you have good reason to be confident that your team managers will make the right decisions and show the right behaviours. You may have given additional support and training to managers during the outbreak period. That will certainly help.
However, when the end of the outbreak arrives many employees may still be infected, afraid to return to work or have concerns. It is critically important that all managers continue with the great work they did during the outbreak period and show empathy and understanding. Not all employees will feel able to return to work at the same point even if the circumstances appear the same so ensure all managers are acting consistently and showing trust.
2. Continue with Additional Support for Your People:
Disaster management or avoidance is a likely approach during the outbreak period and many of your staff will show great flexibility, loyalty, and grit during that time. If this period has resulted in a downturn in revenues, then many of your employees are likely to have suffered lower incomes as overtime becomes scarce or they have been off sick, whether unwell or in isolation. The value of their tips is likely to be much lower too and, dependent upon the circumstances at their children’s school, their child-care costs may have risen. Many may have taken short-term loans to an end during the lean period.
Let your people know that help is available. If you offer interest free employee loans include reminders in your communications, guide managers on how to support locally and with tact by encouraging each team member to support each other – some will be happy to give up shifts whilst others will feel desperate for the extra hours.
Remind all employees of your helplines and if you don’t have one now would be a good time to set one up.
3. Welcome Back Your People:
Once the peak of disruption and fear is over and most of your teams are back in work then, with tact and decorum, celebrate! Encourage leaders to act with freedom within a framework as they have always done and do something locally that shows appreciation for what their team have been through. Also, take time now to prepare how the board will thank everyone. If your style is a letter, then draft it now so you can focus on maximum revenues and profit when the upturn come.
4. Maintain Increased Communications:
No doubt your outbreak plan will have included increasing communications with all team members. Maintain these for at least 3 months following the end of this period.
Not everyone (employees and customers) will return to normality at the same rate so keeping all of your team members well informed with a support network to have their questions and concerns answered will make a big difference to the speed at which they return to their best.
5. Evaluate the Future of Flexible Working:
Whilst only applicable to a limited number of roles it is likely that whatever your starting point, your business saw a greater uptake of working from home during the outbreak period. This may well have brought newfound improvements in efficiency, productivity, and morale that you wish to see continue. Do not assume that all those who switched to flexible working temporarily wish to revert to previous ways but do appropriately investigate what is right for your people and your business going forward. Whatever approaches you decide to adopt, be clear with your people and welcome their queries.
6. Welcome Back Your Customers:
It is extremely likely that this virus outbreak will result in a downturn in customer numbers and although the level of opportunity this brings will depend on the impact on your people resource there are most definitely opportunities to capitalise on during quieter than expected times. Here are a few:
• Improve your sites: When your customers return you have an opportunity to showcase your physical environments as the best, they have ever been
• Address maintenance issues those where disruption to the customer experience is unavoidable
• Focus available resource on cleaning and hygiene standards
• Bring forward scheduled works such as equipment servicing and decoration
• Consider bringing forward wholesale improvements such as I.T. or supply chain enhancements (these will need particularly careful planning taking available resource into consideration as well as financial impact)
• Utilise chef resource to participate in future menu development ideas – no doubt already a scheduled part of your annual activities, However, there are great benefits from getting ready for future changes ahead of time
• Prepare a catalogue of marketing activities suitable for encouraging customers to return so they may be deployed at a short notice later
• Train your people: You are likely to have prioritised improving multi-skilling as part of your plan to mitigate the impact from absence at sites and once completed move on to areas of greatest benefit to customer service if trade is low.
If we experience a lengthy spell of consumers avoiding social spaces
then the popularity of our pubs, restaurants, hotels, and cafes
could take an unexpected and significant knock that will require
great expertise from business leaders to overcome.
7. Evaluate Any Long-Term Changes in Consumer Behaviours
One of the risks to periods of disruption is that, during these periods, our customers forge new habits and even the best welcome back plan may not be enough to compel some to return as they feel their new world is an improvement on the old one.
This may manifest in a number of ways e.g. if, despite your best efforts they have switched to a competitor then traditional methods of winning custom back are likely to be your choice of weapon e.g. targeted marketing, social media presence and focussing on what your brand stands for.
However, if the consumer change is deeper than it is critical you are aware of it.
Following the FMD in 2001 beef sales plummeted for several years and later, big changes in how the British meat industry guaranteed its quality were essential in order for consumer confidence to begin to return.
The difference here with the coronavirus is obvious, however, if we experience a lengthy spell of consumers avoiding social spaces then the popularity of our pubs, restaurants, hotels, and cafes could take an unexpected and significant knock that will require great expertise from business leaders to overcome.
Potential changes in consumers may not be as obvious and simple as staying away from venues so my advice is to plan now for the gathering of high-quality insight at a local and national level. Spend time determining what questions you need answering and be prepared to adjust your long-term strategy on the back of your findings before your competitors do.
8. Prepare for Revenues Higher Than Pre-Outbreak
I believe more likely than customers staying away from our venues for lengthy periods following the outbreak we will experience an overall increase in customer numbers and, therefore, revenues. For 4 main reasons:
1. You have done such a great job during the outbreak that you actually attracted new customers from less diligent and ill-prepared competitors. These new customers were impressed so are sticking with you!
2. You mastered your welcome back plan and implemented it brilliantly so, again, you have attracted new customers
3. Perhaps most significantly, international travel is already suffering, and it is highly likely more Brits than previous years will already be planning a “staycation” for summer 2020. Of course, there is a flip side in that those venues that usually benefit from overseas visitors are likely to see a downturn. However, history tells us that more Brits holidaying on home soil is good for our hospitality business overall.
4. Even if the virus is brought under control in China relatively quickly retailers will still need to brace for an impact e.g. with apparel businesses relying so heavily on Chinese manufacturing they are expected to be one of the worst effected and slowest to recover. Primark have already stated that their summer ranges and stock levels will suffer in the UK no matter how quickly the recovery now comes. This scenario brings an opportunity for the UK hospitality sector, as whilst the retail sector is still recovering consumers will have spare spending power, as clothing retailers are unable to service their desires.
My advice is to prepare for an overall increase in revenues versus pre-outbreak but note: The impact this virus has on tourism and the knock-on effects to other sectors are likely to be amongst the most volatile and changeable so an area that hospitality business leaders should remain extremely close to. Data from travel analytics firm, Forward Keys, shows that international flights booked from the UK were down 20% year-on-year for the 5-week period ending February 23rd and likely to be much worse since then. The international tourist is a major customer to many hospitality businesses so we should expect an impact. However, many consumers place high importance on their holidays and won’t give them up easily so reliant businesses need to show great flexibility. Even if bookings remain strong, last minute cancellations are probable and conversely, if the outbreak period passes quickly, last minute bookings are also possible.
9. CONTROL COSTS
Too often “control costs” is interpreted as “reduce costs” but control is certainly the right word here.
And the Key Message for Hospitality Business Leaders is Clarity, Clarity, Clarity!
You may have decided to reduce certain costs during the downturn of the outbreak period. A reduction in team meetings and travelling may have identified that on-going lower cost budgets are appropriate. Equally, you may have brought forward planned expenditure during the quieter trading patterns and must now negate the temporary overspend versus budget. Perhaps temporary cost reductions were essential, but you now wish for a return to usual spending as trade returns. Or maybe you have decided to invest in increased labour to capitalise on the increased customer numbers described in point 8.
Whatever you decide is right for your business it is critical that you communicate clearly with all team members and monitor performance closely. You and your teams have potentially been through a huge turmoil by this stage and had to show great flexibility and nimble leadership to deliver a satisfactory commercial performance. KPI targets and budgets may have changed more than once so once the board has agreed the new expectations, even if they are simply a return to what used to be, make it ultra-clear for everyone.
10. Forecast Carefully:
Regular reviews are part of the DNA of any good hospitality business, however, the tip here is to avoid the trap of increasing year-end forecasts at the first sign of recovery. Continue with best, worst, and mid scenarios and resist the pressure from shareholders that is likely to be building by now. They will be looking for original, pre-outbreak forecasts to be met at year-end and diligent caution should be adopted particularly when viruses are known to return.
11. Prepare for A 2nd Wave:
Probably the last thing you want to hear, however, scientists have stated that even if the virus is controlled quickly and helped by rising summer temperatures a 2nd wave can arrive along with the return of colder weather. The great news, of course, is that you have mastered it once so you can do it even better a 2nd time! Most importantly, shortly after the 1st outbreak period performs a full review of how your business coped. Capture the successes and opportunities to develop a master plan you can deploy at a moment’s notice.
12. Continue with Increased Risk Register Reviews:
Similar to some previous points around communications and forecasting continue with your increased attention to the risk register for at least 3 months following the outbreak period. There is no doubt you will have made changes during that period and hopefully some scary entries have now reduced in severity or gone altogether. You will need to be ultra-nimble and potentially strategically flexible for some time until the coronavirus threat goes completely. As the coronavirus has only just begun it is only natural to have concerns and I wish you, your family, your friends, and colleagues the absolute best of health. Let us not forget that scientists in the UK are extremely confident that most of us will not become infected and those who are will make a full and speedy recovery.
Potentially, you are more concerned about the impact on your business and I wish you every success in your endeavours to overcome the challenges you are facing into.
Mark McMullen has extensive experience in senior leadership roles within hospitality, retail and leisure where being people centric has been key to his success. His commercial intuition is to always be forward facing and to future-proof organisations. He continually develops ways to turnaround under-performing businesses or take an already strong performing business to its full potential.
You can contact Mark at firstname.lastname@example.org or by calling +447739 177815.
He would be incredibly happy to discuss any of the points in this article with you.