Hospitality CEO on COVID-19 impact on hotel industry: It's tough, it's unprecedented
Summary
TLDRIn this interview, Dave Johnson, CEO of Aimbridge Hospitality, discusses the impact of the pandemic on the hotel industry, with many franchisees struggling and facing closure. He notes a slow recovery, with some signs of life in leisure travel to destinations where social distancing is easier. Johnson emphasizes the importance of cleanliness protocols and the need for a vaccine to boost confidence in travel. He also predicts a stronger future for larger hotel operators due to their ability to weather the storm financially.
Takeaways
- 🏨 The travel industry is facing unprecedented challenges with many hotels experiencing low occupancy rates or closure.
- 🛏️ Franchisees are struggling and may require government relief to survive the downturn in the hospitality sector.
- 📈 There are signs of recovery in leisure travel as some destinations like beaches begin to open, but business travel remains significantly impacted.
- 🌐 Ambridge Hospitality operates a large number of hotels and resorts, which allows them to gather extensive data on travel trends and consumer behavior.
- 🚗 There is an increase in domestic leisure travel as people prefer to drive to destinations where they can maintain social distancing.
- 🧼 Hotel brands are implementing new cleaning protocols to ensure guest safety, which is a responsibility shared by franchisees.
- 💼 Larger franchisees with strong balance sheets are more likely to survive the crisis compared to smaller operators.
- 🛑 Business travel is still very slow, and many companies have imposed travel restrictions due to the pandemic.
- 🛌 Changes in hotel amenities are being made, such as rearranging furniture to allow for social distancing, and buffets may not return for a long time.
- 🏋️♂️ Gyms in hotels are still closed, and the reopening process is dependent on local ordinances and safety protocols.
- 💉 The return of the hotel industry to normalcy largely depends on scientific advancements like therapeutics and vaccines, which will restore consumer confidence.
Q & A
How is the travel industry currently affected by the pandemic?
-The travel industry is taking a significant hit due to the pandemic, with many hotels experiencing low occupancy rates and some even being closed.
What is the current situation for hotel franchisees according to Dave Johnson?
-Franchisees are struggling, with some needing relief from the government. Many hotels that were running at 70% occupancy in January are now closed or running single-digit occupancy.
What signs of relief are being seen in the leisure travel sector?
-There are signs of relief in leisure travel as beaches and leisure destinations start to open up, giving people the option to travel by car and maintain social distancing.
How does Ambridge Hospitality foresee the near-term future for hotel bookings?
-Ambridge Hospitality is seeing some positive signs for bookings, especially for summer and around Memorial Day weekend, for destinations that are drivable and offer the ability to social distance.
What is the responsibility of franchisees regarding new cleaning protocols?
-Franchisees are responsible for implementing the new cleaning protocols set by the hotel brands, ensuring that the rooms are as safe as possible for guests.
How does Dave Johnson view the survival of large franchisees during this crisis?
-Dave Johnson believes that larger franchisees with strong balance sheets and partnerships may actually survive and come out stronger due to a flight to scale and quality in the industry.
What impact does the pandemic have on business travel and group conventions?
-Business travel and group conventions are significantly impacted, with very low demand for main gateway cities and many companies imposing travel restrictions.
What are the chances of a large franchisee going under during this crisis, according to Dave Johnson?
-Dave Johnson suggests that it might be the smaller franchisees that are more at risk, not the larger ones, as they may not have the financial resources to weather the storm.
What factors does Dave Johnson believe will help the hotel industry recover?
-Johnson believes that a combination of scientific advancements like therapeutics and vaccines, cleanliness standards, and a gradual return of confidence among different age groups will contribute to the industry's recovery.
How are hotel amenities being adjusted to accommodate social distancing?
-Hotel amenities such as pools and beach resorts are adjusting by spreading out furniture to allow for social distancing. Buffets are expected to take longer to return due to the challenges of maintaining safety.
What is the current status of gyms in hotels?
-Gyms in hotels are still mostly closed, with the situation varying by state and local ordinances. Some areas are starting to open gyms with strict protocols in place.
Outlines
🏨 Impact of Pandemic on Hotels and Future Outlook
The travel industry, particularly hotels, is facing unprecedented challenges due to the pandemic. Many hotels have closed or are operating at low occupancy rates. Dave Johnson, CEO of Aimbridge Hospitality, discusses the difficulties franchisees are experiencing and the potential for relief from the government. He highlights signs of recovery in leisure travel as restrictions ease, with some destinations seeing an uptick in bookings. Johnson also addresses the new cleaning protocols being implemented by hotel brands to ensure guest safety, which are coordinated with franchisees. The conversation suggests that larger franchisees with strong balance sheets may be better positioned to survive the crisis, while smaller operators could struggle.
😷 Changes in Hotel Operations and Amenities Amid Pandemic
The script discusses the changes in hotel operations due to the pandemic, including the potential long-term closure of buffets and pools. Dave Johnson explains that social distancing measures have led to the rearrangement of furniture in pools and beach resorts. He predicts that buffets may not return for a long time, even with protective measures like sneeze guards. Johnson also comments on the current state of business travel, which remains slow, particularly in major cities. He notes that extended-stay hotels and lower-end chains are faring better, but overall demand is still very low. The conversation concludes with a look at the gradual recovery of the industry, with a focus on cleanliness standards and the potential return of business travel as companies lift travel restrictions.
Mindmap
Keywords
💡Travel industry
💡Recovery
💡Cleaning protocols
💡Franchisees
💡Occupancy
💡Leisure travel
💡Drive to leisure destinations
💡Social distancing
💡Balance sheet
💡Flight to scale
💡Vaccine
💡Business travel
💡Amenities
Highlights
The travel industry continues to suffer due to the pandemic, with many hotels implementing new cleaning protocols.
Franchisees are struggling and may need government relief, with some hotels closed and others running at low occupancy.
Aimbridge Hospitality CEO, Dave Johnson, discusses the unprecedented challenges faced by the hotel industry compared to past crises.
There are signs of relief in leisure travel as beaches open up, but business travel and group conventions remain significantly impacted.
Aimbridge Hospitality operates 1,400 hotels and resorts globally, providing valuable data on travel trends and bookings.
Positive signs for summer travel are emerging, especially for drive-to leisure destinations where social distancing is possible.
Hotel brands like Hilton, Marriott, and Hyatt are leading the way in setting new cleaning standards for franchisees to follow.
The responsibility for implementing new cleaning procedures falls on franchisees, who must adhere to brand standards.
Smaller franchisees may struggle to survive the crisis due to lack of financial resources, unlike larger operators with stronger balance sheets.
The hotel industry's recovery may be gradual, with a focus on cleanliness and safety protocols to build consumer confidence.
A vaccine or therapeutic treatments would significantly boost confidence for travelers and the industry's recovery.
Different demographic groups, such as Gen Z and Millennials, may recover travel habits faster than older generations.
Business travel remains slow, with many companies imposing travel restrictions and favoring remote work.
Extended-stay hotels and lower-end chains are faring better in terms of occupancy compared to downtown hotels in major cities.
Amenities within hotels are changing, with pools and beach furniture being rearranged to allow for social distancing.
Buffets are unlikely to return soon due to hygiene concerns, and gyms remain closed or have limited access based on local regulations.
The interview concludes with a discussion on the potential long-term changes to hotel amenities and services post-pandemic.
Transcripts
the travel industry now continues to
take a hit as we head toward the road to
recovery many hotel companies like
Hillen are implementing new cleaning
protocols here discuss how franchisees
will be able to keep up with that demand
is the CEO of third party management
company aim bridge hospitality
Dave Johnson Dave good good to talk with
you here we recently spoke with the
Hilton team CFL Kevin Jacobs and CEO
Chris Necedah and one takeaway for me is
that franchisees there they're hurting
and they may need a good bit of relief
from the government what are you hearing
from the franchise each community are
they getting any relief and what's the
outlook for well thank you Brian good
morning and it's it's tough it's
unprecedent times you know I was I let a
company through 9/11 I let a company
through the Great Recession and and what
we're experiencing right now is
unprecedented
you know hotels that in January running
seventy percent occupancy and now we
have 25 30 percent of our hotels that
are closed and the other ones are
running single-digit if we're fortunate
we're seeing some signs relief in
leisure travel with the beaches opening
up what but it's a it's a very difficult
time right now for franchisees Dave any
idea what the near-term future might
look like I mean are you getting folks
inquiring about bookings when they
anticipate their state reopening so
let's sort of talking about maybe end of
summer into early fall are you seeing
any bookings pick up there it's a great
question we operate about 1,400 hotels
and resorts in 20 countries 49 of the 50
states we've got great data
forward-looking and what we're seeing
signs of some some positive signs for
summer and even Memorial Day weekend our
drive to leisure destinations places
like South Florida with the beaches
South Texas places like Sedona also
places like Napa Valley and Colorado
where people I think feel comfortable
you can get in their car and drive as
opposed to getting an airplane there's
still a lot of fear there and also the
fact that they can social distance
outside on a golf course or on a beach
on Napa Valley etc so we are seeing some
signs of life as it relates to the
business travel and any kind of group
convention of meetings still very very
important and what about the the
cleaning protocols which I mean are
really unprecedented
I would imagine cleanliness is always
top of my
but now these these hotels are
implementing new procedures does that
burden fall on you as a franchisee to
buy those those items and to do the
cleaning yes it's our responsibility but
we take direction from the brands you
know brands set brand standards and hats
off to Brian so you spoke with Chris
Necedah Hilton's been a real leader
Marriott's done a fantastic job Hyatt
IHG where most of the brand's largest
franchisees so we're walking step in
step with the brands to really assure
the traveling public that are you know
that our rooms are as safe as your as
your home Dave there are some large
franchisees and these in these hotel
networks I don't tell you that what are
the chances that one large one goes
under or does not survive this I think
that's one of the main concerns from
from an investor's standpoint
yeah Brian I think it's gonna be the
opposite actually you know in our world
I think the small ones 10 12 years ago
Ambridge was small we ran 50 to 100
hotels under franchise license I think
those are the ones that don't have the
balance sheet to weather the storm
actually think the larger ones are the
ones that may survive unfortunately a
lot of my competitors they're smaller
our good friends and they're struggling
right now they may have you know 60 to
90 days of runway they got a little bit
of relief from the federal government in
the cares Act but that's that's a 90-day
kind of relief companies like mine that
have a strong balance sheet strong
partners were private we can weather the
storm but I'm think we may come out of
this thing a stronger organization
because there's a flight to scale and
there's my ownership there's a flavor
scale in a flight to quality so there's
a lot there's probably over 350
third-party operators the United States
but probably 275 operate under under 100
Hotel so they don't have a balance sheet
to weather the storm Dave what gets the
hotel industry out of this is it as
simple as to say we need a vaccine so
people feel confident that they can go
out and stay in hotel they can take a
plane they can go out and take a
vacation yeah I mean science is a big
part of it you know I mean you've got
science you get therapeutics that could
potentially come out to treat it we
obviously a vaccine would be a would be
a home run we got our finger on the
pulse we're already seeing signs of life
airline employments are going up but but
obviously they were drastically low
I think cleanliness standards but I we
really look at it in three tranches I
actually think in speaking with people
Gen Z and Millennials I think that
they're the first ones to get on a plane
the first ones again on a cruise ship
take a vacation etcetera Lee I think the
elderly obviously for fear of what can
happen in all the statistics we see it's
gonna be awhile before they come back
but yes to your point of vaccine would
be fantastic but I think it's gonna be a
gradual comeback for our industry you
know and I think a lot of us you know I
love the protocols at the airlines are
putting in place because people feel
safer the fact that everyone's gonna
wear a mask I think most business
travelers are more worried about the
person sitting next to them and they are
themselves so the fact that everybody's
gonna be wearing a mask I think gives a
little bit more comfort for somebody to
get on that point deep what are you
seeing in terms of demand from business
travelers which we know is really the
bread and butter of the hospitality
industry hotels and airlines alike are
you seeing that kind of coming back now
because more and more people than ever
are working from home and many companies
may say you know what this is working
out okay we don't need to send somebody
someplace to get a deal done in person
you know business travel is still very
slow if you look at the main gateway
cities like San Francisco New York LA
Chicago
it's still very very low on demand a lot
of the drive markets lower end with you
know trucking companies people who need
to stay drive markets we're see it's a
very positive if you look at certain
chains extended Stay America with the
lower end extended stay they're still
running occupancy in the 50s and 60s
chain wide we look at any hotel that's
in downtown New York LA Chicago beer
either closed or you're running
single-digit occupancy especially
midweek so still still very very slow
from that standpoint like a lot of be
with companies you know there's still a
lot of people that are desiring to
travel but their company has said we're
putting restrictions on travel so until
those restrictions are lifted
I think demand will be very low Dave
last before I let you go how does the
amenities change inside of Hotel how
long is the buffet just not going to be
open or the pool will be closed you know
I think in our pools we drove half the
furniture so that from that standpoint
you can have social this
cool same thing if we have beach resort
locations we're spreading the furniture
out you know that we put out every day
buffets I think it's a long time before
the phase come back even with sneeze
guards and things like that I think that
the time of the buffet is you know you
know you know in a hotel breakfast
rephase think we see like that or alarm
going well III what about jinns what
about the jinns in the hotels gyms are
still closed man obviously it's a
state-by-state municipality county by
county ordinance we're just making sure
that we follow you know whatever the
local ordinances are but again gyms are
starting help I live in the state of
Texas
we're opening gyms here and I think the
protocol that these companies are using
are actually very very good all right
let's leave it there Dave Johnson CEO of
Ambridge hospitality I'll just say this
I'm really going to miss my hotel buffet
but root for it to come back for sure
thank you brother preciate alright we'll
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