Bill Heinecke’s Advice for Hotel Owners ‘ Hold onto Your Cash’

Everyone has been affected one way or another by the COVID-19 crisis, and everyone has their own personal story to tell. To understand the bigger picture, however, it is fascinating to listen to the point of view of someone who is actively shaping that bigger picture. Hotelintel.co had the opportunity this week to talk to Bill Heinecke, CEO of Minor International Public Co., Ltd., who shared his thoughts on the current situation, and also handled a host of supplementary questions posted by online viewers. The interview makes for great viewing and can be seen at Bill Heinecke Interview, while some of the extra topics are explained right here.

According to Bill, Thailand has performed very well in orchestrating its response to COVID-19, especially when compared to the situation in Europe and the US. The lockdown measures were implemented quickly and effectively in ways that some other countries have been unwilling to try, and as a consequence the Kingdom is now ready to re-emerge. The task ahead is to figure out how to save the economy.

Fear of the virus is likely to fade over time, but there will be an emphasis of hygiene in hotels, with measures taken to ensure social distancing to protect guests and staff. For example, restaurants are able to reopen but with less seating. Buffets may have to be restructured, and sneeze guards or protective screens will be essential – but as Bill points out, customers aren’t dumb; they will eat the way they want to eat, but will have the sense to take precautions. In the short term, restaurants are unlikely to be full as people have lost jobs and have less to spend in the tourism and leisure sector.

Opening up the economy is now the goal, with Minor hoping to see local tourism picking up in the third quarter, with international travel returning slowly in the fourth quarter. Initially that should start with bilateral agreements between countries with low numbers of virus cases. Of course, a 14-day quarantine period doesn’t work for tourism, so agreements on visa-free travel between ‘safe’ countries are the way to go. To look at the example of the Maldives, Bill believes the country is suffering economically right now as everyone is confined to their own island, with no travel permitted, but by August things may be ready to open up. Virus cases remain very low.

And Bill’s advice to would-be hotel owners: hang on to your cash and wait for better times. There is oversupply right now, and this is definitely not the time to build. With the main interview complete, Bill then opened up his inbox to additional questions, some of which are presented as follows:

Do you think that the situation of higher costs and lower revenue for hotels is going to last for a long time or will it be that things go back to normal? If they do not adjust back to prior times then how does this impact the hotel industry in the longer term?

The hospitality industry will return to normal, we will survive and ultimately we will be stronger than ever. However, the road to recovery will be long and slow and we need to adapt and make decisions based on this ‘new normal’.

Our current expectation is that things will start to recover during the third quarter, and we hope to be in a position to take advantage of the high season in the fourth quarter.

We are starting to see some green shoots, we have reopened in China and recently reopened our hotels in Vietnam for domestic travelers, and currently we are working on relaunch plans for other locations in each region.

When you say the new norm is going to be different from the old norm, is this a short or mid-term outlook? Or will this have a long-term impact?

The ‘new normal’ is still evolving as we speak, and we have yet to understand the full effects of COVID-19 and whether a vaccine will be found, how quickly it could be rolled out, etc. There are still a lot of unknowns out there.

What we can expect is that the short and medium term will look very different due to health and hygiene standards, border closures, grounded airlines, etc. Once things open up, we will be better able to judge the effects on our industry. No matter what, the future will look different and we need to accept that now and make decisions accordingly.

Corporate clients may ask hotels to renegotiate their rates, what would be your recommendations? What role will travel agents play in recovery, will they come back into fashion?

I do not believe that it is healthy to start a price war by dropping rates drastically, this will not benefit anyone, and it would mean a drop in standards. We need to elevate our industry, not drive it into a downward spiral.  Also, I’m sure corporate bookers are looking to ensure the safety and wellbeing of their clients at this time and I hope this is a priority over the cheapest room rate in the destination.

Concerning industry players such as AirBnB or OTAs, I think they will experience a dip due to safety, security, and hygiene concerns for the former, and cancellation and change polices for both. Over the coming months, I think guests will feel more confident booking with an established hotel brand rather than a stand-alone or very small chain, as slightly larger brands have bigger budgets to roll out and enforce strong health and hygiene policies coupled with consistent standards - all created in consultation with industry experts.

What is your economic outlook, how long do you think the market will take to rebound? Do you think locals will revert to local tourism over international?

We are confident that tourism will return, but it will be a slow process. In the short term, domestic tourism will be the first to resume, followed by regional markets, and it will take longer for the international markets to return.

That said, Thailand will see strong levels of domestic tourism due to pent up demand and cancelled international travel plans. I am confident that the Kingdom will benefit from solid regional demand once things open up as it remains a destination of choice that offers good value for money, excellent customer service, and a fantastic cultural experience.

Over the coming months we will focus heavily on ensuring that our guests feel reassured by the health and safety measures that we are rolling out at our hotels globally. We will also focus on wellness initiatives such as preventative wellness, retreats, immune boosting, etc. We are already well underway with plans to launch wellness facilities at both of our Anantara properties in Bangkok later this year.

Do you think there will be consolidation in the market or will expansion still take place albeit staggered over a period of time? Is the market saturated?How do we prepare for the next crisis?

Always expect the unexpected and be ready to adapt quickly.