Occupancy Led Expense Budgeting Will Determine The Success Of Hotels: Jayant Singh, Treehouse Hotels
The hospitality sector has started picking up after the long shutdown. This fast-paced drive's credit goes to technology as it played an integral part in reviving the service sector. Now, it has become a necessity of life. In an interview with BW Businessworld, Jayant Singh, Founder and Managing Partner, talks about what has changed so far in the sector due to Covid-19.
The hospitality sector is one of the worst-hit due to Covid, how have the shutdowns and current situation affected Tree House Hotels in terms of revenues?
Last one and a half years have been tough for the entire hospitality Industry. Despite a long duration of lock down period and Government restrictions, we managed to break even in most of our hotels in the previous financial year. As soon as the first lock down was announced, we started focussing on alternate revenue streams. Very early on we figured out that small format weddings would continue to take place and home delivery of food would also pick up. Consequently, we immediately geared our team towards these two goals only and we found reasonable success. Of course, in addition to the new revenue sources, we took a hard look at our costs and rationalized costs wherever we could. So this two pronged approach helped us to stay afloat.
Do you think the government could have taken further steps to revive the sector the way the centre helped other sectors?
The Government could have definitely done more for the Hospitality industry, which was most hard hit during the previous one and half years due to the pandemic. Ours is a capital intensive business which requires constant fund infusion. A dedicated lending scheme for the hospitality sector could have been introduced. On the opex side, the Government could have easily lowered the electricity rates for the industry, they could have also reimbursed us for the licenses we had paid for, or at the least increased the validity of the licenses. All these steps would have surely given the industry a breather and helped the industry to revive quicker.
Is there any other state that has received more bookings as compared to the others?
Not states but certain segments / categories of hotels and certain locations have definitely received more bookings compared to others. The leisure segment has definitely seen more bookings than the business hotels. Drivable destinations and hill stations have definitely seen increased bookings. Hotels / Resorts that offer large open spaces have done better than places that have space constrictions.
What will be the next big thing for the hotel industry in the coming years?
Occupancy led expense budgeting will determine the success of the hotel in the future. Almost all the hotels are working with reduced staff strength. With sudden surge in occupancy the demand for manpower will increase; however, this would be a temporary trend. A hotel would need to maintain minimal fixed cost and budget for sudden surge in occupancies.
How has the trend changed for the five-star hotel in terms of buffers and restaurants?
Like all other businesses, the F&B business has its own unique challenges. While buffet means lesser man power to serve but safety is an issue and a la carte means safer environment but more staff. So the restaurants will have to increase prices of their a la carte menus in case they decide to do away with the buffets.
Covid has turned things upside down from education to marketing technology has overpowered all. How is technology treating the hotel industry?
Technology is playing an integral part in all aspects of the hospitality industry. From contact less check-in to QR code based menus, data analytics and digital marketing technology is transforming how the business is conducted today and in times to come. Technology has been a great support especially where safety of the guests and our staff is concerned. However, there are two things we need to remember while implementing technology in our hotels - (i) the long term impact on human resources and, (ii) the recurring cost for technology updation as most of the new technology is SAAS based and has recurring expense.
What changes can be seen in the marketing and sales strategies?
There is a complete shift in the way sales and marketing was done pre -covid time. In fact they have completely transformed. The physical sale calls have almost stopped. Digital marketing is the way forward and only medium left to market and popularize the hotel. We have been following the digital approach from pre covid days. It is a 360 degree loop which we have created using digital first approach. When we started this approach, only 11 percent of our revenues were generated digitally; however, now this figure has crossed almost 80 percent. This figure will come down once the physical sale calling and business and inbound travel resumes. There is no denying that digital marketing has really helped us during these tough times.
