Neil Bayliss
In this episode, we follow up on our podcast of last year and ask what effect is the Covid-19 crisis continuing to have on the hotel sector and on travel and tourism in general? Are we now seeing light at the end of the tunnel? Have hotels adapted or is everyone just holding tight and hoping for business as usual when the pandemic recedes? And will survivors emerge stronger than ever before, facing fewer competitors in the leaner, more efficient business model.
Hello and welcome to the Mishcon Academy Digital Sessions podcast. I’m Neil Bayliss, a Partner and Head of the Travel Group at Mishcon de Reya and I’m joined remotely by my friend Katherine Doggrell of NewDog PR Company and an Industry Expert in the Hotels Sector.
Katherine, it’s great to have you here again to follow up on our discussion last summer on Covid and the Travel Sector. I hope your new PR company is going well. Last time, we spoke about travel and Covid and this time we’re going to look with a bit more focus at the Hotels Sector, which I know is your specialist area. So, let’s kick off with perhaps a crystal-ball type question, after perhaps the most difficult year in our living memory for the Travel and Hotel Sectors. Do you see signs of optimism? Is the Hotel Sector starting to feel more confident?
Katherine Doggrell
Gosh, well it’s lovely to be back Neil. Lovely to see that we’ve both thus far made it through the pandemic.
Neil Bayliss
Thank you.
Katherine Doggrell
It’s very good. So, yes the Hotels Sector, you had me at perhaps the most difficult year in our living memory but it has been bad for hotels as well and it’s not getting better any time soon but I think people are starting to feel more confident in as much as they’ve realised certainly in the UK, that you can’t just close down lots of hotels, well, lots of hotels in Central London of course have completely closed and who knows when they’re going to open again. But a lot of others have started to take the view that it’s (a) too complicated to keep closing and open again and (b) any loss that you’re making can be seen as marketing, people know, sorry it’s my pandemic puppy squeaking away there, got to have a pandemic puppy.
So, as far as the Hotels Sector goes, we were expecting there to be a lot of blood in the water as far as lost money and people calling in debt and things closing down. We haven’t seen that, what we’ve seen so far are some pretty high-profile refinancings but people are pretty much just sticking with it. There was an interesting example a few weeks ago. JJW here in Paris and elsewhere, but mostly here in Paris, has been going through some traumas for months and months and months and years and years and years and people have been looking to buy it and they haven’t bought it and nobody wanted it and they put it on the market and then loads of loads, something like 55, there were 55 different bidders. A couple of people bid twice, which I thought was enthusiastic, but about 55 different bidders and then the owner thought, “Ooh. Well, maybe there’s something to be done here,” and now it’s all going through the Courts as he decides he doesn’t quite fancy it after all. So, I think we’re seeing the sector not suffering quite as much and people finding workouts and that sort of shenanigans. So, there is optimism, people are constantly waiting for this return to travel, which everyone knows will come. Investors are, as you can see from JJW, just ganging up to buy hotels because they believe that when they come back, they will bounce back the hardest and the fastest. Exactly, compared to retail or office, which is where you need to look if you’re an investor; it’s not so much a case of how are hotels, it’s a case of how is everyone else? Much, much worse. So, you have to look at that. So, I think the Hotels Sector is feeling confident but frustrated. It would be nice to open but they keep on having these deadlines which, you know, just keep on flying by and you’re not really sure what things are going to look like when you can reopen.
Neil Bayliss
So, there’s some optimism in that when things do re-open it’ll be sort of rapid growth and exciting times but it’s just how long.
Katherine Doggrell
That’s the hope and it’s going to be completely split isn’t it amongst, as we saw last summer, domestic market in the UK, great, domestic market in France, great, international travel, nowhere to be seen. So, fantastic if you’ve got a hotel in Cornwall, horrifying if you’ve got a hotel in London. The kind of polar opposite to how things used to be.
Neil Bayliss
What about the split between leisure and business? There’s sort of some people saying that, you know, everyone’s just desperate to have a holiday now so as soon as flights restart everyone’s going to be jumping on a budget brand jetliner and jetting off to the sunshine in Spain or Greece or wherever and business will be a little bit more cautious about their employees heading off and taking any risk.
Katherine Doggrell
Yes, I think you’re right I think it’s a case of not allowing your employees necessarily to travel too much unless they’ve all been vaccinated. It seems to me at a very senior level pretty much they will be even if they’re, you know, buying Russian Vaccines or whatever and if anyone has a Russian vaccine please do give me a shout. Just don’t say anything at this point. But yes, it seems that leisure’s the way ahead. Somebody was telling me the other day that where the airlines are seeing the enquiries is for long haul. People who are looking to be reunited with family members. Which is interesting because I would have thought that people would be doing all that business that they haven’t been able to do internationally but it seems that family – family comes first – and people will be going to do that, so… which led us to speculate because obviously all these trips end up with, you know, “I’m going to New York but I’m going to need to sign off some of it on expenses, so probably what I’ll do is have a meeting there or whatever.” So, we had this whole “Bleasure” thing before, which is a horrible word and I think probably we’ll see kind of another version of that, sort of, “I’m going to visit my family but I’m getting some meetings in.” We were trying to come up with words for that. We got as far as “Famcor”, I’m not sure about that and somebody came up with one that had ‘vacation’ in it, fa… “Bizvac”? Bizvac.
Neil Bayliss
Yeah, that’s not bad.
Katherine Doggrell
So there’s that.
Neil Bayliss
A new kind of vacuum cleaner I don’t know but it’s yeah does the job.
Katherine Doggrell
Yeah. Cleans up, you know, revenues all round. But yes, I think you’re right. I think business will be last to the table.
Neil Bayliss
Yeah, yeah. I’m certainly, Mr O’Leary’s confident about his business bouncing back in the autumn, so we’ll see if he’s right about that. Do you think that means budget brands will potentially be in a better place than the five-star luxury brands or not necessarily? I suppose, you know, leisure covers all, doesn’t it?
Katherine Doggrell
Yes, and I think luxury have done pretty well so far depending on where they are. Lots of luxury resorts, because… and people you know, we’re always hearing about this huge screeds of cash everyone’s storing up. So, I think there’ll be two strands won’t there? There’ll be people who are desperate to get away but have had a horrible time of it employment-wise throughout this and there’ll be people who’ve just been sitting on cash and are desperate to have just somebody else do every single thing for them, all day long, that they’ve been previously doing, you know, “I don’t want to lift a finger to do anything at all.” So, you will see, I think you’ll see a lot of people thinking, “I’m going to get away and it’s going to be amazing.” I think one thing whatever happens either way, the guest will be very demanding.
Neil Bayliss
I’ve waited two years for this holiday. This better be good.
Katherine Doggrell
Exactly. You don’t want to be on the… you don’t want to be working on the complaints line of any of those companies at this juncture, because it’ll be awful.
Neil Bayliss
No, no, no. Exactly. No room for any mistakes now though, it’s got to be spot on.
Katherine Doggrell
Perfect, or death.
Neil Bayliss
Yeah. I suppose challenging times often give rise to creativity and force change that wouldn’t otherwise happen. We’ve seen that I think with remote working, obviously haven’t we? People realising that you can actually do most things online.
Katherine Doggrell
It’s true.
Neil Bayliss
You know, people have finally got the hang of their video screens and are comfortable having meetings in that way and so looking at the hotel industry, do you think there have been any changes and which of those will sort of continue? Or is it just everyone literally do nothing and hoping it’s back to normal next year?
Katherine Doggrell
That is hotels’ default position. So, you’ve got to imagine that will probably come to it. I think that what they’ve had to learn to be, particularly and I know that, that you guys have been working a lot with refunds and all that sort of shenanigans. I think that hotels will have had to realise that they need to be a lot more flexible in their booking and a lot more flexible in how they treat the customer because now, I don’t know about you but I’ve been speculatively booking for the summer holidays and I live in France so I feel more smug about it because my domestic market is very well-served.
Neil Bayliss
Yeah.
Katherine Doggrell
And so I, I booked that up but still, still at the back of you mind, you need everything to be 100% cancellable and 100% refundable and I don’t want to be seeing no vouchers because I am running basically a voucher-based economy at the moment. I saw the other day that I think Eurostar have something like £400 million in debt and I thought, “You know, I could cancel that very easily by just saying, ‘It’s okay, I’m going to cash my vouchers in.’” So, I think that they need to be more flexible. All this business of you can only check in at one and you can only do this and you can only do that, they just need to sort that out. And certainly as far as bookings go, you need to be more flexible. The OTA’s have been offering flexible bookings and they’ve made that a USP and hotels need to step into that and I think that they might do, if they know what’s good for them because the ramp up is going to be quick and then I think there’ll probably be a drop off after the initial feeding frenzy.
Neil Bayliss
No, I think you’re right. Easier booking, flexibility and the refund issue and I think a lot of people have obviously had bad experiences and then there are remarkably some hotels and airlines still being a bit difficult in that regard. But hopefully competition will work and the people that do offer the better service will thrive. I mean, obviously some people have accepted travel vouchers and delays and all the rest of it but that’s not the preference for anyone I would have thought, you just want your money back as soon as possible and then, you know, move on to another booking. So, yeah. Hopefully, that will continue.
Katherine Doggrell
And automation as well, I think is something that… because we’ve been moving towards that for a long time in the Hotels Sector and particularly in the luxury end, people said, “No, no people want somebody to say your name three times at the reception like Beetlejuice,” you know but I think they’ve realised now that people want everything to be seamless and I know we talk about friction and frictionless travel and that kind of thing but I think hotels have realised that you have to do it automated at the moment because you can’t be licking and touching everything and they’ve realised that people like that and that gives you the chance to, you know, do other things at check-in rather than just accusing people of theft and taking their credit card details and saying their names multiple times and doing all those other things - “Why are you here? Why…?”
Neil Bayliss
Painful process that yeah, hasn’t really changed in decades.
Katherine Doggrell
Exactly so I think that’s forced them to, to face the fact that that works and it’s okay. It’s going to be fine.
Neil Bayliss
People just want to turn up. They’ve done everything online and they yeah, “Here’s your key, off you go.”
Katherine Doggrell
Yes, or even, “There’s your phone, here’s your key. We’ll talk to you whenever.”
Neil Bayliss
Exactly. Minimal interaction.
Katherine Doggrell
Completely, it’s the dream.
Neil Bayliss
Don’t want human beings involved just automated as you say.
Katherine Doggrell
No, no, no.
Neil Bayliss
And do you think any… I’m not trying to do advertorial here but are there some hotel chains which you think have done particularly well or have got ideas in that regard which have been working well and are really shining as good examples, you know, being creative in terms of new offerings?
Katherine Doggrell
Well, I wouldn’t go so far as to say new offerings. Most people got into the “Have you considered working in our hotel room?” bit, which people did so, that was nice. I think Accor are always out there as innovators. They didn’t launch their self-driving cars, tragically. I hope that that’s just on hold but you know, more on that at some point in the future. But I think what they did do, they did working from an hotel. But what they did do was they were out quite quickly talking to Government and trying to set up industry standards for cleanliness that weren’t just applying to Accor Hotels but the whole sector. They’re lucky because they have the ear of Government in this country, which isn’t obviously the case in all the countries around the world, even if you have a Hotelier for a President. But they were able to get in there and then speak to power and that was good for the sector and they made it good for the rest of the sector by bringing in a global standard. I’m not quite sure how successful that was in the end because I think people mostly just stayed in Airbnbs because you can clean that yourself. But it was a nice idea and I liked that.
Neil Bayliss
Yeah, no, it’s sort of taking a lead, being practical.
Katherine Doggrell
Exactly, taking the lead and talking to power is what you need in this environment. And the other company I think did well were IHG because apart from, we all must find out what Keith Barr’s doing to his face to stay looking so young but Monkey Glands aside, they made a big point of continuing to pursue their kind of planetary responsibilities and they… lots of stuff about their journey to tomorrow which is their responsible planet thing and obviously, at the moment it’s reasonably easy to be responsible about the planet because no-one’s travelling anywhere and no-one’s staying in any hotels.
Neil Bayliss
Exactly. Lowest emissions ever. It’s fantastic.
Katherine Doggrell
Exactly it’s just worked out, it’s really good. But I think that they were good for kind of holding that line because that was very big when we went into this and it will be very big as we come out of this and it was good to see they weren’t too dissuaded.
Neil Bayliss
That’s good. I certainly, that’s something I’m picking up more in the general sort of travel arena is the sort of genuine engagement with ESG issues and in particular the ‘E’ and I think that, I’ve been too cynical for some time, which is one of those things that people gave lip service to or didn’t really want to recognise at all and I think that has sort of finally changed in that it’s no longer acceptable to say, “Look, people are just having a nice time. Don’t get in the way of that by putting restrictions on what people can and can’t do and worrying about how your carbon emissions are going to go up when you fly halfway around the world. Just enjoy yourself.” But that does seem to be changing and I guess hotels are playing a part in that. I think it’s incredibly challenging for the airlines, it’s not like you can have an electric plane yet. That’s a long way off but obviously for hotels there is a huge amount you can do to sort of be as carbon neutral as possible. That’s your sense too, is it, that most chains are now sort of getting their act together and are thinking about look, supply chains and waste and you know, product usage and all the things that you can make significant improvements by thinking about?
Katherine Doggrell
Well, sort of before this they were all, you know, they were banning straws, banning miniature bottles of things and it was all very good.
Neil Bayliss
Re-use your towels, that sort of…
Katherine Doggrell
Oh, just throw your towels everywhere. And then Blackrock came in, didn’t they, and said, “We’re only going to be investing in stuff that’s quantifiably, properly assessed.” And everyone went, “Oh, crap.” So, now they’re all having to do it properly and you’ll see more things like BREEAM ratings in hotels and I think in office now - correct me if I’m wrong - you do get a slightly higher valuation on your property if it is properly rated. And I think that’s not the case yet in hotels but it’s starting to come in and when that comes in, you’ll see that things change, I think, obviously, money talks and all of that.
Neil Bayliss
Yeah, yeah. I’m always surprised by how much carbon is produced by just buildings you know, it’s…
Katherine Doggrell
Yeah, it’s weird though isn’t it? I don’t, I’m not allowed to talk about science but it’s weird, concrete is bad. I don’t really know why.
Neil Bayliss
Plant nice lawns on the roof and… I don’t know. Little windmills everywhere.
Katherine Doggrell
Exactly. Exactly. Yes, it’s fine, it’s fine. I certainly didn’t spend years pulling vines off my house in Bath because it rots it. Just bung them back up. Back up.
Neil Bayliss
Yep, yep. Exactly. Doing great stuff. You mentioned Airbnb briefly as an example of where people are sort of in control in terms of their hygiene issues, I guess. And it has undoubtedly the most famous disrupter to the industry in the last 12 years since it came on the scene. It seems like it’s been around for longer than that but that’s it and obviously it’s had its listing now and certainly significantly up already on the listing price, albeit hasn’t sort of continued to rocket up but it’s in a good place. What’s your view on Airbnb’s future? Is it still a stand out disrupter or do you think its future is pretty positive? Are there people coming up behind it with a similar and perhaps even better model in some ways or is it in the same sort of strong position that it obviously has been for some time now?
Katherine Doggrell
Obviously, fascinated to see the IPO and fascinating to see their progress since then. They still haven’t really come up with a strategy that I’ve seen. Although this year they said that they were going to stop doing, stop doing PR and start doing marketing or the other way round, I forget. They weren’t doing advertising, they were just relying on stories in the newspaper and Brian Chesky said, “We had so many stories in newspapers last year. Like, 6.8 billion or something and it was just amazing.” I thought, “Well, you’re having an IPO mate so…”
Neil Bayliss
It’s not surprising, yeah.
Katherine Doggrell
You may not be able to rely on that. You’re not doing one every year one would assume. But I think, as long as the pandemic continues, things are going to be great for Airbnb, for obvious reasons. Most of their inventory is in place in places that you want to go to hide away from people and you can clean it yourself. So, you know, jobs a good-un. And of course, the leisure market, as you said, is coming back and that’s their focus. Things will be great for them, pandemic and immediately afterwards. They need to do something that isn’t just reputation based and is based on their own supply. So, if they were to use all their buckets of cash to buy physical assets or something like that, that would be a good idea. They’re not showing any signs of doing that and I think that they’ve shown other people how to do it and you’re seeing a lot more companies coming up that are controlling the supply themselves. It used to be that that was very difficult to do, so Accor had huge issues trying to make money off One Fine Stay for example. But Marriott, which did very similar, launched their own thing and also it’s a loss-leader for them this product. They’ve appreciated that it’s a loss-leader but they can control the inventory a lot more and you’ve got the backing of the brand and I think there’s an opportunity here for the hotels, they can’t get to the scale of Airbnb of course, but to start working on that and to really, really have that brand promise that you know, “You’ll get your refund. You’re with us. There’s nothing to worry about,” because I think the shine is going off the Airbnb brand and that’s all that it has. So, I think the opportunity is there for hotels to come back and say, “We can verify this property and if anything goes wrong when you’re there…”
Neil Bayliss
You’ve got a remedy.
Katherine Doggrell
Exactly.
Neil Bayliss
Yeah, you’re not going to be having an argument with a landlord. I’ll go back to what you said earlier, you know people have waited a long time for the holidays haven’t they? They want to go and have a nice experience. Do they want that risk of turning up and finding something’s not as described or someone’s left it in a state and you know, having no real recourse? I’m not so sure.
Katherine Doggrell
No, exactly. So, if you can do it through your Marriott Bonvoy points that you’ve been storing for the last year to 18 months then you’re more likely to. If you can get, you know, if they can bring in the supplies themselves. I don’t think they’re particularly motivated to get up to, you know, 15 million listings for that.
Neil Bayliss
No. Perhaps no-one will get there but I think as you say the challenge is on Airbnb to potentially explore ways to diversify or potentially do a merger at some point just to get themselves a wider offering. Yep.
Katherine Doggrell
I’m sure they will.
Neil Bayliss
Interesting times. I mean, I don’t know if currently it’s challenging isn’t it for anyone to be thinking about entering a market but once things are back to normal then we might see that if Airbnb do continue to do well. It could be one of those brands that people love to hate. It’s successful. People keep on using it even though they’re complaining about it. As we know with certain airlines that continue to make hundreds of millions of pounds even though everyone’s happy to say unpleasant things about their experience.
Katherine Doggrell
Exactly. Oh, yes. That’s always then there are you know, the Hotels Sector aside, Expedia has Verbo which if you go looking on Airbnb you will almost inevitably find the same listings on Verbo, largely because of local laws that prohibit a certain number of listings, you know, people sort of dual list and that sort of thing. And so it’s funny because there is the immediate opportunity to go to a competitor if you find something that you like, which you don’t get in the classic hotels sector, quite so much. You can choose to buy the same thing off two different sites which is a lot more kind of, “Ooh. The internet,” which people are used to doing now. So, I think, you know, in some cases you’ll be looking, I don’t know the Dordogne or wherever, for example and you think, “Oh, that seems nice,” and then you have that choice about who to buy it through and this is where the issues are going to come up, I think for Airbnb. Once people get more savvy. And people are savvy about online shopping because it’s all we’ve been doing for the last year.
Neil Bayliss
Exactly, we’ve all been doing it so… Going to wrap up with just a fun little question so, assuming we’re post-pandemic, everything’s lovely and I’m going to give you a holiday destination anywhere in the world, Katherine, where would that be? Where would you like to go?
Katherine Doggrell
I would like to go… so, I’ve been very lucky because I’m mostly based in Paris for this pandemic and I only moved here recently so it’s like I am in foreign…
Neil Bayliss
Not a bad place to be. Yep, that’s good.
Katherine Doggrell
It’s not a bad place to be because Paris is like a senile Aunt who used to be on the stage.
Neil Bayliss
The Dowager Duchess of the…
Katherine Doggrell
Exactly. Even when the mind has gone and you know, there’s no cinemas or galleries or anything open at the moment. Even when the mind has gone, it still looks good. So, you can still go round, it’s nice, it looks good, even though there’s nothing going on up top. So, that’s been good so I’m not kind of starved of having seen the same place everyday for the last sort of 30 years but on the other hand, I would like to go somewhere I just don’t speak even remotely anything like the language. Like, one of those languages where you can’t, you have to like the Scandi languages where you just have to read the subtitles because you’re not getting anything coming in just from looking at them. Somewhere just completely alien.
Neil Bayliss
Yeah. Vietnamese is quite good for that.
Katherine Doggrell
I would like a bit of Vietnamese actually. I’d like a bit of that. I haven’t been but I enjoyed the Top Gear Special.
Neil Bayliss
That’s true. That is a classic.
Katherine Doggrell
Motorbiking down Vietnam. So, yes, so after the pandemic, I want to become Jeremy Clarkson.
Neil Bayliss
Grab our mopeds and head off to Vietnam, whizz through the paddy fields. Yeah, that sounds like a very good choice. Well, let’s wrap it up there for now. It’s been a fascinating discussion. I’d like to say thanks so much to Katherine Doggrell for joining me for this Mishcon Academy Digital Sessions podcast.
Katherine Doggrell
Thank you for inviting me.
Neil Bayliss
I’m Neil Bayliss and do look out for the next episode in the series.
The Digital Sessions are a series of online events, videos and podcasts, all available at mishcon.com. And if you have any questions you would like answered or suggestions of what you would like us to cover, do let us know at digitalsessions@mishcon.com.
Until next time, take care.
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