This case study looks at changes made by Newport Hospitality Group to stay afloat during the pandemic.
“You take the business wherever and whichever way it comes, but you need to be prepared to serve it,” Andrew Carey, CEO of Newport Hospitality Group (NHG), said during a recent conversation. Having known Carey for over two decades, we reconnected with him to deep dive on how the company and its managed properties were faring during these topsy turvy times. As background, NHG is a property management and development company with over 50 properties under its belt primarily along the Eastern Seaboard.
One of the more remarkable qualities of NHG is that during the 2008 recession its revenue per available room figures were significantly above those for each equivalent market, and now we’re seeing a similar story play out during this ongoing pandemic. The company has added 11 new managed hotels this calendar year, representing a growth of 27.5% during the pandemic.
“What we learned from the 2008-2009 downturn was that you don’t hunker down, you double down,” he said. “And we’ve adapted the playbook we developed 12 years ago to today’s situation. We saw an opportunity to have our hotels be first back into the market following the lockdowns in Spring 2020 by not furloughing management and instead reinvigorating our engagement with the on-property teams so that they could quickly pivot in response to any week-over-week COVID-19 change.”
This perpetual opportunity seeking strategy is really amazing because it gives hope for our industry’s recovery and for the countless team members that hotels around the world have had to let go to stay afloat.
The case study of NHG shows that sweeping furloughs are but a temporary salve, one that doesn’t set a hotel up for success later down the road when revenue opportunities start to pop back up. While the buzzy business term of “pivoting” is so often overused, here it is totally relevant in that hotels need people already in place in order to be ready for a shift to new market conditions and client demands.
Having the Power to Pivot
Pre-pandemic, NHG was firing on all cylinders with occupancy levels blooming in calendar year 2019. Looking back on Q2 and Q3 of 2020, STR data reveals that its properties were able to maintain 6% more RevPAR than their competitive markets. The key to this was that, in the spring, the company focused and retained its operations team rather than reducing headcount to save money.
It realized that shrinking local hotel teams would be unable to manage the coming sales and operational challenges presented by the pandemic and that the NHG corporate teams would need to pick up the slack. The relationship between managed hotel and corporate oversight was thus the opposite of laissez-faire, with executives moving to proactive virtual visits and transforming the sales position into a remote desk job to stay top-of-mind with clients.
Next, by not putting all of its onsite managers on short-term leave during the dark days of March and April 2020, NHG properties were able to diligently work towards setting up new safety guidelines before competitors were able to, and even as those protocols were still evolving. This meant that once a staged reopening order had been issued by a state-level government, NHG-managed properties were already set to welcome guests and they were ready to greenlight a highly targeted ecommerce advertising campaign to maximize transient bookings from both direct channels and online travel agencies.
For groups, flexibility to new demands became instrumental for keeping this segment in place. Rather than letting contracts go stale, NHG was able to creatively counteroffer and do so with speed.
For example, due to a municipal mandate preventing a host property from opening its event space, a cancelled wedding scheduled for this past summer was bifurcated into a smaller, outdoor nuptial with a whole locked-out floor for the group, along with a big reception commitment for the following year, barring any renewed lockdowns, of course. In order to swiftly turn around this new proposal and keep the deal from souring, the sales manager had to confirm with several other department heads within a couple days’ time that they could pull it off safely – a task that would only have been possible had the necessary operational pieces already been put in place.
Another aspect to this is the delayed reopening of onsite amenities. Carey said having a restaurant open downstairs is a huge draw—even in the age of Uber Eats, Grubhub, SkipTheDishes and numerous other app-based ordering platforms—because people want to escape the confines of their rooms to dine. Being first back into the market therefore meant being the first hotel in a given territory to reopen its food-and-beverage outlets, giving each property a strong competitive advantage for reservations.
Being first as a direct result of having its people already in place has also given NHG momentum heading into the slower months of autumn and winter. Word of mouth is a factor, but it’s still a matter of being in a plan adjustment phase rather than still working through the rigors of an initial relaunch.
Normally off-peak period statistics show a marked contrast from peak highs in summer, yet for NHG-managed hotels the average occupancies for August, September and October are at around 55%, which is far better than each comp set. In this sense, 2020 may well be the “year of the pivot” in that the best hoteliers had the courage to change then change again as the world and each region within it adjusts to various pandemic events.
Three key pieces of wisdom to take away from NHG’s success in past year:
- Proactive versus reactive: You can’t wait for direction from the brand; you have to be continually thoughtful about what other leaders are doing. Having fewer immediate needs due to lack of occupancy simply means that now is the time to add value in anticipation of greener pastures ahead. Businesses need to actively plan for the next phase rather than cocoon in fear.
- Get revenue by setting up the “yes”: As illustrated by the wedding example, in order to be ready for any shift in customer demand you have to map out each operation well in advance. If you want to attract displaced travelers or frontline workers—as we saw this past spring—you need to already have designated room sections where isolation and no-contact stays are enabled. If you are still in the process or considering a move into any of these segments, the business will have already gone elsewhere.
- Triple your executive communications: Forcing an outright shutdown in some territories left a bad taste in many owners’ mouths, and trust needs to be restored amongst individual hotel owners, multinational corporate brands and regional management firms. For the latter entity, top-level property engagement can help to resolve this by giving onsite associates the confidence they need to do their jobs effectively, which is then paid forward in the form of better guest service and more revenue to thereby safeguard owners’ interests.
Larry and Adam Mogelonsky are partners at Hotel Mogel Consulting Limited, a Toronto-based consulting practice. Larry focuses on asset management, sales and operations while Adam specializes in hotel technology and marketing.
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