This webinar in partnership with AHLA was a great opportunity to understand the broader business impact of the pandemic, and how AHLA has been working with the federal government to provide business resources to AHLA member hotels.
Chip Rogers, CEO, and President, AHLA highlighted the Safe Stay industry-standard guideline, safety certifications, and welcome back programs launched by the association. He also provided insights into all the federal, and financial support available to member hotels.
Anil Aggarwal, CEO of Milestone, highlighted digital consumer trends, and how hoteliers can leverage their digital assets to drive bookings, and increase occupancy.
- Leverage the cleaning protocols, like Safe Stay, train, and certify staff
- Communicate clean & safe actively throughout the customer experience
- Have a reopening plan, and checklist, implement, adjust, adapt
- Expand communication to reach new markets
- Stay connected to your industry associations, and Milestone for the latest
Don’t miss this amazing event recap, and download the safe stay guidelines.
Title of file: Hospitality recovery with Chip Rogers – CEO, AHLA
The CRG framework was established at the beginning of the shutdown when so many of our customers were asking for very specific guidance like, “what do I do this week? What do I do today in crisis? What do I change on the website? How do I change my content?” So we addressed that with the crisis framework and then they were like, okay, “what’s next? What’s coming in a couple of weeks or a month or two.” And that’s the recovery and the growth phase. So we’re in this reopening sort of this phase of recovery now. And it’s really up to all of us as practitioners in our industries and in the communications industry to build confidence, build demand and drive conversion and build trust. And both Chip and Anil are going to show us a lot of specific things we can do that will do these four things that will drive recovery hopefully get us through the fall and get us into a more normal economy in September, October, November.
Erik, first thanks so much for having me Anil, always good to see you. I’m always glad to talk to my friends at Milestone. It’s been many years that I’ve been working alongside you guys in some capacity, and I really appreciate what you do for the industry. So what I want to talk about today, I’m going to give you an update of what AHLA is doing.
As Erik mentioned a moment ago, a lot of the things we’re focused on with respect to safety and cleanliness, because that is the number one thing. But before we get into that as everyone probably knows, AHLA stands for American Hotel and Lodging Association, and we essentially are the voice for the industry.
Now, mainly what we do is work with policymakers to make sure that our industry is both protected and promoted and policymakers could be president of the United States, it could be members of Congress, it could be your local mayor, a governor, member of your legislature, anybody in between that is working on policy that impacts our industry. Now that’s not all we do. Clearly, we work a lot in job training certification education and we’ll talk more about that in just a few minutes. And as you see here in the bottom of this screen our stay safe program, I’ll talk about that just one second. As we started this pandemic, way back at the end of February keep in mind kind of where we were mentally as an industry. We were wondering, how long was this going to last?
If you recall, you probably had some discussions yourself and some of the suggestions centered on, Hey, why don’t we just shut down the economy for two weeks, it’ll all go away and then we’ll re reopen again. And everyone was bemoaning the fact that we would all lose two weeks of revenue. If only we had been so lucky because obviously, this has changed considerably since the latter stages of February when we first started working. Now at AHLA, everything we focused on since this has begun back in February has been all around Corona Virus.
We were the first industry out there along with the airlines and the restaurants to really talk about the impact it was having on our industry, on hoteliers, specifically at hotel employees, we continue to talk about that because unfortunately we were the first hit, the worst hit and will be the last to recover. And we’ll say a few things about that during this presentation. If you look right in the middle of this particular page, building support in the media, sometimes this is under-appreciated, but it is critically important for us to create our message, not just to consumers and to employees, but to elected officials.
So, creating the narrative of where hotels are, how our industry has been hit, what is necessary for recovery and return to normal. A lot of that is not just direct communication with elected officials, while that’s the most important, but it’s also creating that narrative in and around the media. We’ve been able to do that with hundreds of millions of impressions since this began. In fact, I think you see right there, 14 billion impressions since this began. Now, if you look at the bottom right corner of this page, you will see that since the pandemic started, we’ve been able to generate over 143,000 letters to members of Congress. And that is so critically important and I know I’ve talked a lot on this particular slide. We’ll speed up there in a second, but I want to focus on this just for a minute.
When we as an industry are able to speak with one United voice and we’re able to speak to one set of suggestions that we have, or one set of priorities that we have, our message stands a much, much better chance of being recognized and perhaps implemented by policy makers. If we’re speaking with multiple voices and we’re not being succinct and clear and United in our message, it is going to get lost because there’s a lot of people out there wanting to talk to the members of Congress, wanting to talk to the administration, to try to get some assistance. And if we get lost in that shuffle, we’ll get nothing out of it. Fortunately, we’ve been able to be very clear in this, as we pointed out here with 143,000 letters that all came through hotels act, which is on our website, you’ll hear me talk more about that, but as the single best way anyone in our industry can help us communicate with that unified voice to members of Congress.
So you can see here, a lot of discussion recently in the media around safety and cleanliness. In fact, we started probably back in mid-March as we began to think about, well, how do we get past this? We began to ask consumers, what is it that they will need to have? What assurances, what are they looking for to begin traveling again? Is it prices? Location? Well, the answer was resoundingly safety and cleanliness. In fact, 87% of the folks in a poll that we commissioned through our friends at Morning Consult said their number one priority was safety and cleanliness. That’s over price, that’s over relocation, that’s over brand, that’s over anything. Safety and cleanliness, again and again and again. And in fact, you can see their article right there in the middle from the New York times, says the most important word in hospitality industry today: clean, and that is exactly why we created Safe Stay.
And if you look on the right side of this, you can see just a handful of the organizations that have endorsed Safe Stay, all the major lodging associations, the lodging organizations, from more than 50 States and large cities have all endorsed, Safe Stay. All the major brands have endorsed Safe Stay. This is our unified approach to setting baseline best practices for our industry.
Along with creating the Safe Stay guidelines, which have now been downloaded off our website about 60,000 times. And you can go there and get them for free, by the way, at ahla.com A week ago, we also released training videos, and this is really important, there’s a lot of demand for this, particularly among independent hotels. We were able to negotiate a very, very low price with our friends at the national association, whom together we have an organization called the educational Institute, many of you may know about that. It is owned by the NRA. We help administer it, and they created training videos just for hotel employees to deal with Corona Virus. It was through a learning management system. So you get questions if you do well, you’ll get a certified completion certificate at the end, which is very important. And we were able to negotiate a price for independent hotels that it’s only $5 for a single employee, which is incredibly low. If you’re with a brand, most likely those brands they’re buying it in bulk, they’re going to make it available to you for free, but this is really important for our industry to make sure that we can communicate to everyone that our employees have been certified on cleaning and safety.
Here are a number of things that you can do at your property, not only download the guidelines, which by the way have been reviewed by the CDC. We’re one of the only industries that have had our guidelines reviewed by the CDC, you can also download the logo for any signage that you may need. That’s critically important. You can put it on your website. I know Anil and the team certainly know how to do that, but you can use that Safe Stay logo so the consumers and employees, and policymakers know where your property is with respect to following these guidelines. And then the last thing you see, there is a checklist and you can self-certify and send us back that checklist that you have self-certified that you were doing all these things to make sure your property is clean and safe.
Now, getting back to where we started with us advocating on behalf of the industry, in front of you, you see a whole host of issues, all of them pertain to Corona Virus. I’ll do it really quick, you probably looking at this thing, I’m not going to take forever.
Limited Liability Language, that’s our number one priority, making sure that you don’t get sued if someone claims they caught the Corona Virus while at your property. Pandemic Risk Insurance, to make sure if we ever go through this again, your business is covered by being insured very much like Terrorism Risk Insurance that’s already involved today, Business Interruption Insurance, same thing. If your business is interrupted and your revenue stream is cut short, How can you make sure that you’re insured for that.
At CMBS, we estimated about a third of all the loans in our industry are CMBS loans. If you have one, you know how difficult this problem is right now, this has been one of our top priorities. Travel Tax Incentives, we’ve had them for many years for business. There are proposals to enhance them for business travel, but also for the first time, creating travel tax incentives for just average people like you and me to take our families on trips and vacations. One proposal is up to $8,000 credit for your travel working for YOU. expenses. That would be enormously important and helping to spur travel. PPP Technical Corrections, as we know this has been the best lifeline for hoteliers, we have been extremely successful in getting a number of technical corrections made, the PPP will continue to do that. Federal Lending Facilities, that’s just the main strict lending act, making sure that that is available for hoteliers.
And then finally the Per Diem Rates. The last thing we need as an industry is tap Per Diem Rates go back down or readjust down because people’s average daily rate is going down, we are trying to lock those into the previous year so that we maintain those levels for all of the government travel and we think that’s critically important.
This one is pretty important, the president did sign an executive order on immigration. It may affect you if you have properties that use the HTB visa, most people already had their HTB workforce in place. It wouldn’t affect anybody whose workforce was already in place, but if you didn’t, this could potentially affect.
I talked a minute ago about main steet lending. One of the challenges that we’ve run into is that those businesses that have a lot of debt like hotels, because the mortgage is so large on properties, many of them don’t qualify for main street lending facility. We have been working closely with the administration to get that fixed. Hopefully will get fixed, you can see that we also brought together a whole Latino hotel association in our effort to make sure that this problem is highlighted so that hotels can gain access to this level of fund. I talked a minute ago about Commercial Debt Relief, particularly CMBS, that is so critical.
We expect legislation to be introduced very soon on this, we did get a bipartisan letter signed by more than 100 members of Congress asking the administration to help fix this problem. They’re struggling with that, the administration is, so there will be legislation hopefully introduced that could fix it as well. So an enormous amount of attention paid to CMBS. We talked already about the Per Diem Rate freeze, this is important to maintain those per diems that are coming to your properties. Travel Incentive Legislation, I mentioned that a moment ago. One of the things I didn’t mention was a grant program for our friends at the DMO, those are the folks that of course that market your cities and market your areas for travelers. And it’s so important that they are funded and that they’re in business because if they’re not, we know when there’s no marketing people typically don’t show up.
So this is really important. We do a lot of polling, as I mentioned earlier through morning console, we believe that the best they’re out in the field, every single day, polling thousands of people and all sorts of different questions. We have a contract with them where they will ask questions that we ask of them about hotels and travel. As you can see in front of us, one of the really concerning things is the number of people who are expected to travel this year. It is not what we need, so you only have about 17% or 18% of the folks in our country that have traveled during 2020. Those who say they will travel at all during 2020 is about 40% AHLA Update. And to put that in context, typically it’s between 75% and 80% of people take at least one trip per year and so this is quite concerning.
The data clearly shows we’re on a long, long way to recovery. It’s interesting that occupancy had been taking up about two and a half percent per week ever since we hit the bottom back in mid April, the numbers just came out today for the last week and they held steady. They did not go up for the first time since April. And that is concerning. I’m hoping we have not hit a plateau, clearly the media coverage of spikes in the virus have caused some people to rethink travel plans. And that again is concerning because we really need this summer travel, but we’re sitting right now nationally at about 46% occupancy. And as most of you know anything below 55% means the industry is not yet at the break-even point.
Welcome back campaign. So you guys talked about it at the beginning, and this is really important. This is being done in phases, but keep in mind, phase one continues on even when phase two begins and the reason that is so important is because our industry is not homogenous, in other words, we don’t all rise and fall at the exact same time. There are hotels in certain places, if you’re around a beach somewhere or near a mountain resort, you might be doing okay right now. But if you’re an urban city center, particularly around any type of convention center, conference center, you’re not doing well right now. And we recognize that. So we understand that hotels are in different phases of recovery. Some are still just trying to survive, some have found a way to what they believe to be survival, and now are trying to economically recover to back to where they were.
And so, as we roll out our phases, the first thing we wanted to do was reassure travelers and say, Hey, hotels are safe and clean, Safe Stay is a critical component to that. So if you will go to our website, ahla.com/safestay endorse Safe Stay as the industry guidelines. That really helps us, because now we have travelers, it helps with policy makers as well. So we’d appreciate you doing that. The second phase that we’re just rolling out this month is how are we recognizing our hotel heroes? There’s a lot of them out there that have done some amazing work during this pandemic. We want to showcase them and show how wonderful the hospitality world is and the people that make up our hotel teams.
I mentioned a moment ago with the Safe Stay and how we are rolling through this by creating the guidelines, creating the employee training and the checklist, creating the welcome back toolkit, so that guests understand the hotels, and we can mark it and get guests back in and then of course, continuing do the polling, which is so critical to find out what is it that travelers are looking for? What is it that they want? For example, I’ll give you a perfect case example right now, we are dealing with a lot of union activity around the nation where they are demanding that every hotel room that is used be cleaned every single day. Now, despite the fact that that is contrary to CDC recommendations what we did is we went out and asked guests, do you want a cleaning crew in your room every day during your stay? By a two to one margin, people do not want that cleaning crew in their room every day during their stay.
And so that’s critical information that we pass along the policymakers, as they think about all sorts of things that one, aren’t clean and safe two, put our hotel employees at risk and three are very expensive to implement at a time where hotels can’t afford it. So we need that information to make those policy arguments so that the right thing gets done.
Hey, thanks, Chip. That was fantastic. And I’ve known you a very long time, and I appreciate every single thing you do for all of us in the industry. It’s a lot of very hard work, I’m not sure if everybody appreciates what it takes to do all the work that you’re doing in DC as well as with all the other industry groups. So thank you. And it’s making an impact, we hear all of this and we see this, we read it in the newspapers. I was reading the article today, yesterday, every single day. I think what you’re doing is making an impact. So at this point, what we’re going to do is switch gears slightly. We’re gonna talk about what Chip, just showed you, and then talk about what you can actually do. What are the things that you can do?
So first of all, to corroborate what Chip was saying, here is some digital data. So what we’re seeing is that hotels near me searches are almost at the same level as July of last year. That’s a very big deal, right? What that’s telling you is people are beginning to search. You can see where the dip was right in April, where the COVID-19 hit and then gradually it’s been swinging upwards. So very important message for our industry here is that consumers are beginning to search the levels of searches and at the same point as what it was July of last year, to me, that’s a very big deal because even we were surprised when we saw that.
Again, Chip referred to this data, he talked about the occupancy moving back up to 45% level and while 45% doesn’t sound very good or 46%, I think the number is precise. Number is on the flip side, if you look at where we were at the end of April, we’ve just seen a steady, steady increase. And the hope is that we get to 65% levels in the next several months. We’ll keep our fingers crossed. Like Chip said, we’ve seen a little bit of setback or hold up rather than not set back, but it’s held up this week. But again, what’s very interesting is all of the data that Chip was citing through the polls and through interviews with people. We’re sort of validating all of that digitally. So what’s top of mind for your customers? Again corroborating what we just saw from the morning poll here, what we’re seeing is clean hotels.
You can see the number of searches it’s at an all-time high and safe hotels, safe hotels is higher than it’s ever been before. So this is where I think digital becomes very impactful, right? And all the work that the organizations like AHLA, they’re basically collecting very critical data. A lot of stuff about marketing is really understanding what your customers need and presenting them. And what this is telling you is that your customers are looking for safety within the hotels. They’re looking for clean hotels. And what you have to do is digitally and offline, online, everything really build that confidence. And if you do, I think you’re going to see a larger share versus the competitors who are not doing so.
What are some of the safe bets to met? And these are all safe bets. I would say these are things that are going to happen, the number one thing is the leisure and drive market travel is likely to recover the earliest. We know that, we’re seeing that, hotels near me, people are looking for local travel, local hotels consumers want to feel safe and what they’re likely to pay more, to stay safe. We very strongly feel that so I think there’s a message in there that you don’t actually have to drop your rates. What you have to focus on is safety and if you do that, people will pay the rates that they are looking for. The third thing that we expect is that there’s going to be a lot of pent up demand, right?
There is a lot of people who are locked up in their homes, who haven’t traveled, people who were used to traveling every day and they’re trying to get back on the road. So the upside of this is that we should see a very big spike in domestic travel because of all these people feeling like they want to get out, I can’t wait to get out. The thing is that international and non-essential business travel is likely to be the last to recover, the international borders still seem close for most of the countries.
Every country is protecting their citizens, which makes sense, we’re doing the same. So the international travel is likely to be the last and non-essential business travel. The corporations are still asking their employees to travel. And I think until they feel more safer so we’re probably, that’ll be the last category to recover. And the last and final which we’re seeing is that digital, we’ll see a huge uptake. We’re seeing this across all verticals, travel retail automotive, every organization is pivoting to be more digital so that you know, because consumers feel more safe shopping digitally, they’re not going to come to the stores or different ways.
So one of the opportunities that lays ahead is to make sure that your digital presence is absolutely perfect, these are the five sort of safe bets, the assumptions that we make and a lot of these are playing out to be true. So given these are the assumptions, I’m going to get a little bit tactical at this point.
We’ve laid out the level and this is what’s going to happen, these are the things that consumers are looking for and what should you be doing under these conditions? So there’s five things that we’re recommending:
1. Make sure your digital presence is perfect, and I’ll tell you what digital perfect digital presence means.
2. Pivot to focus on leisure, as you wait for business travel to return, so even if you are in downtown San Francisco or in Silicon Valley, you know, I’m fully with those markets because that’s where I live and you know your focus, your primary business was all the problem from corporations like Google and Facebook. What you gotta do is pivot yourself to focus on leisure because that doesn’t struggle. It’s going to take a little bit longer to return.
3. You have to do is give people what they’re looking for where they’re looking for a safety and cleanliness, and you got to retool your website to make sure that it exudes safety.
4. You got to spend some marketing dollars, but spend it on a markets where your customers are, where you can actually get a bigger bang for the buck, start small and focus on drive markets because I think that’s where the consumers are, and then.
5. Be flexible in your booking policies, because people are just concerned that they may have to cancel. So those are five, five things that we’re seeing.
So let’s talk about what a perfect web digital presence or a perfect website looks. A lot of sites still, unfortunately, are set up as brochure sites. They’re not set up as ecommerce engine so you have to make sure it is, given that you probably don’t have actual salespeople and you’re not calling on corporations or business travel, and you have to rely on consumers to find you digitally, that your sites are set up as ecommerce engines they’re as competitive on ecommerce as booking or Expedia or Amazon or any of these sites and you know what does that means?
It just means the quality of the content on your site, the underlying technology, whether you have a structured data speed conversion elements, mobile, people are looking on mobile. So these are all the elements that you have to make sure especially if you’re a brand, then the brand sort of takes care of a lot of this for you, but if you are an independent hotel, I would really figure out how well optimized your site is, not how beautiful it is.
It goes without saying it needs to be beautiful because travel is an emotional purchase decision. So it needs to look beautiful, but really the underlying engine, how powerful is it? Are you able to bring consumers into your site because you do need that in this current environment, the second thing, and what interesting case study, this is a Hacienda Del Sol in Arizona and what we’re finding is actually their bookings are higher than year over year. So. It’s very interesting during the COVID time in may and June, their website is booking more business than they booked last year. And obviously, one part is that they are in the leisure market, but the second thing is really creating a ecommerce-driven site with all the underlying technology that can attract more users.
I think that’s the key, they haven’t increased their marketing experience. They haven’t really changed anything significan, It’s mostly just changing the website architecture and changing the website technology that’s causing that increase. So big opportunity there classic case, to me, this is a classic example of somebody who’s actually running higher than last year, of course not as a complete hotel, but at least on digital, the next thing focus on leisure.
So if you don’t have what we call goal local content need to put in every location has some local elements what to do, even if you were this is an example of a Silicon Valley hotel that was primarily a business hotel. They didn’t actually have to do any marketing because companies like Google, LinkedIn, and Facebook would just fill up all the rooms in the hotel. But you can see the period now, right? It’s talking about the mountain views and the Bay area exploration versus the, you know, the golf courses and the walking trails so completely different focus from what it used to be and that’s something I think Chip referred to as well. The business travel is probably going to take longer to come back and you have two options. You could wait for the business traveler to come back, or you could pivot yourself to the extent possible and look for travelers and the other segments because people are traveling.
The other thing, the very important thing is book with confidence messaging. We talked about that focus on safety, so you can see Chip’s Safe Stay badge. You can download that very clearly on this website. You’ll see that, so this hotel went in and followed all the guidelines that AHLA Chip’s team is asking them to fulfill. And then you can put this badge on. Getting a bag that is recognizable, that’s done by the industry’s largest association, I think it goes a long way in communicating confidence. I’m going out next weekend and I’m looking for hotels that are going to be safe. You can see the other way to do it is to put some custom messaging here is what we’re doing and cleanliness and care packages, and offers and packages around attracting local travelers so again, it’s a typical merchandising, so play on the fact that consumers are looking to get out. They’re not going to get on a plane, they’re going to look for local hotels and they’re getting on the plane, but to a lesser extent, there’s a lot of people who are looking for driving options and not only just create the content, but create the offers that would entice them.
Use channels like Google My Business, Bing, Apple, Yelp, TripAdvisor, makes sure the same messaging that’s going on your website is getting exuded there because the consumers will go on to other channels, look for the same exact thing, so very big opportunity. Again, like I said, if you’re a brand, because the brand probably takes care of this messaging for you but if you are independent hotels or if you’re an independent chain, these are the kinds of things where you can make a big difference and communicate confidence. You can put in covert special hours, you can put an attributes amenities that you’re offering related to COVID. You know, one other thing, the secret thing that I will tell you is that you know, obviously you have to focus on the market where customers are. So business customers are still not traveling, but the leisure ones are, and I would run paid advertising because it is paying off, it is more cheaper than it’s ever been before, it’s more efficient right now. Take advantage of that.
What we’re seeing is obviously, we’re seeing significantly reduced level of spends, but what you’ll see in the next thing is that the click through rates is much higher, which tells you the competition is lower. And then the cost per click is just significantly, It’s almost 50% of what it used to be and the cost per conversion is 50% less. So that’s a very big deal, right? So the advertising is very efficient, more bang for your buck. I know most of you are very constrained on budgets, but if you have hotels, where in your pivoted, where you can bring in leisure market, your travelers, I will do some limited advertising, depending on what your results you’ll see, but this is across our entire portfolio that I’m showing so I’m not giving you a case study of one or two hotels who are doing this. This is across the board. We’re seeing about a 50% decline in the cost and about a 20% increase in conversion rate and cost per conversion, going down to becoming half of what it used to be. Focused on the feeder markets and previous customers, people who have stayed with you before and focus on your local drive markets and leverage keyword trends like open hotels, safe hotels.
So a little bit detailed, sort of big picture is that people are traveling. People are beginning to look, people are, what they’re looking for safe hotels, clean hotels, give them that information on your digital, as well as digital channels, all your digital channels. So your website, your social media, your GMB profiles, your TripAdvisor listings and Yelp listings, make sure you’re offering them the same value across the board and then you know I think you’re going to pick up some business probably not at the same levels as you had before, but I showed you an instance of that hotel in Arizona that’s picking up higher than what they used to last year. So that, I think brings me to the end of what I wanted to talk about and at this point, what we’re gonna do is we’re gonna switch gears and ask Chip a lot of questions, I think Erik mentioned this at the beginning of the presentation, but Erik, go ahead. This is something that you lead, so why don’t you talk to what this offer is.
The first question that I have, your Safe Stay badge, it’s sort of, I think it’s going to become synonymous with security and safety and cleanliness. What do I do if I’m an independent hotelier to get that badge, do I just need to go to your website and download that and fulfill your guidelines? Any advice for our listeners there?
Yeah, great question and frankly, a lot of it is focused on independent hotels. So we appreciate that, go to the website, you could download the guidelines to see generally what we’re talking about. And again, these guidelines were reviewed by the CDC so we know they’re in alignment with what the true health experts are asking us. The second part is there’s an actual property checklist there. Now we realize that all properties are different but where you can do this checklist and self-certify that’s critically important to show what you’re doing so we can prove to people,
Hey, this is what our hotels are doing. And even if you wanted to take that and put it on your website or draw people’s attention to it, that’s good. The third thing of course is to download those logos and use those wherever you can. We have signage that is available too, that you can download. And then actually there a fourth thing, and that is, of course, get your employees trained, the training, learning management system, it takes about 15 minutes to go through it. It’s only $5, so you don’t have to do it once. So it’s really cheap but we think that’s important. And if you do all those, you’re going to be at a much better position and you can market yourself as having done those things.
Very good. Very good. I know there were a couple of questions online as well, other than that. So hopefully that answers the question. So looking a little bit about, I know your long time travel industry, what do you miss the most about the pre-pandemic times, on a personal level? I guess you’re a consumer, you’re a traveler, tell us about what you feel like as a consumer and as a travel industry, executive, what do you miss?
Well, I have as you know, I had the opportunity over the last few years to travel a lot. I think in 2018, I spent about 150 nights on the road, which is roughly half the year and that’s not even including weekends. So spent a lot of time in a lot of hotels and you certainly, you do miss that. There’s no question about it then there’s the silver lining of spending a lot more time at home with your family during the pandemic, which is good as well so, there’s good and bad with both, but I think what bothers me the most about the pandemic is so many friends I have in the industry that I know have built their businesses for decades. Many of these are family businesses that are now seeing those businesses threatened and in some places closed down because of something that they didn’t do wrong, but frankly no one did wrong.
But it’s something that happened and it is so sad and I think we as a society have to recognize that we’re all very hopeful for a vaccine that will come out this fall, or by the beginning of the year and that would be great. It would help us get past it, but we also ought to recognize that we need to be behaving now as if there weren’t going to be a vaccine. We can’t just stay shelter in place forever, we can’t just close down the entire American economy forever. So what are the steps we need to take to be safe, continue to drive business, continue to have hotels functional and those are the things we need to be focused on because I don’t want to see any more of my friends lose their businesses. I don’t want to see any more families devastated over this. Those are the things that I think are the worst part of this pandemic beyond just obviously the loss of life it’s all the businesses that are being crushed and the jobs that are being lost.
I can’t agree more. I mean, that’s the part that saddens me the most, every single day you go out and, for me, the saddest thing is going to those markets or strip malls or places that were just teaming with people six months ago. And you just see nobody there anyway, how is this crisis different? Obviously the hotel industry has endured a couple of previous crisis. I think there was 9/11 in 2001. And then we had 2008, 2009, 2010 crisis. What is different about this? And any advice for hotel guests on other than what we’ve already talked about, but they could do different in this current environment.
The one silver lining of a crisis is that it forces you to focus on those things that are most important. And in business obviously, it’s how do you keep your business open? And so you’re going to focus yourself on making sure you’re as efficient as possible that your resources are being deployed in a way that gets you a return, whether those are human resources, whether those are physical resources, whether those are capital resources, you’re going to make sure you’re getting that return. And you’re really going to streamline your process, everybody’s doing that. Literally everybody is doing that just to survive, that will serve us well in the years to come. So there’s no question about that, but as we compare this to what has happened in the past, and we’ll look at the most two recent, you had 9/11, which for the most part impacted our industry in a very regional manner.
Now for a short period of time, people were fearful of getting on an airplane, that fear actually exists somewhat today as well, by the way, people were, were doing drive to markets back then but Americans got past that quickly security systems were put in place at airports that while they slow us up a little bit, certainly make people feel more secure. And then it was also a regional problem. The impact on New York city and the greater New York area in Washington, DC was much greater than it was throughout the rest of the country. So then let’s go to the financial crisis that happened after that, well, two things happened there.
First, the American people look at their bank account and said, I can’t afford to travel. I’m worried about my job, I’m worried about making my house payment, therefore I’m not going to spend money on travel. That did impact us for a little while, not as long as this has been, that was a very short one to two month timeframe that people had that concern. Then you also had on the owner side, in our industry, you have people losing their hotels because we had a financial crisis that caused banking regulators to come into a hotel owner and say, Hey, your property is now worth 30% less than than your loan amount and therefore you got to cough up the difference in hotels. A hotel owners didn’t have the ability to do that at that time so that was what’s so different about the crisis in ’08 and ’09. This one is much deeper, It’s much broader and it’s much longer.
We’ve never seen an occupancy drop like this that’s universal across the country, we’ve never seen an occupancy drop like this that has lasted so long. We’ve never seen an occupancy drop tied to to a pandemic to where we don’t know where the end is in sight, like when 9/11 happened, it happened and in a matter of an hour, or it was over. And we started that long recovery process. There were still fears that something like that might happen again, but we started the recovery process, here, It’s happening day after day after, day after day, and that’s why consumers are more concerned. This is both a medical challenge that we face and a psychological challenge that we face and economic challenge that we face all rolled into one. And that’s why this one is a much greater concern to me than the other two combined.
That’s very well said. So, you’re talking about what the challenges are, how is AHLA pivoting themselves in this organization? Like what are the things that you were having to do different within your organization to manage this current crisis? Obviously, it’s very evident that you’re spending a lot more time policy makers and the government, but give us a couple of examples, I want to make sure that your organization does a fantastic amount of work. And you know, maybe there inspiration examples for our listeners here to see how you are actually pivoting in your organization.
So just like everybody else, we had to really begin to focus on what are the most important things, right now, it’s the bottom line to hoteliers to make sure that the industry survives, the employees themselves and hotels across the country can have a job.That’s really what we’re focused on, so we’ve been working on nothing but Corona Virus since mid to late February and that has taken on kind of a life itself. Now we are impacted just like everybody else, we’ve had to make significant cuts at AHLA, just like almost every business in America and particularly every business in our industry, yet at the same time we’re being asked to do more because what’s happening in Washington, DC, not just with Congress, but the daily work we have to do with the administration, particularly through the treasury department that is critical stuff.
As we look at legislation and how it’s being implemented and how it impacts our industry. Let me give you a perfect example. If you go back to February, when Congress was thinking about the first cares act that created the PPP, we knew that the lending was going to go through the SBA well under SBA rules, any employer or any ownership group that has more than 500 employees would not qualify. So if you have an owner and that ownership group could own a hotel, but they could also own a restaurant, they could own a shopping center, they could own all sorts of things. But if all the businesses combined into that ownership group had 500 employees or more, they would not be qualified to receive any of the PPP funding. And so we knew that was going to be devastating to our industry because we calculated that without waiving that rule, that 500 employee rule, only about 62% of the hotels across the US would be covered.
We were able to lobby Congress and get them to waive what’s known as the affiliation rule that combines all the employees under one ownership group into one count. And we got them to recognize that every franchise hotel and restaurant would be treated individually no matter who owns it. And what that did is that took us from about 62% coverage of hotels to about 98% of the hotels in the country being covered by the PPP. And that was really, really important, that extra 30% or so, more than 30% got covered and that their employees were taken care of as well. So that’s just one example, but we not only work with Congress and the administration, we’re working at the city level, the state level every single day. And right now we’re having to do it on a much more limited staff. So it is challenging it’s 24/7. But the industry is worth fighting for and so we’re happy to do it.
Yeah, I’m going to just applaud you for that. That’s a very big deal, I know. I have worked with so many of our partners and customers who’ve talked about how the loan basically was the lifeline for them and to take it from 62% to 98% coverage, that’s just mind boggling. I didn’t even know that that’s a new fact that I learned today, that’s huge, huge very, very impressive.
Well, I guess I’ve got last two questions before we could pick up some questions from the audience. So any guidance for the people on the call, on what skills they should develop , we clearly talked about doing the online certification and cleanliness, anything else that you see from your vantage point, the skills that you were thinking that this would be a good time, especially for a lot of our industry friends who are on furloughs or on reduced work hours, what they should be reading, training themselves on?
Well, really anything and everything inside of our industry and even some of those things that are outside of our industry, you know, basic things like how do I master Excel and things like that. I mean, those are always important, but if you go to our website, we have a broad array of educational offerings that we offer through the educational Institute, all sorts of certifications and trainings. Sometimes some of those are actually free, but they’re all very low cost and any of them are going to help you position yourself in a much better place.
I think we have to all recognize the reality of what we’re facing and that the hotel industry, as we know, it may be smaller than what it was in January of this year. There may be fewer opportunities, fewer hotels, at least in the short run. And therefore, if you make yourself more valuable, you stand a much better opportunity to maintain a position in this industry, because there will be competition among physicians, particularly after we get past the advanced and unemployment benefits that the federal government has that run out at the end of July and we see a lot more demand coming back into the market.
Very good. And, you know, I’ve got some advice as well there, one skill that’s gonna continue to become even more important as we go forward is the digital skills. So I would take the opportunity. I think AHLA has some great digital classes. Cornell offers some, my good friend, Bob Gilbert from HSMAI, they offer some, so take advantage of those, learn some of those skills, because those are gonna come in handy, no matter what job you do within the industry, right?
Because a lot of things will move digitally. Any examples of hotels that come to mind that have done this really well, Chip, any of your friends in the industry that just example any tips from a specific example that springs to mind that people could take advantage of, or would be excited about hearing?
Every hotel has different needs, so it’s hard to pick out a single hotel that has done it. I will tell you as a general proposition, and even before the pandemic, Wyndham hotels has always done a great job with getting their folks to do training. And a lot of the programs that we offer, we have an apprenticeship program as well, and was very successful. And Wyndham hotels had always been very active in that. Our friends at Ambridge obviously the world’s largest management company, they use a lot of the tools that we offer and so they’ve made it available to their folks as well and encourage their team members to take advantage of it.
So those are probably two of the larger companies, but there are thousands of them. During the months of April and May, we had a special going on where we were actually giving away most of our training, we had some donors step up and make it available. And we gave away about $3,500,000 worth of training, which represented thousands of people taking the free training.
Very insightful. Alright, I guess Erik, I’m going to throw it back at you, Chip, those are fantastic insights. Erik, you want to pick up some, or do we have time for some audience questions?
We do. So here’s an interesting question, probably for Anil, when providing local content, is it better to provide the information with a landing page on your site versus a hyperlink to the attraction, if via a landing page, what is the best way to provide the content in terms of assets, pictures, text or guest feedback?
it is always good to have original content on your own website, so the most important thing is that you should create a landing page, you should create information about local attractions and things to do, and try to make sure that you don’t copy off the internet and you actually create original content and in that content. If somebody is interested in more details, you can provide a link to the actual attraction, but I would highly recommend building out the content on your site.
Most hotels are part of chambers of commerce or their local business association. Through that association, you should have access to a photography of the local attractions. So you should be able to get it royalty free without having to pay for the photography for the local. If you’re part of the Chamber of Commerce, typically what we recommend that contact your local business association, get those pictures, create original content, it’s worth every penny to create original content and then provide a link to the organization that you’re talking about. If you feel like that will help.
This one probably for Chip. Our resort has observed assuming large scale ADR setback in the market we’re in and yet we’re hearing on the call that consumers will be willing to pay more for safety so we don’t need to drop our rates, the ongoing STR reports seem to report the opposite. Please advise on her comment.
I think it’s comparative. So yes, ADR is being pushed down because occupancies dropped off significantly, those are just the math, that’s just the forces of economics in play. But if you’re comparing your hotel in this environment to the hotel down the street, and you’re able to promote complying with safety guidelines, we know from consumer data that you are going to be able to drive a higher price than the hotel down the street. There’s no question about that because that’s what consumers are saying they want and consumer is always wanting to pay a little bit more for what they want, so yes, all rates have come down.
There’s no question about it. But when comparing to your comp set if you have the safety guidelines, you should be able to get a little bit more. Now, keep in mind, everybody’s going to promote safety and cleanliness. And so the thing is, you might really look into how do I promote something that is generally recognized, and that’s why we’ve made such a push with safe stay to become kind of the industry standard so that there is one set and keep in mind, we’ve built this for the hotel industry, there’s no charge for it. We’re certainly not making any revenue off of it, but we want it to be used because the more it is used and recognized, the more valuable it becomes because the consumers see it and they understand what it means. So, gentlemen, I thank you so much for the opportunity.
Thank you for joining us Chip. It was wonderful material. And I want to thank the audience for joining us today.
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