Getting Back On The Road To Recovery With Ted Teng
Viewing our world through the prism of the Pandemic, it strangely yet optimistically, reminds me of the folklore around a tiny ant and a great, ancient King. During one of his unsuccessful raids, the injured King felt hopeless and hapless, fearing defeat and a possibly nearing end.
Cooped up in a forsaken fortress in a desert, one night the King noticed a little ant attempt to carry a grain up a wet and slippery wall. The King counted 69 failed attempts when the ant scaled up a little and then fell down with the grain. However, on the 70th try, the ant managed to lug the piece of grain up the slippery wall to his destination.
Upon seeing this, the King reenergized himself, regrouped and fought his next battle to victory.
The human spirit is as resilient. Generations of people have grown up in harrowing times, with many living through disasters and calamities of huge proportions. Yet, the world has been resurrected each time and lives rebuilt.
In the present scenario, I see several industries, including the hospitality industry, work towards rejuvenation and reemergence.
I spoke to Ted Teng regarding what this renewal and revival process should entail.
Ted Teng is the former President & CEO of The Leading Hotels of the World and the current President of the Cornell Hotel Society. With a career spanning 40 years in the global hospitality industry, Ted has driven company growth, created new organizations, revitalized businesses to generate greater enterprise value and revenue, developed landmark projects and steered companies through crisis for survival into better markets.
I enjoy talking to Teng because he lays it out straight and doesn’t balk from looking the issue in the eye to offer the wisest counsel that cuts through trope in order to help find tough but triumphant measures.
Tune in -
L. Aruna Dhir - There has never been a more fierce wake-up call for the industry. What changes should the hotels bring about in their SOPs?
Ted Teng - True this is a fierce wake-up call. Will the industry wake up or go back to business as usual? Some will have an awakening and most won’t. We have short memories. We are more pre-occupied with the tasks at hand, gain occupancy, drive ADR and operating profits.
We need to recognize that hotel usage is incidental to the purpose of travel. We don’t generate demand (with a few exceptions); we simply accommodate demand generated by others. That being the case, there are circumstances beyond our control. We have to think of other productive activities we can conduct during these times such as renovations, staff training, and community support.
Clearly guests and staff safety and security are non-negotiable. There is no compromising. This has to be institutionalized. We tend to downplay risks until it is too late. Often, we get away with it and this only emboldens future rationalizing. We have to live by the “it is better to be safe than sorry” motto.
Staff training takes three levels: Basic process; what if situations; and emergency procedures. I am afraid most training conducted in hotels today are just the basic processes, i.e., how to check in and out guests.
With the thinning of the supervisory level staff, there is very little what if situational training, i.e., if a guest is requesting this, here is how to accommodate. This is hospitality.
Lastly there is very little emergency training conducted as these situations seldom occur. With the recent almost complete turnover of front-line staff, services and guest experiences at hotels are seriously challenged.
This is also a great opportunity for those who are forward thinking as “good” will stand out more than ever.
L. Aruna Dhir - In order to bring some stability to the bottom line, how should the hotels be ensuring profit protection?
Ted Teng - This will depend greatly whether it is short term or long-term profits. Is it profits from operations or sale of the asset?
Hotels are seasonal and cyclical business. Revenue and profits vary from month to month, which we all seem to accept. Hotels also track economic cycles, which we don’t seem to recognize as well. Further exaggerating the economic cycles, hotels also have a development lag time of three to five years which has a tendency to produce under and over supply situations.
Stability in the bottom-line is performance tracking to the cycles in the market.
There is also spotting opportunities and developing market demand. There are sometimes market opportunities such as airlines adding flights, building of a convention center or attraction which would generate more hotel demand. But these will often attract more addition of supply as well, unless there are established barriers to entry.
Developing demand for market would be to work with destination planning to create more demand and manage responsible growth and development.
L. Aruna Dhir - What is your advice for countries that have been more severely hit than the others?
Ted Teng - Invest to recover. Diversify your economy. Diversify your source markets of visitors.
L. Aruna Dhir - The USA, India, Brazil, France, Turkey, Russia, the UK, Italy, Argentina and Germany are the top ten worst affected countries. Are there any lessons coming out of them?
Ted Teng - The lessons are all individual to each country. Whether they will learn any lessons depends on their political will.
This won’t be our last pandemic or global crisis.
Be prepared.
Don’t downplay.
Take early signs seriously.
Communicate transparently.
Play for the long term.
L. Aruna Dhir - What measures should the hotel guests and travelers be adopting to bring the business back to the industry? For instance, there has been an opportunity to avail the WFH provision by taking up temporary residence in hotels at scenic and less crowded destinations.
Ted Teng - Most of the large economies of the world are based on pursuit of self-fulfillment and it is not up to the customers to save businesses. What I am saying is that the travelers cannot be expected to save the industry. In pursuit of their enjoyment and break from isolation, they may still bring sizeable succour. But the “why” they are traveling is not to save the industry.
The mantle really rests with the mandarins of the industry and the Governments who must put forth a cohesive, concerted, consistent, courageous and compassionate approach and plan of action.
Most of the short-term measures during the pandemic will go away or become insignificant. Still, it is heartening to see most establishments conscientiously adopt practices around masks, social distancing, partitions, use of hand sanitizer, two people per elevator, etc.
Having said that; hotels do not have a solution to the pandemic! The vaccine was the solution.
As for the surge in WFH, I do think the independent contractor worker will take advantage of WFM WFA, Work for myself, work from anywhere; which is fine as long as personal and company targets are met and goals achieved.
L. Aruna Dhir - What attractive features – out of the box and heretofore untried - should the leisure hotels be offering to meet their occupancy and ARR expectations?
Ted Teng - For some hotels, they have very special rooms they should sell through some form of auctions. We will need some technology platform to accomplish this, but it could be a nice upside for some hotels.
I have been in suites where there is a huge terrace. Some guests won’t use it. Some would pay an extra $1,000 a night just for the terrace. Some bathrooms have steam baths which I would pay more for.
Right now, we don’t have the means of selling rooms to the guests who get the most value from the room and therefore willing to pay more for it.
Personalization has great potential for the luxury hotel market. You know; things like Arrival amenities, Colour scheme of your room, Bathroom amenities, Size of your slippers, One page room service menu that says “What would you like to eat?" The possibilities are endless.
L. Aruna Dhir - What additional facilities should the business hotels be providing in order to aim for increased traffic and a healthy bottom line?
Ted Teng - I think the real opportunity is not in facilities but in services, personalized services. Chain branded hotels owned by institutional investors have largely been taking hospitality out of hotels to cut cost and turning hotels into commodity products.
Hotels with great services to each guest stand to capture a greater share of a “no frills” good enough solution market.
Specialized and highly personalized services make a hotel, easily, rise above the crowd and define what truly luxury is.
Turn down the bed based on the side the guest sleeps on. Provide Luggage racks suitable for the size of suitcase the guest has brought along. Leave the TV remote where the guest left it not where the standards say they should place it.
Study your guest profile, know your guests and then offer the services tailor-made to how the guest desires it.
Personalization in services is the best way to deliver your brand promise and affirm your brand value.
L. Aruna Dhir - Hotels such as the Hyatt, with their exciting F&B fare and excellent restaurants, took the lead in swiftly venturing into DIY kits; Take home menus and sound delivery systems. What do you think the hotels can do to keep the restaurant business going on?
Ted Teng - To me, the only reason to keep restaurants operating during the pandemic is to keep the culinary staff employed and practicing their craft.
It is not to make a profit because it won’t. It is not to keep your diners engaged because they will come back. Keeping the culinary staff in place is a reopening plan.
Again, look closely at what the guest really wants at this time, when planning the recovery course to bring back business through your culinary POS.
When health and wellness is paramount and on everyone’s mind, have your restaurants list out all the ingredients and nutritional content of a menu item. That is the only reason to have an iPad as a menu.
Make each menu item customizable. Can the guest order items not on the menu? Can you go the length even for home deliveries? Can you offer easy-to-assemble, healthy alternatives?
L. Aruna Dhir - What should be the big time sustainability strategy developed by the hotel industry, going forward?
Ted Teng - Environmental sustainability in the hotel industry has three major parts: Buildings and facilities; hotel operations; and restaurant operations.
Buildings can have a large impact on building material, energy consumption and maintenance material used. But only 2-3% of rooms inventory are added each year. It would take 40 to 50 years to replace buildings. We have to move forward but there won’t be much short-term impact.
Hotel operations have to do with laundry, cleaning chemicals, and plastic usage. This area offers the greatest immediate impact. But we have to stop green washing and be genuine about sustainability. We also have to stop making the guests receive less service.
An area lacking attention is our food menu offerings. We know animal-raising for consumption accounts for roughly 15% of the greenhouse gas emissions. We as an industry can lead consumers into eating foods not harming the world as much.
L. Aruna Dhir - With all of us being in it together; inclusiveness, CSR and philanthropy became the important cornerstones in our fight back. What exemplary stories have you come across when a hotel group or destination has gone beyond the brief in their community development and corporate conscientiousness?
Ted Teng - We may be in the same storm, but we are in different boats. This pandemic magnified the unequal world that we live in. I think labour is going to demand a fairer share of the economy from capital going forward.
In the US, right now there are a lot of hotel owners and operators complaining about a labour shortage. They even blame the government unemployment benefits as the reason workers are staying out.
Pre-pandemic the industry was adequately staffed. Who laid off almost the entire work force to preserve capital? Who abandoned the workers? Perhaps workers not returning because of unemployment benefits is a clear sign that we are not fairly compensating our workers. Our actions do not match our words. It is just feel-good talks. This is not leadership.
I still think the Dorchester Collection keeping all their staff employed at full pay for the duration of the pandemic is one great example of a business taking a strategic view of its people.
L. Aruna Dhir - What should a hotel Crisis Communication Manual look like now? What are your top recommendations that should be integrally included in the present times and beyond?
Ted Teng - Crisis Communications Manuals all attempt to make the company look good or not look bad and not about telling the truth or what the audience need to know.
They don’t take responsibility of what went wrong. They always have statements like guest safety is our upmost priority. Well, if it truly were, this probably wouldn’t have happened. They shift responsibilities to their outsourced supplier (which they are responsible for supervising).
Crisis Communications need to:
- Be transparent and complete.
- Seek to inform.
- Seek to build trust for the brand.
- Never lie, distort, or misinform.
L. Aruna Dhir - Given the prolonged, wide and deep penetration of the Pandemic in all aspects of our life, what curricular changes or additions should the global hotel schools be bringing about?
Ted Teng - Hotel schools should help students step back 20-30 years to see the cycles in our business. They should also look at the long-term changes over this period and the implications.
For example, changes in hotel ownership from hotel operations’ investors to financial investors have caused hotels to become financial assets from hospitality assets. The consequence is that hospitality has been mostly taken out of hotels to cut cost and improve bottom line in the short term.
There should be a focus on the structure of the industry. On the different Business models!
Hotel Schools should push the industry rather than sing backup vocal to the industry.
L. Aruna Dhir - What should the hotel companies be doing to effectively raise the confidence, morale and spirit, both of the internal and external customers?
Ted Teng - As to internal customers – the employees, we blew it in a big way this past eighteen months. It will take a long time to repair. We will pay the price with shortage of staff, higher cost and poor guest experience.
As for external customers – our guests, we need to restore full service rather than using the pandemic as the excuse for providing less.
L. Aruna Dhir - Together with business acumen, empathy and adaptability are coming out as two of the strongest human traits. What attitudinal reengineering should we develop as professionals, given that the business climate will continue to be more challenging and dynamic than ever before?
Ted Teng - One skill I believe that has been under-recognized as essential is pattern recognition. Our brains are good at it, yet we don’t always apply it to our work.
If you play basketball, as you dribble the ball down the court, you see not only the positions of the nine other players. You see any mis-match coverage, you see lanes, you see movements and time your play. This is pattern recognition. When you look at paintings in a museum, you recognize patterns.
If you play chess, you are seeing patterns. Yet we walk through our hotels and not always see the patterns going on.
I went to an Amex conference at a Five-star deluxe hotel in Las Vegas. It is a 400-room hotel and the Amex group was like 200 rooms. It was all high profile guests.
At the Opening session, the Keynote speaker complained about not getting his room service on time. The GM later said to me, they were slammed with over 100 room service orders that morning. That is a pattern that is predictable. The GM didn’t see it.
The dishwasher knows what food people are not eating. But No one ever asked the dishwashing.
What is the pattern of changes in booking lead time over the year?
There are several patterns across the different functions of the hotel that can be recognized and acted upon, in order to minimize errors and provide that absolutely immaculate service!
