Picking up the pieces

Besides causing immense damage to people and property, the Easter bombings in Sri Lanka have severely impacted hospitality brands such as Shangri-La, Kingsbury and Cinnamon Grand that operate in Colombo. Hotels in Lanka are now witnessing a 40-50% drop in bookings and occupancy levels of below 40%. 

Similarly, in December 2017, the volcanic eruption of Mt. Agung in Bali had led to a severe drop in the occupancy levels of hotels to 25%, from 80% a year ago. 

Experts say natural and man-made disasters wreak tremendous havoc on hotel brands, which suffer on all fronts. Along with profitability, brand equity, legacy and customer loyalty may also get eroded. “There is a huge loss of business. What is important to remember here is that it is not really the hotel brand that people shy away from, but the market or the region where the tragedy has occurred. But even then the hotel brand suffers as people refrain from travelling to that region,” says Nandivardhan Jain, CEO, Noesis Capital Advisors. 

In a market where competition is intensive, any loss suffered by a hospitality brand can have far-reaching implications. The brand values of several leading hotel chains have already dropped owing to the competition and the rise of online aggregators like Airbnb. According to a report by brand valuation and strategy consultancy Brand Finance, Hilton witnessed a 24% drop in brand value from about $8.3 billion in 2017 to $6.3 billion in 2018. Hyatt, meanwhile, experienced a 13% drop in brand value from over $4 billion in 2017 to about $ 3.5 billion in 2018. Interestingly, the brand value of Airbnb rose by 51% in the same period to tower over $5.5 billion in 2018, says the report. 

Thus, brands have to recoup at lightning speed in order to remain in the limelight in the face of stiff competition, add experts.

Brands that have properties located in sensitive areas need to forever “be ready”. This includes keeping a surplus of as many supplies as possible, having power backup handy and alternate communication lines if cell towers collapse. “Brands can ensure a set procedure with schedule drills during the time of peace to be prepared for any exigency that arises,” says Ajit Singh Garcha, area general manager, THE Park Hotels (Bengaluru, Mumbai, Vizag). 

If a calamity strikes, the brand should stand tall and sturdy and avoid becoming a victim, as that does not reflect well on its legacy, say experts. “The aura of the brand, even during a calamity, should exude its strength and willingness to go the extra mile, like the Taj Mahal Palace and Towers during the 2008 attacks.”

Furthermore, as an immediate measure, it is recommended that brands offer waivers on cancellation fees, or rescheduling options in order to protect their guests' money and gain in their confidence and loyalty, says Akshaara Lalwani, founder and CEO, Communicate India. “Restoring their properties and working alongside other citizens through philanthropic activities is in the best interest of hospitality brands.” 

Experts feel the corporate social responsibility (CSR) wings should be active in sponsoring relief efforts, streamlining donation drives and organising volunteer groups. Says Garcha, “A brand could be the support system for hotel guests and the neighbourhood in terms of food and shelter. During the 2014 cyclone in Vizag, we were prepared with essential supplies and water for our staff and guests. We also provided food to over 1,000 people a day in the neighbourhood when public services were disrupted. Our staff that had lost their accommodation were allowed to stay in the hotel.'' 

Once the calamity has passed by, brands need to leverage their sales and marketing channels, their distribution channels and their communications platforms in a holistic manner to reach out to their patrons and convince them to visit again, says Achin Khanna, managing partner – strategic advisory, Hotelivate. “Brands should adopt a robust social media and digital marketing strategy to tell guests that they are open for business and have a host of interesting services and offerings to make,'' says Khanna.

BIG DROP

• 40-50% – Fall in bookings at hotels in Sri Lanka after the attack
   
• 25% – Occupancy levels at hotels in Bali had dropped to after the volcanic eruption of Mt. Agung