by Tariq Chauhan, Group CEO of EFS Facilities Services Group
In the current state of the world economy, there is an endless list of industries in distress. Some of them are in deep turmoil, especially Aviation and Hotel. These are going through callous times, and going is getting more and more difficult. The pandemic and its after-effects have put their business model under intense scrutiny. It is time for them to introspect how to manage this torrent state of the industry and contemplate their next moves to stay afloat. Their losses are running into trillions, and their very survival is at stake. So instead of waiting for a miracle to happen, it is high time that the industry takes a giant leap to transform.
The hotel industry in this turbulence is amongst the worst affected. It is time for the sector to tweak its business model that is lean, agile, tactical, and transformative. These need to align with the evolving market needs and trends; landscape demands path-breaking changes. The Hotel industry, even in the Pre pandemic stage, was already under pressure due to many factors, namely, Airbnb, real estate costs, and ever-changing consumer needs in terms of the guest experience. The pandemic has brought the Hotel industry on its knees, with occupancy levels plummeting and bottom lines in red with accumulated losses. It is time to introspect now and transform to overcome the worries. The recipe of recovery herein calls for a complete overhaul. Bring change in every context, from the hotelier’s business model. From revenue to cost to design to resourcing, each aspect would need a revisit.
As a Facilities Management professional and a professional entrepreneur, I would bring some critical aspects of FM related transformation that the hotel industry needs to adopt. For a long time, they have ignored FM as a necessary tool of sustainable practices. In the interest of all its stakeholders and the state of the industry, this has become an absolute necessity. The changing face of real estate and its property management cost is one of the many essential factors that require FM intervention for better cost management. It is not a tool of facilities upkeep only but a holistic optimization of assets and cost-efficiency. This careful cost management is amongst the few steps that hospitality and leisure need to prioritize. I am sure if this is adopted effectively, it can significantly impact the Hotel industry survival dynamics. On average, hotels spend runs in double digits between Capex and Opex on its maintenance, far higher than any other built environment benchmark. I can’t entirely agree with the contention of some of the Hotel industry professionals that being a customer-centric business. The guest experience perspective demands additional specs; therefore, the higher cost is justified. No specific indicator should require additional spend other than a change in maintenance related service level requirements, what we call customized SLAs. It is more to move away from the fixated mindsets of hoteliers that industry needs are unique. Not at all; built environments have their specific set of SLAs but do need to elevate costs.
For a long time, the hotel industry has not adhered to FM protocols critical to life cycle management. It is paramount in managing longevity as well as long term cost management. The sector is by and large operated in operations and maintenance modes with little focus on preventative planned maintenance. Their quagmire between revenue centric approach with occupied rooms being a revenue source. They have been dragging their feet on preventive measures to more reactive responses. Hotels are by and large known for being high-cost guzzlers in maintenance cost. Unfortunately, its impact is lost in the translation with blame on its guest experience sensitivities that is not true in most cases.
The FM regime is well known for its cost-effectiveness and time and again proved its mettle in upholding its true impact. It is high time that the Hoteliers community adopt FM in its entirety rather than just tactical maneuvers in outsourcing. It is common to see more and more Hoteliers outsourcing housekeeping, laundry or banquet staffing services, but these are more supply chain initiatives with fewer FM considerations. Time is ripe for transforming building & asset maintenance strategy to more effective ways with an eye on cost-benefits and quality services upkeep. There is no room for argument that any built environment cannot achieve a better end-user experience by ignoring critical PPM guidelines. This elevates the customer woes, besides the cost. It is just in hotels; the guest experience feedback does not necessarily capture maintenance-related provisions in their HMA, Hotel Management Agreements. This, in fact, is often a common contentious issue between the Hotel management companies and owners. Both continue to bicker over the Capex & OPEX costs, who should bear it, and what to classify between their accounting treatment. More so, operators want to manage gross margins whilst leaving operating expenses to owners with a headache. Therefore, it is time for stakeholders to guard their interest. The IFM regime can indeed protect to their benefit to manage costs efficiently and protect the property’s fabric.