Blog: 8 Ways Hotels Can Manage Cashflow During Coronavirus
Managing Cashflow During Crisis
In the next few blogs, I am going to be taking a look at what hotels can do to survive the Coronavirus pandemic that currently grips the globe. Everyone knows that cashflow is key during times of crisis. In this post, I’m going to give you the top 8 ways I believe you can manage cashflow during this crisis now, and possibly in the future too. Hopefully, this post will help you in protecting your revenue streams and being prepared for when we emerge ever stronger from these challenging times.
Boost & Protect Your Revenue
Both boosting and protecting revenue are key components of managing cashflow. It’s very easy during times of crisis to focus on only protecting revenue. This is risky though because while protecting revenue streams is obvious, times of crisis often open up new opportunities. Sometimes in ways you never expected. The financial markets talk constantly about diversification, and I believe hoteliers should take the same approach.
So, here are my first 4 tips – for managing cashflow during coronavirus.
1. Chase, chase, chase – Chase all account receivables
Diligently chase all account receivables and expected revenue. Start to check back through those invoices, are there any outstanding? Perhaps many are near their due date? Create a process for chasing them up, both close to the due date and when overdue. Check-in with staff members, are they holding onto invoices for services already delivered? Get them issued!
2. Turn the challenge of hotel refunds on its own head
Driven initially by the reaction of the OTA’s, hotels and chains are now in a position of offering refunds, even on previously non-refundable rates. Marriott, InterContinental, Hilton, Hyatt, Wyndham and Best Western have all waived cancellation fees or relaxed their cancellation policies in countries affected by the coronavirus. The answer to protecting your revenue stream in such a scenario could be gift cards. Offering the guest, a gift card rather than a refund avoids returning cash to guests when it is needed most.
Of course, sometimes a gift card can seem like a hard sell. The key is making it worthwhile for the guest. Look to offer extras, something that not only entices the guest back but also makes them feel as though they are getting some extra value. I know it would work for me!
The impact of buying a gift card is actually two-fold. Firstly, it makes a lovely present for a family member or close friend to redeem in the future. Secondly, it allows you to support local businesses as well. Businesses are crying out through this kind of support, and the greatest need is clearly in the Hospitality sector, just like in this example.
Taking this to a whole new level though, how about actually selling these gift cards online? Creating packages of offers with flexibility, that entice guests with those three points I mentioned above, something extra and of better value! Maybe you even need to use an interesting tag line, see further down for some ideas.
Incidentally, this article, originally from The New York Times, shows that there is still demand for hotel rooms and flights. Digital Nomads are using this time to relocate themselves to their ideal locations, to carry on working, but also to take full advantage of low hotel rates and airfares.
3. Make it irresistible
The time is now to get creative with your marketing, beat the trends, and get those irresistible future-dated offers out to your guests. Maybe for those gift cards, you could come up with some interesting statements. “Buy your beer now, drink it later”, “Lockdowns will not lock hearts down. Buy your loved ones gifts, unlock the locks!”. Or even, “Investing in those low-cost shares? Why not buy holidays at low costs too?”. I think you get the idea.
4. Multiple properties? Multiply your sales
If you run multiple properties, you can leverage this advantage in your revenue generation initiatives. Look to group your similar properties together as a way to make your offers more attractive. Perhaps selling group-wide gift cards or offers that incorporate a selection of hotels to choose from. Maybe each hotel can have a different hidden, or not so hidden extra!
Control Your Costs
The second part of this post focusses on controlling costs. While protecting and boosting revenue are a key part of cashflow management, so is applying controls to outgoings. Nevermore has the case been stronger for taking a good hard look at expenditure, to have a clear handle on the cash flowing out of your hotel business.
So, here are the next 4 tips in managing cashflow during coronavirus.
1. Turn off all non-essential services
Your number 1 priority has to be to turn off all non-essential services. Take a long, hard look at what you can do without. Before you turn entire services off, can you break it down? Are there elements of services that can be paused, or cancelled? I’m sure many partners would be willing to support you to find a solution that helps everyone survive.
2. Spread the cost
If you are in the middle of procuring new infrastructure while paying it all in one go, maybe there could be alternative options. Work with your suppliers to look at delaying payments, or even better, investigate leasing options. Moving to lease agreements could allow you to spread the cost of an investment, meaning you are prepared for the eventual upturn, but only covering the cost when your revenue streams are returning to normal levels.
3. Tap into government grants
I think this is obvious for many now, but governments throughout the world have created extraordinary support packages for businesses. My advice is check, and check again, make sure you know what your business is entitled to. These grants could just be enough to get you through!
4. Avoid lay-offs and find alternatives
The final step, of course, is to work with your staff for a solution to staffing expenses. Look into government support for your staff and their salaries. See which staff can take voluntary leaves of absence or be considered as furloughed workers. Where possible avoid laying them off because when we come out of this you will undoubtedly need those experienced workers to steer your ship in the upturn.
|Simon I’Anson is Chief Strategy Officer with Hoist Group, whose main focus is finding Hoist Group’s myriad of advanced technology solutions their rightful home in some of the world’s greatest hotels. With over 15 years of experience in the hospitality technology space, he is sharing his valuable insights through these posts. Outside of work he is a big fan of many sports, including Rugby and Tennis, enjoys spending time with his family, and likes the type of music that should be turned up to ‘11’. You can find more about him here – LinkedIn|