Hospitality Ventures Had the Perfect Plan for the Pandemic
Throughout the coronavirus pandemic, hospitality companies have searched for the right strategy so they could return to the business levels they enjoyed before the virus hit. Atlanta-based private hotel investment, ownership and management company Hospitality Ventures Management Group (HVMG) says it has managed to outperform the industry by rapidly executing its own plan as the pandemic spread.
According to the company, it delivered greater gross operating profit (GOP) per available room and GOP percentage than the industry from June to August 2020 and is still exceeding industry metrics. “HVMG reacted decisively in the very early stages of the pandemic spread by implementing some drastic, cash-conserving measures which enabled us to confront the situation head-on,” HVMG President and CEO Robert Cole said.
“We took a variety of steps beyond similarly reducing headcount and benefit costs, which ranged from moving salaried associates to hourly, which allowed us to flex labor hours and costs to align with occupancy levels, to closing floors that reduced utility costs,” he continued. “We also focused on other controllable expenses, such as eliminating or renegotiating service contracts and maintenance agreements.”
With this plan, HVMG reduced its total portfolio operating expenses more than $14 per available room, while its GOP margin for the three-month period ending August was 27.4%, which was almost 23.1 percentage points higher than the industry average of 4.3%. Its upper-upscale portfolio produced nearly 32% more top-line revenue than the industry segment average and a GOP margin of 26%, as opposed to the industry category average of -8.4%.
“Our emergency planning allowed us to move swiftly and boldly when the pandemic commenced in early March and provide our general managers with a roadmap for sweeping, simultaneous changes versus incremental steps over a longer period of time,” Cole said. “We are equally well-positioned with a plan for the inevitable recovery. While we believe that comprehensive rapid testing and confidence in a vaccine/therapeutic will be the key driver for a return to pre-pandemic travel, HVMG already is well into the planning stage as to what the right business and staff models are for each of our hotels.
“Given that the rebound in occupancy will very likely be slow and methodical, it is vital that we continue to provide maximum flexibility to adjust our costs according to business levels,” he continued. “Our primary goal remains to safeguard our owners by conserving cash and protecting long-term asset value, while simultaneously ensuring the health and safety of our guests and associates through HVMG’s Trust & Preparedness Plan that was launched in May.”