In the latest Industry Q&A Series from Maze Hospitality, Robert Swade, Managing Director, talks to psd’s Simon Tucker-Brown, Managing Director, Hotels, Leisure & Travel, about talent retention, recruitment and current trends in the hospitality market in light of the global pandemic.

In your opinion, what are the challenges for recruitment in the hospitality sector at this time? Are there any recruitment opportunities arising from the uncertainty of 2020?

There are numerous challenges in the current environment. Firstly, as a result of downsizing, restructuring and redundancies there is a surplus of talented individuals in the marketplace with very few vacancies. When employers post new opportunities, they are inundated with applications. Responding to and then filtering these applications can be enormously time consuming at a point when many companies have reduced talent acquisition headcount.

In addition, there is a dichotomy in the recruitment marketplace as active candidates will chase down all opportunities whilst those who are passive (currently in roles) are rightly extremely cautious about considering a move to a new employer. Sacrificing a good level of continuous service for an environment where they could be “last in – first out” is a real risk. This is also having an impact on compensation with the active market prepared to consider lower packages and the passive candidates looking for a premium to mitigate perceived risk.

As a result of this situation we are seeing some of the industry’s best talent starting to actively consider other sectors. We spoke with a CEO of global luxury hotel brand recently who told me he sees this as a real problem as, if we lose this talent, we will not easily replace these individuals.

At present, the opportunities we are seeing are coming about as a direct result of restructuring. Where layers of management are being stripped out thus creating greater demand for seasoned leadership skills.

At present, the opportunities we are seeing are coming about as a direct result of restructuring. Where layers of management are being stripped out thus creating greater demand for seasoned leadership skills. In addition, we are seeing casualties where executives have not adapted effectively to the “new normal” resulting in boards seeking change. We anticipate that this will gather pace as the industry transitions from survive to revive mode.

Finally, whilst we are not seeing much evidence just yet, it is inevitable that M&A activity will increase in 2021. Private Equity firms are holding record levels of capital ready to invest in the sector. With many firms under significant pressure and with limited availability of finance, next year could present a unique buying opportunity either through acquiring businesses or the debt and this will, without doubt mean changes of leadership at a senior level.

 

What are some of the measures that businesses could be taking to ensure the recruitment gap is filled? Does it come down to reinvention of business models and practices?

As well as focusing on reducing payroll costs, employers need to devote time and effort to enrolling and retaining those leaders they wish to keep and who will ultimately be responsible for leading their businesses out of this situation. Employer loyalty has been significantly eroded during the pandemic and this, combined with an outlook of uncertainty ahead, has created a perfect storm. Leading businesses through this period has been incredibly challenging, many CEOs we have spoken to citing that they have never worked harder. This needs to be recognised accordingly.

As well as focusing on reducing payroll costs, employers need to devote time and effort to enrolling and retaining those leaders they wish to keep and who will ultimately be responsible for leading their businesses out of this situation.

Regarding reinvention, the businesses that have fared better over the past six months are typically those in the limited service and long stay sectors. Whilst it is not possible for all businesses to pivot their operating models, we do see there being a continuing shift towards staffing with flexible hourly contracts and staff that can deliver multiple roles.

In addition, we have seen a far greater interest in technology that reduces staff interaction as a result of the pandemic for example, automated check-in, keyless entry and delivery and grab and go food and beverage offers. The end customer will accept these new initiatives and so we would expect them to become more commonplace on the other side.

 

With over 20 years’ experience in leadership recruitment in hospitality, how does Covid-19 compare to previous market disruptions? Is this the biggest disruption you can recall – and are there any lessons companies can draw upon from previous disruptive events such as the financial crisis of 2007?

In all honesty we have never seen anything like this before. In the aftermath of 9/11 and as result of the Global Financial crisis of 2008 there was always a greater sense of resilience as, despite hitting the sector very hard, businesses were still open and trading.

In the current situation there have been no definitive horizons and leaders have had to deal with and adapt to constant change in terms of both restriction and advice. This has had a massive effect on recruitment at the senior end of the market. We started March 2020 with 11 retained searches underway and finished the month with just two with balance being either cancelled or paused.

 

What emerging trends are you currently seeing in the hospitality sector?

We see hotels in particular, working hard to become more relevant and connected to their local environments and communities. Whilst this is not necessarily new (companies such as Ennismore for instance have been built on this) many brands have ignored potentially valuable income streams on their doorstep. This has become particularly relevant with far fewer people able to travel.

Repositioning the hotel as a community hub with relevant bars and restaurants can be a great investment. In addition, providing extra products and services such as repurposing space for co-working and ad-hoc meetings and ensuring you have a local community of advocates who are recognised and rewarded is critical. This is far harder to achieve for the larger global brands where curation is typically done at such scale it dilutes authenticity. The previous five years have seen a huge interest in the “lifestyle” sector, and we expect this to accelerate.

We see hotels in particular, working hard to become more relevant and connected to their local environments and communities.

One of the most interesting openings here in the UK this year has been Chris Penn’s Birch  which has seen him challenge many of the accepted norms of the hotel and private members club world. He has effectively created a community within a community based on interests, experiences and informality. Whilst he is undoubtedly a pioneer, we think this type of concept will become far more common and is a good example of the blurring of the lines between various hotel, accommodation and hospitality sectors.

Finally, the rise of the staycation has seen a far greater focus on domestic markets as result of the absence of inbound and outbound tourism. Creating a multi-tiered product offer such as the UK’s Farncombe Estate based around a hub of facilities and outlets available to the guests is a clever way to tap into various markets at the same time whilst allowing customers to trade up accordingly.

 

Do you think the industry disruption we are seeing now is here to stay for the long-run? And will that fundamentally challenge how businesses recruit?

Interestingly we recently asked Nick van Marken, MD at van Marken and ex Deloitte the very same question. His view was that it would be 2024 before we saw a full return to pre-Covid trading levels. The recent advances with the various vaccines may perhaps accelerate this however there has to be a lag effect.

The huge global conferences and exhibitions that key destinations rely on cannot simply be reinstated, the MICE market will continue to suffer in the medium as a result of changing attitudes towards international travel, particularly long-haul. Business travel in general will also be slower to recover as companies have embraced the cost benefits of virtual meetings over recent months.

Perhaps the bright spot will be the leisure market as there is likely to be huge pent up demand to get away once the travel restrictions and need for quarantine have passed. That said it is likely that people will travel overseas less often and so spend more on fewer trips. This should provide opportunity for new destinations as consumers seek new experiences.

There will be strong pockets of demand as companies seek to pivot their business models requiring skills that weren’t necessarily there before.

From a recruitment perspective this translates into more short- and medium-term pain however, as always there will be strong pockets of demand as companies seek to pivot their business models requiring skills that weren’t necessarily there before. Interestingly we have one client we are speaking to at present who is seeking to appoint a CPO – Chief Productivity Officer to focus on continued efficiencies across the business. In addition, there are several owner-operator businesses now seeking to broaden their scope into management contracts and this will require new teams and new skills.

 

In your opinion, which international markets do you think will come out of the pandemic strongest – and why?

Clearly Asia is bouncing back first as a result of a significant domestic market and tighter controls at the very start of the pandemic. This means they have a head start as the rest of the world starts to emerge and travel again. We have already seen far more recruitment activity in locations such as Singapore and even Tokyo in the past couple of months.

This should be replicated globally wherever there is a strong domestic and regional leisure market to create a base from which to build and so Europe and the US will be well placed to grow back quickly. Over time the weak demand for business travel should improve but, at present, it is difficult to accurately forecast when this will happen.

 

And which global markets do you think are going to be hit hardest? And why?

Markets such as the key destinations in the Middle East that were already suffering from oversupply and RevPar decline prior to the pandemic will take far longer to recover. Prior to Covid-19 there was already something of a stand-off between owners and the global management companies. We expect this to drive an increase in the creation of localised owner operator businesses, perhaps on a franchise basis and the rise of third party management companies in the region taking their lead from Europe and the US as owners seek greater self-determination when managing their assets.

Interestingly, from a recruitment perspective, we predict it will now become tougher to place senior executives in the region. Historically ex-pat packages and benefits have been amongst the most generous in the world but the impact of the pandemic has brought about the sobering realisation that if you do lose your job at a time like this, you also lose your accommodation, your schooling and eventually your residency visa, effectively everything. Whilst the global management brands can provide support for a limited period it is a very expensive place to live with no income and with very few vacancies.

 

What are your thoughts about the future of the hospitality sector? Are you optimistic about the industry’s future?

Whilst this is, without doubt, the most difficult period the industry has faced we do remain optimistic. Out of adversity comes opportunity and this period has given the sector an opportunity to look inwards and think hard about the future. As a result, we expect to see an increase in innovation, new business models, greater customer engagement and a rise in experiential and adventure travel.

The industry may also finally make a move away from the somewhat restrictive nature of the hard brands. That is not to say that the likes of Hilton, Marriott, Accor and IHG will not continue to grow but that their focus will shift to soft brands allowing owners to have the benefits of being part of a global network whilst still retaining control of design, facilities and overall product offer.

Hybrid concepts including aparthotels, hostels, co-living, and micro-living will continue to blur the lines and allow greater synergies within central hubs with multiple offers in a single complex around a shared set of facilities. The sharing economy has driven huge positive change in retail and food and beverage, and we expect this to be incorporated in new concepts and brands.

Maze Hospitality, delivers expertly crafted solutions for hotel owners, investors and hospitality companies, including Operator Search & Selection , Asset Management, Brand Equity Development and New Projects , Transactional Support and Project Management.