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 On March 12th, SARS Reared its Ugly Head; 
Every Cloud Has a Silver Lining
�Three Rules of Work: Out of clutter find simplicity; From discord find harmony; In the middle of difficulty lies opportunity�
Albert Einstein

by Karl D. John - April 2003

Hotels in Hanoi were experiencing their best year for a very long time (since before the Asian financial crisis) and optimistic business plans were made.  Foreign investors had started to look at new investments in the hotel sector.   It seemed that the good times were coming to Vietnam, again.

On March 12th, SARS reared its ugly head at the French Hospital in Hanoi, having been brought here by a businessman who had stayed at a hotel in Hong Kong.  In that Hong Kong hotel, a 64-year-old doctor infected three Singaporeans, two Canadians, an American-Chinese businessman and a 26-year old Hong Kong airport worker.  This was the start of the global problem that we now face.

The Vietnamese Government acted quickly to combat the virus, closing the hospital and forming a Task Force that encompassed vital ministries.  Their swift action signalled to the world that they were doing something.  Meanwhile, the Hong Kong Government took its time to put quarantine measures into effect and continued to let relatives visit infected patients.  One would think that the Hong Kong Government would have learnt from the Bird Flu epidemic in 1997, but apparently not.   Training in Crisis Management for the Hong Kong Government is a must.

One week later the war in Iraq started.  Most people expected a quick campaign but nobody could have imagined that Saddam�s army would crumble as it did.  Now the process of re-building Iraq has to happen.  At least its effect on the travelling public has eased.

Six weeks after SARS appeared in Hanoi, hotel occupancy has dropped to between 18% and 41%.  At this time of the year, hotels had expected to be running occupancy between 85% to 90%.  The sad reality is, this does not only apply to Hanoi, hotels in Ho Chi Minh City and Danang are reporting similar tales of woe.  Although a recent survey by Deloitte & Touche found that RevPar during March in Ho Chi Minh City increased by 17.7%, whilst occupancy dropped 7.0% against the same period in 2001.  Of course, the full effect of SARS would not have been felt by the time the survey was conducted.

What are hotels doing to ward off the effects of SARS on the industry?  The common response is that there is not much that they can do, if the market disappears.  They try to cut costs by letting their casual staff go, ask permanent staff to take their annual leave and offer special room rates.  In some cases, expatriate staff have either been sent on leave, not had their contracts renewed or been terminated to save costs. With less businessmen and tourists coming to Vietnam, those staff that are on duty, at times seem quite bored while they wait for activity.  They, like the management, wish that the good times will return, today.

The Hilton in Hanoi introduced an aggressive campaign, �pay as much as you like for your room� + service charge and government tax.  The fine print limited this offer to one night and a certain number of rooms, but a friend did recently stay for one night at US$1++.  He also spent five times that amount on food & beverage.  By using the room as a �lost leader�, the Hilton increased sales in their outlets.

This proactive approach was followed by a Roundtable meeting of industry leaders organised by the American and European Chambers of Commerce, titled �Destination Vietnam - Strategies for Tourism and Hospitality Development�.  The meeting discussed strategies for the country�s tourism and hospitality industries, as they grappled with SARS and the war.  To deal with the crisis, it was suggested that the country should push its image at major tourism fairs around the world and conduct promotional campaigns, including global advertising.  Jan Hilhorst, General Manager of the Hanoi Horison Hotel, said �it is only a temporary crisis and we expect everything to be on track and the world to travel again in August.�

Participants at the meeting agreed that despite SARS being under control in Vietnam, having been taken off the World Health Organisation�s list of affected countries, visitors are still reluctant to visit.  This is a psychological reaction and therefore the the country should promote itself as a safe and peaceful destination.  Promotional campaigns have proven to bring almost immediate results, as in the case of Bali.

There is no doubt that SARS is affecting the global hospitality industry, airlines, the retail sector and many others.  An expert recently commented that even �ladies of the night� and the spread of HIV are affected.  As there are less foreign clients, they ply their trade with locals.  The price of their service is reduced and there is more unprotected sex.  This increases the risk of spreading HIV. 

Traditionally, hotels would conduct training during the quiet times and schedule renovations when the rooms were empty.  It was easy to do that, when you knew what the occupancy would be.  When business was normal, when it followed trends.

The opportunist hotelier would say to himself or herself, SARS is going to be with us for a while and occupancies will remain low, so let�s grasp the opportunity and use the time wisely to conduct staff training between now and August.  Let�s keep the staff busy and motivated.  Let�s do it now!
 

� The pessimist sees danger in every opportunity. The optimist sees opportunity in every danger. �
Winston Churchill

It�s a question of mindset.  If one would have to spend on training and renovations anyway, why not be flexible and change the period when you spend.  What happens if those groups and conferences, that postponed or cancelled due to SARS, re-appear during the traditional quiet period?  There might not be the time to do what you had planned to do.  One needs to use downtime effectively.

If they don�t re-appear, you will have well-trained work-force and still have the option of asking staff to take their annual leave.  Now is not the time to sit back and moan.  Now is the time to be pro-active.  Perfect attitudes, service and procedures � train now!

By all means, look at cost cutting measures but let�s not throw the baby out with the bath water.
 

�The Chinese use two brush strokes to write the word �crisis�. One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger � but recognise the opportunity.�
Richard M. Nixon


© Karl D. John

 
Contact:
Karl D. John has worked for Hilton International, The Royal Hong Kong Jockey Club and Bond Corporation in Australia.  He is Managing Director of Contacts International Consultants ( www.ciclhk.net ).  Email:  [email protected]


 
Also See: Asian Hotel Market: A Very Fragile Recovery Process / HotelBenchmark Special Report / April 2003
Hotels Struggle with World's Toughest Challenge / Deloitte and Touche / March 2003


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