Canadian Hotels Battle A Year-Long Pandemic: How IHG Is Coping

January 19, 2021 Jim Byers

If COVID-19 and the coronavirus are the two biggest words of the past year, “pivot” isn’t far behind.

Companies that made widgets shifted to producing PPE. Airlines beaten down by a lack of consumer demand last year shifted to filling planes with cargo. The hotel industry also has had to make big changes. We recently caught up with Beata Cieplik, Regional Vice President Canada, Marketing Commercial and Revenue Management for InterContinental Hotels Group. It’s a massive hotel company that includes Intercontinental Hotels, Kimpton Hotels, Crowne Plaza Hotels, Holiday Inns, Staybridge Suites, Indigo Hotels, and many other brands. Cieplik oversees 196 IHG hotels across the country.

Here’s a partial transcript of our chat.

Thanks for chatting with us, Beata. What’s your assessment of where things stand with the hotel industry right now?

“I think folks in the U.S. thought that a lot of the problems with the virus were behind them in quarter four of last year. That’s obviously not the case. The impact of the crisis on the travel and hospitality industry is definitely not something we can underestimate. Overall I think people are in the habit of travel and are so passionate about travel that this is something that will never go away no matter what. It’s just a question of stabilizing the situation and really resetting the new normal. You know what, travel will come back, because business must turn and events need to go on. Not everything is possible thru Zoom. We’re encouraged by the idea that vaccines in Canada could be more widely available by April, so we can stabilize the situation.

Are we seeing any signs of recovery yet?

We’re seeing some encouraging signs of a domestic recovery. But we’re not seeing the same level of occupancy and demand across the country, and that’s how we believe the recovery will go. Right now, the business we’re seeing is mainly leisure and essential business workers. The hotels that are doing best are the extended stay properties, because a traveller can be in their own bubble. They have a a bedroom, a reading or work room, and kitchen facilities. They can recreate what they have at home. Those are popular with essential workers and health care workers, as well as people in construction. They’re booking our Staybridge Suites, Candlewood Suites and Holiday Inn Express and Suites. At IHG Canada, 80% of our portfolio is built on those brands. In that sense, we believe we have the right hotels in Canada to really drive that domestic recovery. We’re also trying to diversify our service mix, recycling a hotel, if you like, to be more of a transient hotel instead of a business hotel. People are travelling for staycations and weekend getaways, and they want drive-to destinations. It’s shorter stays, versus an international business person coming for a convention.

When you say a hotel is being recycled to be aimed more at transient travellers, what does that mean? Are you talking about room or lobby alterations?

It’s not as much about physical changes as it is how you market to customers. You need to adapt marketing and selling strategies to talk to the travellers you’re targeting. It’s all about having relevant content on your website; making sure you have relevant offers. Most customers are now driving to hotels. You have to speak the language they understand. It’s also all about digital presence and social media, having relevant marketing and relevant packages.

When do you think business travel might rebound?

When you think of conventions, they’ll come back because not everything can be done virtually. People need other people’s energy. They need to meet to exchange ideas. We think convention and international travel might rebound late in 2022 or early in 2023. For this year, we hope in the second half of the year that the border will re-open with the U.S. and we’ll see some degree of individual business coming back and restoring some of the commercial trade that Canada is so dependent on. Before the pandemic, we had 400,000 people crossing the border every day by land and air combined.

The hotel business has been devastated by the pandemic. But I understand hotels in Canada have been working together?

Yes. That’s one nice thing about our industry. At the end of the day we compete with Marriott and Hilton and Hyatt. But during the pandemic we’ve all worked together in the travel and hospitality industry to really understand what’s happening to our industry and try to leverage all our forces and lobby for proper assistance. We need help from different levels of government to survive the pandemic. People sometimes think of hotels as big corporations, but 96% of the hotels in Canada are owned by families or are independently owned. They’re franchised, but people have put their family savings into those institutions. Of course, we need to support not only hotels but our airlines and restaurants.

I’ve read that luxury hotels and budget-priced hotels might do best in the near term. What’s your thought on that?

Actually, what we’re seeing right now from not only corporate but leisure perspective, is that people are definitely looking for branded hotels. They’re feeling safe and making sure they’re family is safe. They put safety and cleanliness at the top of the list, and that’s going to help branded hotels drive more performance than independent hotels. When you’re a family, you’re exposed so much to the Holiday Inn brand and you know what Holiday Inn is about. We’re well-positioned to drive that market. People are looking for value, yes. Their first priority is safety, then price.

IHG has a major cleanliness program in place, right?

Earlier we announced the IHG Clean Promise. We wanted to be very transparent with our customers and partners and explain how we keep our customers and our employees safe by really taking every hygiene and safety measure, and by making sure all social distancing is being implemented in every hotel, so customers can have that clear expectation. “When I get to that Holiday Inn I know what to expect.” So, that was launched. Then we have the “Meet with Confidence” program (which allows folks to book future group and meeting space with no cancellation fees). We work with every hotel with meeting space. Basically, every hotel has had to redesign their layouts and change their F&B offerings to meet new rules. We’re not offering any buffets at meetings, for example.

I was in Kingston in early September at the new Holiday Inn Kingston Waterfront and the city was fairly crowded, almost like old times. In Montreal it was very quiet. Are you seeing a difference in occupancy between big cities and smaller destinations?

What we’re seeing right now is that hotels located in secondary or tertiary markets, much smaller markets in remote locations, are doing much better than major markets. The hotels that have been hit the most are based in Montreal and Toronto. Vancouver is doing relatively well, but again that can switch very quickly depending on COVID numbers and provincial lockdown rules coming in. Generally, we’re finding places that ear near big energy projects or near health care facilities or are involved in mining have pretty decent levels. Major markets are around 20% occupancy, but some hotels in remote areas are at 90%. It’s all about what’s happening in your area and who needs you.

Having the maor airlines cut their routes is obviously a concern for you. If people can’t fly to Fredericton or Kamloops, obviously that hurts your occupancy levels.

Cutting routes is not a help to our industry. We’re eventually hoping that the government will wake up and realize that our industry is a main economic driver, and we need to come up with a long-term strategy. How do we want to place Canada as a destination on the international level? This is where governments need to come down and really make a clear plan.

Is this a good time for hotels to do renovations? I mean, there aren’t any customers so it’s less of an intrusion. Then again, hotel owners may not have the money right now.

If a hotel is due for a renovation, we encourage them to do that. Yes, you’re right, they’re not displacing as much business right now. It’s the perfect moment. But we have to be conscientious about their financial situation. We actively listen, and we’re here to support them. There’s no blanket approach. Some owners do have money and can renovate. It depends some times on how long they’ve had the hotel and where it is.

Speaking of renovations, the Crowne Plaza at the Toronto Airport has had a major facelift What can you tell us about it?

They’ve pretty much redesigned the entire place; the bedrooms and public spaces are completely redesigned. They’re finishing the restaurants. The meeting rooms are redesigned. Practically everything has been given a new scheme.

Another aspect important for meetings is cancellation and deposit policies.

We have flexible cancellation and deposit policies. We’re working with companies and meeting planners and being extremely flexible. It’s not unusual to see meetings booked and then pushed ahead as the situation changes.  We do have some nuances because we’re working with franchises. The global rule is cancellation 24 hours prior to your stay, but we’re encouraging hotels, especially in Canada, to go with 6 p.m. on the arrival date.

That’s pretty flexible, all right. Do you think you’ll go back to 24-hour cancellations at a later date?

I think it would be reviewed on a regular basis, depending on what’s going on in each market. Keep in mind that the recovery won’t be the same in Vancouver as it is in Mississaga or St. John’s, Newfoundland.

About the Author