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The Hearns: managing during a recession

What do Dennis and Grant Hearn believe, is important to survival in the current crisis?

At this year’s Master Innholders Conference, the Hearns outlined their thoughts on how to handle the present climate,what leadership behaviours were needed and what the future may look like. Interestingly, they both described different industry crises experienced in their careers as a comparison to today’s current climate.As Dennis pointed out, at the age of 80, he has lived through worse times than now, having experienced major events such as war.

Dennis Hearn, former Chief Executive, Forte

“One man with his big idea solved that crisis for us.Believe me the summer came alive after that, and we actually prospered. If you think the trouble we are in now is bad, I’ve been in worse and I can tell you there is always an answer.”

Dennis referring to crisis brought about by the bombing of Libya in 1986 and ensuing threats of reprisals. It spelt disaster for UK tourism after the US’ media response stopped travel. British Airways’ Sales Director launched a competition to offer free travel and accommodation (courtesy of Forte) for five days to anywhere in the UK, resulting in 1.5 million entrants and thousands of winners.

What to do:

  • Accept that we are in new territory: we have not had this kind of crisis before.
  • Make a plan, re-budget realistically, with the minimum aim of survival.
  • Optimise revenue: search for new markets, play to your existing strengths, and do not be afraid to rob your competitors.
  • Get busier when you are busy; create extra covers or over-book rooms.
  • Don’t tolerate missed opportunities.
  • Consider the timing of maintenance and upgrades.
  • Having done everything you can to optimise revenue, review your cost base.
  • Know how much business you expect.
  • Choose the right targets for cost savings - taking 20% out of everything is the easy answer, but don’t do it.
  • Have zero tolerance - have an eye for waste anywhere, cut unnecessary expenditure… but don’t cut off your good arm.When others see that you are serious about cost savings, then they will get serious too.
  • Review the frequency of reporting, ensuring you have sufficient time to take action.
  • You need to know now how you are going to achieve the budget.

Behaviours:

  • Don’t compromise quality.Value for money involves giving people quality they are looking for.
  • Define what quality is and deliver it.
  • Luxury is not about ostentatious waste.
  • You need to take short term action within a long term strategy. It is about survival BUT your business needs a long term strategy.
  • When you have determined what action to take, do it today.
  • Have a sense of competitive urgency.
  • Behave in the way that you are asking others to behave. Spell it out - tell staff the plan.
  • These times call for great leadership. Success really depends on you.Get out there.
  • Be visible and visibly positive.
  • People are influenced by example and not by exultation.

The future?

  • There will be a tomorrow, it will come sooner if you plan and work for it.
  • It won’t necessarily be a day after today.The recession will be deep and long. It is a hard one, times will get very hard.
  • There have been worse times, but most people will not have experienced anything like it.
  • One of the major contributing factors to the current crisis is short-termism.
  • Start to think longer-term.
  • Continue to take the action necessary to survive today.
  • Do not cut training and succession planning.
  • Remember: the easy option may prove to be a false economy.

Grant Hearn, Chief Executive, Travelodge

“In normal times, delegation is important.But if you are the best person, take control.Doing nothing isn’t an option.”

Grant reflecting on his experiences of 9/11 whilst MD of Hilton UK & Ireland

What to do:

  • Be absolutely clear about your positioning.
  • There will be a move away from the “mushy middle” - this could be quite broadly defined.
  • Expect structural change of some significance.
  • Prices will continue to fall for some time yet, and there will be real pressure from low-cost providers.
  • Get into the detail of costs; look at them again.
  • In the early 90’s London hoteliers lost strategic control of their inventory to the likes of Gullivers. Never make this mistake again,work with websites such as Expedia. Otherwise, it could take years to get back.

Behaviours:

  • Plan your visibility in diary if not naturally inclined.
  • Be clear what you are expecting of your people.
  • Create a sense of urgency, have weekly war meetings and regular all staff addresses.
  • Take time to ensure motivation.
  • The real enemy is time in this crisis. The figures might not get much worse, but it will feel worse because it goes on for so long.
  • You have to do something,have a plan, do not wait.
  • Career wise, you can end up treading water, but learning is the key.
  • The most valuable lessons are in the downturns.

Future

  • Structural change will take two forms: consumers and supply.
  • During recessionary times people will use low cost businesses and they will not automatically revert to previous buying habits.This will lead to greater polarisation.
  • Opportunities for acquisition of sites to reposition as budget hotels for example will increase, creating a change of supply in the market.

Photo Credits: courtesy of Master Innholders.

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