“Tourism & Hospitality Education during and after the pandemic”
Every country more or less has been effected by the crisis that is right now still continuing. A world without international tourism was hard to imagine - it is reality now. Hotels completely closed like in Western Europe without a perspective - a time plan when they will be allowed to open again. Hotels operating like in Russia , in China and many other countries but without tourist, with very small numbers of business travelers and with almost no events, fairs, Concerts and celebrations that were always providing numbers , income and employment in hospitality.
Cruise ships parked all over the world - some starting local cruises - around England with only British tourist - from Singapore - only for citizen of Singapore - from Germany without going ashore as most harbors still don't give permission - but that is less than 3% of the business. 1 Million unemployed only in the cruise industry.
Airlines that are mostly grounded. IATA the official body for the airline industry predicted last year already that it will take time to come back to the numbers of passengers and flights like in 2019 - before the crisis - and it might not happen before 2024. That was last years prediction when it was still not clear how long governments will continue the lockdown.
How do we prepare decision makers, management for the next crisis or for the continuation of the existing one? How do we educate? How do we have to change?
To be successful we have to take in account the changes that happened and the changes that will happen and will continue to influence tourism, hospitality and leisure like events and entertainment.
Besides the theoretical knowledge from Finances to business plans, budget and operation the practical part of education is very important. At institutions like University, hotelschools and Management schools we should add and concentrate more on educating future Managers - and also seasoned managers in our postgraduate programs - taking into account the new normal and the response to crisis.
Looking at Western Europe we can not look at politicians to learn from. Instead of acting and leading with a plan they are reacting and changing already confusing decisions daily to add to the chaos. In business - to act without a plan - to change daily the instructions will leave confused employees, reduce trust of owners and partners and will result in loosing guest, clients, customers that are looking for stability, trustworthy products and stable business relations. They all - employees, owners, partners and for sure the customer will turn to others to run their business or buy from.
But how can you prepare for a crisis? How can we educate for the unknown?
A ship has life boats not for the daily operation. They are an investment, a security for a moment of crisis.
In education we can prepare future players in tourism and hospitality, managers and investors - to be better prepared and act by enhancing the teaching, coaching and educating of :
Talking about change management we mostly think and also teach about
Changing consumer behavior
changes in the economy
How to react to the measures introduced by governments can’t be taught as with the current crisis nobody could have foreseen the implications and the effect it would have on tourism and hospitality. But being better prepared for change - without being scared of change - is something we should get more in detail.
This would include financials, alternative supply chain options, managing the workforce. Especially managing the workforce it seems to be the only option to fire and lay off staff once a bigger change like the current crisis appears. A few rare examples show us that coming to a different solution involving the workforce can lead to avoid lay offs, financial recovery and long stable progress and success. Besides the old standard reactions we need to encourage students to embrace alternatives, think critically but open and start to look for different solutions. That first implies that we as teachers and mentors are open for new ways and never stop learning . Would be a good example for our students too.
“Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters.”
Again - not be scared of risk but to take risk and prepare as good as possible is something important to learn and teach. No entrepreneurs would exist without embracing risk.
Managing risk doesn’t mean to buy an Insurance against everything. This would be a waste of money. Insurances are sold so you pay a monthly fee and get in return the feeling of being a little safer. In reality insurances make profit by taking your fees and finding a reason not to pay you once you need them.
Allianz one of the biggest insurers also in Germany sold for many years insurances for the case that your business is closed by government order and you can’t get income so the insurance will step in. In reality more than 80.000 hospitality buisnesses in Germany have no income for almost 2 years now - many are closed forever - bankrupt- and the once that are insured against such cases do not receive insurances payments because of the small print. Courts mainly ruled in favor of the Insurance company and the insured - the business owner - received nothing. Last month Allianz announced that it will pay to its stakeholders a few billion Euros of its profits this year.
Of course there are insurances that are legally required but managing risk means to really have these contracts checked by professional to avoid spending money for nothing.
Risk management also means to learn from corona. Now we have an example what can happen, what effect it can have on tourism, hospitality. How will we react in a future crisis? What can we do to be able to survive? What financial back up do we have? When should we plan for an exit? Giving up your business early might be a big mistake, closing to late might be a bigger and more costly one. Now is the time to think about, now is the time to prepare and now is the time to educate our students.
Especially after Corona we should reconsider how we negotiate contracts, leases, management agreements. In the new normal the business conditions have changed tremendously and we have to educate and prepare our students for this new reality. This again requires the ones teaching and educating to learn a lot, get all the informations and stay in contact with the real world. The tourism enterprises, hospitality operators, banks, investment and owners.
Negotiations are the beginning of a business deal and here you can win or loose a lot or everything. To later change what has been negotiated at the start is a difficult and often impossible task.
Preparation and getting informations before negotiating a business deal. Essential and deadly if neglected. We need to educate where, how and what information are essential. The source of the information will always vary with the location.
Don’t waste time at things which are non negotiable. Taxes have to be paid - no need to try to negotiate. Finding loopholes for taxes like in the EU tax heaven - is lawyers work not negotiations.
Negotiating rents and leases. Now might be the time to change negotiating what rent you will pay for a building once starting a new business. During the pandemic a lot of businesses had to give up because they were not able to pay rent anymore. Before the crisis the rent might have been easily covered by even a small income in low season - now - with no income it proofed to be deadly. Some owners agreed to reduce rent - some even waived rent but often the owners were not ready to change and a rental contract signed was non negotiable. Rent without income for a long period - a deadly combination. So how to change and negotiate rent differently? In Hagen a city in Germany the city provides business space owned by the city free of charge to encourage business owners. Some negotiate rent as a percentage of profit. No profit - no rent. High profit - high rent! There are for sure many different options and if not now - when should we start thinking about alternatives?
In addition Psychology of negotiations is as important as negotiant skills. Here also Educational institutions should provide more value for students by adjusting and adding to their programs.
When it comes to educate differently, adapting to the changing times we - in education - have to change tremendously, fast and efficient to adjust our curriculums to provide up to date useful knowledge to the once we are teaching coaching and mentoring. A challenge for us - an interesting one - but essential to gain the trust of our students and to offer competitive education of value.
Author: Stephan Busch, Academic Director at the State University for the Humanities Moscow RGGU, Faculty of Tourism & Hospitality and the Swiss International University earned his Master Certificate in Hospitality Management from Cornell University, USA. He has a diverse experience in launching operations, business development and service training- for hotel and cruise companies in Asia, Europe, Canada and Russia.