How a five-star hotel is finding new customers during coronavirus

At midnight, on 8 April, a celebratory light show lit up Wuhan’s skyline. Messages on office buildings beamed, “Hello, Wuhan”. The world’s first city to be put under strict movement control to contain the coronavirus’s spread ended its lockdown after 76 days.

In the industrial hub of 11 million, the reopening of highways, train stations, and the airport began an exodus of tens of thousands travelling back to their cities and workplaces. In the coming weeks and months, the city will be closely watched worldwide for lessons on how communities can recover from vast humanitarian and economic losses. For businesses emerging into a new normal, how will they grapple with lost business opportunities? What inventive ways and out-of-the-box thinking will we see?

At New World Wuhan Hotel a few days after the end of lockdown, 209 health workers who had been caring for coronavirus patients in intensive care units — the last remaining group dispatched from another province — were given a grand send-off by the city government and hotel staff. As a police motorcade escorting the buses of medical workers departed from the hotel, preparations for a reopening began in earnest.

But a reality is becoming more evident: When the hotel reopens, will there be visitors to Wuhan?

“The pandemic has caused a huge change to our industry and market,” said Janet Yan, FCMA, CGMA, finance director of New World Wuhan Hotel in an interview with FM.

In January, when the city was put on strict quarantine measures to contain the virus’s spread, the hotel immediately closed restaurants, cancelled wedding banquets, and refunded room bookings.

At a customarily busy time when families gather for a Lunar New Year reunion dinner and up to 90% of rooms are occupied, the five-star hotel was closed to the public and only hosted the health workers and about 20 stranded hotel guests who didn’t manage to leave the city before the lockdown.

Part of Rosewood Hotel Group, a division of a Hong Kong-based conglomerate Chow Tai Fook Enterprises, the hotel is located in Wuhan’s business district, and its guests are mostly domestic business travellers. It attracts some international travellers from France, the US, and Japan due to manufacturing facilities that automakers Peugeot-Citroën, General Motors, and Honda set up in the city with local carmakers.

With many countries still battling the coronavirus spread, the travel and hospitality industries may take the longest time to recover. The longer a crisis, the more likely temporary measures become permanent fixtures.

Already, millions of office workers worldwide are being forced to work from home and replace face-to-face interactions with virtual meetings. Travel budgets have been slashed to save costs. Many CFOs are considering permanently moving employees to full-time remote positions. In finance work, it’s also becoming clear that remote auditing is possible. Virtual annual general meetings are also springing up out of necessity.

For hotels, the road to recovery will not be as simple as reopening doors.

Quest for new customers

But Yan’s team has not been caught unprepared.

In the past two months after the initial crisis response mode, Yan’s finance team of 19 employees, working from home, started researching new business opportunities. They first looked at new businesses for the hotel’s restaurants.

“Because business or travel trips will be stopped, the only group of people we can rely on is our own community,” Yan said. “We need to expand our consumer channels.”

As a finance director whose role includes business partnering, Yan said part of her remit is to support the guest services and restaurant divisions’ marketing efforts. “During this time, we’re constantly thinking about what’s next in our operational strategy.”

“Previously, when our guests walk into our hotel’s restaurants, what they seek are luxury and first-class service and dining ambience,” Yan said. “But if these can no longer be our main selling points after coronavirus, we need to reconsider customers’ needs.”

And their search for answers started with a humble breakfast item — steamed buns.

From social media posts by friends and relatives during the lockdown, her team members realised that many started cooking a lot more and a recurring theme in families’ kitchens are wheat-based foods — breads, buns, noodles, and dumplings. Likes and comments abounded for these posts.

“So we thought, what’s a food item that’s suitable for the young and old in a family, easy to deliver, and can be sold at an affordable price point?” she said. They also scrutinised available online sales channels and the additional costs to sell on these channels.

Brainstorm sessions led to steamed buns, or baozi in Mandarin, as the first test product. Soft, pillowy, and stuffed with sweet or savoury fillings, they are one of the most common breakfast items in China. A morning rush to school or work for many includes a pit stop at their neighbourhood steamed bun seller.

The main objective was to assess the market’s demand for ready-made food delivered to customers’ doorstep, Yan said. Would a five-star hotel brand be enough to win over consumers from more established food brands?

Using neighbourhood group chats

Eight pork-filled buns in a packet, vacuum sealed, and delivered to designated pick-up points in neighbourhoods, the test product gained traction. At CNY 48 ($7) per packet, the hotel sold 300 buns on the first day the product was rolled out in February. In following weeks, the staff grew bolder in their offerings. Durian pancakes, cakes of all kinds, and roast duck were added to the list.

What’s fascinating is how they’re reaching these new customers. It’s a lesson in spotting consumer trends and making quick adjustments.

During Wuhan’s lockdown, when one person from each household could go out only once every three days for necessities, a new form of buying and selling emerged.

Families that didn’t want to venture outdoors at all bought groceries online. Small neighbourhood grocers that couldn’t compete with big supermarkets with online stores decided to set up chat groups on WeChat, a social media platform, to take orders. These neighbourhood retailers added customers they knew into the chat group and posted notices in neighbourhoods to get more people in the community included. These small retailers essentially created their own online platform according to residential neighbourhoods to sell vegetables, fruits, and meat.

Sellers would send messages in chat groups explaining their daily offerings. The social nature of the chat platforms had the potential to spark interest amongst users seeing their neighbours and friends purchasing, said Ashley Dudarenok, founder of ChoZan, a digital marketing agency in Hong Kong.

As the lockdown continued, the number of community chat groups exploded. This form of two-way communication between buyer and seller became more sophisticated, and bigger brands such as Walmart and Alibaba’s Freshippo entered the space by building apps within WeChat called mini programs. The neighbourhood group chats also evolved beyond groceries.

Online communities have sprouted for beauty salons, parenting, and community fitness, Dudarenok said. After the lockdown, the decentralised, community-focused service and product sales model may continue to be a strong trend.

The hotel seized on this new opportunity. It set up online groups for neighbourhoods it wanted to target. The orders are then delivered to pick-up points in neighbourhoods with the help from apartment buildings’ management.

But the test products need to be perfected. Yan said hotel staff are working on product taste and delivery lead time to better target these communities. A bonus would be social-media-worthy aesthetics, where “the packaging or design compels them to take pictures and show it off to friends on social media”.

Steamed buns aside, her team has also been cooking up other business plans.

The hotel plans to propose outdoor weddings to its customers who had to postpone their wedding banquet bookings. Just as necessary as food, “people still need to get married”, she said.

Chinese weddings are usually big-scale celebrations with friends and extended family members invited. In the countryside, the whole village would be involved. In cities, indoor banquets in restaurants or hotels with hundreds of guests are common. But this will change as people take precautionary measures to avoid contracting the virus.

Spring has arrived in the city. With the warming weather, people will want to be outside. The open space will allow wedding guests to practise physical distancing while enjoying the social aspects of a gathering, Yan said. In March, her team attended an online wedding expo to gauge consumer demand for wedding events in the coming months. Further planning will include pinning down suitable outdoor locations and pricing for these packages.

Suite rooms for staycations, gym memberships, and steak dinners are also on pre-sale ahead of its reopening at the end of April. It’s about reinventing what a hotel can offer by taking apart services typically reserved for room guests and marketing them piecemeal to a wider base of customers. Guests may walk into the hotel for different services, but all enjoy the five-star experience. This rethinking of a hotel’s place and purpose is an idea long espoused by the group’s CEO, Sonia Cheng.

“Traditionally, it’s all just about people coming in. You stay over in the room. You use the restaurant, the meeting space, for events. That’s it. But now I think it’s about building community,” said Cheng, in an interview with travel news site Skift. “People want to be connected … the behaviours of consumers are changing. And we need to change and re-look at the whole hotel real estate model to cater to that.”

Connecting finance and the business

For finance professionals, the pandemic has made it even more apparent that risk management skills are vital, Yan said.

“Before this crisis, a company may not even realise that it is only three months away from running out of cash,” she said. “You may never think of crisis preparation and crisis recovery planning because things have been going smoothly.”

But in moments of emergency, companies realise there needs to be contingency planning — what to do when workers can’t show up at work but there’s work to be done, or if the finance processes are really traditional and banks are closed, how to keep the business going, she said.

She also thinks the notion that a management accountant’s work connects both finance and the business will receive greater buy-in and influence in companies after the coronavirus.

“Because the pandemic has altered companies’ business opportunities, business model, and operations,” she said, adding that “a management accountant will really need to keep up with the operational changes and evaluate the stakeholder relationships”.

“By doing this, you will have an even deeper understanding of the data you have and not a case of just acknowledging and recording the revenue numbers from operations.”

Road to recovery

As the hotel reorganises for its reopening, Yan is planning how workers can readjust from remote working to working in the office again. Forecasting and reforecasting will continue as the finance team keeps a close eye on revenues and profits.

The finance team will also need to look at more ways to control costs and increase cash flow to get through this downturn before the business fully recovers. It has so far avoided layoffs, which was key in sustaining employee morale, Yan said.

“How will Wuhan’s business environment look like, whether it will recover to pre-coronavirus levels or not at all, we need to know these scenarios,” Yan said.

But Yan admits that there’s simply not enough information at this point for complete answers to those questions.

“I honestly don’t know. I see the manufacturing industry and the government workers back to work,” she said. “But our industry is one of the hardest hit, and we may be the last to recover from this. Of course, our hope is we can at least return to normal operating conditions by the end of the year.”

On the day when the lockdown ended, Yan and her husband went for a drive around the city. They saw young couples out dating, people and cars back on the roads, bringing back a glimpse of the exuberance in the city before January. But the city is no longer the same and may never be the same again. Of mainland China’s total reported casualties, the vast majority have been in Wuhan.

“Yes, we may be in the epicentre, but when I speak to friends and co-workers, we’re all still very optimistic,” Yan said. “No matter how much longer we need to wear masks or how much longer we need to be on guard against the virus, we’re doing the little that we can in our work, in our personal lives to help this city bounce back to life.”

For more news and reporting on the coronavirus and how management accountants can handle challenges related to the pandemic, visit FM’s coronavirus resources page.

— Alexis SeeTho (Alexis.SeeTho@aicpa-cima.com) is an FM magazine associate editor.