Question

the Mandarin Oriental Hotel in Boston is about to get some new competition. Four Seasons is opening a hotel a few blocks away at One Dalton St, and Wynn is opening a large casino hotel in Boston Harbor.

If you were the asset manager for the Mandarin Oriental, would you pro actively consider making some additional investments in this property, knowing that these two new properties are likely to impact your occupancy and ADR? Or would you wait and see where the market settles? Regardless of whether you would make improvements now or later, what types of things would you invest in?

Answer 1

Ans

Given that Mandarin Oriental Hotel and Four Seasons are both ultra luxury hotel so there would be direct competition between the two. Wynn is a luxury resort hotel with casino which generally attracts tourists requiring such services.

a)The impact of Covid-19 on the hotel industry and specifically to Mandarin and its competition needs to be taken into consideration. I would make the following investments in this regard :

1. The hotel needs to promote the hygiene and cleanliness of the hotel along with the special measures taken for covid-19 like implementation of social distancing norms inside the hotel, hotel staff wearing masks and gloves at all times, bed sheets and daily usage items being daily replaced.

2. The hotel needs to price itself even higher than usual tariff. This seems counterintuitive given the low demand but makes sense once we realize that higher prices would be judged with better safety norms and more stringent quality checking. The demand is there for quality and not for volume.

3. The hotel needs to keep emergency services available on priority with a  Covid hospital

5.The staff have to be very well trained to work in Covid-19 norms which means contact less delivery of services including check-in and check-out, maintaining social distancing norms at all times, use of disposable menu's and cutlery in restaurant inside the hotels and maintaining a pleasant behaviour even in these stressful times.

6.The new process has to be defined and staff has to be trained about the new processes like contact less delivery of services including check-in and check-out, maintaining social distancing norms at all times, use of disposable menu's and cutlery in restaurant inside the hotels .

b)The hotel should invest in  TV and online and digital promotion media like Instagram and other social media platforms to convey its message of culture, history and safety  amongst its targeted segment.

c) I would also invest in adoption of technology to improve services like booking, cancellation, feedback, Surveillance, services etc.