Strategic Management Assignment: Impact Of COVIS-19 On Sheraton

Question

Task:
You are supposed to write a report on strategic management assignment on the topic “How the Covid-19 affecting business of Sheraton hotel and how Sheraton hotel and what are the strategic management approach taken by hotel for recovery?”

You should write the answer of these questions.

1. What are the issues that are faced by the business of Sheraton hotel Melbourne during the situation of COVID 19?
2. What is the impact of COVID 19 situation on the employees and management of Sheraton hotel Melbourne?
3. What are the current measures that are adopted by the management of Sheraton hotel Melbourne to deal with the COVID 19 situation?
4. What are the recommended strategies that will be helpful in proving the strategic management approaches for Sheraton hotel Melbourne to deal with the COVID 19 situation?

Answer

Impact of Covid-19 on hospitality industry
As identified by Hu, et. al. (2020) in the present context of strategic management assignment, the magnitude of the crisis caused by Covid-19 has left the hospitality sector with unprecedented losses. As the Covid-19 pandemic wreaks havoc, the hospitality sectors and its associated industries have been looking at an empty horizon with uncertainties of resumption of business. While there is not much relief from this unprecedented situation, the tourists also suffer from the lack of confidence to resume their leisure and business travels. Alonso, et. al. (2020) have observed that majority of countries are bound to either temporarily close their hotel and restaurant businesses or completely shut down. However, as time has passed, countries whose economy heavily depends on hospitality and tourism industry have taken strict safety measures to reopen their businesses. The hotel industry in Australia after a decimated situation during months of lockdown has received clear heads to be wide open. However, the aftermath of Covid-19 has greatly impacted Melbourne’s hotel industry with room revenues down more than 75% (Cummins, 2020). The following report will highlight the impact of Covid-19 on Melbourne hospitality industry specifically focusing on the Hotel Sheraton in Melbourne. The strategic management assignment will also identify the measures taken by Sheraton to deal with the situation and recommend strategies to incorporate in their management approaches.

Issues faced by Sheraton Hotel Melbourne
As opined by Borland & Charlton (2020), the hotel sector is one of Australia's biggest employers and has been the worst hit due to the Coronavirus pandemic situation. The closure of international and domestic borders for tourists has led to a drop in occupancies in hotels thereby causing unprecedented losses to the hoteliers across the country. Among the worst hit locations, Melbourne is one of them with less than expected inflow of visitor economy and the loss of workforce. The Sheraton Melbourne Hotel is located in Melbourne CBD inviting travellers and leisure guests offering relaxing retreats away from the chaos of the city. However, Covid-19 global pandemic has severely impacted the business of Sheraton Melbourne Hotel and the entire Marriott hotel chain. After a good start to 2020, the Covid-19 crisis jolted the daily operations at Sheraton affecting its management, revenues, and employability (Top Hotel News, 2020). Consequently, the demand has dropped drastically due to fear of travel and global travel restrictions. The occupancy levels have plunged below certain percentage which is way less than previous years. Even when the hotel is undertaking every possible way to mitigate with the aftermath of Covid-19 situation, guests are reluctant to take risks of travelling. As the hotel business is not operating to its full capacity, the need for more number of employees has also reduced. The hotel has been forced to reduce their workforce and freeze further hiring. Eventually, it has reduced the need to pay all the employees especially the part-time and contractual workforce.

Since the situation has worsened the hotel operations, Sheraton Melbourne had to reduce its investments and marketing spends thereby cutting general and administrative costs. The hotel has significantly reduced the room tariffs of traditional king rooms and superior king rooms from 350 AUD to 230 AUD. This price war and occupancy drops has pressurised the hotel to keep the rates less than their actual tariffs (Choudhary, 2020). The hotel is expecting to recover the losses in its initial phases but it is challenging in terms of providing quality experiences and yield higher revenues. The short-term and long-term business investments have plunged down by making payments to employees, maintaining hotel inventories and marketing expenses. Although the situation has disrupted cost control but the hotel needs to have a broader vision to sensibly cut costs. Consumer behaviour and lifestyle are heavily impacted making it challenging for the hotel to gain their confidence to travel again. The Sheraton Melbourne hotel has been donating unused food produces to the needy and charities to mitigate the loss of costs on stocked inventories. The main issue identified is making adjustments to the available services, amenities and facilities. Additional costs on purchase of masks, gloves, sanitation products, PPE kits, antimicrobial wipes have become fixed expenses. Investments in touch-less technology and room offerings has been expensive but a dire need in this situation. Food and beverage services have been affected as guests are fearing the contamination of germs and having antibody attacks. Due to social distancing, the hotel has closed additional services like swimming pool, golf courses, spa, parking and conference centres. Eliminating these services have reduced the revenues significantly. However, maintaining these service areas incur high maintenance costs and property expenses which has become a challenging situation for Sheraton Melbourne Hotel.

Apart from all the issues, under the Marriott Group, the operating income has been almost half when compared to operating income of 2019. This eventually reduced the net income, diluted earnings per share and included the impairment charges. The expenses like general expenses, administrative and other expenses have been low in the third quarter compared to previous year's quarter (Marriott International, 2020). The hotel added new properties in different geographical locations. This is a sign of positive impact but it has anyhow increased the initial expenses in these locations. However, the third quarter of 2020 has significantly shown progress due to resumption of travel and tourism in the country. The Government felt the need to support the hotel industry which yields a great amount that brings huge economy to the country. The Sheraton Melbourne Hotels’ future performance depends on the severity and duration of Covid-19 and its impacts (Marriott International, 2020). The hotel management expects to provide all the necessary services and maintain safety measures to welcome their guests.

Impact on management of the hotel
The Federal Government of Australia has introduced a Job-keeper payment scheme to support businesses and non-profit organisations that are deeply affected by Covid-19. The idea behind this theme is to safeguard the jobs of several employees working in the companies that are hit by the impact of coronavirus. The Job-keeper Payment is administered by the Australian Taxation Office (Australian Government, 2020). The rate of Job-keeper payments depends on the number of hours an eligible business or employee is actively engaged in their operations. Under the tier-1 payments, eligible employees working for 80 hours or more in the four weeks of payment periods before 1st March 2020 or 1st July 2020 will or eligible business partners actively engaged in 80 hours or more in February and provided a declaration to it will be eligible for payments. Under tier-2 payments, any other specific business or employees can avail the payments. The eligible businesses and employees will now receive $1,200 per fortnight before tax under tier-1 and $750 per fortnight before tax (Australian Government, 2020). After the month of September, the extension rates will be applied on businesses and employees. This scheme is helpful for such businesses where the COVID impact has majorly hit. As per the recent findings and investigations by Yun (2020) it has been revealed that the staff of Sheraton Hotel Melbourne have been revoked from their Job-keeper payments. This issue came into light when employees who were eligible to such payments did not receive the payments even after the federal government’s notice to the business. The loophole created has left the hotel under suspicion. This also left the employees devastated as they were eligible for the tier-1 payments but were soon revoked from the payments. At least 60 employees have received three weeks’ worth of Job-keeper payments that were made after the backdating the entry to the beginning of April. This was done after the hotel received an approval from the Australian Taxation Office for Job-keeper (Yun, 2020). The management of Sheraton Melbourne Hotel has faced issues due to forced furloughs of thousands of employees. The management is no longer able to afford a fleet of housekeepers and therefore most of them are laid off to reduce the costs. However, apart from cleaning staff, many new employees’ jobs are put on hold due to lack of payments. The impact on the management is grave because there is no significant inflow of income. Managers and senior management are being paid less to adjust the costs.

The Federal Government of Australia has introduced a Job-keeper payment scheme to support businesses and non-profit organisations that are deeply affected by Covid-19. The idea behind this theme is to safeguard the jobs of several employees working in the companies that are hit by the impact of coronavirus. The Job-keeper Payment is administered by the Australian Taxation Office (Australian Government, 2020). The rate of Job-keeper payments depends on the number of hours an eligible business or employee is actively engaged in their operations. Under the tier-1 payments, eligible employees working for 80 hours or more in the four weeks of payment periods before 1st March 2020 or 1st July 2020 will or eligible business partners actively engaged in 80 hours or more in February and provided a declaration to it will be eligible for payments. Under tier-2 payments, any other specific business or employees can avail the payments. The eligible businesses and employees will now receive $1,200 per fortnight before tax under tier-1 and $750 per fortnight before tax (Australian Government, 2020). After the month of September, the extension rates will be applied on businesses and employees. This scheme is helpful for such businesses where the COVID impact has majorly hit. As per the recent findings and investigations by Yun (2020) it has been revealed that the staff of Sheraton Hotel Melbourne have been revoked from their Job-keeper payments. This issue came into light when employees who were eligible to such payments did not receive the payments even after the federal government’s notice to the business. The loophole created has left the hotel under suspicion. This also left the employees devastated as they were eligible for the tier-1 payments but were soon revoked from the payments. At least 60 employees have received three weeks’ worth of Job-keeper payments that were made after the backdating the entry to the beginning of April. This was done after the hotel received an approval from the Australian Taxation Office for Job-keeper (Yun, 2020). The management of Sheraton Melbourne Hotel has faced issues due to forced furloughs of thousands of employees. The management is no longer able to afford a fleet of housekeepers and therefore most of them are laid off to reduce the costs. However, apart from cleaning staff, many new employees’ jobs are put on hold due to lack of payments. The impact on the management is grave because there is no significant inflow of income. Managers and senior management are being paid less to adjust the costs.

Current measures adopted
The Sheraton Melbourne Hotel is closely monitoring the rules and regulations to be maintained during Covid-19 as per the statements of World Health Organization. It is also following the guidelines from local health departments and agencies that help mitigate the risk of the coronavirus spreading (Marriott Bonvoy, 2020). The hotel considers the well-being and safety of its employees and guests to be the foremost priority. Since the hotel has opened its doors for its guests from all around the globe, it has to maintain safe environments. The hotel is committed to provide safe environments for both hotel staff and its guests. The protocols are thereby followed without any negligence. The cleanliness council under the Marriott Group provides important guidelines to its subordinate hotels to follow them to maintain safety of staff and guests. The following measures are taken by Sheraton Melbourne Hotel for the interests of guests-

• Safety masks- in order to promote health and safety of the community, every guest and employee of the hotel are advised to wear masks in all indoor public areas. Without masks the staff and guests will not be allowed inside the premises. The hotel staff will maintain safety distance from guests to avoid any direct contact (Marriott Bonvoy, 2020). The kitchen staff will always wear head nets, gloves and safety masks before entering the kitchen. This will be maintained to avoid any contamination in food.
• Touch less technology at hotel- After Covid-19, the scars of the pandemic has devastated industries and its operations. However, businesses have optimism and are willing to resume their business operations by maintaining safety measures. As people fear the next wave of coronavirus attack, hotels are reassuring that guests must feel safe. The Sheraton hotel uses the Marriott Bonvoy App to maintain contactless experience. This app will help guests to check-in online and check-out online, order in-room dining and ask for other requests.
• Shared responsibility- Sheraton aims to provide a safer environment for guests and associates as a top priority. Being this a shared responsibility, Sheraton expects its guests to maintain the same level of cleanliness and self-safety. The public spaces are maintained safe by complying with the local regulations. Social distancing is practiced within and outside the hotel premises by staying 6 feet or 2 meters from other guests and hotel staff (Sheraton, 2020). The hotel expects these simple rules to be followed to reduce the spread of coronavirus.
• Social distancing measures- The Sheraton Melbourne Hotel have maintained utmost safety through display of Signage throughout the hotel. These signages remind the hotel staff and guests to maintain social distancing at any cost. The responsibility lies in both hotel and guests’; therefore it should be maintained as a top priority. The hotel has reduced seating capacity and occupancy limits in hotel restaurant. There will be no live events and gatherings within the premises. The public spaces will be maintained following the local legislations. The Marriott Bonvoy application will available for mobile check-in and other service requests. The valet service is currently unavailable.
• Cleaning Protocols- in order to work as per the guidelines of commitment to clean policy, Sheraton Melbourne Hotel has made several changes in its cleaning practices throughout the property and room services. The public spaces are cleaned all the time with disinfectants with particular areas like restrooms, lobbies, parking spaces, lifts and other common areas. Hand sanitations are installed at designated places to keep people germ free all the time. The staff must wear Personal protective equipment based on the activities they are performing and following the guidelines framed by the local authorities (Sheraton, 2020). In public spaces guests are requested to wear safety masks to avoid spreading of the virus. To maintain this, the hotel staff will provide free masks to all the guests. Electrostatic spraying is also adopted by the hotel to keep the hotel well sanitised. Hospital-grade disinfectants are used to continue rigorous cleaning protocols. The guests will be provided with disinfectant wipes upon request.
• Housekeeping facilities- In order to maintain contactless delivery of room service, the hotel has followed new protocols starting from thorough cleaning of the rooms and disinfecting prior to the arrival of guests. Additional cleaning facilities will be available upon request. The food service menu will be available on their in-room TV sets.
• Unavailable services- Since safety of guests and hotel associates is important, the hotel has not resumed the additional services like fitness centre, restaurants, Bar area and Spas. These services will remain closed to avoid congestion of people in these areas. However, with the permission of local authorities and state government, there is no guarantee that these services will be available sooner.
• Food and beverages offerings- The Sheraton Melbourne Hotel has currently kept its restaurants, bars and event areas closed to avoid spreading of the virus. However, complimentary services of takeaways are available for guests. The hotel has partnered with several other restaurants and bars to help guests receive full dining experience in their rooms. The food will be directly delivered to their rooms and the menu selection will available on their TV sets. This step has been taken to make the guest feel comfortable and experience fine dining experience within the comfort of their room (Sheraton, 2020). The food handlers are trained to implement safe practices during food preparation and delivery services. The company has modified the practices for in-room dining and design new approaches to buffet services.

Recommendations
The situation of Covid-19 has been devastating for hoteliers and investors. It has transformed many hotels and their businesses and allowed them to implement new strategies to survive in the industry. As the virus subsided, there is a high chance that hotel industry will never be the same again (Filimonau, Derqui & Matute, 2020). The operations and services will need better strategies to regain the losses thereby maintaining safety within the premises. As a priority, safety will be at first to avoid any later consequences. In this following report, the Sheraton Melbourne Hotel has been hard hit by the Covid but still has an optimistic approach to regain its lost position in the market. This set back has forced the business of the Sheraton Melbourne Hotel to close down its many operations and introduce safety protocols within and outside its premises. The hotel implements high class services to maintain safety and social distancing norms. However, in order to make enhance these safety measures, few recommendations can be given.

• Rigorous use of contactless technology- the pandemic has left the hotel with no other option than implementing touch-less technologies. Even when the touchless technology like the Marriott Bonvoy application is used to support contactless experience, many customers are not aware of how to use it. This problem can be solved by providing written instruction within the application for the ease of use. Also, the key cards can be replaced with QR scans to avoid any contact. Touch-free devices such as sanitisation stations, doors and dispensers will maintain contactless service. In order to maintain person-to-person contact, the hotel can provide with applications for food ordering services from in-house restaurants as well as other partner restaurants. This will help customers to customers to experience good dining experience within their room itself.
• Technology for room cleaning- The hotel has a great opportunity to implement cleaning robots within rooms and indoor premises to avoid person-to-person contact. The hotel can add fresh seals to doors and room-cleaning robots (Shin & Kang, 2020). These cleaning rituals can be boon for the hotel to attract the attention of more guests and regain their trust.
• Food and beverages operations alterations- Generally, the local authorities are requesting hotels to keep their restaurants closed to maintain social distancing norms. However, the country also needs to support its economy. Therefore, with utmost safety protocols and following guidelines, The Sheraton Melbourne Hotel has opened its restaurant and bar service upon guest request. The restaurant remains closed but the dining experience will be provided in individual rooms. The hotel has an opportunity to maintain spreading the virus by providing safe measures of preparation of food and its delivery.
• In-room offerings- The hotel rooms must provide less shared devices within the rooms. Voice controlled devices must be installed without forcing guests to touch the devices. This will promote touchless technology and keep guests as well as hotel staff safe.
• Reducing current operating costs- The hotel has the opportunity to reduce their operational costs and make profitable decisions. Reduction in labour costs is the hardest decision but can reduce the number of staff within the staff. The utilities costs can also be reduced. The property expenses can be reduced by closing the golf courses, spas and swimming pools. The maintenance costs will also automatically reduce property expenses.

The hotel can cut programmes and make necessary adjustments. These programmes must be provided only upon guest demand.

References
Alonso, A. D., Kok, S. K., Bressan, A., O’Shea, M., Sakellarios, N., Koresis, A., ... & Santoni, L. J. (2020). COVID-19, aftermath, impacts, and hospitality firms: An international perspective. International journal of hospitality management, 91, 102654.

Australian Government. (2020). JobKeeper Payment. Retrieved from: https://business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business/JobKeeper-Payment#:~:text=The%20JobKeeper%20Payment%20is%20a,Australian%20Taxation%20Office%20(ATO).

Borland, J., & Charlton, A. (2020). The Australian Labour Market and the Early Impact of COVID?19: An Assessment. Australian Economic Review, 53(3), 297-324.

Choudhary, R. P. (2020). Challenges in times of Covid-19: Owner-driven hotels and independent chains face market crisis. Retrieved from: https://hospitality.economictimes.indiatimes.com/blog/challenges-in-times-of-covid-19-owner-driven-hotels-and-independent-chains-face-market-crisis/4159.

Cummins, C. (2020). Hotel industry body calls for clear heads on road to recovery. Retrieved from: https://www.smh.com.au/business/companies/hotel-industry-body-calls-for-clear-heads-on-road-to-recovery-20200909-p55tyn.html

Filimonau, V., Derqui, B., & Matute, J. (2020). The COVID-19 pandemic and organisational commitment of senior hotel managers. International Journal of Hospitality Management, 91, 102659.

Hu, X., Yan, H., Casey, T., & Wu, C. H. (2020). Creating a safe haven during the crisis: How organizations can achieve deep compliance with COVID-19 safety measures in the hospitality industry. International Journal of Hospitality Management, 102662.

Marriott Bonvoy. (2020). Travel with confidence during Covid-19. Retrieved from: https://clean.marriott.com/#commitment.

Marriott International. (2020). Marriott International Reports Third Quarter 2020 Results. Retrieved from: https://news.marriott.com/news/2020/11/06/marriott-international-reports-third-quarter-2020-results.

Sheraton. (2020). Sheraton Melbourne Hotel. Retrieved from: https://whattoexpect.marriott.com/melsi.

Shin, H., & Kang, J. (2020). Reducing perceived health risk to attract hotel customers in the COVID-19 pandemic era: Focused on technology innovation for social distancing and cleanliness. International Journal of Hospitality Management, 91, 102664.

Top Hotel News, 2020. About the brand. Retrieved from: https://tophotel.news/sheraton/