Hospitality Management
Article | July 18, 2023
Despite the global pandemic controlling business travel headlines for the past twelve months, there are quite a few other topics top of mind for travel managers today in North America.
Egencia has taken a dive into the other important topics that are weighing on the minds of travel managers, and we’ve taken a look at what’s creating a buzz in the industry and within the Egencia travel manager Connect Community.
Read More
Business Travel
Article | May 17, 2023
Most people associate the term "blockchain" with cryptocurrencies such as Bitcoin, Dogecoin, or Ethereum. Blockchain is the technology behind cryptocurrencies, but it is also a technology in its own right that has many uses.
Blockchain is an immutable ledger that tracks transactions and assets, like cash and patents. All parties have access to the same data simultaneously, eliminating intermediaries and making it a cost-effective way to track assets. It could, for example, track a flight delay and automatically refund a customer’s money.
A German blockchain start-up Etherisc launched an insurance product, FlightDelay, which uses blockchain to automatically issue policies and execute payouts for flight delays and cancellations on around 80 airlines. Customers can buy policies with cryptocurrency and receive claims in cryptocurrency.
Flight delays are where blockchain-based insurance can make a difference in the travel insurance domain. Data on delays and cancellations is readily accessible, and all assist in automatic payments. This way, companies that offer flight insurance can avoid higher claims-processing costs and save on data protection costs because blockchain is secure.
U.S. Insurance Regulations Prevent Blockchain-based Travel Insurance
In the U.S, there is a need for state-by-state approval for changes in regulations. Blockchain’s appearance in the U.S. insurance industry may take another ten or fifteen years. However, the potential of blockchain-based insurance products is huge. Insurance companies can sell them at much lower costs compared to traditional insurance products.
Blockchain Can Change the Travel Insurance Business
Interestingly, the U.S. already has an insurance product similar to FlightDelay but none of them have the blockchain component. Called ‘parametric insurance’, an auto payout is done when some parameter is violated. Using blockchain technology to offer this insurance could save money and enable insurers to pass on some of the savings to the customers. Insurance industry experts think blockchain will definitely make a mark in the travel insurance domain and can change the way travel insurance businesses operate at large.
Read More
Hospitality Management
Article | July 19, 2023
The September 11th attacks. The Great Recession. The COVID-19 pandemic.
All three of these seismic and tragic events have resulted in heartbreak to humanity, including loss of life and our emotional well-being both individually and collectively. Of course, accompanying these global crises were monetary meltdowns reminiscent of the Great Depression that commenced in 1929 and lingered until the late 1930s.
After a “relatively” calm 70 years, the United States economy has suffered three devastating developments inside the last two decades, alone. There have been wars fought throughout the world and inflation escalations along the way, to be sure, but the start to the 21st century has suffered escalating and unusually concentrated economic calamities some that have profoundly altered the very fabric of our lives, both personally and professionally.
Indeed, on the business front, such periods have been among the most perhaps the unequivocal most trying of times. Amid current circumstances as the coronavirus rages on around the globe, I recently connected with internationally-renowned business restructuring executive James “Jim” Martin, founder of ACM Capital Partners with offices in Charlotte, Denver and Miami. Having spent the last three decades leading international middle-market companies through periods of distress and transition to actualize stability and growth, Martin is uniquely well-positioned to share insights on how business can rally to best assure a “COVID comeback.” Here’s what he had to say.
MK: First, before addressing the current coronavirus situation, what can you tell us about how you’ve helped companies navigate previous “rough waters”?
JM: Relative to the September 11th attacks back in 2001, I’ll share a representative example of a strategic pivot that didn’t just help a company survive, but actually drove profit. After that horrendous event, I stepped in to assist a large aviation maintenance repair-and-overhaul facility whose revenue had been cut fully in half immediately following the attacks the result of many carriers permanently parking older aircraft (including the 727 fleet). The sizable challenge presented was to maintain a 1000-person labor force while allowing the industry the necessary time to recover. To do so, we created a captive subcontracting company to which we transferred one-third of our labor force. During our troughs, we contracted this labor to our competitors and, during peak periods, we utilized this labor for ourselves. Thus, not only were we able to retain our skilled, well-oriented labor force during the recovery, but that very staff actually provided additional, supplemental profit. The end result was that we sold the business for $138 million, which provided our new investors with a 33 percent internal rate of return (IRR).
Less than a decade after 9/11, amid The Great Recession in 2008, I entered another industry that proved to be among the most brutalized by a global economic downturn: automotive supply. My client was a key supplier to the “Big 3” U.S. auto manufacturers.
At the start of 2008, the industry forecast was the production of 18 million vehicles in North America. Come summer, however, it was clear the automakers would not come near reaching that forecast due to the financial crisis. This did not come as a complete surprise to us, though, because amid our firm’s protocols we had had already fully immersed ourselves in our client’s industry and employed forecasting tools alerting us of trends ... this one in the wrong direction. So, we were privy to the situation well before management and others within the industry. By late June 2008, we instituted cost-cutting maneuvers and furloughs that enabled the company to withstand the industry’s brutal second half of ’08 that would result in two of the “Big 3” automakers filing for Chapter 11. Despite the industry producing less than half—as much as eight million—of its original vehicle-production forecast, our client not only survived, but ultimately grew and prospered.
MK: Turning attentions to COVID-19, what do you feel is integral for businesses to survive and recover?
JM: For businesses to recover from the coronavirus shutdown, it’s going to take a two-pronged approach: both financial and human capital. Starting with the financial, it will be a “loan-ly” world for those not well-versed in the intricacies of SBA, PPP and other “economic disaster” lending. Consider how expeditiously those programs were rolled out. Then consider how even more quickly they were scooped up. Did anyone really read those loan documents in full, or even halfway through, initially or even to this day?
My guess is at least half of the companies receiving COVID-related loans took a very “CliffsNotes” approach to these agreements. The result is there’s a solid chance funds were used incorrectly, which is going to make a lot of the loans, shall we say, less “forgivable.” For example, if your company’s payroll roster is shorter today than it was pre-virus, the portion of the loans forgiven is likely to be less.
And while your mind may rush to claiming ignorance and throwing yourself upon the mercy of the government to which you already pay taxes, realize that third-party capital is likely to participate in this market through securitization. This means that thousands of SBA loans could be bought, then packaged to be sold to the secondary market, at a discounted rate, no less. If this happens, understand that the purchasers will have the full intention of holding their borrowers (i.e. small business owners) to paying back 100 cents on the dollar.
So, those companies who received loans and are required, but unable, to pay them back in full may be exposed to either foreclosure or, worse, a “loan to own” scenario. In other words, much like the agreement that comes with your big-tech user agreements, like those prompting users to “click agree,” the fine print matters.
What this means to recovery is that, once again, cash is king: gather it; preserve it; cease lines of credit; liquidate what you can; negotiate costs down with suppliers. And if your company had a healthy bottom line pre-COVID, than a professional familiar with these trenches can help you look to refinance or bring in equity.
With all of that said, the key to a COVID-19 recovery is going to be adhering to the rules of a lender’s road, as well as the ability to navigate the red tape when you veer off that road. If you have read all the fine print and properly managed your loan, congratulations! You’ve acquired some really cheap capital. For those who didn’t do their research, however, this road to recovery likely will need some paving.
MK: What about the human capital you mentioned?
JM: Yes, and then we arrive at the human capital. Lots of companies today are excessively top-heavy. Remember the part about removing emotions from this process? Companies that quickly recognize cuts need to be made will be better positioned to recover than those who dawdle. Again, compiling and preserving cash is going to best position a business for recovery.
This is an instance where it’s especially beneficial to know when to pull triggers (best if earlier than others) and to make decisions that are not based on emotions a tall order for many CEOs, which is why many turn to turnaround experts. However it’s undertaken, what’s certain is that reducing human capital is painful, but it is also often necessary and almost always beneficial.
The upside is that, when the virus no longer exits, businesses can already be well-positioned for a fairly quick recovery. Maybe not v-shaped sans a vaccine, but quick relatively speaking due to the downturn having been so specific to one singular causing factor.
MK: Tell us a bit about your role as and general value of a turnaround expert when turmoil strikes a business.
JM: During times of difficulty, owners and executives can greatly benefit from specialized knowledge that’ll help them best navigate those unchartered waters that are often entangled in a lot of red tape. So, turnaround experts bring to the table a litany of tried-and-true “been there, weathered that” experience and expertise. There’s simply no substitute for engaging with a partner whose entire mandate is ensuring your company’s survival and success during some of the most grim and challenging times it might experience those professionals who are willing to spend sleepless nights figuring out how to ensure the company meets payroll; who’ll work around the clock to keep the company’s doors open; and who can tackle challenges without being hindered by emotions that understandably weigh on a business owner or manager. It takes this kind of specialized expertise, experience and grit to lead companies through periods of distress and transition, to stability and growth.
No stranger to corporate chaos, during Martin’s own three decades as a globally-regarded turnaround expert, he has reportedly created and restored nearly $1.5 billion in value to lower middle-market companies; raised an additional $1 billion in capital; and managed mergers and acquisitions in excess of $500 million all collectively representing his company restructuring portfolio valuation in excess of $3 billion.
Today, as the coronavirus continues to wreak havoc on business operations far and wide, take heed that there are various key strategic and creative tactics that can help businesses not only weather the storm, but even emerge stronger and more financially secure on the other side.
Read More
Hospitality Trends
Article | January 3, 2022
If a kid comes to me nowadays and tells me about his passion for working in the hotel industry, he goes back home with a dream to become a pilot. I am not saying that the hotel industry is the worst kind of industry currently existing in today’s environment, but I am also not denying that.
Now, no offence to the hoteliers. You guys rock! It is no joke to work on a New Year Eve and see other people celebrating it while you guys make it happen. You have my respect! But I am probably not that tough. It took me a whole trial and error approach to declare this industry a nightmare for me. But I have so many of my friends still working in hotels and loving every second of their life. (At least that’s what they tell me.)
So why were our experiences so different? Why do I know that so many people are not really made for this industry? And what does it take to be a hotelier? I will try to answer these questions through my experience and observations.
Why Hotel Management?
It is that one question that is the most common and important one. Before taking any big decision, one should be asking a similar question. But what was my why?
Allow me to rewind my journey. I was in my 12th with commerce stream, and I was going through that self-enquiry phase. What after this? There was no 13th, nor did I enjoy accountancy too much to do it until I die.
So I used to surf the internet and explore different career options almost every day. That was one of my significant hobbies during that time. I used to evaluate my choices, and very soon I understood that I had limited options in the commerce field. So it was arts then? But what was the median salary in that sector?
After a lot of research, I realised the median salary in the arts sector was ‘disappointing’.
But still, if not that, then what? What was I going to do with my life? It was then that I saw the picture of a cruise ship and remembered 'Titanic'. It was then that I imagined the luxury of a 5-star hotel. It was that moment where I was about to make one of the stupidest decisions of my life.
I had never stepped into a kitchen nor showed the slightest interest in making any dish. I never really fancied cleaning glasses, nor did I like managing people under me. I also didn’t know absolutely anything about what was this industry all about.
But I dared to share it with my sister, and she was like, wow! It sounds so different! I told this to my friends, and they were like, wow! We always knew you would be doing something different! I told this to my father, and he told me students have to clean toilets during the internship, and I shouted, ‘But that’s not a big deal! Anyone can do that!’ Dad said, ‘Do whatever you want to do then, my son.’
Well, so what did I want apart from freedom in my life at that point? Maybe maturity? Oh! Screw that!
So I gave the entrance exam and got a decent rank. I desired to stand in the lobby of a 5-star-hotel and meet salacious women. I was pretty sure that many women would choose that industry apart from me. That was enough motivation! So yes, my reasons to choose the hotel industry was very logical and thoughtful, suffice to say.
What Happens in a Hotel?
The hotel industry is one of the most glamorous industries out there. Everything is so clean, eloquent, expensive, and pretty. People come to a 5-star hotel, are warmly welcomed, served drinks; they are provided comfortable beds to sleep in, and they enjoy their stay and endless services. Then they simply check out.
My only mistake while considering this option was that I wouldn’t be treated like one of those ‘People’ there. In our very first lecture, the term ‘Guest’ was taught to us and how we are not them. We are the ones who would serve them. We would be the waiters, the cooks, the greeters, the bartenders, etc. We wouldn’t be drinking with them but watching them while they would be cavorting.
That was a shocker! So many things happen in a hotel, and hoteliers make those things happen. They do all the hard work. The Bakery Chef would spend hours decorating the cake, which the guests would smash on each other's faces. The housekeeper would clean the bathtub while the guest would take five more baths after that.
The front desk agent would be greeting the guest during check-in, and the guest would throw tantrums because of his arduous journey. Suddenly my bubble broke, and I realised what I really signed for. I signed for an everyday vacation in hell.
Who Survives?
I think adulthood is about that realisation when you get to know that bread isn’t free. And what buys that bread isn’t that easy to get. And how much that thing matters to you is going to decide how happy you are going to be in your life.
If I was that guy who had grown up watching Masterchef and experimenting in the Kitchen all my life, then a Gordon Ramsey could have come out of me.
If I were a fastidious guy who wanted everything to be clean and perfect, then an entrepreneur or a manager could have come out of me who would have tried to do that during his job.
If I were a guy who loved making people smile, then interacting with guests while serving the food or taking their check-ins would have been the best things out there for me.
You get my point! There are so many things that could have made hotel management an ideal career choice for me. It really is a glamorous industry, and it can provide satisfaction as a career option to some people out there. But that wasn’t the case with me. Sadly that wasn’t the case with many of my batchmates and colleagues of mine as well.
After completing my three-year graduation, four-month industrial training, and one-year job as a Front Desk Agent, I quit. Nor could the managers inspire me, nor any other incentives that the industry had to offer. My future looked as grim as the life of an insect (No offence to you if you are an insect.)
So yes, be wise before choosing this industry because this industry demands a lot! It is one of the most selfless jobs out there, and you have to be prepared for the nasty feedbacks after all your hard work. So do some self-inspection (Unlike me) if you are stuck in this industry or are planning to do so.
And if you love where you are right now, then as I said, you have my respect.
Read More