"Nothing will be the same": How Italian hoteliers are coping with coronavirus fallout
Life in Italy is largely at a standstill since the country-wide lockdown on March 10, which came as a result of a dramatic increase in the number of infections and deaths from the COVID-19 coronavirus. All but essential travel is banned, and those traveling must prove why it is necessary. Tourism is one of the largest industries in Italy. Phocuswright estimates created before the outbreak put combined online and offline bookings at more than $25 billion for this year. To get a sense of the current situation in Italy, we talked to Florence-based Giancarlo Carniani last week. Carniani manages a small hotel company, ToFlorence Hotels, which operates three properties in the city. He is also the current president of Confindustria Alberghi Firenze, the region’s hotel association, which has about 150 member properties ranging from small independent hotels to large ones operating under the Marriott and Four Seasons brands. He is also Phocuswright's analyst for Italy.
Below, Carniani explains how the hotels in the region are coping, why hoteliers are "furious" at Booking.com and why the hospitality industry will be starting at point zero when the crisis subsides.
Q: Before we get into what’s happening from your perspective as a hotelier, tell us what life is like for you personally.
Working in the hotel, I’ve met a lot of people in this period. For more than a week we’ve been very careful and stay far from each other. Since yesterday I’ve been working from home only, but I’ve decided to stay away from my family.
There was a job I had to do [interacting with others] and I’ve done it. We are lucky we have another apartment that usually we rent on Airbnb, and this time I’m here alone and for the next two weeks I’m talking with my family only through the web. There is no other solution. We had hotel guests until yesterday. The last guests were an American couple on honeymoon. They were stuck here because they couldn’t find a way to go back, so we stayed open until they left. And now we have closed.
The situation is unreal. We can go out with a mask just to buy food, because the only thing open is food stores and pharmacies. You have half an hour or one hour to go out. There are police checking everyone. Unless you have to go to work – if you work in an activity that is still open - you have to print special permission and keep it with you. But it’s less and less people going to work now because most things are shut down. Yesterday I was coming back to my home from the hotel, and I walked through the city center – it was unreal. There was no one. And we were talking about overtourism until a few weeks ago!
Q: Are all hotels in Florence closed like yours? And what is the situation with your employees?
A few have stayed open because there are still some people with needs to travel and go around, from the sanitary people, the police and others. So the government has decided not to shut down the hotels, but 90% are closed anyway. The local authorities have asked hotels which are already closed to become kind of hospitals. They need the beds in the [actual] hospitals for all those which are in the most serious condition. So for all the people which have to stay in quarantine, they are asking hotels if they can do that it there. A few hotels here in Florence have accepted, and in the next few days they will become like a clinic for people which are already out of the virus but need to stay away from people for another 15 days. We haven’t fired anyone. All the people in my hotels - we had 120 people working for us - are home and they will get paid. It’s less than [their normal] wages but they will get paid, until the situation is over, by the government. The government has stopped taxation for all the companies that had to close down. They made a law immediately. Tourism was the first and then other categories are entering the situation.
Obviously I don’t get what I usually earn, but I get enough to survive for a while. If you had loans by a bank you are not paying until the situation is over. It’s trying to protect everything in order of cash to save the people and to save the companies.
Q: How have you been handling guest communications and cancellations?
By receiving an amount so big of cancellations, OTAs were not any more able to deal with it. Many clients have called us direct, which never happens in this world. We are all used to seeing our guest when he shows up to the hotel. We don’t know anything about him - he has booked on Expedia or Booking. Now it’s like coming back to the old time. You speak with the people.
My booking office, which is still open but working from home, they said, "I have never talked with clients like I am talking now." It is really changing connections. It’s like we need more human touch. We talk a lot about technology, but we went back as human in this case. And at the very beginning, before we had this paper where it says no travel or airlines shutting down flights to Italy, we tried to handle the situation by saying to all the people that had booked nonrefundable rooms that we will freeze the credit. I was amazed because most of them were okay with freezing the credit, and obviously no one was planning to come in 2020, most were saying to us, "Let’s do that but I’m planning to be in Italy next year." Then in the last two days all the hotel companies have been furious with Booking.com because Booking has decided on its site to reimburse every single guest even if the guest had accepted the credit. This has made hoteliers furious. We have tried to handle this in the most gentle possible way, and having such a big organization [such as Booking.com] decide that, it was really something unacceptable in this kind of situation. They can do that by contracts, but it was really unfair. [Editor's note: Booking.com has not responded to request for comment at the time of publication.] For our three hotels, Booking.com alone is 20% in two of those hotels and 40% in the smaller one, which is a boutique hotel so it depends more on Booking.com. Then of the whole online, it’s about 40% coming from online if I add Ctrip and Expedia and LastMinute and others. But obviously Booking is a strong voice in every single hotel here in Florence.
Q: As president of the Confindustria Alberghi Firenze association, what are you hearing from other hoteliers about this?
Today I had a video meeting with a lot of hoteliers, and there is a kind of rebellion because of that. That’s why I think after the coronavirus, nothing will be back as normal. We really want to start from point zero. It’s a really strong voice coming from hoteliers about that, that we need to do something.
We have handled it the best way possible. We understand it is not possible to travel. There have been a lot of no-shows, and the hotels have not charged it. But this position by Booking is very different than what Ctrip and Expedia have done.
Ctrip - maybe because they have had the virus as well [in China] and they know the situation – they have asked the hotel to proceed in the best possible way. Expedia has done the same, and in fact we have received a letter from Cyril Ranque [president Expedia Travel Partners Group] expressing his concern and desire to collaborate. Booking is trying to force us to do only refunds, appealing to some condition of the contract. And we are furious about that, because when you are in a bad situation like this the worst thing that could happen to you is someone who doesn’t really care about what you are doing. We have the impression they care too much about the stock market. Yesterday we had a webinar with 2,000 people, all hoteliers in Italy. We have decided Giovanna Manzi, who is in charge of one of the biggest chains in Italy - Best Western, which I think they have nearly 200 hotels in Italy - she’s going to have a call with them and explain it was a very bad behavior. We know it is an incredible situation for the clients and for the suppliers. Booking has decided to only go with the clients. Suppliers are struggling now, and they are very upset.
Q: Explain what you mean by saying that when this is over, “nothing will be back as normal."
We have an impression here in Italy in the hotelier community that when this whole story will be over, nothing will be as it was before, nothing will be the same, especially in the distribution. We are all in the same condition. We are all at zero. So that is a condition where you say we’re going to start again. We don’t know when, it will take a few months, but then really you start from point zero and we have the force to change the distribution. We had 2,000 on the webinar yesterday that are feeling this way. When there was the internet revolution, the hoteliers were not there. The OTAs and other distributors took over the space, and for us it has been difficult to emerge with our own brand. I think after the coronavirus everywhere in the world, there will be a new renaissance and distribution will be all changed. I’m glad The Phocuswright Conference will still be there in August, because in August we will see the rise of a new distribution. Everything will change. That’s my impression and the impression of many people here in Italy. Because when you are at zero, you have nothing to lose. You can really change the way you do business.
Q: What is your outlook for the Italian travel industry as you think to the future?
The feeling that we have is that when this thing is over, the people which now are stuck in these apartments, the first thing they will do if it’s possible is travel. So we are going to come back. If I have to consider what will happen since the virus is expanding in other countries, when we reopen we may have the others not coming because it will be in their country.
In two weeks, France and Germany I think will be the same as Italy [as far as the virus]. In tourism it will be a strong impact. It’s not like September 11 – I was working then – not any country came to zero, zero reservations, zero people, zero flights. It’s a catastrophe. Everyone is thinking about taking care of the domestic market, even if it’s not enough for all the hoteliers. For example, I think personally the seaside and the mountain [areas] will do a fantastic summer season with the internal market. I don’t think we will have many people coming from abroad. Our position now is everything will be restarting in fall with traffic of people coming from other countries, but normal will take a few years. So we are concentrating on what we can do internally.
Q: Have you started to think about specific strategies for a post-coronavirus world in Florence, for example around revenue management?
Everything will change, but no one is thinking now about what it will be because we don’t know. We have to see. Going back from zero it’s different than the economic crisis of 2008 when people were still traveling. They had less money, so rates were lower, but they were still traveling so it was different. Now I don’t know what my revenue system will tell me when we reopen. We will have to start from zero, because something like that has never happened. Even the previous year will count as zero because the whole situation has changed. But nobody is thinking about revenue right now. Nobody in our talks is even mentioning that. The focus is when are we going to reopen. That’s it. Personally what I do to stay in touch - because obviously you feel like a prisoner in your apartment - I have a video chat every night with my staff. And people are giving me a lot of new ideas. For example, one of the hotels we have we may decide to change it for one year and to make it a villa for parties, because it’s in the middle of a park and every activity – like weddings – was postponed to the fall. People will need to go out. We are lucky our hotels, one is in the middle of a park, one has a fantastic rooftop terrace. So we will do everything we can for locals. Then we are asking the government to do a strong campaign about Italy as a country – not now – now nobody will come here. But we are lucky this country is in the middle of the dream of every single traveler in the world. Florence, Venice, Milan, Rome will be back. I’m sure of that. We have time to think of new ideas!
After a week of reassuring staff things will be fine and then reassuring hoteliers because you are president, yesterday after I closed the hotel I was coming back to my apartment, there was one hotelier who wrote me a text message. I can tell you I cried for nearly an hour. It is a very stressful period.