SM Hotels and Conventions (SMHCC) – the Philippines' largest MICE operator with seven convention centres and nine hotels – bore a heavy brunt when the sector was decimated by the pandemic. Its executive vice president, Peggy Angeles, charts the sector's travails and how it is rebuilding amid uncertainties
What was it like to be at the helm of SMHCC during the pandemic? What did you do to ensure the company’s survival?
It was a very stressful period because this is something that I don’t think any hotelier or business leader could prepare for. Our business continuity plans are based on past experiences such as earthquakes, volcanic eruptions, floods, and typhoons. We can prepare for these natural disasters, but not for a pandemic of this magnitude. Even during the SARS period in 2000, when there was SARS, the situation did not appear this bad. The stress level is different and there were a lot of sleepless nights.
But we must move on and move forward.
We repurposed our function spaces at SMX convention centres, transforming them into safe satellite/ghost kitchens, warehousing, production studios, and tailor-made exam and licensure spaces. We also repurposed our talents to ensure that business priorities were achieved, without sacrificing an employee’s critical skills and relevant experience.
For accommodation, we marketed for long-term stays and offered housekeeping services, complimentary parking, and unlimited high-speed Internet access. Some of our hotels, like Taal Vista Hotel in Tagaytay also targeted working adults with the promise of strong Internet connectivity and the convenience of a hotel stay.
During this downtime, SMHCC also invested in sustainability features, new dining concepts, touchless transactions, and additional safety equipment such as thermal imaging systems, electrostatic sprayers and UV disinfection lamps.
Your properties are located throughout the Philippines. How did they handle the different and constantly changing guidelines, carrying capacity and lockdown statuses?
We had to adapt almost instantaneously to the vacillating guidelines and quarantine status and abide by different regulations depending on where a specific property is located.
Due to limited operational capacities dictated by the quarantine status, as well as restrictions on whom were allowed to stay in our various facilities, the revenue potential of our properties could not be maximised.
We were prepared to maximise revenue generation as the different alert levels were imposed. As each alert level progresses, we have always been guided by the restrictions and capacities that the Inter-Agency Task Force for the Management of Emerging Infectious Diseases has designed.
So depending on which alert level we are in, we have our plans on how we are going to generate revenue from F&B outlets, as well as from room accommodation, meetings, conventions, and exhibitions. It is a matter of switching gears.
How is the industry rebuilding the business events sector as the Philippines has reopened its doors?
While there have been several reports on foreign arrivals including balikbayans (returning Filipinos) from the US and Canada, the question is where they are going? Many of the balikbayans go straight home because there is no longer a need for quarantine thereby affecting hotels that were converted into quarantine hotels.
Hence, our hotels are focusing on domestic travellers – staycations and out of town trips, as well as the revival of some small meetings and social events. These will be the segments that will tide us over until the post-pandemic days, which is not going to be until 2023.
Could you share the various challenges in bringing business back to hotels and convention centres?
Critical markets like China are not going to visit because they need to be quarantined when they go back. Therefore, until the travelling policies of other countries where we used to get our business change, it will always be a challenge.
We also do not know when the airlines will come around. Our locations and destinations are dependent on inbound flights. Even domestically, if flight frequencies are not increased to Iloilo, Bacolod, Davao, Clark, Cebu where we have properties, then there will be limited traffic.
For our hotels located right next to convention centres, the challenge there is as long as PCOs are not organising regular events, that particular MICE segment will not improve. What we do see are PCOs blocking out dates, but whether an event does materialise is another question.
We have suffered losses in the past two years. What most of the hotels generated in the last two years was just enough to pay for operational expenses.
What do you think the business outlook will look like for this and next year?
The Philippines’ tourism secretary Bernadette Romulo-Puyat could not provide a forecast for arrivals for 2022. If the Department of Tourism cannot give targeted numbers, it is very hard for us to also do that.
What we can see is that there is going to be a change in the business mix. Previously as quarantine hotels, our properties were on 80 to 90 per cent occupancy but at low rates. The business mix has now changed to lower occupancies but at slightly increased rates, thanks to a small number of corporate travellers, staycations, and several small meetings. This will probably continue until end-2022.
During the rebuilding stage, there will also be a lot of uncertainty, and we do not want to change the pricing strategy on our end. We need to be cautious with pricing because every other country is also rebuilding, which means that prices will be competitive.
At the same time, we cannot drop hotel rates too much just to obtain volume. We will, however, deploy competitive packages and offers that will target leisure travellers, with all the bells and whistles thrown in, as leisure travellers are now looking for more experiential options.
By 2023, hopefully, things will start to pick up, and in 2024, I hope that we can be back to 2019 levels of business.
How can the Philippines rebuild interest in business events and market confidence?
Start domestically, because this change will not happen overnight. There are still companies that will be cautious and continue to have virtual or hybrid business events, which we are prepared to accommodate at our convention centres and hotels.
Hopefully towards 3Q2022 or 4Q2022, confidence will build and the number of participants physically there will be more than those virtually attending.
The Department of Tourism and the Tourism Promotions Board need to be very strategic in their spending and focus on low-hanging fruits.
What I mean is, many countries – with the exception of Hong Kong and China – have adopted a ‘let’s live with Covid’ perspective. Countries that have done away with their quarantine requirements or a reciprocal agreement in the case of Singapore, Thailand, and Australia, should be targeted.
Is SMHCC pushing through with properties that have already been planned for construction or opening?
Yes. For example, the first Lanson Place Hotel and Serviced Apartment within the SM Mall of Asia complex will open early next year. SMX Convention Centers will also continue to plant its flags in key destinations, including the opening of SMX Convention Center Clark by 3Q2022. Last year in June, the Park Inn by Radisson Clark completed its 100-room expansion in its South Wing, while in July, Park Inn by Radisson Bacolod was launched.