By Walter Seib
While the whole world has navigated uncharted territories, society and business have continued to seek the much fabled “new normal”. Experts have written papers on it, newspapers have speculated on it, and business leaders have presented on it. In fact, I have lost count of how many times I have faced this question in interviews. Do we really need a “new normal”? What we actually need is change.
Throughout this time, we have not stood still. The world has innovated. We have developed new ways of working, new ways of staying connected, and new ways of doing business. All of that development was largely initiated in response to the forced conditions of the pandemic.
Most significantly, the landscape of our industries–for travel, retail, and food & beverage–has changed, and we have all changed with it. We have met the challenges set before us with flexibility and agility; we have drawn strength from strong partnerships, we have worked together to help communities, and we have kept our people and our guests safe. That has all come at great cost and sacrifice.
While nearly all aircraft was parked on tarmacs, our company lost over 98.5% of its revenue, we had to close 85% of our stores, and we also had to say goodbye to more than 50% of our dedicated and hard-working associates. For the past few months, my team and I have worked 24/7 with virtually zero revenue.
We have all encountered change during the pandemic, and change begets change. Instead of continuing to speculate about the new normal, as an industry, we need to discuss what (permanent) actions we want to take with respect to those changes. To put it simply, the concession business needs to be done differently.
From high capex to low capex, we also need to reutilize the existing assets we have. For example, when stripping out or taking over existing units, we need to look at how we can preserve equipment and infrastructure that still has life and value. We should even think differently: Why are we buying equipment instead of leasing it?
Before we can get back to business as usual–any sense of “normal”–we first need to repay all our debts. That is end to end for our industry.
Landlords, retail, and food & beverage operators: We all need to make profit again. When making profit, it will first be used to repay debts. Only after repayments have been made can new or additional investments be considered. As an industry, we still have a couple of years ahead of us before we will be able to have the same investment level as before the pandemic.
We are in this together–let us find our way out of it together. The last 18 months have hit all of us: No one has emerged as a winner, and we need to continue to support each other.
For concessionaires, we need a different mechanism on Minimum Guarantees and other parameters like, for example, cash deposits, service costs, etc. We need a sliding scale for concession percentages to allow for the differences experienced in various countries and locations. While a return to a focus on square meters would be great, that approach does not acknowledge our current reality. It undermines the change we have already undergone and negates the past 18 months of our experiences, our lessons learned, and our losses.
As confident as I am in the fact that recovery is coming, I can also tell you that we are not out of the woods yet. We do not need a new normal–we need change, and we can only do that together.