Crises like the pandemic can be catalysts for change and generate opportunities for businesses to create more value over time. By talking to company leaders, Nicky Burridge finds out what steps companies are taking to ensure a safe and successful relaunch and how they are redesigning business models to get through the disruption or prepare for a post-COVID world
Illustrations by Ester Zirilli
The COVID-19 pandemic and its associated travel restrictions might be expected to have had a significant impact on a private jet management business. But Joyce Kee, Chief Executive Officer of Aegle Aviation, does not view the sharp fall in air travel in a negative light. Instead, she says it gave the company the opportunity to take a step back, review its systems, processes and people, and focus on ways to enhance its offering.
In fact, Aegle Aviation, which offers services ranging from handling flight logistics to providing technical support to private jet owners, saw a rise in demand for its consultancy services on jet purchases and maintenance. “This year, we took on new consultancy projects. Apparently, some people are working hard to prepare for the post-COVID economy coming back stronger. We expect more revenue contributions to come from our consultancy projects, as we tap into our knowledge and experience base,” says Kee, a Hong Kong Institute of CPAs member.
Even so, Kee adds that Aegle Aviation’s operating model has had to be tweaked on a daily basis during the pandemic, while its team has needed to be more dynamic to stay ahead of the game.
While COVID-19 has had a significant impact on economic activity, many businesses are viewing the pandemic as an opportunity rather than a challenge. For some companies, the pause it has provided has enabled them to review their operations ahead of a relaunch once restrictions are lifted, while for others it has acted as a catalyst to change their business model and explore new opportunities.
Aegle Aviation is not alone in having to refocus its services as a result of travel restrictions. High-end hotel chain The Hongkong and Shanghai Hotels, which owns The Peninsula in Kowloon, introduced changes as borders were closed and mandatory quarantine periods were introduced, significantly impacting tourist numbers in its markets across Asia, Europe and the United States.
Clement King Man Kwok, Managing Director and CEO of The Hongkong and Shanghai Hotels and an Institute member, explains that as a result, the group has been focusing on domestic tourism. “Our business model has not changed as we believe the fundamentals of luxury hospitality do not change over time, but we have developed some innovative staycation packages and dining packages to attract local guests,” he says.
Other tweaks include introducing “Peninsula Time,” which allows guests to have their room ready as early as 6 a.m. on their arrival date and checkout as late as 10 p.m. on their departure date. The group has also put in place additional health and safety measures at its hotels. “There is hospital-grade cleaning and disinfecting happening, although we do try to shield our guests from this unromantic reality,” Kwok says.
Seizing the opportunity
Louisa Yeung, CEO of Hong Kong recruitment agency KOS International, sees the pandemic as being a significant opportunity for her business. “To me, a downturn is the best time to prove yourself. If we keep doing the basics right and maintain our professional standards, we will be able to stand out among our competitors. Once the downturn is over, we will have an excellent opportunity to take market share and expand, pushing the brand and business to next level,” says Yeung, also an Institute member.
To keep the business going during the downturn, KOS International is focusing on its high margin recruitment services, rather than its payroll and human resources outsourcing operations. It has also expanded its coverage into new industries, such as logistics and supply chain, education, media and manufacturing.
The company is also making the most of a surge in demand for technology-based positions as companies scrambled to digitize their operations. It has expanded the technology side of its business, transferring an experienced member of staff to take charge of the sector. “We stay very close to our key clients who are still hiring and ensure they receive top quality recruitment services and market advice. We also offer quality career counselling advice to our candidates by posting video clips on how to handle job searching,” Yeung says.
To me, a downturn is the best time to prove yourself. If we keep doing the basics right and maintain our professional standards, we will be able to stand out among our competitors.
For Shirley Tse, owner of mergers and acquisitions accounting consultancy firm Dikan Solution and an Institute member, the pandemic has also provided an opportunity to expand into new sectors. Tse explains that in the past, time pressures meant it was often difficult to spend a lot of time really getting to know clients. But with the pandemic reducing travelling and time spent commuting to the office, she has been able to spend more time with her clients, which has led to referrals to work with new clients in industries in which she was not previously active. “In the past, you may only have been able to spend one hour with a client but now you can spend three hours with them. It leads to networking and this creates new opportunities,” she says.
Despite the opportunities created, this does not mean there were not challenges that needed to be overcome. For Kee, one of the immediate challenges was having to work away from Aegle Aviation’s offices, while keeping abreast of different countries’ travel restrictions and supporting crew who were quarantined or away from home for long periods of time. “Under the low flying mode, we also needed to be more conscious of aircraft maintenance,” she says.
IT consulting and support services company Arcotect has seen two major challenges as a result of the pandemic. The first was changing the way it communicated with its existing customers, with the company switching to electronic channels, such as Zoom, email, WhatsApp and WeChat. But more significantly, the pandemic reduced opportunities for it to meet potential new customers. “It has decreased our opportunities to bring in more business and sign-up new customers,” says Dr George Fok, CEO of Arcotect and an Institute member. Instead, he says the company was focusing its efforts on developing new products for when normal business activity could resume.
Unsurprisingly, maintaining strong financials has been a key factor in surviving the business disruption. “We have been through many crises over the years, although COVID is one of the worst, and because of this, we have always maintained a strong balance sheet and a conservative financial position. We know that all crises will eventually end and that we can overcome adversity if we are well prepared,” says Kwok.
In the meantime, The Hongkong and Shanghai Hotels has accessed some government subsidies and, while it is trying to minimize layoffs, it has had to furlough some of its staff. Arcotect has also had to take action. Fok says: “To stay afloat financially, the main tactics were to cut costs and downsize the workforce. The company is also conscious about managing our human resources more effectively and trying to improve the productivity of our staff.”
Yeung says KOS International has also kept a tight control on its expenses and ensured it has a good return on investment on all its expenditure. “We still celebrate successes but in a controlled fashion and manner,” she says.
Looking after staff
Alongside ensuring they maintain sound financials, many companies have also prioritized taking care of their staff. “This is a time to look after people and ensure wellness is a priority. If your people are safe and trust the company, then when we come out of the pandemic, innovation will thrive,” Kwok says.
He adds that the mental health impact of the crisis on staff has been a big concern for The Hongkong and Shanghai Hotels, and alongside taking steps to ensure its employees feel safe and protected at work, including introducing extensive guidelines for hygiene standards, and appointing a hygiene manager in all of its hotels to oversee cleaning protocols and regular testing procedures, it has also upgraded its medical benefits to include mental health awareness and treatment.
Kee at Aegle Aviation agrees on the importance of taking care of both staff and clients: “Our people are our assets, and protecting our assets has become our number one priority,” she says. In practice, this has meant the company always having first-hand regulatory information at its fingertips, as well as implementing digital transformation to enable remote working.
For KOS International, investment in its IT systems has paid off during the pandemic. “We have a world-class business operating system and our billers were able to operate smoothly during the pandemic. We offer flexible work hours, and have closed our office and moved everything online, so that our people will be able to work safely at home,” says Yeung. “In the recruitment industry, people and talent are our core assets.”
Tse at Dikan Solution thinks one of the lasting impacts of the pandemic is that it will accelerate changes that were already taking place. “Companies need to shift to digital marketing models. This approach is favoured by the younger generation. I think the pandemic has increased the speed at which companies will bring forward plans in this area,” she says. Tse adds that she has also found working from home to be more efficient than going into the office, and she expects this change to persist after the pandemic.
Kwok at The Hongkong and Shanghai Hotels agrees: “Our industry has already been seeing a move towards increasing digitization and robotics, and we are exploring innovative UV sterilization technology and anti-viral cleaning equipment, such as using anti-viral coatings and products to test for the presence of viruses, bacteria, allergens and pathogens. There will also be increasing contactless check-in, digital room service orders and communication methods.”
He adds that the group has recently launched a system called PenChat allowing contactless communication. “These are all areas which were happening already, but the health crisis has accelerated the need for implementation,” Kwok says.
Positioning for the recovery
Over the long term, Kwok remains optimistic that demand for luxury hospitality will remain strong, and the group is continuing to position itself to capture this market. “We are preparing our operations for the eventual end of the pandemic by ensuring that our businesses have adapted in terms of technology, and that our staff are well trained and most importantly, safe. We are upgrading our service offering according to requests from our guests,” he says.
The group is also continuing to press ahead with three new Peninsula Hotel projects in London, Istanbul and Yangon, as well as the Peak Tram upgrade project in Hong Kong. The company is also reviewing its current hotels. “In our existing hotels we are taking the opportunity to enhance the retail arcade at The Peninsula Hong Kong, and we are reviewing our marketing strategies in Mainland China.”
Arcotect has also been preparing for when more normal business conditions resume. “We have been working on upgrading our software products and preparing business proposals in anticipation of business activities picking up again,” Fok says.
Kee thinks the current situation creates opportunities for Aegle Aviation which it is looking to harness. “For our business, offering customized charter solutions is an opportunity as it can be perceived as being safer and more accommodative to any personalized travel needs,” she says.
Advice for others
For companies that have seen a drop in business volumes due to the pandemic, Fok suggests taking the opportunity to revisit the business plan and cost model, as well as working on contingency planning. “The budgetary control and review exercise will have to venture into uncharted waters, such as if total turnover falls by 50 percent, 60 percent and even 80 percent, looking at the likelihood of survival under those circumstances.”
He adds that companies should also think about a holistic exit strategy, covering individual product lines, market segments, such as geographies, channels or partnerships, and modes of operations, as well as exiting from the entire business altogether to preserve shareholder wealth, if the potential for new shareholder wealth creation is limited. “An exit strategy is something not many businesses are willing to expend effort on, but it is fast becoming a reality that every business should start drawing up an exit strategy and identify when to trigger it, with monitoring metrics kept under constant review.”
During downturns, we need to take all possible opportunities to keep our heads above water.
Tse at Dikan Solution suggests companies should explore online opportunities, adding that they should focus on what young people want, as they are the future generation of consumers. “If companies do this they can figure out what the new business model is likely to be like,” she says.
Yeung at KOS International emphasizes the need to remain agile and look for opportunities to diversify the business. “During downturns, we need to take all possible opportunities to keep our heads above water,” she says. Yeung adds that having a clear and transparent communication style, and keeping staff informed is also important, as well as striking a balance between the business’s interests and looking after employees.
Finally, she advises companies to be prepared to do more to help their clients. “We have offered valuable and realistic career advice to candidates who are out of jobs and they will remember us when the market is back to normal.”
Executive are more optimistic about the year ahead, according to The Coronavirus Effect on Global Economic Sentiment, a study issued by McKinsey & Company last month. 63 percent of the almost 1,400 executives surveyed from November to December 2020 say economic conditions in their countries will be better six months into 2021, up from 54 percent who said the same in mid-October.