Lessons from the Storm

Lessons from the Storm

By Jean Gruss

Editor/Lee-Collier

The Sanibel Harbour Resort & Spa's hurricane-preparation manual spelled out in meticulous detail over several hundred pages how to prepare for a major hurricane. So when Hurricane Charley blew past the Fort Myers area in August 2004, the resort was ready.

But what managers weren't prepared for was the devastating aftermath. The manual upon which they relied to get ready devoted just three pages to recovery efforts.

Lesson No. 1: Make sure you have a recovery plan that's as comprehensive as your preparation plan. It's one of many lessons the resort's management would learn over the next six months, as the hotel's employees struggled to get the 400-room resort open by the following February 1.

How they accomplished the task is now the subject of a case study by Elaine McLaughlin, a professor at Florida Gulf Coast University, and John McCarthy, president of Liberty Hospitality Group. They will publish their findings December 1 in Hotel Investments: Issues and Perspectives, an annual publication of the Educational Institute of the American Hotel and Lodging Association.

What set the Sanibel resort apart from many other hotels and businesses, McLaughlin and hotel managers say, was the fact that they had opted to purchase business-interruption insurance with payroll coverage. That guaranteed all 500 employees would continue to be paid even as the hotel was closed in the months that followed. Although expensive-management declined to say how much it cost or who provided it-the insurance turned out to be the critical element that helped the resort reemerge as a potent competitor.

Clearing the debris

When the management team emerged from the hotel immediately after the storm, they discovered they were shut off from nearby Summerlin Road. That's because downed ficus trees and building debris littered the entrance. They quickly learned one of the first lessons of recovery: chainsaws, generators and gas-powered golf carts are essential to get through the first days.

Another lesson they learned was that most of the cell phones weren't working because towers were down. Landlines were out of service too. Of the four cell-phone companies with which the hotel had contracts, only one was functioning immediately after the storm. If that one service had not been available, the hotel staff would have been unable to communicate with the outside world. Looking back, satellite phones would have been a wise investment.

Almost immediately after the storm, Boston-based insurance giant Liberty Mutual, the hotel's owner, sent a disaster recovery team from Georgia to seal the buildings from further water intrusion. The hotel suffered extensive damage, including leaks in every one of its 400 rooms. The recovery team provided security, additional generators, fuel, radios and hard hats. What's more, the team came from outside the devastated area, injecting a much-needed positive attitude into the crisis situation.

Obviously, many businesses don't have the backing of a company like Liberty Mutual with $20 billion in annual revenues to provide recovery teams anywhere disaster strikes. However, smaller businesses can band together by signing mutual-aid agreements to contract with disaster-recovery companies and help each other out by sharing human resources, McLaughlin and McCarthy suggest in their study.

In the first days after the storm, it was critical to make sure that the property was safe for employees to return. Power was restored after five days, but it took two days to bring full power back to the resort because of the water intrusion and wind damage. "You don't just turn on the switch," says Barry Brown, the hotel's director of sales and marketing and one of the top executives in charge of the recovery effort.

Communication was key

The success of any recovery effort depends on employees being physically and emotionally engaged. The management of the hotel quickly informed employees their paychecks would keep coming, even though the hotel would be closed for nearly six months.

However, many hotel employees depended on tips from guests as one of their main sources of compensation. Without guests, a huge chunk of their income disappeared. In an innovative twist, payroll managers took each employee's average trailing 12 months' worth of tips and added it to their regular pay. Meanwhile, vacation and other benefits continued to accrue during the time the resort was under repair.

The key was having business-interruption insurance with the payroll coverage as an additional rider. Although hotel management wouldn't say how much the insurance cost, they were happy to have it. Above all, the insurance ensured that most of the same employees would be present to reopen in February, the height of the tourist season when the labor market is typically at its tightest and well-qualified candidates are nearly impossible to find.

Almost immediately after the storm, the hotel's management assigned jobs to employees, from clearing debris to tearing down water-soaked walls, moving furniture and inventorying salvageable artwork. The kitchen staff prepared meals for employees and construction workers. The spa staff gave massages to weary workers. The employees of the spa shop set up kiosks at local malls to sell hotel merchandise. These meaningful tasks prevented employees from twiddling their thumbs and getting depressed about the damage and kept them focused on the reopening.

In some cases, managers allowed people to take unpaid leave in cases where their homes were severely damaged, but they strongly encouraged the staff to actively take part in the recovery. "We didn't want people to stay home and watch soaps," says Brown. Another concern: Managers didn't want their staff to start looking for other jobs while they were still on the payroll.

One of the critical decisions was to set a target date for reopening that would be aggressive but realistic. The last renovation of the hotel had taken 18 months, but managers decided to reopen within six months, in time for the tourist season on February 1.

"The construction guys thought we were crazy," Brown says. Still, he adds, "if you never have a goal, you'll never reach it."

However aggressive, the February 1 reopening date had the effect of galvanizing the staff. "We were going to make season," Brown recalls. It forced the management to hire the best contractors-not necessarily the least expensive-to get a jump on the reconstruction.

For example, it hired design teams for the damaged rooms because the firm promised to provide a bid overnight, rather than two to three weeks like its competitors. It was a good thing too, because Charley turned out to be the first of four hurricanes that hit the state and the resort was ahead of many others when it came to securing labor and materials. This was important because every room had to be stripped of its cabinetry, bedding and carpeting and redone. Some of the high-quality carpeting called Axminster for the heavily trafficked second floor would take 15 weeks to order and install and possibly longer if they had dawdled.

Meanwhile, the hotel's sales department was assigned the task of calling guests to tell them the hotel would be closed for months. When they couldn't reschedule guests to a later date, the sales staff offered to help them select an alternative resort in another city. For groups such as corporate meetings or weddings, the sales staff even offered to fly to that alternative hotel to help ensure the gathering would go smoothly. That went over well with meeting planners and, although only three groups took them up on the offer, the gesture was well received.

Hotel managers also took extra time to communicate with vendors who supplied the hotel with services and goods, from dry cleaning to flowers. In the case of the dry cleaner, the hotel and the dry-cleaning company worked out a plan so that bedspreads and draperies would be cleaned during the downtime. In other cases, such as the flower service, the hotel couldn't give the vendors much business.

Finally, the hotel sales staff kept in constant touch with travel writers and meeting planners by writing to them with regular updates on the progress of the renovations and updating the resort's Web site. In particular, it was crucial that the updates include photos of the work in progress so that media and planners could verify that things were moving ahead.

Opportunities to improve

Despite the catastrophe, the Sanibel resort's management took advantage of the fact that there were no guests to serve; the time was used to provide employees and managers with additional training and other improvements. Further, with the extensive damage done to the lobby area, they realized that it could be redesigned to look better than it had before the storm.

For example, the Haitian-born staff took English-language lessons, the back-office staff learned new computer skills, the catering staff learned about serving foods such as cheese and wine, and local university professors came to teach management skills, such as conflict resolution.

Tasks that had previously been set aside because they were too time-consuming were put on the front burner. For example, the concierge spent 400 hours putting together an electronic document that listed the region's local attractions, restaurants and events in great detail. When the resort reopened, the concierge would have a wealth of knowledge at his or her fingertips.

In addition, the hotel managers reexamined the resort's five-year capital plan and decided to move some of those projects ahead of schedule. Among the most dramatic was to redesign the lobby to include a fountain, intricate tile and better lighting. The hotel also improved its driveway-called a porte cochere-to include custom millwork, new tile and outdoor furniture to improve the guest's first impressions.

In the midst of it all, the hotel managers invited professors and students from the Resort & Hospitality Management program at Florida Gulf Coast University to view the restoration progress first-hand.

The result of the resort's efforts was that the hotel reopened with well-trained employees who were motivated to provide service that was better than before the hurricane.

In the end, the resort recognized that its employees are its most valuable assets and the high cost of payroll insurance was well worth it. McLaughlin says "they deserve tremendous accolades for making that decision."

About Sanibel Harbour Resort & Spa

The Sanibel Harbour Resort & Spa is located on more than 85 acres on Punta Rassa in Fort Myers, at the mouth of the Caloosahatchee River The resort has a view of Sanibel Island.

The resort, which opened in 1989, is owned and operated by a subsidiary of Liberty Mutual Group called Liberty Hospitality Group. The property consists of seven buildings that include a total of 400 hotel rooms and vacation condos.

In addition to a 40,000-square-foot spa, fitness and tennis center, the resort includes 40,000 square feet of meeting space, three restaurants, a poolside snack bar and a children's club.

The hotel's Web site is www.sanibel-resort.com.

Lessons

in Crisis Management

The Sanibel Harbour Resort & Spa learned the hard way what it takes to recover from a catastrophic storm. Barry Brown, the resort's sales and marketing director, and Elaine McLaughlin, a professor at Florida Gulf Coast University, outline some of the lessons learned:

1. Make sure you have the chainsaws and generators you need to clear debris and provide power.

2. For large properties, gas-powered golf carts are more useful because electricity likely won't be available to recharge electric carts.

3. Cell phones may not function because towers are down, so buy some satellite phones.

4. Move ahead fast with your recovery plans with your best contractors. Waiting for bids to come in will waste valuable time and may keep your property from reopening sooner.

5. Business-interruption insurance with payroll coverage is essential in order to keep valued staff.

6. Set an aggressive, but realistic, date for reopening your business so that you and your staff can strive toward a goal.

7. Tell your employees their jobs are safe and they will be paid. The success of the recovery depends on your employees' physical and emotional engagement.

8. Don't let psychology of hopelessness creep in. Assign recovery work right away to give employees a sense of purpose.

9. Take advantage of the downtime to train employees and management.

10. Keep in touch with your customers. Let them know how your recovery is progressing. Show them photos of the progress and how you plan to reopen your business.

11. Designate one person to speak with the media to avoid contradictory statements. This person also should stay in touch with media to inform them of your company's recovery.

12. Draft mutual-aid agreements with other properties to share resources.

13. Consider how you might rebuild your property and make it better.

14. Show off your efforts. Highlight your recovery with the media, schools and community groups.

15. Take decisive action and move with speed.