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How the Gstaad Palace Hotel Approached the COVID-19 Pandemic

Updated: Apr 12, 2021

Despite the common belief that the COVID-19 pandemic has had a totally devastating effect on the hospitality industry, certain hotels have been seen to be capable of dealing with the pandemic circumstances. Managers from these hotels view crisis management as a common and essential skill for the industry, and they are always prepared to face challenges such as inclement weather, economic crisis, terrorist attacks, etc. Even though the COVID-19 pandemic is generally considered as unprecedented, with no previously validated guidelines for operations, some hoteliers have developed and implemented new policies and practices that have allowed them to safely continue their operations without major financial losses during the pandemic. The objective of this case study is to describe the approach to the COVID-19 pandemic implemented at the Gstaad Palace hotel in Switzerland.

Hotel Background

The Gstaad Palace hotel is one of the most famous luxury hotels in Switzerland. It was established in 1913, and is managed now by the third generation of the Scherz Family. This legendary mountain resort was built in the image of a romantic castle, with elegant and comfortable interior design while having modern facilities to offer a charming and relaxed experience. The hotel has 90 stylish and fully equipped rooms, and 5 banquet rooms with a capacity of 10 to 300 people. The Palace Spa features on 1800 m2 eight treatment rooms, a private spa suite, saunas and steam baths, relaxation areas with incredible views, indoor pool and outdoor pool with jacuzzi, a state-of-the-art gym, an activity room and a unique hammam experience with seven rooms as well as an Olympic outdoor swimming pool in summer (1). The Gstaad Palace is normally open from mid-June to mid-September and from mid-December to mid-March.

Fortunate during the Pandemic

The COVID-19 pandemic had a dramatic effect on every aspect of life and business, but most especially on the hospitality industry. In attempt to reduce the spreading of the COVID-19 virus infection, health authorities were required to limit human interaction and to close most of the tourism sector businesses that couldn’t comply with new health and safety requirements. The Gstaad Palace hotel has managed to avoid closure.

Apart from intelligent and timely implementation of an approach to crisis management, there were several factors that helped Gstaad Palace hotel to carry-on operations during the pandemic.

First of all, it is a seasonal hotel operating only 3 months in summer and 3 months in winter, being closed for the other 6 months of the year. Therefore, the impact of the pandemic was limited to 6 months only. The seasonal business model practiced by the Gstaad Palace allows it to organize everything in such a way that during this short period of time it can generate sufficient revenue to cover the expenses during the rest of the year when it’s closed and still remain profitable.

Second, it is located in an isolated mountain region, which provided numerous advantages during the COVID-19 confinement period. Free from traffic, crowds of people and air pollution, this destination turned to be even more attractive during the pandemic because this environment was seen as safer from the risk of virus infection. Here people could still enjoy certain level of freedom while being in the open air and surrounded with vast, breathtaking, nature.

Third, the international travel restrictions have confined people in their countries preventing most potential international visitors from traveling abroad. The Swiss internal tourism market is very limited and there are not enough potential visitors for a longer period of time; however, hotels like the Gstaad Palace have managed to maintain an occupancy rate of 70% just relying on loyal local clients. Comparing to other Swiss hotels, where international clients represent over 50% of their business model, the Gstaad Palace counts on only about 30% international clients.

Fourth, the product-service mix at the Gstaad Palace has fewer market segments, focusing mostly on leisure travelers. This segment represents about 90% of clients at the Gstaad Palace hotel and therefore provides competitive advantage during health crisis periods when business travel is restricted.

Implementing COVID-19 Health and Safety Requirements.

The main approach of the Gstaad Palace hotel during the COVID-19 pandemic was following a three-step process:

1. Strictly adhere to government regulations,

2. Translate these regulations into a concise format for employees, and

3. Lead by example.

In Switzerland the public-private sector communication channels are well developed, and in the hospitality industry the intermediary role is fulfilled by the Swiss Hotel Association. This organization prepared a comprehensive series of documents communicating in detail the government regulations to its members. Unfortunately, as it was structured, this well intended communiqué could not be easily understood by every hotel manager or easily implemented with the diverse international backgrounds of hotel employees. Instead of just handing over these lengthy documents to its employees, the Gstaad Palace management team undertook an effort to reduce these regulations into a single, easy to understand, one page guide which was applicable to every employee in every section of the hotel.

One of the means of reducing the volume of the official documents decided upon by the hotel managers was to eliminate all of the explanations on why certain rules apply. They believed that such information might provoke unnecessary discussions and challenges to the requirements by their employees and the guests. They also took away all of the repetitive statements and summarized them in one section. They kept only the most relevant information, omitting everything that was not directly related to the hotel staff and guest behavior requirements.

Once the condensed document was competed, the hotel employees underwent intensive training. They were not only trained to follow hotel rules, but also on how to approach in a polite manner any clients that disobeyed the rules. Managers themselves also strictly adhered to the rules, leading by example. As Mr. Ludwig (Executive Assistant Manager Sales & Marketing at Gstaad Palace Hotel) mentioned, it is easy to break a rule while following someone else who is doing it, as when you are driving and following another car that is exceeding the speed limit. So, the role of managers, showing compliant behavior, was a turning point in successful implementation of COVID-19 safety practices at the hotel. The managers at the Gstaad Palace hotel had to take it all very seriously to convince all of the employees and the clients to do the same.

Managing Hotel Guests.

In order to keep their doors open during the pandemic, hotels had to treat their highly demanding guests differently, requiring them to follow the rules. Now the hotel could not tolerate any misconduct of new safety rules and was obliged to refuse those few valuable clients who disobeyed the safety requirements. Considering the fact that hotels were allowed to welcome only registered for overnight stay clients and couldn’t accept any outsiders, the numbers of the clients were even lower.

The Gstaad Palace hotel developed a set of actions at each step of engagement with a client, ensuring that every person who wished to stay in the hotel will certainly know about the new rules. These steps are described as follows:

1. On the hotel website there is banner which explains the new safety rules at the hotel.

2. Upon completion of online reservation, a new client automatically receives a document with safety rules described there.

3. During the check-in process a client is obliged to sign a document confirming that he/she has read the safety rules and didn’t visit recently a high-risk country.

4. There are numerous signs in the hotel reminding the guests about the safety rules.

5. Each room has a printed document with listed safety rules.

6. Employees are constantly observing the guests and reminding them about the safety rules when needed.

Today, one year into the pandemic, the future of this situation is still not clear, while further international travel restrictions could represent a significant challenge even for such successful hotels as the Gstaad Palace. There is an optimistic forecast, however, among hotel managers that once the borders would reopen again, the international travel will really boom. Presumably people are very tired of being locked in their houses and would all start to travel more often once it’s allowed.

(1) Retrieved from the website

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