The post-pandemic boom in tourism and hotel construction and expansion in Asia has created fresh momentum for hospitality companies and evolved responsibilities for their in-house legal departments. GCs in the hotel sector discuss what they have been busy with and how their roles are becoming increasingly multifaceted as these companies navigate the challenges and opportunities presented by the post-pandemic hospitality landscape.
ALB: How has the reopening of the hospitality sector in the Asia-Pacific region impacted the workload and priorities of the legal department within your hotel and hospitality company?
RAJENDRA MISRA, executive vice president and general counsel, The Indian Hotels Company Limited (IHCL): The legal team in our organisation never stopped working during COVID. On the contrary, the challenges thrown by the pandemic resulted in the legal team remaining active, sometimes even more than in the period prior to the pandemic. We were occupied enabling what we could do best legally – invoking force majeure clauses and seeking waivers on rentals. We observed reinforced trust in our brand and further enhancement of our brand image, which made us the first choice and the preferred hospitality partner.
"Following the pandemic, a resurgent India backed by travel hungry travellers aided in a speedy recovery of the industry, evidenced by the growth numbers delivered. The industry was revived, and we were back in action once business started coming back on track. The increase in business also saw an increase in operational issues where the legal team is engaged in addressing them."
- Rajendra Misra, The Indian Hotels Company Limited
This is evident from the number of hotel signings we have achieved yearly since the pandemic, and this momentum continues. The last financial year was a year of record signings, when we signed 36 new hotel deals – the highest in the hospitality industry. This feat was achieved in close collaboration with and full support of the legal team.
Further, post the pandemic, a resurgent India backed by travel-hungry travellers aided in speedy recovery of the industry, evidenced by the growth numbers delivered. The industry was revived, and we were back in action once business started coming back on track. The increase in business also saw an increase in operational issues where the legal team is engaged in addressing them.
With growth on an upward swing and business bouncing back stronger, our priorities include negotiating and signing new hotel deals, handling myriad operational issues, as well as keeping a sharp eye on compliance management.
IOTA HOU, vice president, Shanghai Jin Jiang International Hotels: Compared with the COVID-19 period in the past three years, on the B2C side, the number of guests has increased, and naturally B2C-related legal matters have increased. On the B2B side, because of the experiences from the epidemic, franchisors have become more conservative and rational, and thus they have raised more and higher requirements on franchise agreements. All these have impacted our workload.
"We need the ability to provide solutions to cope with the so-called BANI (brittle, anxious, nonlinear, and incomprehensible) world. My way is to foster a culture of continuous learning in our team. Besides, the following principles shall always be kept in mind: integrity, openness, innovation and seeking win-win."
- Iota Hou, Shanghai Jin Jiang International Hotels
We have made compliance one of our top priorities. Starting this year, we will further strengthen our compliance work. With the strengthening of legislation and law enforcement in various countries and the changing geopolitics, as a multinational group, it is a big challenge for us to ensure compliance in different jurisdictions.
JOANNE SIMPSON, legal vice president, Southeast Asia and Pacific Rim, Wyndham Hotels & Resorts: Throughout the COVID-19 pandemic and more recently with the resumption of travel across Asia Pacific, the hospitality sector has faced many unique circumstances and unprecedented challenges, often under new rules and changed mindsets.
"In addition to supporting our sales and business development teams in adding new hotels to our portfolio, we've noticed mindset changes in both the hospitality company and the hotels themselves coming out of COVID-19. These mindset changes include relooking at old processes, procures and structures and evaluating if they continue to be effective."
- Joanne Simpson, Southeast Asia and Pacific Rim, Wyndham Hotels & Resorts
This has placed an increased workload on the legal department as the trusted advisors to the business to help guide them through these unique challenges whilst considering different stakeholders, options, and remedies. Our role as in-house legal counsel is to help the business grow sustainably, with integrity and an eye to balancing risk.
As the hospitality industry continues its strong recovery, we are providing support to the business to grow the number of hotels, as well as get the existing properties already in the network back online and operating smoothly and aligned with existing contracts.
ALB: With travel demand expected to reach pre-COVID levels, what specific legal challenges or issues do you anticipate your department will face in the next 12-24 months, and how are you preparing to address them?
MISRA: The travel demand for the hospitality sector has far outpaced pre-COVID levels, and the hospitality industry has seen tremendous growth. We are negotiating and signing new hotel deals; on the other hand, we are today opening more hotels than ever, which means increasing number of operational issues to address.
Further, the concept of Bleisure – Workation – Homestays gained momentum during COVID and continues to remain popular. We continue to sign more homestays under our brand ãma Stays & Trails. Facilitating this growth and keeping pace is our priority. With increased business, the challenge of effectively managing multiple guests related operational issues arose.
Further, latest developments in the sector in the form of new digital advancements and artificial intelligence, though at their nascent stages, are challenging, and yet we see an opportunity to thrive with their learnings and adoption.
We, as a team, periodically scan the environment and brainstorm so that we are future-ready. Challenges are identified, probable solutions are worked out, and after careful evaluation, solutions are effectively implemented, enabling us to keep going and delivering.
HOU: It is believed that the gradual popularity of AI will be reflected in the daily operation of hotels, and thus there may be more intelligent scenes in hotels, which will lead to more new legal issues worthy of our attention and study. I don't expect to be able to recruit legal talents who are also proficient in AI, although I believe there are such talents, but it is few and far between. To deal with these challenges, stay open and keep learning.
SIMPSON: In addition to supporting our sales and business development teams in adding new hotels to our portfolio, we've noticed mindset changes in both the hospitality company and the hotels themselves coming out of COVID-19. These mindset changes include relooking at old processes, procures and structures and evaluating if they continue to be effective.
This places an increased demand on the in-house legal department as the business reaches out to ask the legal reasoning behind old processes and the potential legal implications if processes were changed. As a result, we are focused on re-evaluating our processes and redistributing resources to ensure that we continue to operate effectively with the resources we have.
ALB: As borders reopen and travel resumes, are there any regulatory/compliance concerns that your legal department is particularly focused on, and what measures are being taken to ensure adherence to these requirements?
MISRA: Today, there is an increased focus on "wellness." Taking care of one's health was never taken this seriously; the pandemic has taught us that quite well. So, the focus has changed significantly to ensuring that our deliverables add to the wellness and well-being of everyone around us, be it our guests, our employees, or the community at large. Our offerings are now focused to ensure that wellness is a key concept.
Further, today, more than ever, compliance management is an area of focus; and we are continuously engaged in ensuring that our compliance management system is robust enough to ensure compliance management and assurance.
We have also embarked upon conducting training sessions for non-legal employees. These trainings are focussed on effective implementation of hotel management contract rights and obligations, as well as on nuances of competition law, etc.
HOU: Due to the promulgation and implementation of data-related legislations in various jurisdictions, we focus on data security and privacy protection. Relevant measures taken include, without limitation to trainings, government filings, necessary improvement and rectification of system and process, and so on.
SIMPSON: We've noticed some changes to visa policy and travel requirements across the Southeast Asia and Pacific Rim region. Certain countries have made changes to lending policy, foreign ownership policy and land controls. All these factors affect the tourism industry, from inception of hotel projects to the international attractiveness of the assets and industry.
In terms of particular focus, our in-house legal team continue to work with the business to monitor the changes that we think will have the most impact, including the continuing trend on privacy and data compliance.
ALB: In light of the evolving landscape in the hospitality sector, what strategic initiatives or plans has your legal department implemented or is planning to implement to support the company's growth and success in the next 12-24 months?
MISRA: There is a definite focus on growth and new openings, coupled with ensuring that there is consistency of service excellence and ensuring that our guest have a bespoke experience of our offerings.
Having said that, the legal team has stepped up and taken effective measures to ensure that we deliver on what is expected, i.e., excellence. We have crafted standard templates for agreements, focused on service-level deliverables and ensured that we have effective compliance management systems in place. We periodically issue guidelines and conduct trainings for the operational teams. Further, the legal team uses the latest technology (including AI-based tools) available for research, contract management, IPR management, etc.
With a view to delivering service excellence, we are also evaluating modes to enhance further our compliance management setup for efficiencies and operational ease of use.
HOU: Our group is promoting high-quality development, which includes a greater focus on ESG. Therefore, our legal department will respond with more effort in this regard.
Besides, our legal department plans to increase the use of digital tools to streamline legal processes and increase efficiency, in line with the Group's initiatives of cost reduction and efficiency improvement.
SIMPSON: We are re-evaluating our processes and redistributing resources. Strategically we're working with the business to optimise internal company structures and processes. We've been working closely with our operations teams post-COVID-19 to support reopening existing hotels and ensure contract terms remain relevant.
We're also working with our sales and business development teams to ensure our brands are poised for optimised growth in certain countries, by evaluating our portfolio of brands and identifying which countries we could introduce new brands for enhanced growth.
ALB: With the anticipated increase in corporate and leisure demand, are there any specific areas of legal expertise or skills that your department will require to navigate the changing industry dynamics effectively, and how are you addressing these talent needs?
MISRA: With our company's growth trajectory and the increased signings, the legal team needs to enhance its negotiation skills continuously. Appropriate courses, trainings etc., are evaluated for upskilling the team to negotiate better and promptly close projects.
Given the criticality of compliance, we need to periodically review and enhance the compliance management tools and legal process management tools by evaluating newer, effective tools adopting the latest technology, including AI.
The legal team also needs to keep itself up to date and upskill itself in the use of AI and increased use of digital tools, which are proving to be worthy enablers of prompt execution and completion of time-sensitive tasks/projects.
HOU: We need to enhance our expertise in data security to meet statutory requirements. We also need to keep abreast of changes in laws and regulations of various jurisdictions and adapt to the circumstances to ensure compliance.
Most importantly, we need the ability to provide solutions to cope with the so-called BANI (brittle, anxious, nonlinear, and incomprehensible) world. My way is to foster a culture of continuous learning in our team. Besides, the following principles shall always be kept in mind: integrity, openness, innovation and seeking win-win.
SIMPSON: We don't see a specific need for legal expertise related to increased corporate and leisure demand. Instead, it is more of an all-encompassing need for increased resources as the number of hotels in our network continues to increase, and the existing hotels get "back on track" with the growth of their businesses.
We find that it's helpful to have in-house lawyers that can think strategically while remaining cognisant of when they can push themselves to develop a piece of work and when they need to engage specialist external counsel help. We often look for part-time solutions, secondees or contractors to fill the gaps for specific once-off work or peaks and troughs of work.
We also find it's helpful to gather as a team once or twice a month, to re-evaluate how the business is leveraging the legal department as a resource and see where we can build efficiency on what they are asking for. If there is a specific process, letter or piece of advice that seems repeated across the region, we will ask ourselves a couple of key questions:
- Can we make a template document or process for business use more widely?
- Should we hold an internal education session to distribute the advice more widely and give the business time to ask questions?
