Accommodation provider Quest has weathered the impacts of Covid-19 lockdowns and is thinking ahead, writes Andrew Patterson in this content partnership article.
When Covid-19 really began to bite in March this year after our borders had closed and the country moved to a full Level 4 lockdown, there was a sense of foreboding within the business community, but particularly within the tourism and hospitality sector, that this was the ultimate ‘black swan’ event.
There was simply no precedent for a pandemic-induced shutdown in modern times. Not even the best contingency planning could have anticipated a disruption to business on such a scale.
While many businesses could switch to working from home, for the accommodation sector this wasn’t an option.
Quest CEO Stephen Mansfield vividly remembers the scale of the task facing his company, but was as confident as he could be that it had prepared and positioned the Quest franchise for the challenge ahead.
“The stress-testing we’d done on our business model since the GFC reinforced our confidence to back ourselves going into this predicament. Of course, no-one anticipated a ‘global pandemic’ but the very fact we had taken a long term view on all our dealings – 30-year leases for example – meant that preparing for some sort of economic shock was simply part of being a responsible business.”
Fast forward six months and Mansfield’s the first to admit he has been pleasantly surprised at the outcome.
“Our overall financial results are almost on a par with last year proving we have come through this experience in good shape.”
And it wasn’t because Quest benefited from being a quarantine facility. In fact, Quest declined the opportunity to do so, opting instead to continue to support its SME and corporate guests. Mansfield says it is a decision that is providing an opportunity to build new relationships with new customers for a post-Covid environment, as well as strengthening existing ones.
So, what was the ground work and model that saw Quest come through the early Covid challenges so well?
Quest operates a franchise business model in New Zealand. Its network of properties provide a range of apartment style accommodation, mainly to corporate and business customers, with only limited exposure to the tourism market. All of its properties are owner-operated and its serviced apartments and units are, in turn, owned by individual landlords.
It’s a potentially complex mix of landlords wanting a good return on their investment, franchisees needing a constant stream of bookings and a franchisor overseeing the brand – nurturing its growth and stepping in when needed.
Mansfield says what has been key to managing through Covid has been investing in relationships.
“Quest’s approach to, and relationship with, its stakeholders is based around openness and transparency. By engaging with our landlords and telling them that we would pay them at least 40 percent of the turnover of the property during the Level 4 lockdown they knew that they they were getting some cashflow from their investment.”
In fact, during the months of April, May and June, Quest received a total of $2m nationally in a mixture of rental abatement and/or deferment. However Mansfield was also keen to point out that Quest paid around $4m in rent during the same period.
“While incurring capital losses ourselves, our office ensured we kept all team members on full salary and were able to pass on extensive levels of franchise fee relief, and in some instances, interest free loans to support stakeholders.”
But Mansfield is the first to admit there were plenty of difficult moments.
“There were a few heated and challenging conversations, but by and large they were mutually respectful and acknowledged that all stakeholders must present as part of the solution and not expect to be carried by others.”
As a result of careful and prudent management, at significant financial and health risk to franchisees, all of Quest’s franchises nationwide have been able to stay open and operational during all phases of the lock downs, ensuring that safe, secure and value for money temporary accommodation facilities have been available to guests.
What’s more, 30 percent of Quest’s properties managed to trade through the various lockdowns without requiring any landlord abatements at all.
But in times of adversity, Mansfield says, it’s always heartening to hear stories that go above and beyond expectations.
“In one instance, we actually had one of our franchisees lend his landlord one month’s rental in advance as they knew the landlord was struggling. Obviously, the landlord won’t ever forget that gesture and it reinforces why our business is so relationship driven.”
Proactively keeping all stakeholders in the loop has also been important, particularly for financiers such as Daniel Cloete, National Manager Franchise & Strategic Partnerships at Westpac.
“We have been impressed at how Quest in New Zealand engaged with and kept all stakeholders updated throughout Covid-19 and through that also supported the Quest franchisees.”
Quest NZ began in 1998 when Mansfield took on Master Franchisor Rights in New Zealand and opened Quest Auckland and Quest Wellington for corporate travellers. The first purpose-built Quest facility was opened in 2003: Quest Parnell.
By 2018, Quest NZ had 35 properties and was the fastest-growing accommodation provider in New Zealand. In the past 18 months, new Quest properties have opened in Christchurch, Tauranga and Palmerston North with five new openings planned next year: two in the Auckland suburbs of Takapuna and Mt Eden, plus Hastings, Mt Maunganui and Cambridge Terrace in Christchurch.
Mansfield says he still sees plenty of opportunities for growth in New Zealand, despite the setback from Covid-19, and is pleased with how the company has weathered the experience.
“The feedback and support we have received from our existing customers, franchisees and landlords during this extremely challenging period has been very humbling. In fact, it’s been nourishing for the organisation as we deal with the stresses and strains that the impact of Covid has thrown at us.”
After a year that has both tested and strengthened the relationships between Quest’s various stakeholders Mansfield is the first to admit that if you can survive Covid, then you can probably survive just about any business setback.
“Covid has certainly made us stronger. Whilst not saying we are perfect or cannot be better at executing on our mission, this current environment has only served to reinforce the validity of our approach, and through it we will learn how to be even stronger in our delivery in the future.”
This story is part of a content partnership between Newsroom and Quest