BUSINESS14
CRIS RATCLIFFE/BLOOMBERGBWTalks KeithBarr
InterContinental Hotels Group’s chief
executive officer was sheltering in place
with family in the U.K., where the company
is based, when he spoke by phone about
how businesses may recover from the
virus. —By Carol Massar and Jason Kelly○ While about 400,000 people work in InterContinental hotels around
the world, the company is basically a franchise operation ○ Almost 6,
hotels are individually owned small businesses that may employ 15 to
20 people ○ The hotels are hosting front-line medical workers○ Interviews are edited for clarity and length. Listen to Bloomberg Businessweek With
Carol Massar and Jason Kelly, weekdays from 2 p.m. to 6 p.m. ET on Bloomberg Radio.What’s the impact been on business?We’ve never seen an impact
on demand for the hotel
industry like this in our
lifetime. We had a fairly good
January and February. And
then, as an industry, we saw
revenue begin falling quite
quickly in March. I saw the
U.S. data just this morning:
From the start of April, it
looks like U.S. revenue per
available room is down 80%
year over year.What have you resorted to?At the corporate level,
we’ve been cutting people’s
salaries, cutting capital
expenditures, and really
focusing on liquidity to make
sure we can get through
this very, very challenging
time. People have been
furloughed.What about government stimulus
and assistance?These programs are going
to have to expand and be
extended, because this is
not going to be over in amonth. Business doesn’t go
back to normal tomorrow.
Until you get better
therapeutics, broad-based
testing, and a vaccine, I don’t
believe you can fully reopen.How does InterContinental head into
the future?We’ll learn from this. It may
lead to temperature checks,
increased cleanliness
standards, and changing
food and beverage
operations. We have a team
of innovation people working
on this now, thinking through
how this is going to evolve.And what’s the post-Covid-19 era like?The companies with
scale can leverage their
procurement powers to
reduce the costs to operate,
of distribution, of building
all those things. That will
create value for owners.
The bigger companies will
get bigger, and some of the
smaller companies will need
to consolidate. That reality is
the new norm going forward.THE BOTTOM LINE With ventilators in short supply, desperate
hospitals and governments are seeking the machines from
unfamiliar sources online. That’s opened the door to criminals.General Motors to jump into production to
address shortages. That’s blurred traditional supply
chains—and created an opening for fraud.
Beijing Aeonmed has found scammers using its
name without authority, touting forged documents,
and employing bogus engraved official stamps in
an attempt to hijack contracts. The company said
it isn’t involved in any attempts to mark up the list
price of its products. Some scammers have been so
brazen they’ve set up bogus businesses right outside
Aeonmed’s Beijing office and posed as employees
to prospective clients. “Ventilators are really unlike
masks; they can’t be churned out,” Li says. The com-
pany has reported several cases to local police.
Since April 1, China has stepped up quality con-
trol on virus-related exports, forbidding med-
ical supplies without government certification
to be sold abroad. The Ministry of Industry and
Information Technology, which coordinates ven-
tilator production, said Chinese makers have been
unable to sufficiently expand capacity because of
a lack of key components from foreign suppliers
hit by the pandemic. “We are proactively pushing
domestic companies to speed up production and
expand capacity,” the ministry said in a statement.
“We are helping them to solve raw materials and
labor issues and continuing to urge them to do a
good job of quality control.” The ministry said that
from March 1 to April 22, Chinese manufacturers
supplied more than 7,700 invasive ventilators and
almost 40,000 noninvasive ones to foreign nations.
In another ventilator case, Ambulanc
(Shenzhen) Tech. Co. said people pretending to
be employees contacted foreign embassies and
health bureaus to offer the machines for sale. The
company discovered the fraud only when it was
approached by the diplomatic missions.
“Those wishing to get already-made ventilators
are prone to scams,” says Liu Bo, vice general man-
ager of Ambulanc. “Our production capacity is
already booked through June and July.”
The FBI warned in April of multiple incidents of
U.S. state government agencies transferring funds
to fraudulent brokers and sellers before equip-
ment had been delivered. In one case, an individual
claimed to represent an entity with which a state
purchasing agency had an existing business rela-
tionship. By the time the agency became suspi-
cious of the transactions, much of the funds had
been transferred outside the reach of U.S. law
enforcement and was unrecoverable, the FBI said
on April 13. —Jinshan Hong