You could sit down and endlessly discuss how bad things are or you could grasp this major opportunity to do things differently for your clients. Now is the time to ensure that you fully understand what your clients value rather than what you think they value. Armed with this information it should be possible to reduce costs (headcount and other things) in areas that clients do not care much about. At the same time you must maintain or even improve the quality and standards that your clients do really care about. The worst thing to do is to randomly cut costs or headcount and expect the same levels of service to be delivered. Unless the organisation has been very inefficient customer service levels will fall and can make the situation even worse.
As an example in the hotel business you might discover that it would be quite acceptable to cut the number of options on the menu, use a fast checkout system, cut the wattage of some light fittings or any number of other things. Just be very sure to check with your own clients that these factors are not the key reasons why they choose your hotel over the competition in the first place.