(Article by Hotel Intel.co, Aug 23, 2021)
August 29, 2021
An article by Giovanni Angelini
The profound and devastating global impact of the COVID-19 pandemic has forced us to rethink how we live our daily lives, and it has brought what really matters into sharp relief. It will remain in the collective memory for generations to come.
The hospitality and tourism sectors have been hit particularly hard by the virus. It has forced the industry to make monumental shifts to boost creativity, enhance efficiency, search for new customers, and remain competitive.
The hotel industry has survived many economic crises in the past, and there is no question the industry will survive this crisis too. The human spirit is resilient – so is travel and hospitality. But this is a fierce wake-up call for our industry.
While no one can accurately predict the course of the pandemic, it is expected that the timeline for recovery will be bumpy and most probably will occur in phases, domestic first followed by international travelers. Consumers’ attention will be focused on countries and destinations that have managed the pandemic better than others.
The core business of providing hospitality and experiences has not changed. Neither have the basic rules of doing business – revenue-cost-risk-profit. But the pandemic has tested the ability of owners and operators to differentiate, innovate, eliminate formalities, and create clear competitive advantages.
A unified team of experienced and solid professionals with a focused vision and clear objectives is simply a must to pull through this crisis – including diverse and inclusive hotel executives who have faced past crises and know how to adapt and thrive in the post-pandemic market dynamics. This is not only a matter of trends; it is a question of evolution and growth.
Consumer behaviour and spending has been – and will continue to be – altered, and business plans need to adapt to these new circumstances. Many industries have been negatively affected by this pandemic, and unemployment is expected to remain high. Consequently, there will be less disposable income for leisure travel
The industry can’t rely on pre-pandemic strategies. Most will no longer apply in a world of new expectations, new needs, new products, new competition, new booking processes, and so on. Operators will have to figure out a way to stay ahead of what’s to come, build new ways to attract customers and gain their loyalty, and, most importantly, learn how to capture a ‘larger piece of the pie’. Differentiating from the competition is no longer enough; products and services must be exceptional.
How can hoteliers adapt to the factors that are shaping the future of the hospitality industry and resist the temptation to believe that things will return to normal?
Revisiting the basics and understanding the trends that are driving demand are important and necessary processes. People will still travel for business and leisure, of course, but they will travel smarter, favouring low-risk destinations and the safest modes of travel.
Planning and strategizing are essential in any business, and in the current situation, the hotel industry has to ask some fundamental questions: “What have we done and achieved so far? What should we do now? What’s next?”
Planning for the future, it’s clear that business models need to be reconfigured. Hoteliers must focus on searching for new sources of business, crafting new SOPs, setting new targets, implementing new efficient technology, reimagining and rethinking all amenities and offerings, and creating new contingency plans.
A culture of adaptability and a positive attitude towards change is simply a must, and so is the elimination of past bad habits.
The pandemic has accelerated global trends and challenged many widely held, ingrained beliefs about how organizations should operate.
Within the next decade alone, we’re likely to experience more progress than we’ve seen in the past 50 years. In this fast-evolving landscape, hotels will have to adapt the hospitality experience to attract a broader audience. And this offers an excellent opportunity for reinvention.
In today’s ever-changing, uncertain business environment, adaptability is essential. Here are a few guidelines on the post-pandemic trends, behaviors and expectations to which the industry and organizations must adapt and respond.
Trusted leadership and responsible governance
Adaptability comes from trust. In these uncertain times, there is no space for political, self-focused, inexperienced leaders. We need visionary trendsetters that walk the talk, lead by example, create strong teams, and demonstrate leadership agility. The building of trust is simply imperative.
People need to feel supported when they need to shift and adapt to new directions. Open communication, acceptance of failure, and rewards for success are essential. In this environment, strong leadership is paramount.
It has been proven that creative minds are an asset to the hospitality industry. Anyone with outside-the-box thinking and unique ideas can thrive and advance in this demanding business and ultimately help their companies remain competitive and successful. These people are highly valuable – and needed.
A people-centric approach
The hospitality industry has always been and will remain a people-first business. People are the ones who make great brands and great organizations. People are the ones who help companies come out of the doldrums when things are bad and ultimately pull through crises. This will always be the case, and organizations must respond with new training, improved rewards, effective succession planning, opportunities for career advancement (career vs job), pleasant and safe working environments, flexibility, adaptability, and empathy.
A flat hierarchy and a democratic decision-making process that allows people to take ownership should be the norm. This has to be supported by a strong culture of empowerment and team alignment. Remember that success also depends on the employee experience – which should be great.
Elimination of internal silos
While the industry has explored not working in silos for years, there hasn’t been much success in this area. The need to break down silos between hotel departments and functions has never been more important, especially as the industry moves towards travel recovery.
Focusing on the ‘we’ and not on the ‘me’, being accountable, and taking responsibility is a must for all employees within an organization. Each member must know what their role is and what is expected from them.
To facilitate the elimination of silos, organizations should implement effective measurement metrics that outline rewards and incentives for the whole team. Team KPIs with clear, measurable processes are essential for the long-term progress of any company.
Priorities – ‘first things first’
Health and safety considerations have become the primary concern for consumers in the post-pandemic world (especially when it comes to international travel).
Travelers are paying much more attention to the various security, hygiene, and health protocols that establishments are implementing. Thermal scanners, quality of indoor air, touchless/contactless options, digital and mobile devices, biometric systems, robot-assisted deliveries, secure pre-payments, pre-check-in, and lobby kiosks are just a few examples of the new trends and expectations. A health identification system may become mandatory for travel.
Making hotel guests comfortable, both physically and mentally, is simply a must. So is the importance of personalizing their stay. Well-being is a clear customer expectation and takes precedence over location, brand, point system, and other factors.
Post-pandemic, hotel customers will be making purchases based on different criteria and expectations. This could be a clear business opportunity for the industry to adapt, respond, and maximize.
Trends and brand recognition
It’s not easy to predict the future, but it is anticipated that there will be much more focus on recognized quality products, reliable brands, evidence-based services, overall image, attractive offers, and, of course, perceived value.
There will be more pre-planning and much less spontaneous purchasing. This is a time to reshape brands and products for new consumers who are becoming more demanding and expect hotels to fulfil their desires (which they consider basic needs).
The ‘guesstimation’ is that traditional tourism will not return any time soon. Demand for popular destinations (over-tourism) is expected to fall, while demand for greener/less crowded destinations will continue to rise.
Travelers don’t want the same old; they want something new. They want to explore new and safe destinations. Selling by segmentation or by channel?
During post-pandemic recovery, will we see an evolution in how hotels sell their rooms? By segmentations or by channels? What strategy will be more efficient in identifying sources of business and new revenue streams? Generating demand? Acquiring customers and responding to their needs?
Some shifts are expected, but the discipline of managing the segmentation and revisiting the channel mix will not change. Who are the most discerning customers, and what is their spending power?
Reducing and controlling online distribution costs and taking advantage of new/efficient distribution and technology opportunities are critical for operating an efficient and productive revenue culture. And it is important to remember that, in this industry, there is no winner in a race to the bottom with pricing – a typical and expensive mistake made by many.
As travel begins its recovery in several countries and destinations, hotels have an opportunity to influence and reshape customers’ purchasing habits and create a new wave of brand loyalty to increase direct bookings. Of course, this implies and relies upon clean and updated data, increased direct communication, targeted offers, efficient processes, rapid response, flexibility, and recognition.
Bridging the generational differences
The basic principle in the hospitality industry is to welcome everyone without exception. While this will always remain true, the industry has to do better at adapting to shifting demographics and generational requirements.
That different generations have different likes, dislikes, and preferences (needs and wants) is a part of life. Young and older people think and act differently; it’s as simple as that. No group is better than the other. We must accept that if you try to please everyone, you risk pleasing no one. It’s a delicate balance.
It’s a fact that experienced senior generations have the time to travel and more money to spend. Young at heart, they are looking to have selected memorable experiences and want to try new things. They will pay for their experiences without much hesitation and, at present, they are the best spenders.
While younger generations have less spending power, they are extremely socially communicative in the online market and highly influential too. They love to travel and spend on exciting experiences and innovative products. They know what they want and how much they are prepared to spend on it. In the pursuit of individuality, they generally have less patience with outdated and inefficient processes and facilities. Of course preferences and behaviors will change as they age. (Does this mean there is potential to secure them as lifetime loyal customers?)
The success of a brand relies on understanding the needs and expectations of various demographics and responding with targeted products, facilities, services, and offers.
Particular focus should be placed on studying buying behavior and facilitating the whole booking process to match. Remember that a brand that unintentionally makes consumers feel they are ‘too old’ or ‘too young’ to use a product may risk alienating entire generations. Again, a delicate situation.
Offerings and value
Hotels are seasonal and cyclical, and rate parity across all channels and customers is not feasible. Focus instead on value and what customers want from brands, not what brands want from customers. A successful organization needs strategies and offerings that appeal to various clients during different periods throughout the year.
Attention has to go to frequent forecasting, pricing strategy, targeted marketing, personalization, and consistent communication. The creation of credible value perception and a strong brand image are essential for success.
Advanced revenue structure/system
Advanced revenue management (RMS) must be in place. Metasearch, SEO, direct booking platforms, an efficient website, inventory management, forecasting, yield management, and others are critical to maximizing revenue. Are there any untapped revenue potentials? Which room types and which segments are most profitable? Operators have to switch their attention and measurements from RevPAR to GOPPAR.
Can you stop OTAs from displaying wholesale rates? How many contracts have you signed with wholesalers? Can you reduce the number of wholesalers you work with? Are your distribution partners the right fit?
Three key hotel functions – Marketing, Sales, and Revenue – have to be coordinated under a strong culture of accountability, responsibility, and profitability. Organizations could consider introducing a Chief Commercial Officer position to oversee these three functions – which may help to simplify processes, reduce costs, enhance efficiency, and achieve better results.
Technology and digitalization
Digital transformation is here to stay. Consumers are becoming increasingly digitalized, and demand for digital solutions has increased, especially among younger generations. Digital requirements should be central to the plans and strategy of any organization, now and in the future.
Practical technology, such as an efficient cloud computing framework, which drives value and efficiency and facilitates new business demands and opportunities (including new digital booking channels), is a must.
Technology enhancements and digitalization efforts should focus on facilitating and enhancing the guest experience, revenue generation, strategic planning, and decision-making processes. Do remember that in this industry, tech cannot replace the human touch.
Clean and current customer data is one of the biggest assets of a hospitality organization, and it will remain very important. But we have to accept that in a disruptive pandemic of these dimensions, some of the data we have on file may be irrelevant as consumer preferences have shifted dramatically. Every organization and every market is different, so loyalty can never be one size fits all.
With consumers more willing to try new brands, especially those offering more meaningful experiences than the staid cookie-cutter hotel products, loyalty is very much up for grabs. Based on management/ownership priorities and market conditions, each organization needs to redefine its business objectives and strategies towards loyalty and new potential members. The creation of an efficient customer experience framework is essential to success in this area.
What are the expectations of the new loyal/repeat customers? Points or Brand Loyalty? And can organizations or an individual hotel handle both?
This is not an easy task. An attractive points/incentive/reward program is of interest to many and simpler to handle. But it appears that recognition and personal attention are becoming more important to many customers, and here is where organizations can stand out.
Loyal customers in the post-pandemic world will not fall for standard, old-fashioned marketing gimmicks. Now is the time to wear a creative hat and think of novel solutions.
What new post-pandemic benefits could an organization offer to loyal customers? Would a 24-hour flexible stay be of interest to members? A more friendly cancellation policy? Lower (and less irritating) charges for ancillary services such as minibar and laundry services?
In principle, we have to seek to solve every point of friction for our important customers. The objective is to achieve loyalty towards the brand, and then towards the rewards.
Remember, loyalty is for the long term. A ‘forever guest’ approach can play a significant role in leading a company to success.
Events and remote working
Meetings and large conventions may take time to return, and this area of hotel business will face some modifications. As some organizations have had great success with teleworking, hybrid meetings, and virtual technology, aspects of remote work are likely to remain. As such, IT adjustments may be necessary to facilitate this.
Investments in professional and efficient hybrid studios (featuring LED backdrops, built-in cameras and microphones, studio lighting, virtual whiteboards, etc.) will be necessary for business, commercial, and convention hotels seeking to remain competitive.
Once the situation stabilizes, demand for social and corporate events is expected to improve gradually, and hotels will need to adapt to the changes and needs of this demanding and important segment.
Influence and value of food and beverage in hotels
Good and exciting restaurants are a large part of the hotel stay experience, especially for upper/luxury market travelers.
An interesting and successful restaurant concept is a great way to differentiate a hotel, creating talking points and gaining followers.
Food and beverage is an integral part of hospitality. It is highly competitive and demanding, and a committed and motivated team of experienced specialists and professionals are needed to stay on top of trends. These are the people who will satisfy different tastes, preferences, and expectations – and maintain the consistency critical to overall success.
Clear indications are that consumer behavior will be more oriented towards conscious consumption and minimal waste. Sustainable products, responsible brands, eco-friendly policies, ecological products, and environmental concerns will all be of greater interest in the post-pandemic world.
Ethical standards that meet societal needs should be a top priority for any organization. The industry has to move beyond symbolic statements on sustainability and put in place clear metrics and KPIs. Curbing emissions and mitigating climate change is a clear responsibility, as this could pose huge challenges in the future.
This is a challenging but interesting time for the industry. For success, owners and operators need to be open, flexible, focused, and willing to adopt a new way forward. However, they must also be cautious not to fall into the trap of doing something just to do something. Change for the sake of change is not planning nor strategizing; it is a fast-track to failure.
This is a time for a clear vision supported by a solid plan of action and time-bound measurable targets. A time to invest in people, products, and systems for the future.
Be proactive and stay on top of the trends that are driving the demands of your customers. Stay focused, and don’t let distractions get in the way of your objectives and goals.