Creating value for guests and adopting a focus on local businesses will be instrumental to recovery
As seen in Hotel Business Magazine, April 7, 2020
COVID-19 has sent shock waves through the hospitality industry around the globe. “Social distancing” and “flattening the curve” are phrases that have entered the world’s vocabulary, leading to the cancellation or postponement of events – from business conferences to sporting matches to weddings and other social gatherings. This is causing drops in occupancy, outright hotel closures and large swaths of the hospitality workforce being furloughed. Companies are working diligently to figure out what to do next. With news changing on an hourly basis, Hotel Business reached out to industry experts on the issues the industry will face when the coronavirus pandemic nears its end.
At this early stage in the health crisis, the hospitality industry is already taking an economic hit – the extent of which is still unknown. “If this coronavirus shutdown continues for a period of time, it is going to cause significant erosion to the economic performance of the country, and that is going to impact the hotel business in a huge way,” said Sean Hennessey, clinical assistant professor, NYU School of Professional Studies, Jonathan M. Tisch Center of Hospitality. “We are already starting to see some declines in the economics of the hotel business by just two weeks’ worth. As this continues, those declines will become more substantial and have a longer-term impact for the hotel industry. If by some miracle there was a readily available cure for the problems tomorrow, such that it ended in a couple of weeks, I don’t think we’ll get to the point where there is a gigantic long-term negative economic impact, and I believe we would see a rebound to travel at some point shortly thereafter.”
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Stay local and act local
A key to bringing business back for hotels once the precautions related to the pandemic have been lifted will be focusing on local business. “The things we can look at, and the way that the hospitality industry, in my opinion, can start to recover, is to look for ways to get back to local,” said Mike Chuma, VP, global marketing, enablement and engagement, Ideas, which offers revenue management solutions.
Focusing on the local market is what helped Asia recover from the SARS epidemic in the early 2000s, according to Robert Post, CEO, Knowland, which provides group hospitality analytics for hotels, convention and visitor bureaus (CVBs), conference centers and other meeting venues.
“You have to cultivate it [local business]. You’re not going to fill the big compression events… They are probably gone for the year. But there’s a tremendous amount of built-up demand for companies for corporate, for local and regional, and that’s what you have to fill out. It’s going to be a lot of smaller things – a lot of $50,000 pieces of business versus $500,000. If your head’s not in the game to go get that business, you’re going to be behind because that’s a lot of volume, so sales departments are going to have to be working overtime.”
-Robert Post, CEO, Knowland
Chuma also said that Asia’s recovery from SARS may be a good example to follow. “Direct-marketing cooperatives will need to be able to adjust their strategies, and that is a proven technique,” he said. “Coming out of SARS, the Singapore and the Taipei governments did this really strong public/private partnership to understand who their new segments were.”
With the unknowns involved with when the airline industry will be running at full capacity – and the possible reluctance of travelers to venture too far from home – the drive market will be important. “Going local is one of those ways that we can start seeing spot recovery, not just in the U.S., but globally because you can then figure out ways to drive demand as the restaurants and bars come off their quarantine restrictions,” he said. “People will want to go out and socialize once they feel comfortable.”
Peter J. Bates, president, Strategic Vision, sees the drive market as vitally important to recovery. “Wherever you are, there is a drive market,” he said. “Provided you are telling the right story and you can excite the client, that is something you can look at very quickly. There are some things you can do now in April because no one can tell us when things will be back to normal.”
He said that hotels should be preparing to get that local business now. “A hotelier or resort owner should be looking at their website,” he said. “Is it telling the right story now? Can we adapt it? Does it need factual cleaning up? This is a great time to do that type of thing. Check out your databases. Are those clean? Are they ready to use as soon as it is appropriate? Do you have a robust SEO plan to go when things are ready?”
Chuma said he expects to see more evidence of the drive market going forward. “I anticipate that we are going to see an increase in demand in things that we used to do as kids without parents – car trips, things within driving distance, going camping – so you still have that social distancing activity,” he said. I think there are a lot of ways that the hospitality industry is going to be incredibly creative to find its way back.”
For Bruce Rosenberg, president of the Americas, HotelPlanner, the beginning of the recovery period will be a season of the last-minute vacation. “We are seeing pent-up demand,” he said. “we just did a survey with 1,000-plus adults. People still want to travel. The concern is, has this changed people’s attitudes toward travel? I don’t think so. I think there will be significant pent-up demand that will be released as soon as there is a comfort level that the virus has peaked, and people aren’t getting sick. I don’t think, fundamentally, it is going to change the demand for travel.”
Once the recovery begins, Bates said it is important that hotels go about attracting guests the right way. “I don’t believe that chopping the rate in half is the way to do it,” he said, “though there will be many who will do that. People should be looking at adding value. That may be adding an extra night. Owners have to understand why this is being done by operators. You have got to get people wanting to come to you because everybody is going to be after the same piece of business. Have you added value programs ready to go.”