With the recent global coronavirus pandemic, the tourism and hospitality industry has been hit hard. For hotels, a room that is not sold is a permanent loss of income. Owners and managers of hotels are therefore under the shock, trying to come up with a plan to fight the coronavirus, but above all, to develop strategies for a fresh start after the current crisis passed. Here are a few ideas that we hope will help you to approach this new era.
Industry experts agree, hotels should resist the temptation to reduce their rates in the future. Studies have shown that the hotels that are the most willing to lower their rates and whoever lowers them the most will be the last to recover when there is recovery.
It may seem simple to recommend to hoteliers not to lower their rates, and this is all the more true when they will have to assume the payment of bank loans and will be asked to do everything possible to increase the occupancy rate. However, lower prices have long-term consequences.
One of the reasons is that the pricing structure of many hotels is based on the best retail rate available, which means that all other rates, such as business rates, groups, etc. are linked to this tariff. When demand returns, the most profitable customers, such as business customers and organizers of events or weddings, will be reluctant to accept price increases. The decrease in prices may contribute to a slow recovery in revenues.
In previous crises, such as those of Sras, hotels that had taken the most radical measures with a short-term revenue management strategy have had the hardest time to recover in the long run.
In addition, discounts are useless if people do not travel for reasons of security. Hotel managers will be able to analyze last year's data, to make more recent forecasts on that basis. They will be able to use these data to create short- and medium-term scenarios on profitability and occupancy, and they will need to develop a business continuity plan with various scenarios of impact on income. The plan should also include specific marketing actions to be taken when there's the beginning of a recovery.
Leverage new technologies
Hotels are known to adapt slowly to new technologies. But with the emergence of coronavirus , hotels that do not adopt new innovations – and quickly - are likely to be hit harder. Without adequate technology, hotels face errors, mistakes and misunderstandings, which puts them at a financial disadvantage. How many reservations are hotels missing because a potential customer was not aware of a unique feature provided by the hotel? How many times does the front desk need to upgrade to avoid a bad review from a dissatisfied customer because of a reseller site made a mistake that the hotel didn't even know about?
Analyze who your competitors are in the post-coronavirus era
Professionals who have a say in setting pricing, and income managers tend to consider their competitors as half a dozen similar hotels located nearby. But when people start travelling again, the hotel that you thought to be your competitor is not the one that a given consumer might to be considered as such. An example would be a five-star property that reduces its rates to try and steal a four-star hotels market share. In addition, Airbnb and its competitors have transformed the accommodation market in recent years, reshaping neighbourhoods and entire cities as short-term rentals have become more common in areas with high population density.
But with tourism at a standstill, national economies facing a deep crisis and the reluctant attitude of public towards tourist apartments for sanitary reasons, the prospects for tourist apartments are not very good, When the recovery takes place, these accommodations should not be a major source of too much competition.
Thinking beyond prices
Studies show that clients remember more about their experience with cancellation than the tariff they paid. When possible, offer flexible cancellation policies, or free equipment for future stays. The pace of recovery is something to keep in mind when determining how to spend marketing budgets which segments to target. Business travellers will be the first to come back to the market. Hotels must focus on maintaining their negotiated accounts and individual relationships with the business clientele. Once the business clientele have shown to the general public the possibility of travelling safe, the leisure clientele will follow. Marketers will need choose the right strategy, social distancing will be a recurring problem for the next year or more.
The search for new segments to target with proper marketing actions is also an important point. For example, a hotel that usually caters to leisure travellers will be able to offer its rooms on platforms designed for business travellers.
Maintain strict health protocols, in accordance with the advice of the authorities and the World Health Organization.
Health safety will be paramount, well beyond what the sector has experienced during other pandemics. The way hotels are handling that matter will play an important role in the recovery: what they have done, how they participate to improve the security of their staff/locations, will play a significant part in the decision criteria of consumers. Here are some recommendations; we've developed this aspect in another article.
- Wash your hands regularly with soap (for 20 seconds).
- Offer an alcohol-based hand sanitizer available to everyone i(60% or more of alcohol).
- Keep surfaces clean as much as possible, implement a stricter and more frequent cleaning protocol on the entire property.
- Provide security equipment for hotel staff at the reception. As an example, install Plexiglas at the reception desk to protect customers and employees. This equipment is also easy to clean on a regular basis.
The return of the family clientele
After the period of social distancing, hoteliers should take into account that the traveller’s behaviour will be forever modified. It is important that we understand that behaviours will change. We are already seeing new trends taking shape. For example, travellers will be wary of public transportation and air travel, prefering to take their own car to explore nearby destinations.
Customers may also be looking for more off-trail experiences. Private accommodations and adventure activities where they can be outdoors and
surrounded by nature. COVID-19 has brought together family, friends, and when things get back to normal, customers will need to travel with people they know and trust. Family travel will regain importance.
Look at other markets
In China, the occupancy rate has begun to rebound. China has seen the hotel occupancy rate almost disappear at the height of the crisis, but a recoveryis starting... Occupancy rates vary, but in some cities, they have gone from very low to about 30% now. Learning about the strategies in place in other markets will certainly be an important part of the process.