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Hotel Industry pre- and post-Covid-19

As Coronavirus (Covid-19) continues to impact our daily lives and routines with the situation in many countries changing on a daily basis, many of us are eager to travel again. As soon as the situation permits, hotels will be equally eager to welcome their guests back. The truth is that holding your breath and hoping for the best will make you feel …better (well, at least for a while) but ‘business as usual’ is no longer a sustainable approach. Nevertheless, the hotel and hospitality industry as a whole can actually do a lot right now to stay ahead of the crisis and be prepared to recover more efficiently.

More than 50 % of travelers have either rescheduled or cancelled their trips

Unfortunately, the hotel industry has been devastated by the pandemic. Even the big chains like Hyatt or Hilton have focused on mitigating the crisis through different measures, including layoffs, stopping recruitment and reducing hours. To uphold and save their businesses, independent hotels meet the similar challenges relating to termination of services, staff reduction and cost cutting.

For those in the hotel industry still operating, “the day after” marketing strategy is merely one of the challenges they need to deal with. Nevertheless, as Covid-19 is indisputably going to affect our lives and our work for many months (or years) to come, hotels need to adopt an action plan focused on both the current state of affairs, the future trends in travel demand and the changed concerns of their customers.

Impact of Covid-19 to travel industry 9 times worse than 9/11

Tourism Economics and STR have issued a special forecast indicating that the hotel industry is expected to report considerable declines in demand, occupancy, ADR, and revenue per available room (RevPAR). Regardless of the decline and the potential of the hotel industry to deal with the crisis, the market is expected to recover in the last quarter of 2020 and next year. CBRE’s research shows that US hotel demand will need at least 6-10 months to recover and 12-16 months for RevPAR and ADR to regain footing.

Accordingly, hotels need to adequately prepare for recovery, along with their capability to set reasonable expectations and KPIs. Most hotel industry experts suggest the hotels should adopt a three-staged approach:

While Travel is at a Standstill: While people are  mostly at their homes, not traveling and with most hotels temporarily shut down, hoteliers should focus on maintaining contact with their past and future guests by means of email, social media and editorial content that will keep them entertained and additionally enhance their brand relationship.

Demand going up: Hotels should boost their marketing activities related to brand awareness and attracting new guests through affordable CPCs and CPMs to reach those that are already planning their vacations and figuring out their long-awaited trips. To do this, hotels need to ensure a flexible cancellation policy and appropriate messaging in line with the situation.

Travel demand rises: Marketing focus should be sensitive to new demands and specificities of travel post-Covid-19, along with targeting the right demographics with adequate messaging and packages.

Projected revenue decline of 50 % for 2020

Stage One: While Travel is at a Standstill

As most travel is at a standstill, it is of critical importance to operate in line with crisis-management best practices through a well-developed prevention plan, efficient and effective communication with guests and employees, as well as to introduce necessary modifications to revenue management and digital marketing strategies to rump up recovery. In addition, it is necessary to clearly communicate all the relevant information relating to hotel’s operation and COVID-19 on the hotel’s website and through digital channels. Equally important is to maintain flexible cancellation policies both for current reservations and future bookings.

Changing Perception of Travel During COVID-19. Travel demand may be reduced, but this period should be leveraged to understand the changed traveler’s perception of the COVID-19 situation, think of different ways your brand can actually help travelers and get in touch with consumer preferences and changed attitudes. A recent survey by Fuel Travel showed that peoples’ prevalent associations of travel at this moment were ‘unsafe,’ ‘scary,’ ‘wait’ and ‘caution.’ This is in line with slow travel demand that is not expected to increase before June (at the best).

Creating Value for the Customers. The entire travel and hotel industry is still strongly affected by COVID-19, with most hotels closed or dealing with low demand, but your brand is in a bigger need than ever to remain connected to past guests through your website, e-mail and social media and share relevant and appealing content they can enjoy. You should also convey messages that are positive, encouraging and empathetic.

People are likely to remember that your brand made them feel better about the crisis and adequate content can considerably improve the brand relationship. During this time, your marketing focus should be on brand awareness and valuable and meaningful content that will drive traffic to your website. Ultimately, this is the best time for your hotel to focus on bigger goals and the community as a whole. This includes partnership with a charity and encouraging loyalty members to donate to earn loyalty points or rewards for future bookings or provide exclusive rates to first responders.

Eight in 10 hotel rooms are empty

Experts suggest that recovery strategy for hotels should broadly incorporate:

Sound Prevention Plan: To help your guest feel safe and have positive experience with your hotel, you should establish and implement a prevention plan that protects both guests and employees. Even if your hotel is temporarily closed, your guests will want to know that the prevention plan is still implemented after the hotel reopens.

Share Important COVID-19 Information: You need to inform your guests if the hotel is open, that you implement a prevention plan and that cancellation policies are in place though major communication channels, including your website, email and social media. Critical information you should communicate to your guests (primarily through your web site) include prevention plan, cancelation policy, contact information, FAQ relating to COVID-19 and the way your hotel is engaged in the community.

Flexible Cancellation Policy: With COVID-19 still determining travel demand, hotels need to develop and implement a clear action plan to manage existing reservations and cancellations, along with a flexible cancellation policy on both existing and future reservations. By communicating this properly to guests who have already made reservations, you can enhance your brand trust and boost future bookings.

You could, for example, reach out to your guests proactively by suggesting rebooking along with an added value or incentive. Fuel Travel survey shows cancellations-rescheduling ratio to be at 4:1, with around 50% of respondents rescheduling or cancelling their trips.

2020 is projected to be the worst on record for hotel occupancy

You can consider prompting the guests that have already cancelled their trips to book a future stay or purchase a gift card for the reservation amount, or add an incentive or complimentary bonus. Basically, if you want to enhance brand loyalty and trust and encourage people to rebook, a flexible cancellation policy for six months or even a year should be a solid recovery strategy.

Rethink Your Digital Marketing Strategy: With Covid-19 still dictating the travel demand, you should take time to rethink your digital marketing strategy, restore initiatives and processes to prepare your hotel for a time to come. These strategies may include auditing marketing assets and digital tools, redesigning creative or templates, developing or recreating reputation management strategy, assessing your website’s design, value, relevancy, and brand voice and creating a communication plan and editorial calendar for the next two-three months.

Indulge Healthcare Workers: Given the extreme effort and sacrifice on the part of healthcare workers worldwide, you may consider offering an affordable rate for them and first responders who have spent months in isolation from their loved ones. This may involve affordable rates, complimentary rooms, food donations to local hospitals, or donations to relief funds.

Boost your Editorial Content: Amidst social distancing, isolation and self-isolation, strong and attractive editorial is an effective tool to encourage your past guests who currently cannot visit your hotel. You can share at-home spa treatment tips from your hotel spa, workout or instructional videos your guests can use to stay active at home, your chef’s famous recipe or fun activities for children.

Leverage the Power of Social Media: social distancing has considerably increased time spent on social media. Social media represents a great way to maintain connections with your past guests and inspire followers with attractive travel content. You can ask your followers to share pictures from their past trips or stay at your hotel, share appealing and inspiring photos of your hotel or share virtual tours of your destination landmarks are just a few ways to engage past guests. You can boost your social media presence through activities like

  • “Around the World” social posts – you can inspire people to travel the world virtually by sharing their photos of destinations they travelled and their experiences with those destinations.
  • “Your favorite destination” social posts – invite people to share photos from past stays at your hotel and favorite landmarks in your destination
  • “Virtual Museum”  share virtual tours or videos of local museums and invite people to share their impressions of exhibitions.
  • E-mail marketing – maintain connections with your past guests via email to build awareness of your content by, for example, promoting blog content (spa treatments, workouts, recipes, and so on).
  • “Make a hotel out of your home” – inspire your past guest to create a minibar or use baht products you offer in your hotel to help them bring their hotel experience to their home

70 % of hotel employees laid off or furloughed

Advance Purchase Offers: Travel may be at a standstill, but some people may be interested in booking their trips in advance. Accordingly, it will be of critical importance for you to concentrate on the adequate audience by offering, for example, a 90-day advance purchase, as people usually take around 90 days to make decisions on their flights and hotels.

Focus Your Digital Marketing Activities on Adequate and Inspiring Messaging: During this period, brand awareness should be your primary point of concern, with sensitive messaging that will drive traffic to your website. Should you decide to maintain your offer, you should focus on advance purchases and a flexible cancellation policy. In conclusion, now is the time you should maintain contacts with past guests and foster a strong brand relationship, as people are likely to remember their experience with your brand in making their future travel-related decisions.

Sta with us in the next blog in which we will present strategies for the second stage of your recovery – demand going up.

 

Tourism Economics

Oxford Economics

STR

CBRE

Oxford Economics and Hotel Effectiveness