As we move through 2021, we are beginning to see distinct phases in the return to “normal” with many hoteliers making preparations for a multi‐staged recovery scenario. We anticipate by the summer of 2021 we will see a bounce back in activity, starting with the domestic leisure market.
We also anticipate domestic and some international business travel will come back in the fall based on the releasing of restrictions from companies and the stages of vaccinations around the world.
The winds are shifting as opportunities and challenges associated with the expansion of the revenue management discipline become clearer. Revenue mangers are being tapped to ask the right questions and tell the right story. The velocity of requests isn’t decreasing, and today they include a need for frequently updated forecasts to help decision‐makers look toward a strategic rebound.
Rolling forecasts are becoming more important while rolling budgets are less relevant. With that in mind, having access to a consolidated look at data from rooms to food and beverage to ancillary services will be a key factor for many hotels.
As a result, the current environment lends itself to the convergence of rebound strategies unlike anything we have seen before. These include a better understanding of data, insight into what is driving today’s consumer, untapped innovation, new leadership roles and the agility to keep up with demand.
A staged recovery path
First, work with your revenue manager and software vendors to better understand the data and develop a strategic recovery path accordingly. The shift from monitoring monolithic segments to better understanding key microsegments will ensure you leverage your data and gain insight into the movement in your market.
This granular view of data will help you better determine which microsegment to target. Not every market segment, source market or price point will recover at the same time, so it will be critical to understand what the data is telling you to inform your decisions and recovery strategies.
Second, knowing the movement in your market will help you grasp the consumers’ desire to travel and provide you with the information you need to better target that market. For instance, Barron’s reported that in the U.S. more than $1.3 trillion in savings has been accumulating over the past year. That’s a lot of expendable money traditionally spent on “experience travel.”
Not only is it important to understand, for example, your leisure market, but where that market is coming from, what is the source and what is driving it. Visiting friends and family will be a big driver as many are anxious to see their loved ones.
There is no doubt that as soon as restrictions begin to lift, and vaccines are widely distributed, wanderlust will drive many to look for a way to spend those dollars, even if only regionally or domestically. Your hotel will need to be nimble and agile to deal with the potential tsunami of travelers looking to break free of the current restrictions.
Understanding what drives your customers to travel will inform your next marketing and sales strategy to match that market. It will also be key in helping your teams engage with them and provide you with the agility you need to keep up with the incoming demand.
New business models and innovations are emerging
A lot of new innovative models are emerging in the industry and conversations abound about the new use of space in hotels, particularly for meetings and events. We are beginning to see the rollout of subscription models with many big players such as Hilton, Marriot and Hyatt launching some sort of day or monthly pass.
Some savvy hoteliers are marketing rooms as work‐from‐home spaces and a way to escape the quarantined home environment, if only for a few days. In that vein, as work from home continues to be prevalent and the drive for employees to “work from anywhere” increases, some new models are filling the void as companies look to bring employees together for team meetings. With many companies closing down corporate offices in lieu of the work‐from‐home model, using a hotel’s function space will allow teams to interact on a quality basis in spaces that stimulate conversation, networking and cooperation.
Others are taking creativity to the next level. The Taj Hotels & Resorts in India has launched a food delivery service that includes an app. Instead of relying on Uber Eats, the hotel is leveraging its kitchens to prepare and deliver food to the community around them. The service is now being offered at many of their locations.
It is these types of innovations, in addition to “ghost kitchens,” that are a testament to the changing atmosphere driven by today’s environment. Other new business models include meet and sleep, digital nomads, COVID hotels and housing essential workers.
This is a sign of our industry’s resiliency, fostering a better understanding for how to best use existing spaces creatively, efficiently and effectively to meet this demand. These models are already helping many hotels generate additional revenue. It is a transformation of the hotel space unlike anything we have seen before, and it will be fascinating to watch what happens next in the coming months and years.
Revenue managers take a strong leadership role
That brings us to our fourth stage of recovery. This is the time for revenue managers to step up and take a leadership role. They are the custodians of accurate data and reliable and rational decision‐making. They understand what is happening with data in ways others in the organization don’t. They also understand what is happening in their environment and are able to pull in different data sources effectively.
The revenue manager’s ability to interpret that data and convert it into information that tells a story has become key in the decision‐making process. Today, more stakeholders are turning to revenue managers and looking to them to provide guidance and leadership from a strategic perspective.
Now is the time for revenue managers to step up and take a commercial strategy view, understand the levers and different taps that can be turned on and also understand the affect it will have on their hotel.
Finally, all of the above steps will need to be done with agility, speed and flexibility. We are all at the mercy of the governments regulating the flow of people with a varying degree of restrictions. The reality is that business leaders are not in charge right now, it is the governments that are in control and we have to be prepared to act and react through agility.
The winds of change are upon us
Don’t sit back and wait until restrictions are lifted. The rebound is already happening, so now is the time to think about how to quickly activate each phase of your recovery. Determine which segments will come back first, and in what order, and build strategies around that phase. Then activate each phase according to the data coming in and the analysis that has been done.
Certainly, a connected infrastructure will put you ahead of the competition and provide your teams with an easy way to access, understand and disseminate the data. This in turn will provide revenue managers and leadership teams with the agility, speed and flexibility to try out different scenarios. It’s okay to fail, but do it fast, break some rules and think outside the box. Then learn from your mistakes and remember to avoid the downdraft.
The winds of change are upon us, and it is up to you to take advantage of the investments you have made to elevate your technology. Leveraging those investments will help you navigate the currents and, in turn, set you up to be the next innovator.