Now that the worst of the COVID pandemic is behind us, one thing is clear: Things are not going back to the way they once were. A “new normal” is our new reality, and that means hoteliers can’t rely on pre-pandemic strategies.
Leisure travel has come roaring back and business travel is on the cusp. Hoteliers are now building strategies to ensure they capture their fair share of the recovering market. A winning strategy doesn’t live within a wish for the “return to normal.”
In many ways, the hotel industry is starting over. We’re adapting to new types of demand and customer behavior by putting new operating strategies in place, particularly when it comes to operations, sales, marketing and revenue management. Starting now and moving forward, hoteliers must rely on data and technology to help automate tasks so your reduced staff can do more with less.
In a new Special Report produced by Hotel Recovery and featuring best practices from more than two dozen hoteliers, owners and operators can learn how to lay the foundation for their future. Below, we’ll highlight a few of those strategies.
Preparing for the New Normal
There was no college course, playbook or precedent on pricing hotel rooms during a pandemic. Revenue teams were learning on the fly for the past year — and an entirely new skill set developed in the process. Flexibility became key to success, and it’s a lesson that will stick with the industry far beyond the pandemic. Revenue leaders will need to focus on exactly what their customers want and need, with the understanding that not all customers seek the same experiences.
“Hoteliers need to better understand the needs of their customers in order to adapt their revenue management strategies and tactics. Are there new purposes for visits that have arisen from the new reality we face? How can we create compelling products that align with the new normal? How can we turn hotels with historically high business and group mix into leisure-focused properties when leisure represents the vast majority of demand? How can we make them comfortable booking and staying with us and to advance care along the way?” said Michael Klein, VP of global revenue management at Hyatt Hotels Corporation. “Selling products with the right purpose, lead time, price, fencing and restrictions that speak to our guests’ needs will advance the care needed to convert on bookings in our new normal.”
Understanding New Consumer Behaviors
Consumers have changed their behaviors due to the global pandemic. That means hoteliers need to change, too. Digital channels reigned during lockdown, with consumers flocking to digital for working, shopping, socializing, entertainment, and more. A shift toward digital solutions emerged on-property as well. Travelers sought out new technologies such as self-check-ins and check-outs, touchless payments, app-based services, and augmented or virtual reality.
Travelers also shifted toward stay experiences that would keep them away from others, and alternative accommodation companies, such as Airbnb, grabbed even more share during the crisis. In 2019, the last “normal” year in travel, Airbnb was able to take 10% to 15% of travel demand in many major metropolitan areas and leisure destinations, according to a report from hospitality and online travel tech consultant and strategist Max Starkov. In 2020, Airbnb fared far better than many hoteliers as the traveling public preferred to stay at standalone, host-less accommodations. Airbnb even went public during the pandemic in December 2020, and now the company’s market cap is over $120 billion, more than the combined market caps of the top seven hotel chains: Marriott, Hilton, IHG, Wyndham, Choice, Hyatt and Accor.
So, if someone wasn’t your customer yesterday, that doesn’t mean they can’t be your customer today or tomorrow. You can bet that pandemic-born behaviors and attitudes toward travel will persist.
It Took a Downturn to Break the Silos
The structures of traditional hotel teams are well established and familiar. The sales team is responsible for group and business travel, the marketing team oversees advertising and messaging, and the revenue management team focuses on pricing strategy, forecast achievement and distribution. But if 2020 has taught us anything, we know that change is essential for future survival.
Commercial Strategy is a relatively new way of looking at things. Commercial strategy unifies all of the hotel’s revenue-generating teams (sales, marketing, revenue management and distribution) under one holistic leadership and goal structure. A commercial strategy leader is focused on topline revenue and all the activities and initiatives that drive revenue. This helps unify the team and provide one strong voice as it relates to all topline revenue, including all ancillary revenues.
It is in every hotel’s best interest to take a hard look at how leadership can think and act differently with an eye on cost savings and efficiency. Don’t continue adding to your traditional hotel organizational structure because it only adds cost and overhead. Caryl Helsel of Dragonfly Strategists and Kathleen Cullen, Senior VP of PHG Consulting, recommend a restructure to this new way of thinking to set your team up for success.
For detailed lessons on how the pandemic changed hospitality forever, download “Roaring 20s: How Hospitality Leaders are Building Profitable Recovery Strategies.”