What is new in 2023?
by Robert A. Rauch, CHA
We are seeing a shift from sitting at home to experiencing the world. Some travelers came out in 2021, others in 2022, and everyone is finally getting out in 2023! The world was closed, now it’s completely open with the exception of China. Pent up demand still exists today in the leisure segment and groups and business travelers will continue to increase their travel from 2022 to 2023. This will occur even if there is a recession as companies cannot grow if they do not meet. Corporate balance sheets are in good shape and while the headwinds of a slowing economy could impact some travel, 2023 will be a good, solid year.
Sustainability, Authenticity and Diversity and the Gen Z Traveler
Our guests want us to be friendly to the environment and to be sensitive to greenhouse gases, air and water pollution and clean energy. In 2019, the tourism sector totaled 8% of greenhouse gases globally, according to Carbon Brief. Several industry sources say we are reducing our negative impact across the sector which is good news, but travelers would love to hear that we are doing more.
Sustainability and diversity are top causes for socially conscious meeting planners, their attendees and travelers in general—additionally, wellness is a huge focus. The Global Wellness Institute expects to see over 20% annual growth in the wellness tourism industry over the next several years. Events focusing on health, meditation, recreation, sustainably-sourced food, and related activities will compete favorably for both business meetings and the individual traveler.
Gen Z travelers, who grew up with heightened awareness of climate change, global crises and desire for diversity are looking for newer experiences. They like eco-friendly accommodation options and businesses that hire employees that look like them. There is a five-point spread between Gen Zers and others when considering staying in a green accommodation on their next vacation, 38% of Gen Zers compared to 33% of those over 25.
Gen Z heavily utilizes technology, including TikTok, Instagram and other social media channels when they travel. These travelers are interested in places where they can post photos while they are on the road or after they have returned. These memories and experiences will differentiate one hotel, restaurant or tour from another and one place from another.
Authentic experiences are desirable by nearly 50% of Gen Zers and over one third of global Gen Zers said they prioritize spending money on local businesses and products when traveling, according to MMGY. That is equal to the 25+ crowd, who have more financial freedom. Gen Zers are also more likely to be interested in traveling with a purpose, such as volunteering and ecotourism, which is again fueled by the desire to do something meaningful and give back to the community.
Other Guest Demands
Breakfast continues to be near the top of guest desires and they strongly prefer a free breakfast even if they have to forego award points. Additionally, they want a better breakfast with some creativity! Housekeeping service is a touch point that we must all address this year–how do we simplify it, what bed toppings do we display to show them the changes and how do we deploy staff to fix it?
Our guests are pushing back on rates and expect renovations now that we have all used the supply chain delays as an excuse. Time to freshen the product and get back to smiling at all guests, cleaning up our management teams, training staff and renovating our hotels. I say this not to agree with the brands that want us to spend $50K per room but to at least freshen the areas that the guests notice—lobby, hotel rooms and restaurants/bars.
Technology
It is time to drive business with technology, assess our revenue management systems, drive meetings to our hotels and modernize our operations. We must differentiate our hotels from our competition by providing technology, service and a clean, fresh product. Moreover, we must lead our team via training, sincere management and walking the talk.
The pandemic is over, it is time to move on from ancient practices and pandemic excuses. Covid-19 was hard to endure—but now we can celebrate our successes and grow our teams and profits concurrently! To a great 2023!
Robert A. Rauch, CHA, is an internationally-recognized hotelier, CEO and founder of R.A. Rauch & Associates, a leading hotel management and consulting firm based in San Diego. Rauch has more than 40 years of hospitality-related management experience in all facets of the industry. Visit www.hotelguru.com for more information.
Hotel Industry Today and Technology Changes in 2022
*This article first appeared on Hotel News Now and more recently on Hospitality Net and Hotel-Online
The Best Ways to Navigate an Ever-changing Industry
Today, hotel fundamentals are on an upward trajectory, but several macroeconomic elements are a risk to owners and operators including inflation, higher oil prices, geopolitical tensions, rising interest rates and broader economic growth concerns. A recession would clearly impact near-term hotel stock price performance and sentiment as well as net income; however, hotel industry fundamentals remain solid, midweek business travel is recovering nicely, and groups are coming back. Let’s take a look at what technology changes are occurring today.
Was COVID-19 good for the industry? No, but much of the technology that was implemented during COVID will stay. Contactless check-in and touch-free menus will likely be the norm as viruses are easily passed between people. Contactless will likely rule as most prevalent, but mobile will be a close second. Even baby boomers use their mobile phone for everything; therefore, going forward, reservations, mobile check-in, messaging with guests, mobile room key and control of the guest room via mobile phone will be standard.
What Do Guests Want?
Guests are getting used to more self-service at limited-service hotels. They are aware of employment data (if you are an operator, you know it is extremely tight) and do not mind not having their guest room serviced daily. Resorts are another story — full-service hotels and resorts are expected to offer daily housekeeping and have staff available to assist with questions. Most guests are supporters of new technology, and we believe they will accept robotics and chatbots as they evolve.
We will see more robotics rolled out, especially those that perform mundane tasks. These will include delivery/service robots and vacuum-cleaning robots. Artificial intelligence will become more intelligent as they provide revenue managers with better data. Clearly, they all had to be reprogrammed from year-over-year predictive analytics to pace of bookings and deeper analytics. Using 2020 data to predict 2021, and 2021 data to predict 2022 was senseless as the travel restrictions had a major impact on travel patterns.
Guest room entertainment will continue to be upgraded to reflect guests’ viewing habits. If a guest subscribes to Netflix, why should they have to watch network television? Amazon Prime, Hulu and others will quickly replace the offerings that most hotels have provided for decades. One more related software change will be the use of mobile point-of-sale systems for food and beverage and other revenue sources (spa, golf, recreation, etc). It can be contactless if desired and allows servers or other customer service employees to handle transactions in the field.
The Future in Hotel and Restaurant Technology
5G will be a disruption to all hotels as many now provide cable, fiber or satellite technology. Most likely, 5G will be deployed for property management systems and other uses beyond the guestroom entertainment including augmented reality, voice-assistant technology and more. WiFi 6, a competitor for 5G, will also play a role. For me, it will be interesting to see which one wins in hotels. 5G has the hype and support of the government.
Wi-Fi 6 is a new wireless standard, also called 802.11ax, that is making big waves in network connectivity and user experience improvements. Another hotel technology disruptor will be business analytics — we are just now beginning to use analytics with firms like Kalibri Labs. Understanding when and where a customer exits a purchasing funnel can significantly improve both revenue and service by offering tailored products.
Hotel content distribution will be streamlined, so that it is easier to digitally create new content and have it “auto-populate” company websites, social media and new technologies seamlessly. Further, guest check-in, guest awareness of property attributes and overall guest service needs an overhaul to create consistency.
Automation will grow quickly due to guest demands and challenges with finding labor. Unions will claim hoteliers are eliminating jobs, but that is not the case. We are just filling tasks that are not getting done today. The bottom line is that owners will be spending more money on technology post-pandemic. To great times ahead!
Travel in 2022: Addressing the Demands of a New Era
Managing Revenue and Targeting Travelers in the Tourism Industry
*This article was first published in Hotel News Now in February 2022
This year marks an exciting point for hotels within reach of 2019 numbers. Many select-service and resort hotels fit this profile, but the majority of hotels should see great growth in 2022. What is the landscape?
Threats to the Industry
The greatest threats to the travel and tourism industry include new supply; Airbnb, Vrbo, and similar short-term rental companies; interest-rate increases; oil prices and terrorism. Reduction of visa issuance, global economic stability and economic growth by inflation are other concerns.
Russia, China and Iran are all threats to stability in the Middle East, Eastern Europe and Asia, and this provides for more chances for disruption.
As a nation, we remain divided due to poor political leadership, and we’re not pointing to any one individual.
Opportunities
Our opportunities are the continued need for lodging despite all warnings that videoconferencing would reduce demand — first mentioned in industry publications in 1982 and repeated frequently for two decades — as well as the yet-untapped growth in international travel. While listed as a threat above, Airbnb provides the lodging industry with the opportunity to embrace and adapt to the short-term rental market by changing the offerings for guests to accommodate the needs of today’s travelers.
Lodging is a noble profession that will grow due to the need for groups and salespeople to connect face-to-face, and the perception by Americans and others in free nations that travel is considered a birthright. We will soon see the Zoom phenomenon reduced and business travel slowly return despite this pandemic. The end is near!
Unique Attributes of Lodging
The lodging sector is cyclical like other industries, but it is much more scientific now than ever before. Algorithms are sophisticated for revenue management, distribution channels are limitless, short-term rental entities have become mainstream and the competitors include apartment complexes, cruise ships, timeshares and more. Based on this, the vulnerabilities are real, and the need for intense day-to-day management leaves many real estate investors on the industry sidelines.
We must accurately project room demand based on history and local activity, including, but not limited to, area booking pace, competitive rates and type of business. With that information, one can begin to move business from expensive channels like online travel agencies to direct channels. Further, understanding how long it takes to book that less-expensive business and whether or not that business might potentially be a repeat business further enhances the likelihood of successful revenue generation. Lastly, we must hold rates up instead of “dropping our drawers” at the first sign of a slowdown. This is an essential element that saved us this past pandemic cycle — we held rate!
A good revenue manager must be creative and analytical. If one is set in their ways, this is a non-starter. Revenue management must include knowledge of digital marketing and the tools for the 2020s must be used. These include Kalibri Labs, Demand 360, understanding of content on our websites, social media, newsletters and any marketing campaigns.
Involving the staff in menu writing as well as social posts like Instagram and Facebook will make it more engaging.
Revenue Management: To Outsource or Not
There are many great third-party firms, and some of the brands have a real handle on revenue management, so it is a big decision. A revenue manager is a six-figure investment, so we prefer to farm it out and manage it intensely. Other firms to utilize in addition to Kalibri Labs and TravelClick are Coddi, Google Hotel Ads, metasearch firms and more.
Revenue management refers to the strategic distribution and pricing tactics we use to sell perishable inventory to the right guests at the right time via the right channel at the right price. Other products such as our amenities, food and beverage, and other services are critical add-ons at full-service properties.
Every traveler has an optimum value they offer to our hotels — revenue management is about capturing as much of this value as possible. Booking directly, extending the stay and becoming a repeat visitor are great starts.
Today, staffing is critical. With effective revenue management, we are able to protect against scheduling too many staff members during slow periods while ensuring adequate numbers of staff are safely working during the peak periods.
Revenue management drives the business plan and advises sales team members when they need to find business. Although there are multiple channels, hotel direct, global distribution services and online travel agencies are the biggest. Determining our ideal customer is paramount to revenue optimization. Reviewing our feeder cities, booking window and conversion rates online and through the voice channel are all very helpful.
We wish everyone in this great industry a profitable and healthy 2022!
State of the Industry | Jan 2022
Finance, Technology and Service Will Dominate
Article first appeared in Hotel News Now in December 2021.
Interest rates are low, consumer confidence is stronger, oil prices are high and employment is very uneven. The Purchasing Managers Index (PMI) is at 58.7 in December 2021, down from 60 in November and 61 in October. Any number over 50 shows that the economy is expanding so the PMI is good news. Threats from COVID-19 variant Omicron should peak this month. Perhaps the biggest threat is inflation as that is starting to impact the middle class as well as the poor. The silver lining is that this inflation might cause hotel room rates to grow beyond the 6% inflation rate.
Hotel Finances
During most recessions, there is a significant reduction in value of hotel assets as the demand for lodging is normally in direct relation to the asset value. During the pandemic, this has not been the case. Values have largely held as the fundamentals have improved so rapidly that values are being based on 2023 earnings. If you doubt the values of hotels, take a look at the stock prices and you will see that Wall Street values hotel companies on 2023 numbers. Amazing!
Consolidation will continue as cash is still flowing and private equity is still in abundance, despite this unique cycle. Debt is readily available at relatively low interest rates and while the current economy is somewhat fragile, 2022 looks good due to political policies and cash is burning a hole in the consumer wallet.
Minimum wage growth and the labor shortages have led to more robotics and artificial intelligence, (AI) has taken a prominent role in revenue management and will grow in all areas soon. Immigration policy must be fixed to accommodate those who want to work and obtain a U.S. work visa as the jobs that are badly needed in hospitality can be filled with foreign workers. Personalized service must return and staff shortages do not help to provide personalized service.
Competition For Hotels
There is a marketing war between the short-term rental industry and hotels. To stay competitive, hotels must review trend reports and competitive set information from STR as well as meet with competitors and use lead lists to aggressively pursue business. Websites must be laser-focused on selling, armed with “can’t resist” creative, digital content. The focus must be on experience, not the amenities. The use of storytelling and videos is paramount to success and tech-savvy staff members should keep an eye out for social media trends.
Technology & Customer Service Efficiencies
The hotel industry was never known to be an early-adopter of technology but the adoption of technology was rapidly accelerated following the start of the pandemic. Some of the technology was to reduce the spread of COVID-19, like guest-facing contactless technology. Now, technology implementation at hotels is shifting toward long-term operational efficiencies to retain and supplement—rather than supplant—employees, and to provide support for high performers. This will help provide better service to guests and also retain these newly minted rock stars.
Stay on top of reviews and respond to all of them as we have noticed a sharp decline in positive reviews over the past several months. Guests will no longer accept excuses when they are paying top dollar – and they are! In addition, mobile, digital key, in-room entertainment and the Internet-of-things will drive business going forward. VR, robotics and “contactless” technology will drive customers to hotels and there is more good news – international travelers are now coming and business travelers will be back next year as groups are booking future dates.
The bottom line for hoteliers in 2022 and beyond will continue to be “Cash is King”. Unforeseeable occurrences, like a recession, pandemic or unfavorable weather and drought can happen. Owners are the ones who must protect cash for a rainy day and we just had a long, rainy day! Armed with a hyper-local forecast, competitive analysis and clear strategy with detailed action plans, 2022 will be a great year!
10 Travel Trends That Will Happen in 2022
These trends were first published by Hotel News Now in November 2021.
Travel is taking a new direction in 2022 and it’s important for hoteliers to continue adapting to the consumer changes for these travel predictions. Through a combination of technology, guest expectations, and employment, here are the most important traits to consider in your 2022 management plan. Enjoy reading these trends and have a spectacular and very Happy New Year!
1..The talent void – We furloughed and laid off the majority of our workforce, but we can fix it by recruiting those with strong communication, technology, sales and analytic skills. Yes, we will pay them more but they will perform better and will provide superior customer service that is currently lacking.
2. Live events 2.0 – We will see the return of live events but for a while, they will often include a hybrid component. Companies know they must send their key sales people on the road, but rather than send 4, maybe 2 stay back and pay a reduced admission fee and have access to all the speakers and presentations. The live events will often have strict protocols, on-site COVID testing and more. Every hotel chain is jumping in with their own version of hybrid meetings technology.
3. Contactless transactions – These are here to stay. Nobody wants to touch something that is not clean and sanitized, whether it be in a hotel, restaurant, attraction or meeting environment. Mobile ordering, digital check-in, QR codes, self-service kiosks, digital menu boards and much more. Why? Because they are both safe and effective at reducing labor costs.
4. Hygiene, sustainability, safety and wellness – Firms like Ecolab have been working on the hygiene part of this equation for years. Add in the consumer preference of sustainability and the pandemic’s impact on thoughts about wellness and these all meet up for a package of plastic reduction, reusable spray bottles, recycling, water savings and more.
Sanitizing stations will live on and third-party health and wellness ratings will become commonplace.
5. Death of the good-old boy network – Guests appreciate great service but knowledge of what guests wanted in the 1900s does not make for a successful hotel. Guests want technology that provides them with 2020s quality of life. Fast, free Internet, texts that keep guests updated, smart TVs with the content they want, contactless transactions, use of the mobile phone for everything and more. Add in positive reviews and they are happy!
6. Sales are forever changed – Sure, the basics are critical and sales calls have not changed dramatically, but prospecting tools have changed, booking technology has changed and the process is no longer manual. Order takers are out, data and technology are in and the hybrid meeting component alone will eliminate those who just don’t get it
7. Technology is an investment, not an expense – AI-enhanced guest communications, customer service robots and automation in the front and back of the house will improve profits both short and long term. As an industry, we need to embrace automation, not because it will reduce labor but because it will drive revenue and automate manual, repetitive tasks. Given our labor shortages and increased cost of labor, we get a bonus.
8. Art to science – Yes, our industry is still an art. But it has morphed into a science, first with revenue management and now with all things digital, the Internet of Things (IoT) and digital disruption to name a few. Airbnb and other short-term rentals are nibbling away at our market.
9. All things digital – Every channel that we go to for rooms costs dollars and we need to know how much! How do we develop a business plan post-pandemic? We need every tool in the toolbox and they are all technology-oriented.
Web sites, digital marketing, laser-targeted sales, and knowledge of the changing landscapes are required. Get help from Kalibri Labs, they have the toolbox (no, I do not have a special relationship with Kalibri).
10. Wow customer service returns – Personalization and a return to wow service that we have not seen in a long time will return this year and be a differentiator. All the technology in the world won’t bring people back without this. Hire today’s women as they really get this!
With these shifts in consumer travel trends for 2022, we expect an ongoing recovery to our room revenue and occupancy rates – we should hit very close to 2019 numbers for most US properties. The exceptions to this are convention hotels and those that have large amounts of group and corporate business. Those hotels will see a strong pick up in Q2 of 2022.
In our October 2021 Economic Forecast for 2022, 50% of our readers predicted 2022 as the recovery year, while 40% suggested 2023 was more reasonable. Continue to hang in there and utilize these predictions and tips to speed up your economic recovery. See you in 2022!
by Robert A. Rauch
rauch@hotelguru.com
2022 Hospitality Industry Forecast
Note: last month, we started using a debate platform to ask readers about their thoughts on a subject, so we ask this question above that can be answered from the sided.co debate platform.
2022 – A Magical Year or More Misery?
That’s easy – our hospitality forecast says the bumpy ride is coming to an end. We should assume 6 more months; October through March might remain uneven or bumpy. Why? Because business travel is not back and group business is just starting to book going forward. International travel will likely return in April, 2022 when we should be back to 2019 numbers. The 2022 hospitality forecast says you should hang in there!
At the Lodging Conference, Bernie Baumohl, Chief Global Economist of the Economic Outlook Group, my favorite and Wall Street Journal’s #1 most accurate economist was a main draw for me at this great conference. While he placed a caveat that his forecast is based on no debt default by the US (the debt ceiling is October 18, 2021) and no $3.5T bombshell White House giveaway, his information was timely and interesting. He did bake in the $1T infrastructure package currently being finalized (hopefully) in Congress. Based on the economic outlook and hospitality reality, here are our thoughts.
Business Plans and Budgets
Most hospitality operators are smack in the middle of budget season. Business plans should be done, budgets should be in process and according to Bernie Baumohl, the consumer price index is up between 4-5% and will slow to 2-3% by mid-2022. He talked about the mismatch of skills that technology providers are facing and made some predictions (those mismatches could bode well for hospitality as we have struggled to hire and do not need all employees to be tech-savvy).
Bernie Baumohl Predictions:
- GDP will finish at 5.7%, drop to 3.1% in 2022 and drop further to 2.4% in 2023
- Unemployment and Inflation will hover around 5% this year and drop to 3% in 2022
- Delta variant still is a concern
- There is a supply chain bottleneck that persists
- Energy prices and cost of goods are cutting into consumer spending
- Vaccination rates are rising and people are going back to work
Inflation and Deflation in the Hospitality Forecast
While inflation has put a dent in consumer confidence lately, Bernie forecasts an impending inflection point that could send some advantage back to consumers. Our concern is that it could lead to deflation but we can hope that he is right and inflation pressures will come down to 2-3% by 2023.
Business, International Travel and Recession
Bernie Baumohl’s forecast for business travel is that 90% will come back in the next year or so, vaccine boosters and vaccination plans for children will stimulate more travel and international inbound travel to the U.S. will pick up. With the caveat of no more major virus shocks, the passing of the U.S. infrastructure spending package, and a raised or suspended debt ceiling, Bernie said, “recession is off the table for the next five years in the U.S.”
STR Reports
STR reported that profit margins improved in July due to the combination of demand and leaner hotel operations. Their overall status report on the industry is:
- Demand is driven by the transient consumer
- ADR is driving RevPAR growth
- Business travel and groups are needed now more than ever
- 2022 forecast shows improvement but not yet back to 2019
CBRE Reports
GDP continues to set new records and they forecast most markets will return to full employment by mid-2022. Their takeaways were:
- The recent spike in COVID cases has not led to steep declines in mass transit use
- Recent travel trend data all indicate demand and travel trends ~20 – 25% below 2019
- International travel restrictions will ease in November
- Increases in construction costs, weaker demand trends, and labor challenges will result in slowing supply growth.
- Short-term rental market share has normalized, and the bulk of the spike seen earlier in the year was driven by hotel closures.
- GMs, yield management systems, and revenue managers have learned to push rates and cut costs, driving efficiencies during the recovery.
Final Thoughts
While plenty of waves could rock the ship including supply chain disruptions, Bernie seemed pretty bullish on 2022, especially beginning in Q2. May we all hang on until then and have a great recovery year ahead!
The Road Ahead for Hotels in 2022 and Beyond
Before we jump into 2022 plans, please take the quick survey/debate above of how you view the business and feel free to opine on why. Answers will appear on sided.co and on the hotelguru.com website.
Hotel Industry Post-Pandemic
The number of areas of responsibility that fall under a hotelier is hard for other businesses to imagine. Development, acquisition, finance, operations, customer service, restaurant, bar, maintenance, sales, marketing, revenue management and much more. The businesses churn guests daily and requires real time daily decision making. As we look toward 2022, what should we look at? Before we start, I’d like to encourage you to attend three events where I am speaking that are selling out quickly this month:
- California Travel Summit, Sept 12-14, Pasea Hotel Huntington Beach
- San Diego Women in Tourism & Hospitality, Sept 23-24, Four Points Sheraton San Diego
- The Lodging Conference, Sept 27-30, Marriott Desert Ridge, Phoenix, Arizona
Operational Analysis and Review
Now is a great time to determine areas where the property is performing well and areas that are in need of improvements. A careful review of both income statement and balance sheet will help hotel owners in important decision-making regarding their financial performance, renovation requirements, staffing and more. A detailed review of all management company or GM monthly reports is in order. Do you have all the data you need to win?
Property Repositioning Analysis
Hoteliers must regularly conduct analyses to determine how the hotel is positioned in the market from the perspective of the customer and from the perspective of the hotel’s management. Conduct a physical inspection of the property including front and back of house. In addition, a review of annual tax issues and opportunities is needed as well as a reduction of property tax caused by the pandemic.
Another area of review is STR reports, guest service scores, channel management review and electronic documents including the hotel’s website. There are times when a hotel must re-evaluate STR competitors and whether or not additional third-party reports are needed. Paying for reports that are not helpful is foolish but not paying for reports that are in fact helpful is worse.
Risk Evaluation
Additional hotelier responsibilities include identifying key hotel risks and developing strategies to mitigate their effects. Often times, there is no manager on duty at hotels or no plan in place for handling emergencies. Both of these conditions could present a challenge when an event takes place. These events can include medical emergencies, public disasters and active shooters as well as a plethora of unplanned events. A well-trained staff is paramount to success operationally and also helps avoid disasters and litigation.
Evaluating potential investment returns and conducting a detailed analysis of future market trends are both jobs that a good hotelier should be able to accomplish. Reviewing loan documents, assuring there are controls on hotel cash and purchases are in the wheelhouse of a good hotelier.
Check the Team
To operate a hotel today, the quality of the team is paramount. One operator cannot optimize revenues and expenses, make sales calls and handle the financial end of the business. Substantial due diligence is required to ensure the hotel has the right management, brand, renovation and business plan/budget. Hospitality has become extremely complex with revenue management, reputation management, distribution channel management, social media marketing, website development, ADA laws, risk management, human resource management and myriad technology changes.
It is still a great time to be in the hotel business, despite the pandemic. One of the fun parts of evaluating a hospitality business is the chance to install new state-of-the-art technology, institute new concepts and logistics and make changes that truly take advantage of the changing consumer profile. After this grueling summer, it is a chance to meet with the team, thank them for their hard work and give them a gift card, bonus and/or luncheon or ice cream social. If they stayed with you through this summer, they deserve it.
I leave you with a thought about what inning we are in as many industry pundits like to use the baseball game analogy – prior to the pandemic, we were in the 9th inning, going into extra innings. The game got stopped due to rain, er, Covid-19. Today, it is a new game, top of the first inning. Build a solid business plan and budget over the next month or two! May we raise our glasses to a stronger than expected finish to 2021 and a great 2022!
Success in the Summer of ‘21
How To Welcome Post-Pandemic Travelers Back Into Hotels
by Robert A. Rauch
*This article was first published on Hotel News Now in June 2021
The venerable hotel industry has been completely overturned during the past 15 months. We will have to create a very different strategy to outperform the competition this summer. What are the dynamics of hospitality industry competition today and how can we put together a winning plan in time for the Summer of 2021?
Today, a digital marketing strategy is an industry imperative and critical business solution in this digital age. Platforms including Facebook, Instagram, and Twitter allow hotels and restaurants to engage guests and offer a highly personalized level of customer service than before. These social media profiles are a key element that impacts organic search rankings for our business. Adding in great sales strategies that include hybrid meetings and “Zoom” like calls, public relations action plans and digital promotions that are impactful and measurable will help solidify our marketing efforts.
The Post-Pandemic Traveler
We’ve seen a quantum shift from hospitality as an art to hospitality as a science with the advent of digital marketing and now, we have the post-pandemic traveler. In the hospitality industry, knowing our guests’ demographics and spending habits can help us formulate marketing strategies and optimize profits. This information can be organized and integrated in databases that can then be tapped to guide marketing decisions that can assist in building predictive customer-behavior models that aid in decision making. It has been perfected for our industry by Kalibri Labs or you may mine the data in-house. So, what does today’s customer want?
Sustainability is often overlooked because it is such a broad term. Simply, it means, “meeting the needs of the present without compromising the future.” It can be a differentiator. The customer of this past year wanted a great rate to get away. But the discerning customers that will come this summer want to know that we care about the environment, treat our guests with respect and are easy to find. Knowing a customer and providing “wow” customer service earns us loyal customers and creates customer equity. This is even more important now that guests have returned to travel and may or may not have returned to their former hotel of choice.
The 6-Step Shortcut to Success
This can be implemented in one week if carefully orchestrated:
1. There are fewer employees willing to work in our industry now and we must update our personnel policies and orientation checklist and ensure compliance with our laws. Establishing training protocols, labor forecasting and scheduling systems are helpful. A good training program is paramount and includes the Four Step Method – preparing the worker by explaining the tasks, showing them how to do those tasks, allowing the worker to demonstrate understanding of the tasks and then providing feedback.
2. A Maintenance Checklist contains a comprehensive list that identifies each fixture, piece of furniture and equipment in the guest room. Twenty-five percent of the rooms should be inspected for necessary repairs each month of the year – this ensures that every room will be completely checked three times a year. If used in conjunction with a “deep-cleaning” program, every room should be maintained in near-perfect condition.
3. Atmosphere in the food and beverage area must be checked daily for lighting, background music, cleanliness, and service staff experience. Menu design for appearance and profit, purchasing systems to ensure quality, and cost control and pictures of food items and recipes for kitchen team members are all critical. Keeping all transactions contactless is the preferred way now.
4. Sanitation is perhaps the biggest concern of travelers today. Using disinfecting cleaning supplies coupled with diligence and training will keep our public spaces clean for the front and back of the house. When a guest walks into our hotels this summer, they will be pleased to see some of the benefits of the pandemic like impeccably clean lobbies and guest rooms yet no signs that say “guests must wear a mask.”
5. A great website that appears just as well on mobile devices, coupled with a social media platform presence will keep us on top of today’s digital nomad as well as those families who have not seen each other in over a year.
6. Revenue Management success will come from abandoning any reliance on artificial intelligence. These revenue management systems rely on history. What kind of history might we possibly have?
On again, off again travel restrictions, no business travel, no group business – go with your gut now that corporate business has been replaced with leisure! Raise those rates to meet pent up demand and if your revenue manager says something that doesn’t make sense, question it!
Let’s get our PPP loans forgiven, earn some tax credits and manage cash for profits instead of survival – to a phenomenal summer, one that will give us a shot in the arm that we will enjoy rather than a shot that protects us from a virus!
The Current State Of The Hospitality Industry
Where is the Hospitality Industry as of Spring 2021?
Current conditions in the state of the hospitality industry include leisure travel, employee challenges and reinvented guest programming.
While I do not know how we are going to pay for the government spending plans, I do know that in the short-term, we will see huge growth in gross domestic product with some forecasters projecting over 6% for this year. Lenders are back in the game and traffic on the roads seems to me like an increase in business overall. To date, all of the hotel business, by and large, is leisure business. Longer weekends have been created by travelers who are working remote on Fridays and Mondays.
Leisure Travel Demand
What is missing from the travel growth is still business travel, group meetings and international travel. Those hotels and markets that rely on these sectors are still likely a year away from a meaningful recovery. The pent-up leisure demand is here to stay due to consumer confidence.
This is based on “revenge travel” as well as savings and vaccine success to date. Business travel will begin to improve this fall but there will be some travel budget cuts from many companies. Group and convention business will be based on meeting restrictions in each market area and international business is a year away. If business is generally coming back, what is not? Employees.
Employees Challenges
I have been in the hotel industry over 40 years and have never seen the employment challenges we have today. Did the pandemic do this to us? It’s not that simple. In March, 2020, I had the opportunity to meet with all of our employees at a meeting. I called the meeting as soon as the pandemic was announced to advise our team of what our plan was. Unfortunately, we furloughed all line employees on that day.
Having been through myriad crises including fires, bomb threats, etc. I still felt shocked that I had to let our staff go. We had no revenue at all so I had a fiduciary responsibility to make the tough decision. This has not been a fun ride.
Retention
Fast forward a little over one year to Spring 2021 and now we are struggling to bring back those same employees. Some of those employees sought employment in other industries. Others found jobs at hotels that had recovered more quickly like limited-service hotels in suburban markets that had felt less pandemic impact. Others were afraid of the virus due to underlying health concerns, some chose unemployment and others had child-care responsibilities due to closed schools.
To succeed with our most valuable assets, we have to use caution to not overload our employees with extra responsibilities without rewarding them. This might be a good time for nice bonus checks and raises for those who have worked hard for the entire pandemic. With many other industries offering better benefit packages and salaries, we need to compete with these industries and look to become more effective and efficient. As Peter Drucker explained years ago, there is a difference between these. “Efficiency is doing things right; effectiveness is doing the right things.”
Reinvented Guest Programming
We must change the way we take care of our guests. It’s not less service, it is more of what they want. As an example, some guests want daily housekeeping. If we have to charge for that, either in the rate or as a surcharge, that is okay. Reorganizing our priorities is not a sin. Doing nothing is dangerous.
Let’s use technology and reorganization to become more effective. A good example is providing meeting planners with a hybrid tool for meetings. We are investing in Cvent to drive more small meetings business and Zoom to provide the technology needed to host meetings.
Technology
Technology vendors can help us in many ways and while technology will not replace jobs, it can reduce the load on management. In our case, we have outsourced accounting, human resources and revenue management. All of those tasks were taking managers away from their responsibility to ensure that guests receive service. Kalibri Labs adds huge value to revenue management and analytics.
Guest Interactions With Hotel Managers
I have found our managers are now on the frontline, unburdened with sitting at their desk keystroking rate changes, suffering through paperwork overload and crunching numbers to get income statements done. It is time for us to be creative about our future. Let’s talk to our guests and find out what each of them wants today. We have decided to provide more things to do for our guests such as:
- Beer, wine and liquor tastings
- Happy Hour programming with great appetizers from our chef
- Unique grab-and-go product offerings for breakfast, lunch and dinner
The bottom line is that we must ensure that we optimize revenues and expenses to return to profitability. We are a great service industry that can outperform short-term rentals, overcome new supply and adapt to changes in technology and market trends. To the recovery!