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Hospitality and the Coronavirus – Accommodating the Unpredictable

Industry leaders from Mews, Duetto, STR, OTA Insights, Catala Consulting and more came together last week to discuss the current situation for hotels and provide advice and insight on how to best move forward.  

The two-hour webinar, which also included input from hoteliers, kicked off with Robin Rossmann, Managing Director at STR, providing a quick overview of the state of play right now.

Rossmann urged the hotels market to come together, stating: “This is not a time to panic but to take careful and considered decisions. We are in uncharted territory. Never before have se ween an environment in which hotels have had to close.”

Providing data from around the world, Rossmann showed how occupancy declines have been impacted, with STR data for occupancy % change as at week ending 21 March 2020, showing that mainland China is no longer the biggest decline at -72%. Most European countries are now seeing year-on-year occupancy drops of more than -80%.Rossmann stated that Europe is trailing China hotel trends by one month.

Comparing the current crisis with the global economic downturn of 2008/9 and the fallout of 9/11, Rossmann said Covid-19 is “The most significant challenge we have ever had to face as an industry.”

STR data shows that in China, as cases have been controlled, there has been a slow gradual increase in recovery from 10% to above 20%. And that, as off 25 March, 87% of hotels in China were open again.  

Provide flexibility to customers

Looking ahead, the STR data showed that people are still making bookings in the medium to long-term. With Rossmann saying that hotels should leave this inventory open and yielding, “providing flexibility to customers.”

He concluded with:

1. Coronavirus is having a devastating impact on our industry

Hotels are having no choice but to close

Some may be re-purposed for the humanitarian effort

How long they stay closed for depends on how long the virus persists

2. Forecast scenarios have worsened significantly

Most economists now expecting a global recession

Length and depth again dependent on virus… and government intervention

The big question is will this have a long-term impact on travel behaviour?

3. What can you do now

Don’t panic – we will bounce back

Plan for the summer / second half of the year

Look after each other

Remember this is about lives, not numbers

On a positive note, Rossmann did tell everyone on the webinar to “Look forward to a fantastic 2021.” Let’s hope so. 

Looking forward

Angelika Sharma, Senior Solutions Consultant, OTA Insight, talked about how hotels are reacting and what rate adjustments are happening in the market.  

Echoing what Rossmann was saying about mid and long-term booking windows, Sharma said that hotels don’t appear to be closing inventory for very long periods of time. She recommended hotels monitor what their customers are doing – are they cancelling or postponing?

Sharma provided a snapshot of how some international markets are reacting. In the US, she said OTA Insights was seeing price adjustments for June from the San Diego market, pointing to a faith in business returning to the American west coast. In Orlando, with Disney now shut until 19 April, hotels are fielding a somewhat positive outlook for May and June.

Tipping point

Thibault Catala, Founder & Managing Director, Catala Consulting, said that “We are currently at a tipping point, it is crucial to react and take the right decisions.”

He offered a 7-point action plan:

  1. This is not the time to panic. Focus on what you can control.
  2. Don’t drop your rates. This will lead to a ‘race to the bottom’. Instead offer deals such as 3 for 2, or added values such as free breakfasts.
  3. Empathy and kindness always pay. Guests are looking for flexibility. Enable them to book now, cancel later; remove your non-refundable rates; encourage change of dates rather than full cancellations.
  4. Focus on your domestic market. This is the last market to drop and first one to reappear. Communication is key. Consider geotargeted SEO, SEM; newsletter communication (CRM); and staycation packages.
  5. Look for diversification. Don’t put all your eggs into one basket in terms of segmentation and distribution. Explore new channels, focus on transient (retail and discount), and in lockdown consider what you can offer to healthcare workers, patients, government, etc.
  6. Be creative with your revenue streams. For example, open a ghost restaurant and do delivery.
  7. Contingency plan – optimise the bottom line when the top line is forecasted to short fall. Adjust costs accordingly (non-essential spend, labour costs, floors OOO, vacations); and seek government help and support.

Catala pushed home the importance of being ready for the travel boom. “Don’t give up on 2020 and be ready to bounce back,” he told the webinar participants.

Refocus your forecast

And Duetto’s Philip Niemann, Group Vice President, APAC, offered his advice on how to drive the right decisions to ride out the storm. Niemann recounted his experiences working in Asia during the SARS epidemic and the Bangkok protests, when his hotel dropped to 3% occupancy.

He explained how Duetto can be adjusted to only focus on the recent past, enabling hotels to react to the crisis rather than to last year’s business patterns.

“Hotels are monitoring this and providing us with feedback of how future trends are progressing. As we move out of this and demand starts to change, and as we hear what is happening in China, as soon as business kicks back in the application helps you ride that curve,” he explained.

He advised hotels in larger cities to collate as much guest information as possible, and market to that loyal following.

“When things return to the ‘new normal’ closer geographic sources of business are probably the ones that are going to travel first. Then start creating excitement for clients further afield. Make sure you have that two prong approach to prepare for the long-term future and not just the immediate,” he advised.


Listen to the whole webinar here: https://www.mews.com/events/hospitality-and-the-coronavirus


 

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