“Our industry is being tested on all fronts right now,” said David Woolenberg, CEO at Duetto, as he opened the latest One World Webinar.
“We're all going through this as a global community. We're in our homes, maybe not living our normal lives, but we're all finding ways to get through it,” he remarked.
Joining David on the One World webinar on August 6 were Jonathon Liu, Director of Revenue Strategy & Marketing for the UK’s glh Hotels, and Erick Valdespino, Associate Director Pricing & Revenue Management, at Mexico’s Posadas.
Market Reactions
Getting the conversation going, Woolenberg asked each panelist to talk through their current market conditions.
Posadas is the largest hotel brand operating in Mexico. Under normal circumstances, the company has more than 150 hotels with 24,000 hotel rooms in operation. As Mexico begins to open up, the group is seeing increasing demand for its beach properties over its urban hotels.
“Beach destinations are performing a little bit better than the urban ones,” Erick Valdespino confirmed.
He went on to explain how short-term bookings for up to 30 days in advance have been showing signs of recovery for the past three weeks, and that even bookings up to 90 days in advance were recovering a bit. Bookings are slowly starting to improve, but cancellation rates remain high.
“We are running, on average, 60% of cancellations right now, “ Valdespino confirmed. “But we are improving week-on-week. In the beginning of July, we were running at 90% cancellations, now it's 60%, so it’s improving a little.”
In urban markets, Posadas sees a more challenging situation because corporate demand is still paused.
“The truth is that in the main cities here in Mexico, the occupancy level is still with very low. For example, at the end of July, Mexico City was running occupancy of 9%. The beach destinations are running at 27% occupancy. That is the situation right now,” Valdespino said.
In the UK, there’s a similar divide between urban and regional destinations, as Jonathon Liu of glh explained. Much like Posadas, glh is the largest operator in its market, with more than 5,000 rooms in London alone.
“Most of the UK was in lockdown and the hotels closed up until early July, so we've only had a few weeks of operating. Our properties outside of London are doing really well, with our property on the seaside possibly having its best summer ever,” said Liu.
“But unfortunately there's not a lot to do in London so we are really struggling there and of the 15 hotels, we only have two open at this stage.”
Finding Opportunities
According to Liu, having closed hotels has also presented opportunities to work with the teams, build them up and develop new skills.
In terms of operations, Liu and his team have re-engineered their whole organization. “We've streamlined our reporting. We've actually assigned the right accountabilities to the right people and really tried to tighten up and make our operation as efficient as possible and really have a focus back on the customer and spending as much time interacting with the customer, rather than interacting with ourselves and chasing our tails,” Liu explained.
In terms of revenue, glh has placed a new focus on cash flow.
“Beforehand cash flow was never really an issue. So we've had to really look at that, understand that we have no revenue coming in. How do we manage those expenses? And then forecasting from a zero budget of expenses. Making sure that every cent that we invest in marketing or any advertising we're actually going to get a return out of that. So it's made us think more deeply and more targeted and more focused - understanding what gives value to our customers,” Liu remarked.
It’s a similar story in Mexico where Posadas is also watching cash flow.
“We are more aware of the cash flow needs and how to manage in a more efficient way all these expenses and allocate resources. That probably will help us to start recovering a little bit faster,” Valdespino said.
“And on the commercial side we are looking at how we can work together in order to recover a little bit faster than the others,” he added.
Data is also a key focus.
“We're taking more chances. We're trying different things. And really, really being data driven,” said Liu.
“I think the decisions that are coming out from the data are really important because we don't have anything to reference back to. So making sure that, as we're doing things, we’re A/B testing, really looking at what's working, what's not working, improving on that and I think we've become more data driven than before,” Liu added.
For Valdespino, data analytics is also at the forefront of strategy.
“The Duetto application is helping us in order to try to analyze all the data and to review which opportunities are out there in the market and to take advantage of them. We are working on trying to be better than yesterday,” he remarked.
Looking Ahead
Data from our Pulse Report shows that hotels are pacing on average 70% behind last year. But what of the future? Is there light at the end of the pandemic?
“There are still a lot of quarantine restrictions with international travel coming into the UK, particularly from some of our major destinations, like the US,” said Liu from glh.
“We are seeing a little bit more positivity towards the end of the year and coming into the New Year," he continues. "And a lot of our bookings, rather than cancelled have moved into February, March next year, which has been really positive.”
Liu and his team are already making plans to optimize demand toward the end of the year.
“We're really looking to reach out to different partners: attractions or experiences around London, to give customers a real reason to travel to London. I think that's the key. I think everyone wants to travel, and it's having that experience and how we can tie that into a really lovely stay that’s really important,” he explained.
Valdespino sees a similar pattern in terms of demand in Mexico. “What we expect for the remaining part of 2020 is that we still have a slowdown in terms of demand. Our forecast for the remaining part of 2020 is occupancy running at an average of 30%,” he said.
“The good thing is that we see some destinations are performing better. For example, the beach destinations,” he added.
Liu is confident of better times: “There's definitely a pent up demand for travel. People want to get out. I think they've been stuck at home for a long time. Reopening we saw a really strong boost of bookings. So I'm encouraged by seeing some of those numbers coming through and those positive looking signs.”
If you missed this edition of the One World webinar and would still like to listen in on the debate you can catch up on demand. Simply visit: https://www.duettocloud.com/one-world-register-august.