Winding down 2020, the HospitalityVIEW working group met to review industry-wide progress as the pandemic wears on and preview 2021 in hospitality innovation.
The meeting was keynoted by Google Industry Travel Lead, Finnbar Cornwall, who drew on proprietary data and insights to set the frame for a discussion that included an analysis of trends in the hotel industry, the current dynamic between brands and the OTAs, and emerging business models that travel providers are adopting.
Some highlights from the discussion include:
Cornwell shared travel data from 2020 that revealed some interesting dynamics. For example, search volumes were described as “K-shaped,” with some travel search categories, such as cruises, falling off dramatically and remaining very low, while others, such as vacation home rentals, are actually up fairly significantly relative to 2019. Searches for car rentals and hotels were still down versus 2019 but have clearly rebounded from their depths.
During the course of 2020, searches for branded hotels fell off significantly more than searches for unbranded hotels, though that is not the whole story. The HospitalityVIEW panel discussed the possible reasons for this, including a geographic skew (for example, branded hotels are more likely to be in urban markets, while unbranded hotels are more likely to be in more remote locations, the latter currently and clearly being favored by leisure travelers).
Reviewing the Data and Looking Ahead
Nearly everything about travel and hospitality changed during 2020, from how hoteliers marketed their properties and delivered service to the metrics the industry uses to evaluate success.
Business travel fell to such an extent that many “business” hotels are now being forced to reposition themselves as leisure destinations, or even temporary workspaces, and adapt their marketing efforts accordingly.
Hotels that have relied on meetings and events are the most significantly impacted. Large meetings may be very slow to recover, though there were different expectations on timing from HospitalityVIEW panelists. The meetings and events landscape will look very different for the foreseeable future—an upcoming HospitalityVIEW panel will investigate precisely this topic.
Euromonitor data shows that a great percentage consumers plan to continue to cut down on non-essential business travel, while many said they plan to permanently work from home if allowed to do so.
While the falloff in business travel clearly hurts the industry, it is not yet clear what the work-from-home effect will be. It is even possible that this could lead to increased travel to hotels, as remote workers look for opportunities for personal connections.
For example, Cornwall cited a Financial Times article with results from New Zealand, whose borders are effectively closed. Sales trips within New Zealand are increasing from their low point, while there is no evidence yet of any lift from remote workers looking to congregate. The HospitalityVIEW panel had a wide range of opinions on the future impact of the increase in remote working.
Google data also revealed some interesting trends in terms of the drivers of travel decisions. Relative to 2019, customers weigh location and accommodation type more heavily and brand loyalty less heavily. Part of this may be geographically driven, as noted above.
However, the panel also noted that this may present an opportunity to better compete for customers. Given the higher “churn” and lower frequency of leisure travelers, it may now be easier to steal customers from competitors who are not engaging them.
Vacation Rentals, OTAs, and the Broader Tech Landscape
The shift from hotels to vacation homes, which is clear in search data as well as bookings, is an obvious result of the pandemic. The panel was uniformly optimistic about the long-term recovery of hotels, including branded hotels, though participants differed in their expected timeframes. Much depends on the ability of OTAs to impact the market in terms of pricing, and bookings. As always, the OTAs remain a central factor in the shape of things to come.
It remains to be seen whether there has been a permanent shift to home rentals away from hotels (this was a hot topic, as the HospitalityVIEW meeting took place immediately after Airbnb’s IPO). One risk to hotel companies is that the pandemic may have triggered some short-term rentals from travelers who previously had little inclination to try a home rental; and research suggests that those who try it tend to like it.
Another result of the pandemic has of course been increased online activity—shopping, gaming, and much more. This may have increased consumers comfort level with technology, and as a result, increased consumer expectations of technology.
The panel was united in its conviction that all travel companies need to provide simple, flexible, and easy-to-use consumer-facing technology in order to survive. In addition, driven by growing labor costs, travel companies need to seek out opportunities for automation wherever possible.
This needs to be balanced with a continued focus on personal connections with customers and guests, meaning that the automation push needs to be geared towards the more transactional and less “personal” activities. One panelist noted that this need for technology innovation will, by necessity, lead to some owner pushback on brand standards, as part of a larger reprioritization effort.
The “opportunity in technology” was also noted as an investment opportunity, resulting in large global investors looking for opportunities to make their mark on this industry through digital startups, supporting alternative accommodations as well as hotels.
As the discussion drew to a close, some panelists offered words of caution about decision-making. One panelist said that the industry risks making “bets” now on trends that may not last. “Everything changes, except human nature.” Many on the panel felt that consumers will largely revert to pre-pandemic behavior shortly after external conditions allow that to happen.
As the group and the industry launch into 2021, change remains the sole constant for hotels.
HospitalityVIEW is a collaborative, diverse working group of global hotel industry C-level executives, powered by IDeaS, the world’s leading provider of revenue management software and services, to tackle the most pressing questions of innovation and disruption in the hospitality industry.
Those in attendance at the December 3, 2020 meeting included: Tom Corcoran, President and CEO, TCOR Hotel Partners; Chris Hemmeter, Principal, Thayer Ventures; Shane O’Flaherty, Global Director—Travel, Transportation & Hospitality, Microsoft; Kristen Richter, Sonder; Dave Roberts, Faculty, Cornell University, School of Hotel Administration; Prakash Shukla, Managing Partner, Wayfare Ventures; Rachel Spasser, Managing Director and Chief Marketing Officer, Accel-AKKR; Ravi Mehrotra, President, Founder, and Chief Scientist, IDeaS; Klaus Kohlmayr, Chief Evangelist, IDeaS; Finnbar Cornwall, Industry Lead, Travel, Google; and Michael Frenkel, MFC PR/Travel Conversations (moderator).