The following article is from the perspective of Marco Benvenuti, co-founder of Duetto.
The COVID-19 pandemic is a black swan event—unprecedented in scale and impact. It is, therefore, difficult to predict what will happen next with any degree of accuracy. However, hoteliers can look back at how the industry dealt with previous downturns and crises to consider what we did right and what we did wrong and learn from our mistakes.
This is an awful time, but we will get through this. Hoteliers who use this time productively and proactively will reap rewards when the recovery comes.
What Hotels Should Not Be Doing
For hotels that are closed or running extremely low occupancies, there is not much to do to optimize present revenue. However, there are many things hoteliers can do to treat guests with fairness and compassion. The guests in hotels today are there because they have a real need—whether they are first responders, essential workers, military, or even those without another place to go. Hoteliers should avoid price gouging and offer a fair minimum rate that protects the hotel’s brand value.
Be Flexible With Cancellations
Customers will remember how brands worked with them during this crisis. Owners who focus on compassion and service rather than profit will be remembered as people and companies who cared. In today’s ultra-networked world, where revenues are made and lost based on a TripAdvisor review, today’s actions will have huge ramifications when the industry shifts into recovery mode.
Give guests options: Do not enforce a blanket cancellation policy. Offer to hold a credit on their booking for future use, and create packages and value-adds to encourage them to postpone rather than cancel. Give them a fair window of opportunity to re-book, such as 12 months, and be prepared to reconsider that timeframe if the current situation continues for longer than anticipated. Communicate with them, offer options, and show you care.
Take Time to Learn From the Past
Travel will come back. But for now, hotels need to take time to review their strategies and improve on them so they are best positioned for recovery.
During the 2008-2009 recession, I worked for Wynn in Las Vegas. At that time, the business was booming, but money was being left on the table. Our yield management department consisted of two people who were still using Excel. We were stuck in the past, making bad pricing decisions, but still reaping record profits.
In 2008, when the downturn hit, these mistakes became apparent. Wynn started investing in technology and bought an automated revenue management solution, a centralized data warehouse, and created a revenue strategy department, incorporating all the different facets of marketing, yielding, and analytics. It had become clear that the old ways of doing things were not going to work in the future.
The industry is in a similar situation right now after having enjoyed 10 years of RevPAR growth. Before COVID-19, 2020 was already predicted to be the first stagnant year in a decade, but now STR is predicting a 50 percent decline in RevPAR for the year.
The hotel companies that are going to come out of this stronger are the ones that are going to use this time to make the right decisions and the right investments. If you have an RMS, use it—play with different scenarios, run different reports, fully understand its capabilities. Talk to vendors, learn more about what you can do, and encourage your team to spend more time in the application. And if you haven’t built out your technology yet, now is the perfect time to start researching and trialing new solutions.
Staying Ahead in Recovery
This pandemic and economic crisis will pass. Hotels will re-open and welcome guests once more. How should a hotel prepare to reopen and stay ahead of its comp set? Plan ahead—starting now. Make sure that your staffing levels are appropriate. Don’t push low-rate promotions only to gain short-term market share. As the market comes back, create the right digital campaigns and invest money in reaching customers. Have the right technology ready and configured correctly.
Now is the time to reflect, experiment, and try new things. When hoteliers come out of this, there is going to be tremendous innovation. Use this time to prepare for what is coming, because there will be an exciting recovery after the storm.