Tim Hentschel, CEO and co-founder of HotelPlanner, studies the impact of the recent Covid-19 outbreak on the hospitality industry and shares what is imperative for the industry to get back on its feet.
Recently, ITB Berlin was cancelled for the first time in its 58-year run due to concerns over the Covid-19 outbreak. While the impact of the virus has proven to be detrimental to the hospitality industry, the ultimate outcome of what happens to our industry remains largely unknown.
HotelPlanner has seen its fair share of how breaking news and trends have had an impact on the travel landscape, having experienced the effect of SARS in 2008, as well as the 9/11 attacks. Through these trying times, it becomes clear what the industry needs to do to survive this outbreak, and even better, come out stronger on the other end.
Be prepared, and know what to expect
What we think will happen in the near future: The hospitality industry will continue to consolidate under global brands that use technology to see trends first and act fast to adapt to them.
For instance, once we saw bookings in China drop by 80 per cent, while Asia fell to under 50 per cent occupancy, we knew the same was going to happen to hotels in Europe and North America. We quickly made adjustments to our expenses in line with new forecasts.
There will be regional travel companies that are slow to react and will either go out of business or be acquired. Industry first-movers will also either acquire smaller companies that are not prepared for this crisis or take market share from them.
Win travellers back with two key strategies
To ensure that hotels can win travellers back, there are two key strategies to employ.
First, guests need to feel safe. HotelPlanner conducted a survey recently to find out what keeps people from travelling during these times, and the top two responses indicate that it stems from a fear of getting the virus, as well as a fear of being quarantined.
Hotels can combat that fear by conducting temperature screening for all guests, staff, suppliers, contractors, and other associates; getting guests to complete a travel and health declaration and giving them a set of surgical masks and sanitisers upon check-in; as well as sanitising public areas and all guestroom door handles regularly.
The second, and more important thing to do, is to provide customers with the flexibility to change their plans. Monitoring the outbreak, it is clear that travel plans can change in an instant. Not allowing discounted bookings, as well as the flexibility for date changes and cancellations are no longer practical in today’s world where travel plans can be disrupted by government restrictions and other external factors.
Trying to go after customers for extra cash to bolster your revenue will hurt your brand’s reputation and turn repeat customers away. These properties should consider consulting their business insurance brokers instead, which should cover them for business interruptions like the outbreak.
Government stimulus is crucial to tide the industry through tough times
In the US, after multiple calls from our teams pushing for government stimulus in the industry, the White House has reacted positively. Larry Kudlow, president Donald Trump’s top advisor, indicated the possibility of economic aids, and we are optimistic that it can benefit both large and small companies. With this, we can avoid massive layoffs, unemployment will stay low, and the market will continue to grow as more 401k money continues to flow into the market.
It’s tougher to push a central policy for recovery in Asia. Similar to South America, Asia is made up of small countries with very different styles of governments and free markets.
Singapore has the best system in place to implement a central stimulus for the hospitality market. However, beyond the financial support package for the tourism sector, the industry needs more than US$8 billion. The industry needs crisis loans and grants, while citizens need tax credits to spend on staycations – to get locals back int hotels since it will be months before the majority of foreign tourists will return.
Singapore has been great at taking care of people with the virus and tracking the viruses’ spread to reduce future infections. Hopefully, the republic will allow for government intervention to inject financial stimulus into the struggling hospitality businesses.