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When Will It Be Over? Planning Your Hotel's Recovery
By Tracy Dong - Exclusive for 4Hoteliers.com
Thursday, 19th August 2021
 

Tracy Dong, IDeaS - Revenue ManagementExclusive Feature: As the COVID-19 pandemic passes eighteen months and hoteliers across the APAC region are faced with ongoing business disruptions, many in the industry are asking the question: When will it be over?.

While no one can accurately predict the course of the post-COVID economic recovery, what is clear is that vaccination rates will play a large role in returning travel to normal levels and allowing hotels to plan for the future.

Although at a global level, countries like the US and UK have started to reopen their economies due to high rates of vaccination, the APAC region lags behind.

Singapore and Maldives, with full vaccination rates reaching 72% and 53.6% are leading the way in this region. However, the majority of APAC countries are further behind with vaccine rates below 30% of the adult population, resulting in restrictive control measures being in place, which will continue to impact tourism and travel.

The timeline for recovery won’t be a straight line and will likely occur in phases. For instance, Tourism Economics’ latest forecast indicates domestic travel will reach 82% of 2019 levels in 2021 and surpass 2019 levels in 2022 by 110%. However, international travel is expected to recover at a slower rate and will only return to 2019 levels by 2024.

To support their own business recovery, hoteliers need to identify their likely phases of recovery and have contingency plans for any temporary interruptions.

A domestic led recovery

Markets where COVID-19 has been effectively managed have seen strong growth in domestic tourism levels. A recent KPMG survey highlighted that in Australia alone, “72 percent (of people) said they would book a (domestic) holiday between July and December 2021.”

Local, or drive, destinations are experiencing recovery ahead of other sectors—with travellers returning to their favourite family location such as holiday parks, regional country towns and national wildlife or heritage areas. Indeed, Australian Tourism Industry Council executive director Simon Westaway said in March that “tourism businesses within three hours’ drive of Australia’s biggest cities were now slowly starting to recover.”

In this new environment, hoteliers should be prepared for shorter lead times and adjusted inventory management. Given that guests are likely to be families or staycation couples, rather than business guests, hotels also need to quickly analyse and adjust their market segment strategies. Product and promotion should focus on family friendly options like interconnecting rooms or flexible room capacities, in-room dining and provide transparency in any extra person or rollaway charges.

Hoteliers can market their offerings via videos, eDMs or social media posts to entice local guests and highlight features, add-on experiences and upgrade options that will enable the guest to make that first “return-to-normal” hotel stay memorable.

Regional travel corridors

Regional travel in the APAC region will restart between countries that have better managed the pandemic, or which have high levels of vaccination. Already initiatives like a potential ‘travel corridor’ between Singapore and Hong Kong have been planned and a ‘travel bubble’ between Australia and New Zealand has been implemented (albeit with some interruptions).

In this phase, guests will come from countries where outbound travel is allowed within the region. Business travel and wholesale Foreign Independent Tour (FIT) segments will slowly return. There’s argument that wholesale groups might return before FITs given to the travel policy in certain countries, as groups are easier to manage following strict travel policies and can travel within designated areas.

Hoteliers need to map out their capacity and manpower resources with the forecasted demand at this phase. There will be significant workforce shortages as hotels and other tourism businesses embark on hiring programs at the same time. Geographic lead campaigns and promotions are critical in this phase. Meanwhile, hoteliers need stay competitive in pricing and offerings but guard their rates and market positioning.

The return of international guests

The last phase of recovery for hotels in the APAC region will likely come from international markets.

In the early stages of any return of international travel, guests are expected to come from regions where people are fully vaccinated and travel intent is high, such as North America.

Given its national economy is heavily reliant on international tourism, Thailand is launching a pilot program to restart international travel to the island of Phuket, called the Phuket Sandbox. This initiative focuses vaccination efforts on locals and workers in Phuket ahead of opening the destination for quarantine-free international travellers who can demonstrate they are fully vaccinated.

As this initiative may likely be replicated in other resort destinations, like Bali, hoteliers should analyse early data from Phuket (like what destinations people are travelling from, what class of rooms are attracting demand, etc.) to help with their own planning.

It will take some time before full international travel returns. As the pandemic subsides and countries reopen, a new post-pandemic phase of travel will begin. While proof of vaccination booster shots may be required and certain restrictions may be present at large-scale events, freedom of movement will underpin a wider recovery for the industry.

In this phase, hoteliers will need to reimagine how to operate. Guest needs will have evolved, and technology has advanced. As a result of the pandemic, hoteliers have learned how to operate with much smaller workforces and lower minimum occupancy thresholds.

To do so effectively, many hotels turned to automated solutions such as revenue management systems, whose predictive forecasting can help guide business decisions in the short and long term. Revenue management enables you to understand demand at the room-type level and make strategic, agile pricing decisions to better maximise revenue as demand levels return.

Plan for the future

No matter what phase of recovery a hotel (and its local market) is in, hoteliers should take this opportunity to reevaluate their organisational capability and structure, exploring ways to achieve higher efficiency and maximising profit margins and total guest value. Those hotels that plan their own recoveries today will ultimately be rewarded in the future.

This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.

Tracy Dong, is a Principal Industry Consultant at IDeaS. For more information on how your hotel can better adapt its revenue management capabilities and commercial strategy to today's uncertain operating environment, please visit: www.ideas.com

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