Exclusive Feature - Hospitality Industry, Post-Pandemic Evolution, Part Two (marketplace, effectiveness, and success).
Trends and brand recognition
Brands are living things. They represent who you are, what you believe in, and how you are perceived by consumers. Brand revitalisation (not necessarily the logo) is a never-ending process. The creation of a strong brand image is essential for success.
Consumer behaviour and spending has been – and will continue to be – altered, and business plans need to adapt to these new circumstances. Many industries have been negatively affected by this pandemic, and unemployment is expected to remain high. Consequently, there will be less disposable income for leisure travel.
The industry can't rely on pre-pandemic strategies. Most will no longer apply in a world of new expectations, new needs, new products, new competition, new booking processes, and so on. Operators will have to figure out a way to stay ahead of what's to come, build new ways to attract customers and gain their loyalty, and, most importantly, learn how to capture a 'larger piece of the pie.' Differentiating from the competition is no longer enough; products and services must be exceptional.
It's not easy to predict the future, but it is anticipated that there will be much more focus on recognised quality products, reliable brands, evidence-based services, overall image, attractive offers, and, of course, perceived value. Many travelers are searching for an excellent service experience and are willing to pay for a quality stay as long as they receive value (high prices for quality experience).
There will be more pre-planning and much less spontaneous purchasing. This is a time to reshape brands and products for new consumers who are becoming more demanding and expect hotels to fulfil their desires (which they consider basic needs). Traditional roles need to be re-assessed and adapted as well.
The 'guesstimation' is that traditional tourism will not return any time soon. Demand for popular destinations (over-tourism) is expected to fall, while demand for greener/less crowded destinations will continue to rise. Travellers don't want the same old; they want something new. They want to explore new and safe destinations.
Selling by segmentation or by channel?
It is a fact that every hotel needs every guest it can get but in a post-pandemic recovery, will we see an evolution in how hotels sell their rooms? By segmentations or by channels? What strategy will be more efficient in identifying sources of business and new revenue streams? Generating demand? Acquiring customers and responding to their needs?
Some shifts are expected, but the discipline of managing the segmentation and revisiting the channel mix will not change. Who are the most discerning customers, and what is their spending power?
Reducing and controlling online distribution costs and taking advantage of new/efficient distribution and technology opportunities are critical for operating an efficient and productive revenue culture. And it is important to remember that, in this industry, there is no winner in a race to the bottom with pricing – a typical and expensive mistake made by many (remember the rule of thumb; “lower rates do not create demand”).
As travel begins its recovery in several countries and destinations, hotels have an opportunity to influence and reshape customers' purchasing habits and create a new wave of brand loyalty to increase direct bookings. Of course, this implies and relies upon clean and updated data, increased direct communication, targeted offers, efficient processes, rapid response, flexibility, and recognition.
Bridging the generational differences
The basic principle in the hospitality industry is to welcome everyone without exception. While this will always remain true, the industry has to do better at adapting to shifting demographics and generational requirements.
That different generations have different likes, dislikes and preferences (needs and wants) is a part of life. Young and older people think and act differently; it's as simple as that. No group is better than the other. We must accept that if you try to please everyone, you risk pleasing no one. It's a delicate balance.
It's a fact that experienced senior generations have the time to travel and more money to spend. Young at heart, they are looking to have selected memorable experiences and want to try new things. They will pay for their experiences without much hesitation and, at present, they are the best spenders.
While younger generations have less spending power, they are extremely socially communicative in the online market and highly influential too. They love to travel and spend on exciting experiences and innovative products. They know what they want and how much they are prepared to spend on it. In the pursuit of individuality, they generally have less patience with outdated and inefficient processes and facilities. Of course, preferences and behaviours will change as they age. (Does this mean there is potential to secure them as lifetime loyal customers?).
The success of a brand relies on understanding the needs and expectations of various demographics, their preferences, expectations and responding with targeted products, facilities, services, and offers.
Particular focus should be placed on studying buying behaviour and facilitating the whole booking process to match. Remember that a brand that unintentionally makes consumers feel they are 'too old' or 'too young' to use a product may risk alienating entire generations. Again, a delicate situation.
Offerings and value
Hotels are seasonal and cyclical, and rate parity across all channels and customers is not feasible. Focus instead on value and what customers want from brands, not what brands want from customers. A successful organisation needs strategies and offerings that appeal to various clients during different periods throughout the year.
Attention has to go to frequent forecasting, pricing strategy, targeted marketing, personalisation, and consistent communication. The creation of credible value perception, quality and consistency are essential for success.
Advanced revenue structure/system
Advanced revenue management (RMS) must be in place. CRS, Metasearch, SEO, GDS, booking engine/direct booking platforms, transparent and engaging website, inventory management, forecasting, yields management, and others are critical to maximising revenue. Are there any areas of untapped potential revenue? Which room types and which segments are most profitable? Operators have to switch their attention and measurements from RevPAR to GOPPAR.
Objective here is to react instantly and intelligently to shifts in market and business conditions.
Can you stop OTAs from displaying wholesale rates? How many contracts have you signed with wholesalers? Can you reduce the number of wholesalers you work with? Are your distribution partners the right fit?
Broader commercial focus; three key hotel functions – Marketing, Sales, and Revenue – have to be coordinated under a strong culture of accountability, responsibility, and profitability. As a suggestion, organisations could consider introducing a Chief Commercial Officer position, (less/no silos), to oversee these three functions – which may help to simplify processes, reduce costs, enhance efficiency, and achieve better results. There should not be any confusion on who leads the revenue process.
Redefine and reimagine loyalty
Clean and current customer data is one of the biggest assets of a hospitality organisation, and it will remain very important. But we have to accept that, in a disruptive pandemic of this dimension, some of the data we have on file may be irrelevant as consumer preferences have shifted dramatically. Every organisation and every market is different, so loyalty can never be one size fits all.
With consumers more willing to try new brands, especially those offering more meaningful experiences than the staid/cookie-cutter hotel products, loyalty is very much up for grabs.
We have to accept that frequent travelers usually belong to multiple points-based programmes, and their loyalty goes to whoever can offer them a relevant and easy solution at a particular point in time (note that points are usually for the mass).
Based on management/ownership priorities and market conditions, each organisation needs to redefine its business objectives and strategies towards loyalty and new potential members. The creation of an efficient customer experience framework is essential to success in this area.
What are the expectations of the new loyal/repeat customers? Points or Brand Loyalty? and can organisations or an individual hotel handle both? and can brands make their offers more relevant with the objective to attract and retain loyal customers?
This is not an easy task. An attractive points/incentive/rewards programme is of interest to many and simpler to handle. But it appears that recognition and personal attention are becoming more important to many customers, and here is where organisations can stand out.
Repeat and/or Loyal customers?
It is so important for organisations to know the reason why customers are returning. It is a fact that location and price normally drive repeat guests while service, facilities and experiences drive loyal guests. Both are of course needed, but which one is more important to you? And what will you do to stop them from leaving for your competitors?
Loyal customers in the post-pandemic world will not fall for standard, old-fashioned marketing gimmicks. Now is the time to wear a creative hat and think of novel solutions.
What new post-pandemic benefits could an organisation offer to loyal customers? Would a 24-hours flexible stay be of interest to members? A more friendly cancellation policy? Lower (and less irritating) charges for ancillary services such as minibar and laundry services?
In principle, we have to seek to solve every point of friction for our important customers. The objective is to achieve loyalty towards the brand, and then towards the rewards.
Remember, customer equity/loyalty is for the long term. A 'forever guest' approach can play a significant role in leading a company to success.
Events and remote working
The pandemic accelerated many developments in the hotel industry, including hybrid meetings and more efficient technology.
Meetings and large conventions may take time to return, and this area of hotel business will face some modifications. As some organisations have had great success with teleworking, hybrid meetings, and virtual technology, aspects of remote work are likely to remain. As such, IT adjustments may be necessary to facilitate this.
Investments in professional and efficient hybrid studios (featuring LED backdrops, built-in cameras and microphones, studio lighting, virtual whiteboards, etc.) will be necessary for business, commercial, and convention hotels seeking to remain competitive.
Once the situation stabilises, demand for social and corporate events is expected to improve gradually, and hotels will need to adapt to the changes and needs of this demanding and important segment.
This is a challenging but interesting time for the industry. For success, owners and operators need to be open, flexible, focused, and willing to adopt a new way forward. However, they must also be cautious not to fall into the trap of doing something just to do something. Change for the sake of change is not planning nor strategising; it is a fast-track to failure.
This is a time for a clear vision supported by a solid plan of action and time-bound measurable targets. A time to invest in people, products, and systems for the future.
Be proactive and stay on top of the trends that are driving the demands of your customers. Stay focused, and don't let distractions get in the way of your objectives and goals.
Working toward success is the final aspiration of caring leaders and operators. Success in this demanding business is normally determined and measured by employee and customer satisfaction, market leadership, operating profit, return on investment, and continuous growth.
I hope that the personal views and opinions I have expressed in this document help you to thrive and reshape your business roadmap towards success.
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.
A 50 year veteran of the Hotel-Hospitality-travel industry with a wealth of experience acquired in 4 Continents, Asia in particular. A long term resident of Hong Kong and Retired Chief Executive Officer of Shangri-La International.
A board member of several large corporations and member of many industry related and quality management organisations. Founder of Angelini Hospitality, providing consultancy and advisory work to developers and hotels-travel-tourism organisations.
Recipient of two Honoris Causa (Doctorate) in Business Administration and in Global Business Leadership, four Lifetime Achievement Awards, the 2006 Corporate Hotelier of the World, Maestro del Lavoro (2014) and of several other recognitions and awards.
Book: Winning Hospitality - Practical advice for sustainable success (Kindle Edition)
In Winning Hospitality, Giovanni Angelini condenses around 60 years of international hospitality experience into tips and advice for hotel operators and owners, senior and young executives, students, teachers, and anyone striving for excellence in the demanding and dynamic world of travel and tourism planning and management.
The text serves as a vital reference for anyone seeking to develop the business activities, teams, brands, skills and hotels necessary to delight guests, customers, employees, and owners alike – today, and for many years to come...