Moderated by Chris Nelson, President of Riegel | T-Y Group & Harbor Linen, this lively discussion ranged across consumer drivers and marketing strategies. Part 1 of our recap will cover the topics related to emerging trends and what’s immediately ahead for the hospitality industry. Part 2 will explore marketing to industry businesses as well as retail customers.
Q: Where Are We Right Now?
Hospitality losses in 2020 were staggering. Compare them to the dot.com bubble burst or 9/11, when losses were 10 to 20%, or the Great Recession at 30 to 40%. For many businesses, COVID losses were 100%.
But industry news in the last three weeks has been positive. We’re already seeing spikes in bookings for summer and vacation travel. It will be “revenge travel” — people saying, the hell with it, we’ve waited a whole year, we’re going. Not just local drive-to destinations, but world travel.
Q: So, Leisure Travel Will Recover First? What About Business Travel?
Business travelers are road warriors, and they want to get back on the road. They know that successful client relationships depend on sitting down face to face over a cup of coffee, not in a Zoom meeting. When they see that tourism is back and the vaccine is available, they’ll be ready to go.
Though it will be slower than leisure, I expect business travel to come back 60 to 70% by late summer. Large conventions and conferences may still hold back. People will say, “Let someone else be the guinea pig,” so attendance would be low.
Q: When Will Business Travel To The Biggest Downturn Cities Recover?
You’re talking about major cities like New York, Chicago, Miami and San Francisco. They will be slowest to recover because of the work-from-home shift. If you wanted to visit someone who normally works in Manhattan, he would tell you, “I’m working in the Hamptons now.”
However, these are international hubs, they aren’t going away. Asians, Russians and Middle Easterners still want a safe place to put their money and those big cities are all they know. Also, real estate prices have dropped, and that’s going to lure people back to take advantage of the bargains. I predict we’ll see a decent recovery by Labor Day.
Q: How Will Hospitality Businesses Survive The Wait?
Hotels that are financially sound are getting by. Those that are overextended or financially engineered will probably fail.
For restaurants, the picture is a bit different — their margins are getting even smaller. The big 2020 trends toward more casual dining, takeout and self serve will continue. Yet restaurants must focus on quality more than ever, though the setting may not have the traditional formality of fine dining.
Q: We Hear About The Shrinking Middle Class Affecting Travel. How Will It Impact Room Rates And Hotel Budgets?
People who travel because it’s cheap will just stay home. Both hotel and airfare rates are more affordable right now, but that will end with the summer resurgence. Occupancy will come back slowly, and hotels should be able to maintain rate integrity.
Q: How will the raise in minimum wage affect recovery?
Obviously, the margins won’t allow enough markup to offset increased labor costs. Customers wouldn’t tolerate such a steep price increase. Full service restaurants will be more affected by this than hotels.
We need to look for innovative ways to improve efficiency. Some of what we’re spending on now will go away, such as COVID sanitation and disposable everything. We’ll go back to the pre-COVID trend of sustainable products and strategies, which cost less than single use items.
Q: What about in-room personal care amenities like wall-mount dispensers? Will they return to pre-COVID norms?
Wall-mount is the future because of ecological concerns as well as cost savings. Some states, such as California, already have laws about it, and more will surely come.
Q: Will quality need to be cut back during low occupancy?
No, that’s short-sighted. Guests won’t come back post-COVID if they were uncomfortable during their stay. Remember the saying, “penny wise and pound foolish.” Saving a few pennies now could cost you many pounds [dollars] later.
Q: What other travel trends do you see ahead?
A: Travel will be more thoughtful and purposeful. In recent years, we’ve seen a focus on Instagrammable moments and “shock and awe” such as the gilded wooly mammoth skeleton displayed at Miami Beach’s Faena Hotel.
As long as travel restrictions and challenges remain, people will reassess their priorities — what they ultimately want to get out of the trip.
In Part 2, Bashar Wali will share his thoughts and tips on sales and marketing in the hospitality industry.
Need Help With Your Hotel Business Reopening?
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