COVID crisis has disrupted the travel & hospitality industry in a way that no one could have imagined. Half the year is over, and the industry seems further doomed with the second wave of Covid 19 crashing down any left-over hopes. The hoteliers have no choice but to brainstorm new out-of-the-box ideas to find ways to survive. Introducing innovations for strategic, financial, and operational survival has become the new need of the hour.
Leisure travel had picked up initially post the first wave of the pandemic, but that has completely evaporated after the second wave with fear looming across all sections of human society. It is estimated the business travel may permanently reduce by 50% post-pandemic, and that is almost 60-70% of the total available hotel inventory available in the market.
Technology to play a key role in the recovery of the hospitality industry
Hotels will need to convert a lot of fixed costs into variable costs and focus on efficiency, automation, and technology as core USPs to survive through the crisis. All inputs that go into running a hotel, including real-estate, manpower, energy, supplies will have to be optimized and automated to ensure more can be achieved from less.
Since manpower is one of the most important inputs to hotels, hotels will need to reduce staff to room ratios to focus more on profitability and efficiency. Multi-skilling of staff and use of systems to track manpower performance in all areas (like housekeeping, reception, kitchen) will ensure that staff requirements are reduced.
Most hotels in the future will run automated receptions, powered by mobile, kiosks, where routine operations like check-in, checkout, and payments will be done automatically using digital systems. The door keys will be seamlessly connected to these kiosks, in a way that we can provide a face-less, contactless check-in and checkout experience to guests.
Guests will have a seamless/digital experience while staying at the hotel. Whether it is a travel desk, room service, or concierge – digital applications run on mobile apps or tablets will be used to personalize, automate the guest experiences to make it seamless. Augmented reality will be used inside rooms, with an all-in-one connected system that connects all touch-points including entertainment systems, lights, bathrooms, etc.
Energy costs like electricity and water can be minimized using IOT devices and energy-saving instruments that run on a ‘use as you need’ basis instead of large centralized units with high fixed costs. There will be more personalization and automation in using ACs, Heaters, Lights, and other electronic systems.
Operations & Marketing:
Reservations and back-office teams that perform repetitive tasks can be minimized by introducing automated All In One PMS systems. Chatbots can be used to communicate with guests to minimize CRM activity. Hotels will start using cloud-based integrated Property Management Systems that perform all operations & marketing tasks under one umbrella. It will reduce the need for periodic backup and maintenance. Large sales & marketing teams that service corporates and travel agents can be trimmed down by introducing B2B marketplaces where suppliers and customers can transact directly.
Sources of business
Customers will be more discerning and will have a lot more variety of options to choose from. Most customers will either book hotel rooms from Online Travel Agencies, or directly on hotel websites. The booking window of customers will reduce drastically, as most of them will be booking rooms last minute as an impulse purchase. Hotels will focus their efforts on direct booking channels including their own websites to reduce distribution costs. Discounting rates by OTAs to grab market share will reduce and special focus may go to meta-search platforms like Google who will be able to direct customer traffic directly on hotel websites, instead of having to pay high commissions to OTAs.
Cleanliness, hygiene will come out as a major takeaway from the covid crisis. Hotels will be designed to keep contact-less touchpoints and hygiene standards that can be maintained in a way that minimizes guest apprehension towards viruses and other contaminants.
Many hotels may need to reevaluate business units like restaurants, bars, spas, and gyms which have high operating costs but may not necessarily be profitable. Some of them may need to be outsourced to specialized operators who have economies of scale. Banks, PE, and VC funds will chase profitable, sustainable projects that may survive the test of time. Most landlords and asset owners will embrace models like revenue share & management contracts instead of lease and outright sales.
Many markets will not see new flooding of hotels because of a reduction in profitability, especially in the business segment. The leisure segment may still see new supply coming in.
Hotels that are able to overcome and sustain through the crisis may come out as winners as the demand will return, but it may be a long way off, especially in markets where the second wave of Covid has hit very hard.