As one of the world’s oldest industries, hospitality has experienced more than its fair share of global disasters. It weathered both the Great Depression and Recession, survived World War II and even overcame the sharp travel decline after 9/11.
For an industry that’s usually so full of passion, inspiration and light, one glance at my LinkedIn feed reveals a grim reality that few of us ever could have imagined. As of early April 2020, nearly 80% of hotel rooms in the U.S. are empty, most hoteliers are estimating revenue losses of more than 50% for the first half of 2020 and unprecedented layoffs are leaving our colleagues and friends without jobs at alarming rates (70% of direct hotel employees have already been laid off or furloughed). The impact on small businesses is equally dire — as an agency that specifically serves the hospitality industry, we are working harder than ever to stay afloat. Simply put, it’s the most devastating crisis that has ever affected the travel and hospitality space.
That said, never have we have been so confident that hoteliers and travel professionals will rise to the occasion. By working together, supporting each other, and making proactive and informed decisions, we are certain that we will not only survive this crisis, but come out even stronger on the other side.
At a time when we could all use some good news, here are five reasons this too shall pass.
1. Upon Recovery, Travel Demand Will Likely Be Higher Than Ever
While nothing is ever guaranteed, it’s hard to imagine a post-pandemic world where people are not desperate to travel again. They’ve been quarantined in their homes for months and have likely had to cancel at least one, if not several, of their planned trips during that time. Not to mention many people are low on morale and looking for ways to find inspiration and joy.
As experts have been quick to point out, the travel industry is poised for an explosive rebound once society returns to normal. How quickly this rebound happens will depend on several factors, including economic recovery and, most importantly, the reversal of unemployment trends. But one thing is certain: Good times will be back, and hotels will likely be some of the biggest beneficiaries.
2. More Hotels Will Likely Embrace Digital
At a time when in-person experiences are impossible, hoteliers have no choice but to turn online in order to keep their brands alive and consumers engaged. We’re not saying hoteliers haven’t already invested significantly into the digital space, but this might be just the impetus an industry that is notoriously resistant to change needed to embrace the digital space once and for all.
We’re already seeing a significant change in mindsets when it comes to digital marketing. To make up for lost time during hotel closures, many hotels are doubling down on their digital efforts to be proactive, whether it’s building new websites, improving their booking engine experience or ramping up content marketing efforts to stay top of mind and connect with future guests. The way things are heading, we believe hotels will be looking at every possible opportunity to differentiate themselves from the competition once we recover — and in the hotel space, that opportunity lies online.
3. Many Hoteliers Have Learned From Past Mistakes
For most hoteliers, especially those in leadership positions, COVID-19 isn’t their first rodeo with a global crisis — they’ve learned the hard way.
What we haven’t seen much of this time around, for instance, is the type of knee-jerk rate-slashing that happened as a result of the 2007-2009 financial crisis. Instead of trying to artificially create demand by plunging rates, hoteliers are instead sacrificing occupancy and holding onto the one thing they can control: pricing. Based on experience, they know that hotels that maintain rates have a much easier (and faster) time recovering from recessions — whereas rate slashers face an upward battle to rebuild profitability.
4. Local Travel May Keep Us Afloat
Even if the lasting psychological effects of COVID-19 scare people away from long-distance travel for a while, the demand for hotel rooms isn’t likely to just disappear into thin air over the next few years. If people are hesitant to travel far, their plans may simply take on a different form. And if we adjust our marketing strategies to target driving and short-distance travelers, most hotels will find consumers (including transient, corporate and group) to keep their hotels profitable while the world regains the courage to travel internationally and long-distance.
5. China Is Already Showing Signs Of Recovery
To finish on a positive note, all we need to do is look to parts of China and its slow-but-steady upturn in travel demand. According to data from STR, mainland China’s hotels reached a 31.8% daily occupancy rate on March 28, an increase from a low of 7.4% in early February. On a smaller scale, Chinese firm Huazhu Group — which operates more than 2,000 hotels in the country — reports that occupancy has reached 62% at its operational properties, up from a single-digit occupancy rate just a couple of weeks ago.
So while the U.S. may still be several months behind China, this is certainly good news and something we can look to for inspiration.
*** In collaboration with Forbes Magazine and Adam Deflorian – CC