Has the Pandemic Challenged the Status-Quo in the Hospitality Industry?
This blog post explores future trends in consumer behavior, paradigms, digital transformation, and innovative technology from the dramatic acceleration caused by the pandemic. We ask - in a year from now will we be still discussing the same things we did 10 years ago or has the past year shaken off the inertia?
The hospitality industry has always recovered in a crisis time and has ever come out stronger. Hotels have become open to exploring, being creative, solving problems, contacting contactless service, and maintaining health and safety protocols. During the 2008 financial crisis, thousands of people were redundant and desperate to earn a little extra money. Uber and Airbnb, significant travel innovations on smartphones and other devices, helped fulfill people to make extra money. After 9/11, hotels cut their marketing budgets, and OTA stepped up and promised risk-free bookings and picked up the marketing.
What trends would you expect to see in 2021?
During this pandemic, we saw an 84% decline in the travel industry. 2021 will be the year of change and regrowth. Leisure will outperform business travel, and domestic tourism tops international tourism. However, domestic corporate travel is booming in certain countries like Indonesia, Vietnam, and China. Since international borders stay restricted in many countries, hotels and governments encourage residents to support the local and regional businesses with staycations, tourism vouchers, etc. The recovery will be fragmented and messy, but the desire to travel isn't going away. The buying power will shift eastward from 2021 as these markets are much bigger and already ahead of their recovery today - travelers who want to escape reality desire to go overseas. Flights to London to Dubai or even to the Caribbean where there's no such thing as domestic tourism in their market relies primarily on international travelers.
What trends we expect to see down the line are the shift in consumer preference and buying patterns. The destination isn't a top priority when traveling, but travelers' options and experiences are offered to travelers in hotels and destinations. Millennials and Gen Z used to book good hotels and flight deals spontaneously without thinking twice. Now, people are booking with caution. Travelers need to consider border restrictions, pre-booking, travel requirements, and following other health and safety protocols when visiting.
Sensitivity towards over-tourism has been garnering a lot of attention; for instance, 60% of Hawaii citizens say they don't want tourism back on their island. Regenerative tourism is where travelers visit a place and leave it better, the way they found it. Though travel has stopped, living has not, and communities are emerging in new ways. Regenerative tourism focuses on the supply-side, host communities, and ecosystems, rather than just the visitors' needs and wants of the market-demand approach. For example, in 2019, Regenerative Travel is a booking agency promoting 45 eco-resorts spanning from South Africa to Mexico that doesn't just offer accommodation but also protecting natural habitats and ancient monuments to investing in local education, health, and economic development. Tourism New Zealand and Visit Flanders focuses on the economic benefits of travel and focus more on the health and wellbeing of their communities and environment, and offer local experiences. Regenerative tourism plays a vital role in the travel ecosystem. It will shift their attitude towards sustainability and willingness to support businesses trying to make the world a better place. Regenerative tourism is something we're going to be tracking in the coming years.
Before the pandemic, the hospitality industry lagged in digital transformation and resisting change. In-room tablets to mobile self-check-in and check-out and other creative developments in the last decade, innovation is there from chatbots, in-room tablets to mobile self-check-in and check-out. Still, many hoteliers are hesitant to adopt it. Reasons may include high perceived costs, lack of infrastructure, and the uncertainty of new technologies. All hotels desire effective PMS integration with new digital solutions, but hotels are unlikely to adopt technology that can't be integrating with the existing system.
The dramatic acceleration caused by the global pandemic leaped five years forward in consumer, digital implementation, and innovative technology in 8 weeks.
Video calls and messaging had already existed for years. Zoom became an overnight success. Mobile wallets - the shift to mobile was already well underway before the pandemic, driven by the rise of a mobile-first millennial and Gen Z consumer. 84% of young people in China book flights and hotels on phones.
Contactless service will be bigger than ever. Guests want a safe, contactless stay and touchless tech that can be delivered. Oracle hospitality survey found that contactless payments, digital room keys, and digital messaging services were the top factors that make travelers feel more comfortable when they stayed in a hotel during the pandemic. Key-less check-in and digital menus, the virtual concierge was once considered luxury services and have become necessities for hotels to remain relevant. Technology will bring out fundamental changes as we advance.
Staffing levels are likely to decline as almost every aspect of guest service, such as room service, housekeeping, and spa reservations are available through smartphones. Ancillary services will have a more holistic approach. Hotels will increase predictive data analytics tools to personalize guest services, manage demand better, and manage information efficiently.
Restaurants still are reliant on takeaways or delivery. It has left a permeant impact on the dining scene, and restaurants continue to use these methods to keep business going, requiring the hoteliers to become etailers. Traditional marketing practices in this new era needs to undergo a drastic overhaul, supplemented with a greater emphasis on technological tools, data, and analytics.
Event spaces are utilized differently. Whilst demand for weddings and other special occasion celebrations shall sustain, some halls will be converted only to hybrid events to combat the potential drop in business meetings. Marina Bay Sands launched the industry's first "hybrid event broadcast studio design." Hybrid Broadcast Studio, offering live streaming capabilities, broadcast-qualities, and hologram functionalities. Instead of buffets, provide people with individually boxed lunches. There are also early signs of operators converting unutilized spaces to co-working and retail spaces.
Would this require new skill sets to be developed as the industry evolves? Likely, many jobs may never come back. Several others were replaced by technological innovations fostering efficiency or outsourced. Many others a
re requiring not only a change in paradigm but a different skillset. Today, abundant and cost-effective training schemes and skillset enhancement programs help individuals reprogram their careers. Programs such as #SGUnited and MySkillFuture, supported by the government, help people gain necessary knowledge and education through various courses and training programs.
Yes, the pandemic has challenged the status quo in the hospitality industry. Things that we discussed over the past ten years became an overnight reality in less than four months. During closures of properties, hoteliers found temporary solutions digitally and in technology to keep the businesses afloat in the long-run. Providing holistic and soulful experience without maintaining the traditional industry lines in the process; being adaptive is key to success in this fast-moving world. By finding solutions and recovering together as a community, travel will recover by 2023. The good news - the desire for travel isn't going away for anyone, but the need to change the traditional mindset, landscape, and the industry's fabric is ever more essential!
Rev-Mantra management consulting services focus on our clients' most critical issues and opportunities: strategy, marketing (offline/online), distribution, sales representation, and analytics across the service industry and geographies. We bring deep, functional expertise, but are known for our holistic perspective: we capture value across boundaries and between the silos of any organization. We have proven a multiplier effect from optimizing the sum of the parts, not just the individual pieces.