New Rules to be Market Ready

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June 15, 2020
Feature Article
Kathleen Cullen - kcullen@phgconsulting.com

A New Marketplace

There’s no doubt about it. Travel will rebound. People have not changed in their fundamental need to see and explore the world. However, it is difficult to imagine what travel will look like once the hospitality industry ramps back up. For now, no one can predict when or how this pandemic will pass. What we do know is that the travel landscape will be different, and those hoteliers who are ready to operate in the new normal will come out on top. Perhaps it’s also a good time for hoteliers to reset strategies and adjust to a new normal. Amidst the uncertainty, there is some good news on the horizon. On April 7, Preferred Hotels & Resorts surveyed its I Prefer Members, inviting them to share their travel aspirations and provide insight to where and when they may travel once restrictions are lifted.

In total, 3,700 members participated in the survey and the responses are very promising:

• They want to travel, with 71% of respondents reporting that they’ll book a trip in 2020, most of whom will do so as soon as travel restrictions are lifted.

• They want to see the world, as more than half of respondents highlighted their intention to travel internationally, with 43% saying they’ll travel to another continent.

• More than 80% are ready to fly.

• They Believe in Travel. 

Hoteliers should have a clear focus on how to take advantage and align if they are expected to dominate when travel resumes. Flexibility will be key. Travelers will seek drive markets and these markets will lead. Health and wellness will be paramount. There will be an increased use of, and investment in technology solutions for guest communication and servicing. Hoteliers should be thinking about how to open strong and standout better than ever before. 

Pricing in the New World Hotel pricing is a complex endeavor. Hoteliers are responsible for pricing all available products such as room types, function space, cabana rentals and golf tee-off times, spa treatments and so on. Historically, pricing was determined based on history, pace and competitive set. What happens now when some hotels are opening, and some are not opening? What happens when services and products that used to be available within a marketplace are no longer available? How should hoteliers be pricing their products and services? And what factors are going to play an integral part of pricing considerations? Some hoteliers have experience thinking through scenarios caused by natural disasters in localized areas. What we are facing is a disaster of a global scale. We are in uncharted territory and experiencing unprecedented times right now. The world stopped traveling. Travel will recover and the world will start exploring again, but new thinking and new methodology is critical in getting started again. Hoteliers will need to take a step back and re-evaluate their entire strategy and re-position themselves in a new marketplace

The Changing Traveler Expectations 

Understanding new expectations of the traveler will be crucial. Guests who travel in a post-COVID-19 world will do so with a new lens and shifted priorities. While cleanliness has always been important, expectations in this realm will be a top factor. Hotels will need to demonstrate measures to ensure the cleanliness of their facilities and the safety of their guests. Messaging will be significant for the consumer to travel again and feel safe. PR and marketing teams should promote the hotel’s cleaning regiments and communicate these to guests through unique ways.

Safety and security is a top priority, but perhaps at a completely new level. Will hotels gain in popularity over the (somewhat) controversial alternative lodging options, such as short-term rentals? The short-term rentals could struggle to standardize and communicate their sanitizing process, potentially leading to more comfort and confidence in a hotel setting. Conversely, short-term rentals have the ability to offer distinct social distancing.

Governmental regulations will change the nature of travel, with potential ebbs and flows of travel policies based on jurisdiction. Policies may dictate staff and guest interactions. Getting revenues back will be priority, but every hotelier will need to do their part as a good citizen.

Once travel restrictions are lifted, consumers will likely be very ready to hop into a car for a getaway. Hotels in outdoor locations that offer an abundance of wide-open space and fresh air may see the quickest reservations activity. Booking restrictions flexibility will be an expectation while rebuilding travel, especially while airlines continue providing flexible policies. It will take time for stringent booking requirements to become acceptable again.

And let’s face it, travelers will be shopping for the best rate or the best deal they can find. They will expect it. How hoteliers respond and handle this, while balancing new safety and sanitation communication efforts, will be some of the most important factors as the industry recovers from this pandemic. Pricing and trust in this new world will be integral to this process.

Benchmarking in the New Normal 

Much of how hotels previously determined their strategies was based upon benchmarking their own product and services against other hotels in the same market or similar destinations. But what happens when hotels begin opening again? What happens if not all hotels come back online at the same time? Or, not at all? Re-opening based on past strategies will not work. One of the first things hoteliers should understand are new benchmarking opportunities, as this will help identify the new competitive landscape and will shape your go-to-market strategies. 

Ensure ownership alignment in redefining the hotel’s competitive set for new benchmarking purposes. The new set may or may not be permanent but, for now, it will be important in understanding changes in competition and product offerings within the marketplace. This exercise may need to be adjusted as the marketplace evolves.

What are some changes in the marketplace outside of hotels? Research local changes and other demand drivers that may no longer be available or have adjusted their offerings. How does this impact your hotel? Identify any local partnerships that may need to be adjusted. Is there an opportunity to supplement anything? Are you located in a destination where your hotel relied on local shops providing services and products to your guests?

Consider what will be top of mind for travelers. How will shifting traveler needs, choices and desires impact what you offer? Did the marketplace cater to a specific consumer or demographic group? How might this differ in the future? And, how can you position your hotel to be ready?


Once you have a good understanding of the new marketplace, available products and services, it’s time to select your new competitive set so that you can properly benchmark your hotel. This is where it will be important to understand what now differentiates your hotel and where you can potentially fill in gaps in the marketplace. Also consider that you may make changes to your own products and services that differ from your competition, as this will impact how consumers judge your value against a set of other hotels. 

Understanding the specific amenities and services of each hotel will require calling your colleagues directly. Take the time to get the most accurate information and offerings updated on your website. Following is a simplified method to benchmark your hotel against potential competitors. Pick the hotels you believe will be the best benchmarks, and the specific criteria that will be important in your marketplace. One important consideration is to be realistic in this process of selecting your competitors. Do not to misalign your hotel, as this can cause long-term problems and set your hotel up for failure when assessing successes. 

Market Projections 

Upon completion of defining benchmarking and competitive sets exercise, it is time to review market projections, which will be difficult due to so many unknowns. We’ve created a list of 10 important questions to consider on market projections and posted it online. (www.hospitalityupgrade.com/10questions-for-market-projects-postcovid ) Most hotels are already reforecasting hotel projections for 2020 and 2021. Many are setting up different models based on new assumptions when travel resumes. However, this can only be done effectively with a true understanding of the new travel landscape and how it impacts your hotel. Redefining your hotel’s strategy will be critical. It will be important to speak with ownership and understand their goals for the hotel, as the goals may have changed.

Some questions are:
What are the expectations of hotel ownership?
What are the short- and long-term goals?
What has been promised to the bank?
Is there a strategy to drive ADR where the market permits?
Is there a strategy to gain market share in each individual segment?

Do you have an overall profit-driven strategy?

Equally as important is defining and projecting what a hotel’s staffing model should look like.
Consider additionally how bonus goals should be handled, as no one will likely be able to achieve the original goals previously set.

• How should overall bonus programs be handled for the remainder of the year?

• How should sales bonus programs be handled for the remainder of the year?

• How do you ensure buy-in from associates with impacted goals?

• How will this impact planning for 2021?

Hotels that properly prepare and take care of their biggest asset – the human talent – will be remembered, and many will be loyal to those companies. Every hotel will be eager to gain top talent.  

Pricing in the New World 

Hotel pricing is a complex endeavor. Hoteliers are responsible for pricing all available products such as room types, function space, cabana rentals and golf tee-off times, spa treatments and so on. Historically, pricing was determined based on history, pace and competitive set.

What happens now when some hotels are opening, and some are not opening? What happens when services and products that used to be available within a marketplace are no longer available? How should hoteliers be pricing their products and services? And what factors are going to play an integral part of pricing considerations? 

Some hoteliers have experience thinking through scenarios caused by natural disasters in localized areas. What we are facing is a disaster of a global scale. We are in uncharted territory and experiencing unprecedented times right now. The world stopped traveling. Travel will recover and the world will start exploring again, but new thinking and new methodology is critical in getting started again. Hoteliers will need to take a step back and re-evaluate their entire strategy and re-position themselves in a new marketplace.

New Business Mix

Defining a mix of business is one of the byproducts of developing a cohesive revenue strategy. As hotels review their revenue strategy, identifying a new business mix will also be needed. Review each sub-segment individually and assess how each may respond in a post COVID-19 world.

Identifying a new business mix will require thinking differently. Pricing by segment will be a new world. This is especially true for any segments previously not considered as part of the mix due to price. It will be important to have an open mind in determining the new strategies for each segment.

• Think bigger picture. View strategies and policies through a macro lens.

• Avoid holding onto an ideal higher rate, turning down lower rated segments just to then sell inventory via OTA sites last minute.

• Do not walk away from any RFP negotiation; get creative in how to manage and incorporate accounts into the mix so that you effectively build base.

• Group will take some time to come back. Think about how to replace group business, which may mean you may have to expand into areas previously excluded.

• Explore options with niche players such as FIT, which typically offers longer lengths of stay and books further in advance.

• Consider corporate accounts at various rates. For those lower rated accounts, think about how to make it a mutually beneficial arrangement.

• Understand how the hotel can gain the biggest reach. What partners should be leveraged to help the hotel expand to new audiences and win clientele? 

Optimizing Technology Efficiencies

Most hoteliers realize the benefits technology offers through cost savings and work efficiencies, guest communication and revenue optimization. For those who still rely on manual processes for daily needs in key areas, teams are consumed with manual, menial tasks preventing them from providing superior guest service. Struggling with technology or implementing workarounds becomes a daily source of frustration for staff. 

In addition to time wasted by workflow interruption, it allows for inconsistencies, discrepancies, and overall data unreliability. It’s in the hotel’s best interest to ensure the system versions are all up-to-date, system integrations are implemented and working properly, and that each system is configured with the ideal optimization, understanding its impact on each of the related systems. How a hotel’s CRS and PMS are each uniquely set up directly impacts the revenue management processes (both manual and automated processes).

Technology in the hotel world is still fragmented with many systems for different needs. The configuration and use of each one impacts the output and success of the others, impacting the hotel’s optimization and profitability. Investing in the right tools is key, but investing in the right tools, proper training and holistic configuration unique to the hotel’s needs is a must. Be sure the right resources are dedicated to understanding the optimal system configuration and functionality based on the specific needs of the hotel. The key takeaway in Figure 2 is that all the decisions and details in the configuration will ultimately impact the decision output and revenue strategy. 

Staffing for Success 

There’s no better time to re-evaluate how your team is structured. Do away with traditional organizational hierarchies. Change the vernacular from the traditional sales, marketing and revenue teams and redesign to a winning commercial team. Don’t focus on head count, instead, consider what the hotel will need to operate and win in this new world. What are the top talents, capabilities, skills and knowledge that are needed? Identify segments that have the biggest opportunities. Understand the new forms of engagement with guests and agencies booking hotels. Rethink how buyers want to engage with hotels. Recognize and redeploy resources to cater to the new forms of engagement. It is most certainly going to look different from times past. More knowledge and expertise in digital are essential. 

Data analytics expertise, comfort with new technology, and emerging solutions will be vital. Perhaps more meetings and site inspections will begin using virtual meeting technology. Effectively leverage these tools to display your property and offerings. Financial resources will also be different for hotels. Hoteliers will need to be more creative and think about other ways to accomplish their goals with a depressed staffing budget. Think about disciplines that are important in achieving the hotel’s goals and reach in specific segments.

Perhaps budget constraints don’t allow top talent or a fulltime dedicated resource. Consider the opportunity to be part of a shared service in where you can get top talent in the form of a shared resource. Disciplines such as PR, social media, marketing, revenue management, and sales functions are all opportunities to capitalize on shared services. Perhaps it can happen within a hotel management company helping their portfolio of hotels achieve this.

There are various ways to approach shared services, and myriad options to help reach their targets, whatever they may be. The key is an openness to doing things differently. Identify what is needed and engage the best resources available to help to achieve the end goal. 

Marketing

Marketers are already thinking about creative new campaigns to help capture the travelers once restrictions are lifted. Continue communicating with guests to keep them informed of the hotel’s status and any relevant or creative programming. Marketing campaigns will have to be timed appropriately to ensure alignment with safety. Consumers will be looking for deals but, also will want hotels that provide safety and cleanliness.

Now is the time for marketers to review content on all channels and all forms of communication to ensure that content is being presented from an entirely new perspective.

• Consider a new section on your websites addressing healthy and safe business practices. Confer with legal counsel.

• Arm the reservation sales agents (onsite and call center) to speak to safety, cleanliness and spacing concerns.

• Communicate how spaces may be transformed to accommodate public areas.

• Consider written content on all channels. Ensure the written content represent the right descriptions of any new safety practices, change of services and amenities.

• Revise the check-in and check-out processes for less human interaction or touch points.

Marketing Activities 

In the short to medium term, the demand will likely be domestic. Hotels will be going after a smaller piece of the pie or find new regional demographics to target. Creativity and connections with the local community and smaller businesses will help improve value propositions and programming that is unique and locally inspired. Hotels in secondary or tertiary locations might just see more activity and interest since they are further out and offer larger spaces.

The following highlights some marketing tactics hotels can consider:

• Be ready with the drive market and staycation messaging. Geo-target investments to focus on the drive market. Consider including free parking or offering gas gift cards or credits. Social media is a great way to reach a targeted (and potentially local) audience for your hotel. Work with your digital agency to align paid search to target the drive market and key words related to your specific locations and activities.

• Travelers may research for longer periods of time before they are comfortable booking travel. Consider expanding retargeting criteria to allow a broader timeframe.

• Make the most of loyalty programs and your guest profile database. Communicating directly to them with private and creative offers avoids disruption of publicly available retail offers. These are typically resilient travelers and want recognition more than they want a deal. Consider resort or urban fee waivers.

• Reach out to those guests that had to cancel and invite them back.

• Those who missed milestone celebrations will be eager to celebrate again. Think about packages geared toward various celebrations.

• Think creatively about the use of physical space. Meeting space will likely not be occupied like previously so what are some other opportunities that may be of interest to your local market and guests? The key to all messaging will be to highlight health, safety and sanitation. 

Sales 

The approach to selling and servicing guests and clients will mean doing things very differently in a post COVID-19 world. Recently, Preferred Hotels & Resorts hosted town halls for its member hotels to hear from key industry professionals who shared their insights regarding how hoteliers can keep the magic of travel in the forefront of buyers’ minds. Learn what the buyers want to know from you and what you should be doing now to ensure your hotel is being considered when travel resumes.

Corporate travel is a key segment for many hotels. While no one knows how this segment may change, hoteliers should begin preparing their short- to medium-term strategy as RFP season is just around the corner. How are some of the large travel management companies preparing and how will their policies change? Business traveler confidence will not look the same for everyone. TMCs (Travel Management Companies) anticipate questions and concerns surrounding safety and cleanliness once travel restrictions are lifted and they are working hard now to prepare.

Travel and approval processes are being reviewed. FAQs and up-to-date content such as government directives are being updated on their travel sites. Immunity passports are being evaluated in many countries. It won’t be business as usual. TMCs are indicating they will be tightly monitoring where their travelers are and requiring strict approval prior to trip planning and departure. Many companies will continue doing virtual meetings allowing this to be a longer term solution replacing non-essential travel. It is safe to say there will be a change in supply post recovery, potentially reducing the number of hotels within corporate programs. At the same time, there will be fewer travelers, at least for the near future. TMCs will be focused on hotels that are displaying a duty of care for their guests and their employees. They will want to ensure the health, safety and welfare for their travelers and the broader communities. Strong communication, documentation and execution of the health and safety plans will be an important piece of the corporate negotiated strategy. 

Leisure 

Leisure travelers are expected to be one of the first to begin traveling again, but as with corporate travelers, they will look for hotels that are well prepared and put health and cleanliness at the top of the priority list. 

The following are some tips on how the hotel can remain engaged with TMCs and top of mind once travelers are ready to make their next journey.

• Consider virtual engagements.

• Stay engaged with travel advisors and keep them informed.

• Agents will continue to use GDS but will have more questions about safety and health.

• Consider creating a video of your cleaning process and share with the booking agents.

• Pay commissions in a timely manner – agents have been severely impacted. Realistically many things will not go back to normal.

Hotel groups need to start thinking about how to showcase their hotel differently. Evolve and be creative when looking to engage.

Group / MICE 

The entire world saw the first half of 2020 either cancel or postpone events to later in the year or move to 2021. The challenge and biggest unknown is knowing the best time to rebook. Hotels will need to be agile and pivot to whatever the new normal looks like. Approach the conversations in a transparent and partner-like, way displaying a sense of togetherness, compassion and care, and offer significant flexibility.

The following is a list of some key items group representatives are expecting from hotels:

• Cancellation and cutoff dates may need to be re-evaluated for the remainder of 2020 to provide more flexibility in decision timelines.

• Attrition clauses may no longer be accepted. Hotels will need to think about what is more important – group business at 50% of expected size or no group at all?

• F&B minimums may have to be removed.

• Room to space ratio requirements should be reexamined.

• Program designs will have to allow for more space between attendees.

There may be fewer attendees but same space requirements allowing for social distancing. Rounds initially planned for eight people may go to five. Spacing out of theater style will be expected. Think in advance about how to handle groups that are “space heavy” and have an “off rooms to space ratio” in their ask. Communicate actions the hotel is putting into place and what can be expected. Hotels that are prepared and alleviate concerns in advance of the questions will provide significant comfort and earn trust. Those who communicate preemptively will have the best chance to secure the business by giving clients what they need. It won’t be about rate – it will be about trust, care and communication. 


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