The hotel industry will bounce back from COVID-19, but probably not for a while. Digital tools and knowhow can help hotels manage the long road ahead.
Hotel owners and marketers are now entering a new phase of the COVID-19 pandemic. You’ve lived through the initial wave of virus, shutdowns, and whatever passed for summer “peak.” Now, especially as you’re thinking about budgets for 2021, it’s time to think about the long haul, the long road ahead.
You’ve undoubtedly seen the data that strongly suggests that we’re going to be living with this situation well into next year—if not beyond. What we learned from the downturns in 2001 and 2008 is that it took most hotels between four and five years to recover ADR levels. Some economists have also said that “it will take years” for the economy to return to normal.
Even if recovery happens twice as fast this time, we’re likely looking at 2022 or 2023 before we see business boom again. So, really, you’re not “budgeting for 2021.” You’re working to build a sustainable plan to carry you through the downturn no matter how long it lasts. Plus, the following thinking works in good times as well as bad. You’re setting your hotels up for success in any economy—not just one dominated by COVID-19.
Planning for the long haul
The first thing to note is that a down economy doesn’t mean you can’t find revenue and profits. Guests are traveling. They want to travel. And savvy hotel marketers are using digital and data to plot a successful path to connect with guests. It starts with a fairly straightforward plan. Its key elements:
- Capture your fair share—or more—of any demand coming into your market
- Increase revenue per guest
- Reduce your costs for doing all of the above
Simple, right? OK, it’s easier to say than to do. But it’s also possible and necessary. Of course, you also want to drive demand. But that’s going to fluctuate based on the local health situation. The other three items are what you must do every day, every week and every month, regardless of demand.
How can you use this plan to improve your situation for next year? And how will they support you on the long road ahead?
Putting the plan in action
In most markets, demand remains inextricably tied to the health situation. Data from STR shows “there is a long-term connection between COVID case increases and RevPAR decreases.” That makes intuitive sense. After all, you can’t expect that guests will want to visit your property if your destination is a “hot spot” for the virus. In fact, if you’re in a hot spot for the virus, it’s a bad idea to try and drive more demand into your market.
So what can you do?
Align marketing activities with local health trends. Monitor local health trends closely; you’re not going to see much demand if you’re experiencing an outbreak locally.
Google offers a useful map that tracks COVID-19 cases by county that can help you plan ahead. Many—though, sadly, not all—county and local health departments also offer dashboards that can help you anticipate case loads. You can use that data as an input to your demand forecasts, and to adjust your marketing/revenue management activities accordingly. If case counts increase, that presents an opportunity to pause or reduce some marketing activities and save money for when demand will likely be higher. Focus more on metasearch and search marketing, channels that connect with true demand—for instance, from essential workers and others who must travel.
Geo-target your messaging. Data from TSA shows that airport volumes are slowly ticking up, but remain roughly around 65% below last year’s averages despite recent increases in room demand across many markets. The key takeaway: You shouldn’t expect airline passengers to save you from this mess. At least not yet.
Data from Arrivalist shows that car trips have also declined year-over-year. Again, no surprise—travel is hurting. However, the 15% decline in car travel is relatively small when compared with the catastrophic drop-off in air travel. That’s why drive markets offer your single best opportunity to attract and convert guests until flight volumes recover.
Geo-targeting capabilities—matching advertising to customers in specific locations—in Google, Facebook and Instagram’s paid media solutions let you talk directly with guests in key feeder markets. Even better, you can use the same tools to intelligently reach your fair share—or more—of whatever flight demand does exist for your destination. This not only can drive increased bookings, but also reduce wasted spend by focusing advertising only on those people likely to travel to your destination.
Connect with guests in market. You can also use geo-targeted ads and email campaigns to connect with guests in-market, whether locals or those visiting your destination to drive more revenue as well. A number of properties are finding success with “wedding rescue” and work-from-anywhere packages, improved upsell of ancillary services, and the old standby stay-cation offer to gain increased share of wallet from locals and out-of-town visitors alike.
Guests will travel again. We know that’s true. But no one can tell you how many or how soon. That’s why you need digital to do the heavy lifting needed to get you through the longer term. Use digital tools to capture your fair share, increase share of wallet, and lower your costs and you won’t just be set up to survive the long road ahead. You’ll be set up to thrive.
The opinions expressed in this blog do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.