Consultants, analysts and experts in hospitality reflect on what a recovery might look like for the hotel industry as the impact from the COVID-19 pandemic subsides.
GLOBAL REPORT—A crisis as unparalleled as the COVID-19 pandemic, and its impact on the travel and hospitality industries, can defy expectations or predictions.
That hasn’t stopped thought leaders within the hotel industry from trying to envision a recovery and the steps needed to get there.
As the scope and implications of the pandemic started to come into focus in mid-March, industry insiders writing for Hotel News Now delved into data and leveraged their expertise to analyze and advise.
Analyst and industry veteran David Loeb relied on his 30 years of insight into stocks and capital strategy, noting that as with the past two downturns “fueled by demand shocks, this one started before the black swan landed.”
“In 2001, occupancy turned negative (on a trailing 12-month basis) in May, more than three months before the terrorist attacks of September 11. In January of 2007, occupancy flattened out (also on a trailing 12-month basis), more than six months before Lehman Brothers collapsed. And, as I discussed in my January 2020 column, smoothed occupancy declined slightly for two consecutive months in December of 2019,” Loeb wrote in April.
Applying history to the current crises, Loeb also suggested that hoteliers steering into the recovery will need to take advantage of new varieties of guest demand while waiting for essentials such as group business to return.
Jan Freitag, STR’s SVP of lodging insights, wrote in April that risk assessment will be key to a return of groups to hotels. In the meantime, “the American consumer will take to the roads and skies with a vengeance” as leisure demand bounces back first. (STR is the parent company of Hotel News Now.)
In May, Freitag wrote about signs that this crisis for the industry “too shall pass,” forecasting that rebounding hotel demand in China would eventually come to the U.S.
However, the question of when remains. “In the meantime, the ‘end’ of the pandemic will be characterized by the step-by-step easing of stay-at-home orders and the slow opening of local economies,” he wrote.
“This means hoteliers cannot plan for a specific date, but rather they must plan for specific occupancies and have their plans in place to rehire staff as demand increases.”
Toronto-based consultant Larry Mogelonsky wrote for HNN in April that hoteliers should be prepared for permanent changes in guest behavior and demands as a result of the pandemic.
“To be honest, there is no going back,” he wrote. “The behavioral changes that have resulted from this pandemic are now habits that will change what guests want from their travel experiences.”
In this new era, he wrote, housekeeping will become paramount, “seclusion” packages will be more attractive, and wellness will get a “big boost.”
Richard Warnick of asset-management firm CHMWarnick, writing for HNN in May, agreed that hotels will need to draw more attention to cleanliness efforts, and suggested the cost of those enhanced efforts should be passed on to guests.
“Customers will expect and demand increased standards and vigilance. Brands and operators will institute new standards and protocols. In fact, most already have,” he wrote.
“One answer could be a widely applied ‘health-and-sanitation’ surcharge. Such a practice is not without precedence. They have been accepted more or less readily, by customers depending on what it is for and how it is implemented. Spiking energy costs have resulted in surcharges. Restaurants in markets with rapidly escalating government-mandated labor costs have responded with labor surcharges. Surcharges have been widely applied via resort fees and urban amenity fees to capture additional revenue without raising room rates.”
Amy Jakubowski, a 30-year hospitality design veteran, wrote in May that the pandemic will “spark a wave of innovation that will alter the shape of society and how we live.”
She expects that to include innovative hotel design that addresses the need for people to gather and interact while emphasizing health and nature.
“The benefits of creating an immersive experience with nature and providing a sense of retreat and wellness, particularity in urban settings, is a trend that will likely continue rising to the forefront,” she wrote.
“Sustainability has been trending for decades. Now WELL buildings, the built environment that impacts human health and well-being through air, water, nourishment, light, fitness, comfort and mind, are being designed to work in tandem. Long before this pandemic, there was a recognized need.”
Scott Antel, a partner specializing in hospitality at law firm Bryan Cave Leighton Paisner LLP, wrote in May that hoteliers should also be ready for new legal and commercial challenges “when the lights come back on” for the industry.
Those challenges stem from familiar areas such as how to best utilize the workforce and renegotiating management and franchise agreements.
“The hotel industry is suffering one of its biggest threats to date, and, sadly, not all hospitality companies will emerge from this global pandemic. But the lights will come back on,” Antel wrote.
“The hotel industry is a mature one that has weathered various global terrorist attacks and the previous financial crisis. Then there will be a need for operators and owners alike to take stock, to reflect and rebuild.”