The last few months have brought an unprecedented spate of challenges for the hotels and hospitality sector. As the COVID-19 outbreak impacted 100+ countries around the world, all non-essential travel came to a halt.
NB: This is an article from RateGain
Exclusive research we have conducted has revealed valuable insights into how COVID-19 influenced demand, supply, and distribution.
Room revenue trend is poised to witness a steep decline, reducing by 16% month-on-month starting January-February 2020. Across the next 12 months, our analysis suggests that the decline will continue at a 9% pace for any data in the 12 months. The research is based on our latest bookings data in 90+ countries, across more than 50 properties registered between January 1 and February 29 of this year.
Even more worrying is probably the number of cancellations – volumes have spiked by 53% year over year. This is in line with the predictions made by the International Air Transport Association (IATA), which stated that airline travels and airlines could see losses to the tune of $113 billion in 2020, owing to the COVID-19 outbreak.
In this situation, it is vital for hoteliers to not panic and rely on accurate data along with a thorough pan for determining the way forward. Frequently, the most common response is to reduce prices in a bid to drive up demand. Unfortunately, this isn’t the right answer, as a blanket-curb on all non-essential travel will hold back demand for even the most value-focused room offering.
In fact, price reduction as a strategy could adversely impact a hotel’s brand reputation, creating needless discrepancies in the minds of travelers.
Instead, hotel chains should look at leveraging data and advanced analytics engines to address some of their most pressing challenges in the wake of COVID-19.
5 Key Challenges That Could Hinder Business Continuity and Expansion
We are focused on helping hotel chains and hospitality providers regain their market footing and profitability streams by planning for a #BetterTomorrow.
To achieve this, hoteliers must reimagine their distribution channels with a keen focus on ROI. Tried-and-tested approaches that worked in the past may not find the same response in a post-COVID-19 industry landscape. Conversely, a trial and error approach isn’t something that most hotel chains can afford, as competitors try to sway customer loyalty and gain a competitive advantage.
The following challenges require immediate attention if hoteliers are to maintain business continuity:
1. Discovering new demand
The global impact of COVID-19 has been extremely heterogeneous. There is no one-size-fits-all model that one can apply to unlock new opportunities and possible demand sources. Hoteliers and revenue managers need comprehensive data, updated in real-time, to inform their fresh go-to-market strategies once the restraints put in place in response to COVID-19 are lifted.
Unfortunately, traditional distribution technology does not make room for advanced market insights on these lines. There is a risk of missing popular channels, and inaccurate competitor analysis at a time when every property will try innovative, outside the box pricing tactics.
2. Forging contracts with new channels
Once global demand for travel starts to pick up, hotels have to be more ubiquitous in their marketing footprint than ever before. Already, mobile bookings dominate the landscape, with over 50% of bookings taking place on mobile channels. Between 2018 and 2025, travel booking payments through mobile was expected to cross $1.7 billion, and that is in the APAC alone.
As business and leisure travel begins to catch up in a post-COVID-19 context, we expect travelers to spend more time on research, spread across multiple devices and channels. However, existing distribution technologies cause new channel contracts to become a lengthy process. It takes approximately 30-45 days to onboard a new channel; in the meantime, prospective customers could be looking elsewhere for research and bookings.
3. Setting up content for new demand
This is linked to the previous challenge. Let’s say that a hotel has successfully tied up with a channel after a month of negotiations, effort, and protocol. Now, the hotel staff must spend additional time on setting up the content, manually addressing each extranet. There is a lot of effort duplication, not to mention lost time.
An active channel without the requisite information and content in place is likely to put off travelers, who are eager to experience the best accommodations after an extended period of lockdown. Despite the demand being strong in a post-COVID-19 scenario, hoteliers who do not proactively plan for a #BetterTomorrow with expedited content setup might lose out.
4. Mapping channels and setting up a channel manager
Once again, this is a highly labor-intensive process. It is done manually for each hotel by the channel management staff, who spend a few weeks on mapping different channels and configuring the manager. Ineffective mapping could lead to incorrect room pricing, bringing down per room revenues – on the other hand, a careful setup only extends a hotel’s go-to-market when recovering from the COVID-19 impact.
Fortunately, this challenge is easy to address, by leveraging an AI-based automated mapping recommendations engine. For instance, RateGain’s auto-mapping recommender saves 80% of the manual mapping timelines.
5. Pushing rates and inventory
This critical part of hotel distribution should always be informed by data. And this need is intensified by disaster events such as the COVID-19 outbreak.
Robust rate intelligence and inventory management will remove any rate disparity between channels, ensuring that a hotel’s brand reputation does not take a hit. As customers come out of a protracted curb on travel, the hotel chains that first and most effectively make a positive impression will stand to win customer loyalty for good. Monitoring rate parity and resolving parity issues promptly is integral to this.
How Can We Help to Prepare (and Not Panic)
Scenarios like COVID-19 are a good opportunity to set one’s eyes on new markets and fresh revenue generation opportunities. Rather than bringing down rates in a bid to attract customers, hoteliers can diversify their market footprint, making in-roads into fresh channels, distribution networks, and market regions. But to get this right, they need complete and consistently updated insights into travel demand, regional trends, and competitor movements.
We firmly believe that the appropriate datasets could usher in a #BetterTomorrow, by enabling the following:
- Benchmarking to discover new demand – Compare performance to own historical trends as well as similar market players, conduct market-specific performance analysis, and drill down to demand patterns in emerging source markets once the tides turn after the COVID-19 pandemic period.
- Expedited contracting and SLA setup – streamline the entire contracting process from negotiations to the property go-live, reducing overall timelines from several months to only a few weeks or less.
- AI-based mapping recommender – Leverage data from mapping definitions across OTAs to create fast room-to-room and rate-to-rate mappings, reducing mapping and content upload timelines from several days/hours to minutes.
- Channel manager setup and productivity monitoring – Automatically set up channel managers; monitor productivity for each month, booking window, and length of stay to keep performance at an optimum level in the critical periods of disaster recovery.
- Rate parity intelligence and auto-fixing – Keep an eye on rate parity across newly onboarded channels and OTAs; auto-fix disparities in near-real-time by staying informed of the latest data.
Typically, it takes revenue managers anywhere between 2-4 months to go through the 5-step value chain we listed, overcoming its numerous challenges. From finding new channels and forming contracts to loading, mapping, and validating content and the final Go Live, hoteliers need to spend enormous time and effort to penetrate new markets — something they simply cannot afford in the post COVID-19 world.
Using Smart Distribution technology, it is possible to unlock exceptional ROI, even as hoteliers try to offset any losses incurred due to the pandemic.
Cutting-edge technologies make it possible for hoteliers to outline a strong business continuity and disaster recovery roadmap, even in the face of crisis situations like the COVID-19. For instance, our Smart Distribution solution can help hotels quickly regain their market footing by reinforcing their presence on lucrative channels, which were overlooked in the past.
Keep Calm and Carry On: Strengthening Business Continuity for a #BetterTomorrow
There is no denying the pandemic’s global impact on the overall travel, transport & hospitality value chain. Billions of prospective customers are now being turned away from travel plans, prioritizing citizen safety and the industry’s overall health and safety. However, it is important to prepare for a #BetterTomorrow, putting in place the requisite measures that allow hotels to gain from the inevitable steadying (or even rise) of market demand, once this period approaches a close.
Already, experts believe that travel patterns will see surprising changes in response to COVID-19. In the UK, for example, a localized spike in demand for staycations could offset air travel during the holiday period.
In China, where the country is experiencing early signs of recovery, hotel bookings increased by 40% on March 1, compared to the previous week. Bookings for domestic flights increased by a massive 230% from the record low registered in February. Industry leaders need accurate updates and actionable information on these trends if they are to gain from a #BetterTomorrow – not stay complacent amidst the market slump brought on by COVID-19.
We view the combination of a technology-driven business continuity plan and a pragmatic recovery strategy as central to success in the next few months. The key is to keep an eye on evolving trends, take data-driven (and not panic-ridden) decisions, and build a foundation that allows hotel chains to tap into opportunities without missing a beat.