More than any time in the last decade, travel consumer purchasing habits are up for grabs.
NB: This is an article from Pegasus
In New York City, the sidewalk cafes are bustling, the parks are full of picnics, and the city’s attractions are coming back to life. The city is blooming again, cautiously but happily. And tourists are coming back to town. The same is true across the United States.
While hoteliers are optimistic that the industry is starting its path to recovery, it remains impossible to overstate Covid’s effect on travel.
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The late Arne Sorenson, Marriott CEO, estimated in the early stages of the pandemic that “Covid-19 is having a more severe and sudden economic impact on our business than 9/11 and the 2009 financial crisis combined.” STR has reported YoY occupancy decreases of more than 50% nationwide. Covid-19 was a collapse, not a downturn, with properties and teams hollowed out. While numbers are trending in the right direction, there is uncertainty around the speed and overall strength of recovery, particularly in segments like international leisure, corporate, and group.
Every fellow hotelier we’ve spoken with this year is realistic about the amount of work that remains to bring the industry back. Yet several also discussed how, when looked at from a certain perspective, they see new opportunities going forward. For years, managing a hotel distribution network has felt like tying your shoes on the run—impossible to finish any one task because the next step is always on top of you. But the gradual ramp-up this spring and summer is the perfect chance for hotels to be strategic about their return to business, and to set a foundation for better, healthier distribution strategy in the long-term. Recent data about changing guest preferences post-Covid also provides hotels with reason for optimism.
Travelers Are Ready to Form New Habits
Marketers know that changing a person’s behavior is hard; people are creatures of habit. Academics estimate that 45% of our daily behaviors are habitual, cued by triggers we aren’t aware of and carried out automatically.
Charles Duhigg’s book, The Power of Habit: Why We Do What We Do In Life and Business, is about the science behind our habits, and explores some of the ways forward-thinking retailers leverage data to better understand these habits and more easily change them. Target Corp. and its specific strategies for using big data in its marketing campaigns was the subject of a long-form excerpt of Duhigg’s book that ran in the New York Times. The whole piece is full of wonderful insights about e-commerce, even years later, but some of Target’s specific conclusions about customer habits and purchasing are especially relevant as we consider the post-pandemic travel landscape.
The core learning is that while ingrained shopping habits are usually too difficult to change with even the most ingenious ad campaign, “there are some brief periods in a person’s life when old routines fall apart and buying habits are suddenly in flux.” The greatest of these life moments is the birth of a child, “when parents are exhausted and overwhelmed and their shopping patterns and brand loyalties are up for grabs.” If Target could identify new parents, they could identify people whose lives were in such a state of flux that their habits could be changed and they could be made into better, more loyal customers.
The whole planet is in the process of emerging from just such a moment. Our lives have all changed shape immensely; more than a few of us feel “exhausted and overwhelmed” and our old routines have all fallen apart. But travelers are eager to have new experiences again, and as tourism returns we are already seeing trends in post-pandemic booking habits that look very positive for hoteliers.
After a full decade of losing market share to OTAs and third parties, hotels are seeing the direct channel get a boost this spring, with the uncertainties of traveling post-Covid making guests eager for direct communication with the hotel. Skift’s Hotel Distribution Report from November 2020 stated that hoteliers are reporting increases of more than 10% for the Voice channel, with curious guests calling to ask questions about newly implemented cleaning policies, the changing availability of property restaurants, and the status of area attractions. Properties and brands employing chat functionality are seeing enormous traffic increases over those channels as well, “thousands of percent above what they used to be.” Guests have also learned that booking direct offers the most flexibility, with some OTAs refusing to offer refunds and consumers filing complaints. Guests’ renewed preference for direct communication with the hotel, and the direct booking increases that come with it, seems likely to continue as long as the effects of the pandemic linger, through 2021 and beyond.
OTAs will be a major engine driving recovery; their role in discovery and filtering for new guests is more important than it has ever been. But for years now the hotel industry has lamented OTAs’ control over the guest relationship, with multiple industry-leading brands spending millions of dollars on “Book Direct” marketing campaigns to try to coax customers back to their direct channel.
It seems like over the next 12 months, travelers’ changing habits and preferences may give hoteliers a second chance to make direct bookings the centerpiece of their relationship with their guests.
Hoteliers Are Eager to Embrace Evolving Travel Norms
It’s not only guests whose habits have changed post-Covid. Hotel leaders are in the same boat. Routines across every department have fallen apart and had to be rebuilt or, more often, reinvented. Every hotelier’s job now includes problem solving and innovation in addition to managing known challenges. The only constant over the past 12 months has been change.
But among the revenue and marketing professionals we’ve spoken with, there is the sense that for well-prepared, nimble hotels there are opportunities post-Covid-19 that didn’t exist before. Some of the tangles in the distribution landscape have been cleared away, and for the moment there is more space to breathe. Over the next few months, top-of-funnel ad buys, social media, email marketing, and all of the outbound components of your marketing ecosystem will restart. Business leaders will begin to build new data sets. Conventions for public spaces and neighborhood venues will evolve. And guests will behave according to new, post-pandemic norms, which includes booking direct at higher rates than they had before.
In a dynamic environment, flexibility and efficiency are critical. Brands that can make decisions the most quickly, with the most accurate data and the fewest tools, will be the most adaptable. Aligning your tech stack to your distribution strategy is the first place to start. Hotels that prioritize guest experience and lead with their direct channel needs when it comes to distribution will be the ones that are best positioned to take advantage of the changing landscape.
This is the first of a multi-year recovery process. Going forward, each month should be better than the last. Both travelers and hotels will spend 2021 putting healthy new habits in place. The challenges of 2021 are substantial, but for once they don’t feel like tying your shoes on the run.
