It’s undeniable that the hospitality industry was the hardest-hit by the global COVID-19 pandemic. Between April and May, planes stayed grounded, hotels closed, and restaurants worked as ghost-kitchens to provide take-outs. And just when things were starting to pick up again, a second wave hit and we entered lockdown 2.0.
There is simply no way around it: COVID-19 will continue to shape the future of the hospitality sector. But below the big, dark cloud of the pandemic, what specific trends and challenges will hospitality meet in 2021?
The long and winding road to recovery
We won’t lie to you: it will take a long time before the hospitality industry reaches pre-pandemic profits or occupancy rates. Since we underestimated the time it would take to develop a vaccine or an effective course of treatment for the disease, the industry now faces some of the worst-case scenarios predicted in March. Apart from travel safety concerns, the impending economic crisis will also have a heavy impact. It’s possible that we’ll reach rates and revenues above 2019’s only by 2024.
A study by Deloitte Canada yielded conclusions that potentially translate to every market. Facing a crisis, most customers intend to reduce spending on travelling and restaurants, in exchange for spending more on groceries and digital services. But to see what the path to recovery might be like, we should look into past crises where safety concerns and financial downward spirals mixed, such as the aftermaths of the September 11th terrorist attacks, the SARS outbreak in 2003, and the 2004 Indian Ocean Tsunami.
In all of those cases, the hospitality industry was forced to seek new domestic segments and markets, offer promotional packages, and turn to a safety-focused message until trust was restored. However, take this with a pinch of salt: although we can learn from these past experiences, none had the geographic distribution of COVID-19 or the potential to be solved by hard science.
Economy hotels and accommodation will likely recover faster
Not all hotels will recover at the same pace. Economy hotels will likely recover faster, since there’s more demand, less maintenance, and fewer labour costs. Even with a lower occupancy rate – whether it is for decontamination purposes or lack of demand – many of these outlets can still turn in a profit. Luxury hotels and resorts, on the other hand, need occupancy rates 1.5 greater to stay in the game.
For these hotels, the equation has three variables: variable income (depends on occupancy), semi-fixed (services that may be suspended, e.g. pool bars, spas), and fixed (cannot be suspended, e.g. security, HVAC). The only way to lower costs is to juggle semi-fixed expenses, which also carries the risk of changing the customer experience. We dare say striking the right balance might be the hardest challenge on this list.
Customers will prefer closer destinations
This is a trend we’ve seen throughout 2020, and it will probably continue due to the widespread fear of cancelations and new lockdowns. When Europe was still dealing with the first wave, China was already opening its cities. Destinations near the sea, which had previously been popular but required long-distance flights, took longer to recover. Instead, closer provinces, often accessible by highway or high-speed trains, saw a sharp increase in the number of travellers.
In Europe, we saw this trend once again over the Summer – people tend to prefer regional markets, which are perhaps more rural and sustainable, than big cities. Across Europe, occupancy rates in regional markets swang between 40 and 60%, whereas in the gateway cities they never exceeded 20-30%. In the UK, regional markets registered occupancy rates of 51% on average, while cities registered 29%. For as long as travellers feel more confident and safer closer to home, this trend will not change.
Regaining the guests’ vote of confidence
A Spanish study pointed out that there are two decision-drivers for guests. One is confidence in the destination country – which explains the staycation trend we’ve just mentioned – and the other confidence in hotel companies themselves. Definitely, one of the biggest challenges for the hospitality industry in 2021 is restoring confidence. A lot of hotels, including well-known hotel chains, have taken to “stay safe” programmes that provide on-site medical care, temperature checks, free hand sanitiser, and hygiene products.
The same study by McKinsey showed that guests value extra cleaning, including sanitation with UV lights, downtime between stays, and perhaps even rapid-tests at check-in, along with all the traditional measures “stay safe” programmes provide. In other words: they want hotels to do everything possible, and prove it. Possible solutions are state-issued certificates or apps such as Clean & Safe, which Infraspeak developed in partnership with Portugal’s Tourism Office. Several countries and cities have launched similar initiatives since.
- Still not enough? Check out a few suggestions to regain the trust of your guests.
The tech-savvy post-pandemic travellers
This is definitely something we’ll see more of in the future, according to Deloitte. During successive lockdowns, most people took to technology to stay in touch with their loved ones, for entertainment, and even to order in basic supplies. When travel is restored, customers will show more openness towards technology, and they will probably be more comfortable using it too.
This means self check-ins and check-outs might become the norm in the near future, for example. But there are all sorts of options to explore, such as apps to order room service, control the AC remotely or request cleaning, in a similar vein to what smart hotels are already doing. On one hand, it’s a challenge for hotels to provide a good customer experience with a mix of human and tech-enabled interactions. On the other hand, this trend is an opportunity to improve their operations and minimise face-to-face contacts before the pandemic is fully tamed.
Last, there’s one thing we must never forget: customers crave experiences. Whether they wear a mask or are separated by an acrylic sheet, the hospitality industry must provide unforgettable experiences – only with a heightened demand for safety now.
Struggling to cope with all these challenges? Platforms such as Infraspeak are essential pieces of technology to face new routines. If you’d like to know how a CMMS could supercharge your maintenance team and operations, talk to one of our specialists!