By: Vikramjit Singh Bindra, Principal Consultant

Facing odds but unearthing possibilities to rebuild customer trust

No words can describe the adverse impact the COVID-19 pandemic has had on the hospitality sector. Industry research is predicting a considerable dent in hospitality revenue models. Their detailed scenarios on the industry recovery, post pandemic paint a very gloomy picture. The COVID-19 pandemic has not only contracted all ‘present’ to ‘near present’ demands, but it has also put a big question around the industry recovery. Recovery to the pre-COVID-19 hotel occupancy is not possible in the near to medium term, as is echoed time and again by industry leaders.

After staying completely or partially inactive for more than the last 12 months, hotels are trying to get back into action by serving packed food from their kitchens, offering luxury hotel rooms as private dining spaces, or offering caravan tourism. Room bookings still pose a difficult situation, as they have been lying vacant since the virus outbreak (barring the stays blocked for healthcare workers or emergency teams). And so are the other revenue-generating channels of formal and informal events, including recreation and transportation.

While the industry has watched the situation helplessly so far and has come to terms with it only recently, there is, nonetheless, tremendous opportunity for ideas and innovation to deal with this unforeseen situation. Not only is there a need for new ways and steps to be taken, but there are also many other key actions that the industry would need to act on and adapt to in tackling the situation.

Key actions/changes to be adopted by the hospitality industry today

Building trust

Re-opening properties will not be easy as it is linked to the big question of health and safety. So, the industry has to do a lot on this front, and it must be a multi-directional exercise.

1. Health rating of hotels

Similar to a star categorization of a property into  5-star or  3-star based on the services offered at the place of stay, there will be a need for an additional star for health assurance. This might sound symbolic, but this will add to the vital trust quotient for the customer in these times. Governing bodies for the hospitality industry could come together and formulate an ecosystem around this, so guests get a quick assessment of hotels’ safety readiness and ensure SOPs (Standard Operating Procedures) are in place. Hotels must take advantage of the vaccine availability today and should be required to maintain a 100% vaccination status for their direct and indirect staff. This will help boost trust across all the stakeholders. The industry has already put some of these SOPs in place, backed by stringent guidelines, and believes it may act as a catalyst.

2. Deploying technology

Hotels must deploy technology to an extent where it can ward off fear from the minds of the customers when they visit. This technology adoption and deployment should not be just limited to screening of the incoming traffic and contactless check-in, but it must also bring in aspects of repeated medical tests, full body thermal screening (as in the case of airports), installing HEPA (High-Efficiency Particulate Air) filters in the air-conditioning systems that remove air-borne viruses and bacteria, apart from dust particles. Visual dashboards should be set up at key places like the lobby and restaurants, which can display the number of people present and have alerts and warning mechanisms in place to reassure guests at multiple points in the property. This is a right  time for hospitality chains to arm their properties with the latest to modernize them. The first movers will certainly command leadership and advantage of a good PR along with rising footfalls.

3. Communication and social media

Communication channels like social media must be carefully employed to spread the message clearly and quickly. Traditionally, the industry has had a prominent space for a strong marketing function in place – earlier the emphasis was on pushing the top-line further up; today, it is for building and communicating well around health assurance and post-pandemic readiness.

New pricing and cost structures 

Both top-line and bottom-line around rooms have come under substantial pressure. Hence, the pricing science that forecasts rates for the available rooms would need to be adjusted as the current situation marks nothing short of a catastrophe for the industry. This has shaken the demand parameters, which were the fundamentals of the pricing science in a colossal way. In the absence of past data attributing to this mega event, revenue management and its many models will not be able to offer help as the data science on which it is dependent is no longer able to support the current reality. The industry is already applying new thoughts around its strategic systems like revenue management. Collective human intelligence will be the order of the day that would revolve not around revenue but ‘bringing the customer back’. Strategic systems will become and play more of an operational role in nature, and their full potential will stay muted for some time. Instead of being strategic in their outcome, these systems will work in conjunction with what other operational systems like a PMS (Property Management System) does in its day-to-day requirement around the customer life-cycle. Since the pricing of the rooms will be affected drastically, hotels will require to re-plan the cost of maintenance as well. Operational best practices of Lean and Kaizen will be in demand once again to bring room maintenance costs down.

Marketing and loyalty @ full throttle 

To bring back its existing clientele, the marketing and loyalty business functions at hospitality chains have a lot of work at hand. From an existing customer base to building a new customer set, these two teams would need to demonstrate innovative ways of thinking to attract guests. First and foremost, for the loyalty program, it is the best time to reward high-value customers with incentives like upgrades to premium rooms and other facilities of the property. Also remember, the new lower pricing structure of the rooms will give a lot of leeway to the industry to attract new market segments like ‘budget,’ which can be pursued for some time without any brand dilution. Local tourism may be the mantra during this period, as international tourism may not pick up for a few more months. The expansion of the hospitality brand experience to new segments can help fill crucial gaps in occupancy. The whole effort is to rekindle its core revenue streams and create a new set altogether. Like airlines have offered vouchers for future use in return for canceled tickets, hospitality chains should think along the same lines. The loyalty function must make attempts to bring back valuable customers to reassure them about the new countermeasures in place.

Read blueprint for hospitality 2.0 for key strategies on how your hospitality brand could bounce back from the pandemic. Global hospitality chains have always believed in providing an ever-lasting service experience to their customers. The current situation demands an expansion of this experience to many more value-adds like attractive cost and safety.

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