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People want to travel. Hotels want guests. What will it take to bring them together?

Hospitality execs look to navigate the current crisis while building the customer experience of the future.

By Margaret Lindquist | August 2020


Hospitality Industry

Imagine the hotel stay of the future: You land at the airport and your hotel’s AI chatbot welcomes you to the city, lets you know your room is ready, and provides you with directions and touchless check-in procedures.

In a global economy defined by an ongoing pandemic, that futuristic vision is only months away. The hospitality industry is working against an intense economic retraction: the American Hotel and Lodging Association predicts a 50% reduction in revenue for 2020 and hotel data firm STR sees occupancy rates of 38% for 2020. The key to attracting travelers back to hotel properties will be to match the customer experience with customers’ expectations of hygiene and safety.

“Eighty percent of consumers are considering either regional or domestic travel within the next 6 to 12 months, particularly beach travel,” says Alex Alt, Oracle Hospitality’s SVP and general manager. “So the demand is there as long as hotels can persuade travelers that it’s safe to stay.”

But how do hospitality executives find the resources to reinvent while, at the same time, managing acute economic pain brought about by the pandemic?

Three recovery stages

Data from a recent survey by Oracle Hospitality and travel industry intelligence firm Skift says that hotels are strategizing around what they’re calling ‘the five certainties’ of the new hotel experience: mobile check-in, less frequent housekeeping, room service drop-off, elimination of buffet meals, and self-service parking. The survey also found that hotel executives are investing in technologies that enable this evolution in customer experience, with 80% focused on contactless payments, 70% on digital messaging services, and 67% on self-check-in procedures, either online via an app or via kiosk.

 

“We’ve temporarily adjusted our policies to allow for flexibility and to help guests and customers make the right decisions regarding travel during this time of uncertainty.”

Frank Lavey, Senior Vice President of Global Operations, Hyatt

But adopting those technologies while the COVID-19 crisis unfolds requires hospitality executives to pick their moments. To help, Alt has identified three stages of the hospitality industry pandemic response:

Stage 1: Retrenchment
During this phase, hospitality executives moved rapidly to create liquidity and protect assets to weather the storm. In March, many parts of the world were just starting to grapple with the impact of COVID-19. Revenue per available room (RevPAR) declined by 51.9%, which STR’s Jan Freitag described as “the steepest monthly decline we have ever recorded in our 35-year history.” According to Alt, this largely happened in the March-April time frame, but no doubt will remain top of mind for everyone in the industry.

Hospitality survey

Stage 2: Operational recovery
In this phase, hoteliers are rethinking their entire business, top to bottom. This includes implementing health and cleanliness programs to ensure guest and staff safety and new technology to meet guest demands. “This phase is in full swing as we speak, as hotels around the world are reopening and introducing new operating procedures,” says Alt.

And the data proves this out. According to the Oracle Hospitality/Skift survey, 90% of hotel operators have already changed the frequency of cleaning and disinfecting procedures, 84% are altering public areas to accommodate social distancing, and more than two dozen hotel chains have announced comprehensive initiatives for hygiene, including Accor’s ALLSAFE initiative, Hilton’s CleanStay, and Hyatt’s Global Care & Cleanliness Commitment.

“We know that for our colleagues, guests, and customers to feel confident returning to our hotels, their peace of mind is critical,” said Frank Lavey, senior vice president of global operations at Hyatt.

Stage 3: Internal reset
Going forward, hotels have to change strategies, organizations, and processes at the corporate center to reflect an infrastructure that looks vastly different today than it did pre-COVID-19. With fewer employees, new operational requirements, and evolving guest expectations, hoteliers will inevitably reprioritize investments, including those in technology. Employee training is also a huge component of this stage; 85% of operators are retraining employees to be able to deal with new expectations around employee and guest safety.

80% of consumers are considering either regional or domestic travel within the next 6 to 12 months.

Back to business

In the months to come, hotel executives say they’re expecting domestic travel—specifically road trips—will be the first segment that comes back. Seventy-one percent of guests say they’re more likely to stay at a hotel that offered self-service capabilities to minimize contact with employees and 60% want to see increased frequency of cleaning and disinfecting procedures. Equally important, consumers want more flexibility around booking. Seventy-six percent said they’d be more likely to book a room at a hotel that offered flexible rebooking and cancellation policies.

And the hoteliers are ready to meet that demand. Eighty-two percent of hotel executives say that they’re changing booking and cancellation policies to be more flexible. Sixty-two percent are removing or reducing minimum stay requirements. “We’ve temporarily adjusted our policies to allow for flexibility and to help guests and customers make the right decisions regarding travel during this time of uncertainty,” says Hyatt’s Lavey.

Hospitality survey

Not surprisingly, there’s now a growing sense of urgency around technology in the hospitality industry—it is a critical tool for the two prongs of the pandemic approach: reducing close-proximity interactions and crunching data to better predict guest trends and operational performance across all functional areas. Hotels need technologies that can help predict shifting demand and allow hotel managers to plan in advance for it. They need to power up their investment in mobile technologies. Now more than ever, guests want to do as much as possible through their phone.

Fortunately, the adoption of these technologies was already underway. “Certain mechanized elements of the experience are going to be digitized, but that was happening anyway,” says Hilton CEO Christopher Nassetta. “It’ll just happen faster.”

Although the current situation is a tough one for almost every industry, there is a growing sense of resolve among hospitality industry leaders, and a sense that in order to reopen smoothly, companies need to create rock-solid strategies informed by real data. “There are really two camps of belief in terms of the recovery,” says Alt. “There's the optimistic one which suggests that the 2022/2023 timeframe will be when things get back to normal. The pessimistic camp thinks that the 2024/2025 timeframe is when we’ll get back to pre-COVID levels. Our survey showed a significant portion of respondents were on the optimistic side, and I love that. I think our industry is naturally optimistic.”

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Illustrations: Wes Rowell

Margaret Lindquist

Margaret Lindquist

Margaret Lindquist is a senior director and writer at Oracle.