By: Jason Q. Freed
As new information becomes available, hoteliers are finding themselves constantly hitting refresh to learn the latest implications of the COVID-19 pandemic.
Different hotels are experiencing varying effects, of course, but as group and corporate cancellations pile up and industrywide data rolls in, it’s clear the next six weeks to two months at least are going to be severely impacted.
Common emerging questions are: What can we do to mitigate the damage over the next few months? How long will the virus spread and what will business for the rest of the year look like? When recovery eventually happens, how can you capitalize?
Answers are coming slowly. We know the hotel industry is taking a hit. Almost every major brand company and ownership group has announced they are pulling their first-quarter and full-year 2020 guidance, with millions in revenue expected to be lost as groups continue to cancel events. Industry associations are urging the government to provide economic stimulus packages to help the U.S. hotel industry in the wake of coronavirus concerns. During a recent press conference, AHLA President and CEO Chip Rogers said that 61% of hotels in the U.S. are small businesses. Best case scenario? He said U.S. hoteliers will face a loss of 4.5 points in occupancy and a 15% decline in revenue, as well as operating in negative cash flow for smaller hotel owners.
At Broughton Hotels, a management company with a portfolio of 10 hotels in Chicago and California, there are cancellations across the board. It started with international group business and has now affected all segments.
"At one of our properties, we had over 300 room-night cancellations in a span of three days – we lost another 54 room nights overnight," says Corporate Director of Revenue Optimization Gerald Griffin.
Griffin is engrossed in Coronavirus webinars for information on how long the effects of the virus are going to last. He's hoping fear and travel restrictions are short-lived and that he won't have to drop publicly available rates too drastically to spur more transient drive-in business.
"We're promoting staycation opportunities and weekend opportunities," he says. "It's so cliche to say, but we literally have to sit and watch."
How to Respond
With news seeming so bleak, the focus should shift to response. SHR has been in constant contact with partner hoteliers and recently held a companywide town hall to brainstorm how we can help hotels ensure their guests are safe, mitigate the immediate damage and prepare a long-term strategy:
1. Avoid knee-jerk reactions: We know from past events that the first thought is to drop rate. But, in this climate, dropping rates will not help drive more demand to hotels. Think about it: People are staying home, and a $20 drop in rate isn’t going to get a head in a bed in a highly affected area. At this point, the guests who are traveling to those affected areas are doing so because they need to, not because they found a great rate.
2. Promote staycations: There’s an opportunity to capture demand from within your own market instead of looking outside of it. Let’s look back to the SARS pandemic. Guests cancelled international trips, but then those destinations became internal vacation spots. People have an urge to travel, and if they can’t go overseas, they may look to domestic spots that are a safer option. Consider creating packages and marketing to those in your own backyard. You can use the data within your CRS to target a list of guests within your state who would be good candidates for a deal.
3. Get creative with packaging: In the same vein, consider what types of packages you are offering right now. Guests are going to want to stay away from anything with crowds, such as tours. What other activities can you offer that keep people away from crowds? Think outside the box here. For instance, if you’re in a market that warrants it, nature walks are an option.
4. Offer booking incentives: Incentivize your guests not to cancel. Now’s the time to get a little less stringent with cancellation fees policies. For example, one major resort brand introduced a stress-free policy where cancellation penalties have changed until April 15, only charging guests who cancel within 24 hours of their stay.
5. Look at your channel mix: Are you maximizing your distribution channels? You might be against OTAs, but now is the time more than ever to play on every site so that you get more traffic. That includes metasearch.
6. Take stock of direct: Is your website doing everything for you that it can? Are you using reduced clicks to book, making it as easy as possible for the end user to purchase a stay? Everything begins with your website, so look to see if you need to introduce any new “book now” buttons or direct links from your website.
7. Communicate with guests: Your customers want to know you are taking this pandemic seriously and that you are implementing all best practices into your operations. Consider sending your database an email letting them know what you are doing to combat the virus within your hotel. Be proactive in dispelling fear.
If you think SHR could help in your efforts to combat the fallout from COVID-19, contact us today at firstname.lastname@example.org.
Interested in more information? Check out our list of content to help your hotel during COVID-19.