Chain hotels in the pandemic: problems, challenges, and solutions
The COVID-19 pandemic has changed the well-established course of things, and has raised new, vital questions for everyone. Most businesses faced the question of survival. One of the industries that has most suffered is hotel industry, and that is for a number of obvious reasons. Among them: an almost complete stop in international air traffic, reduction in the number of flights within the country, the suspension of tourist trips, mass lockdown, and all of these led to the cancellation of most business meetings and events.
Working in a hotel chain teaches you to think globally and on a large scale. For years, the revenue of many chain hotels has been based on contract segments: travel groups, athletes, corporate clients, and mass events. Most of the business processes in the sales department were built for this segmentation. This was also typical for our Mozart Hotel Group chain. Due to the limitations caused by the pandemic, demand in these segments has almost disappeared. In addition, the recession caused by the new infection, which continues up to this day, is still poorly understood. Since March 2020, we have understood that a hard time was coming, but we did not realize for how long. What will happen to our industry? How will the needs of our guests change in the new conditions?
By the summer season, it became obvious that the usual course of action is no longer possible – previous periods, including 2019, can not be guidelines for planning in 2020-2021. There was complete uncertainty, when no one could make forecasts or plans for the market. Chain hotels, with a well-established planning methodology, accumulated statistics and established segmentation around the world, faced an unprecedented drop in demand.
Below is the global dynamics of RevPAR in 2020 compared to 2019 according to HVS Global Hospitality Services.
Our team’s and the Mozart Hotel Group Management Company’s challenge was not only to minimize losses, but also to maximize opportunities.
Despite the fact that it became impossible to accommodate groups in the same volume, the need to attract FIT came to the fore. This segment did not use to be the main part of the flow; it required a different marketing communication and a different approach to sales in general. We assumed that there would still be domestic tourism even in the conditions of the quarantine year. It was clear though that the average domestic consumer is less solvent. In addition, the service consumption varies greatly, quality comes to the first place. The individual tourist has a number of important features that must be taken into account:
- Increased attention to the property ratings on the response resources, including the issue of epidemic security of the property.
- Price sensitivity
- The need for packages / promotions / special offers that can attract guests at the current moment, taking into account the impact of the pandemic.
As for the Review score, this metric has always been a priority for our chain. If the hotel team has been handling guest satisfaction for many years, right now it can become a decisive trump card in the market struggle.
For an optimal price offer, we began to analyze the market offers and the daily dynamics of the reservations in our hotels even more deeply. There were very few peak demand dates in 2020, yet they provided the only opportunity to optimize revenue. Therefore, the calendar of such dates and bookings in the periods preceding these dates were in in the area of special attention. Very fast manual management of dynamic rates helped to achieve acceptable RevPAR values on peak days.
We all turned into experts on anti-covid restrictions, which helped to introduce special offers focused on demand, that simply had not existed before, – for instance, packages for comfortable self-isolation in the hotel.
Chain hotels feel the hard way the advantages given by the coherence of actions of several objects united by a common goal. In this crisis period, all hoteliers have such a common goal-to save and support the entire hotel industry, to maintain healthy competition, so that the market lives and has prospects for development.
Benchmarking as a tool of such competition exists in the world practice for many years. Software products that help you compare your results with the results of a competitive group and make reasoned decisions that are beneficial both for an individual object and to the whole market. Perhaps the most notable player in this field is the American STR, founded in 1985. I am happy to say that now the Ukrainian company has developed and is actively implementing a benchmarking tool-Hotel Matrix. This means that modern and healthy approaches to competition and market development are spreading and moving us forward.
I believe that the period of crisis should not pass in vain, the team of the Mozart Hotel Group are trying to use this period with advantage. Now is a very good time to set up and improve all the processes. That is a time to refresh, upgrade the procedures and competencies in the team of the entire hotel, and, of course, in the Sales Department, in particular.
With the reduction of the "routine" load, enough time has appeared to pay attention to the pain points and work on them, reconsider, rethink your product and make new decisions, work out and launch completely new projects.
I will end with a quote from Winston Churchill: “Never let a good crisis go to waste”