Hospitality: Waking to a new dawn and new trends

The world is hopefully coming out of its worst phase and that should be good news for travel and hospitality which was perhaps the worst-affected sectors in a period dominated by the debilitating virus. While the sector has seen some demand come back in fits and starts in 2021, there is still a massive fear that the lockdowns could be back as we keep on discovering new variants and a realisation that one may have to live with the virus for some time though perhaps not as virulent as the strains we have seen before. Though 2022 did start with the new Omicron variant but it turned out to relatively mild for life to progress towards normal. It is looking cautiously positive that things would get better as we move forward. However, the world after this emergency has changed and though it is expected that travel and therefore hospitality would resume its march to normalcy, its essential to recognise that with the stoppage, the means, demand as well as supply paradigm along with motivators could have changed too as it is getting fairly evident. Therefore, a pause in concluding whether it’s a new dawn for these sectors is a must until we have looked at what we lost and need to rebuild. In addition, we need to look at new trends emerging and whether our efforts to regenerate cover the new demand trends. So, clearly interesting times…

Revisiting the recent past sometimes helps to conclude what changed. Three clear areas which changed the normal that one was used to and they are as follows:

Hospitality is dependent on the means of travel. Whether it is by air, road or train or for that matter ship, each has a role to play in the advent of hospitality as a sector. Aviation, at present, enjoys preeminent position within the travel sector to link locations both intra-country as well as inter-country. This key enabler, along with other means, was severely hit with complete lockdown except for emergencies for more than a year. This resulted in idling, deterioration in assets, lack of economic capacity to carry, interest losses and then undersizing the jobs with millions of trained manpower laid off. The asset quality due to non-operation would require billions of dollars across countries to become operational and fit for travel. A rare consequence not witnessed earlier in this interconnected world. The last year or so of resumption has seen a large capacity come back into operation but still not at full tilt as before Covid19. With the Russia-Ukraine conflict, further complexity has been added not only of certain restrictions for travel but also of soaring cost of oil, inflation in other raw materials making travel expensive and unaffordable for many. So, any forward movement in travel and therefore, hospitality is going to have this natural restriction as we move forward.

The second big disrupter has been the disarray the virus caused to the Human Resource market. The rather sudden downsizing due to the Covid19 stoppage, a necessary step for employers but also voluntary as large populace feared for their lives more than their jobs. So, besides airlines, other industries, due to better internet facilities, opted for Work from Home (WFH) protocols which for the time being obviated the need for travel. Its relative success, while giving an option to the businesses, has also put a question mark on the kind of travel demand in the future, especially business and the quality of the manpower as well as training required. Hospitality too because of downsizing has lost trained manpower and with the resumption will need to quickly come up with either more bodies or with alternatives. WFH for hospitality becomes more difficult for hotels where the requirement for some jobs requires people in person. Many hospitality chains, as the demand improves, are in this supply conundrum as some low value labour may not want to travel too far for jobs, though tech alternatives like contactless check-ins, other front office functions are being ramped up in double quick time. However, as with life one needs to give it time to be the new normal.

The third big disrupter has been the need as well as requirement of tech compatibility to be at par or better than your other services. Internet, which was earlier used as an add-on, is now a must and that too efficient as well as enough. Tech is required as discussed earlier in contactless services like marketing which now largely on social media, check-ins and other services which earlier were dominated by people and individual attention. Investing in tech capability, both equipment and training require investment.

While the last point here may not be a disrupter but the big revenue stream of MICE seems to have reduced substantially for WFH, business travel has still to pick up though both may not come back to the same level as earlier as non-essential travel is still a no-no. The wedding businesses, which are an Indian and Asian phenomenon, did however remain and have recovered earlier than the other business events. All these bulk businesses need to still to come back in full swing as Covid19 presence as protocols do play a large part in their resumption.

Some of the above-mentioned disrupter effects are clearly not over and they are likely to play out in the future or new practices as well as demand motivators are going to take its place. Having said that, where are we today?

The business of travel and hospitality is well on its way to recovery. The latter half of 2021 and now first half of 2022, clearly has seen traffic recovering close to pre-Covid19 levels. The foreign connectivity is still a work in progress and so are the Covid19 protocols but both seem to be getting resolved with either with vaccination availability, changed service levels and pent-up enthusiasm for travel. In India, domestic tourism has been the focus where most of the means of travel like trains, roads and flights are now nearly normal. The wedding season which is the real deal was packed this year. The occupancy is up across the spectrum and RevPar is on a rising trend. Most of the places of tourist interest including hill stations have seen an unprecedented rush. A part of this is due to the pent-up demand and the other because of foreign travel not being fully accessible, the rush at domestic destinations is on the higher side. We can also call it ‘revenge tourism’, a term quite popularly used at the moment. However, the real sustenance will only come once the big buyers return to the market ie MICE and business travel.

One is happy at the state of progress but the effect of the disrupters is still to play out. Also, having travelled as have some of you have in India, the level of upkeep of the properties is abysmal, both small as well as luxurious or exclusive and the level of service still far behind of what we can expect from such a category. Most of the normal five stars now are being charged for seven-star prices which I must say some of them do not deserve. A $300 plus charge which was earlier reserved for the villas is now commonplace with much lesser standards. Something is got to give once we are out of the ‘revenge’ phase which is not far! Democratic choice will be back and the Indian hospitality needs to prepare for that. In fact, for the new trends too which are coming. More about that in my next column.

Take care and safe travels!!