How can the hospitality sector be prepared to overcome future crisis and remain resilient?
After a hopeful break last year, the current pandemic continues to affect the economy. Amidst the uncertainty, this is a question that I have been posed with multiple times, and for all the right reasons. Hospitality is one of the many industries that have taken the brunt of this situation. But I must say that it is also an industry that is constantly learning and evolving to adapt to the rapid changes taking place.
One clear lesson that this pandemic has taught our industry is that it is now time to operate on more lean and efficient cost structures. Hotels and properties will be required to change their current operational structures. As they are forced to work on lower fixed costs models in the future, it will eventually lead to higher profitability once businesses bounce back to normal. It also means that if such a crisis were to strike again, they will be better prepared to deal with it.
The industry will also need to keep a stronger focus on the domestic market. The pandemic has, in all ways, widely affected international movement. With border restrictions and increased concern over foreign travel, the focus is going to fall on domestic front and the dependency on international markets will drop significantly.
All this also means that products and services offering for the domestic market will need to be re-looked at. With new SOPs in place and increased technological integration into the customer experience, what is being offered to the customer, and how it is marketed, will change. A lot of players in the industry used the opportunity last year to come up with new products and value add services that were especially targeted to enhance the customer experience during the pandemic. The industry should now build up all these product categories that they experimented with during the covid pandemic between last year and this. One innovative example would be takeaway and food delivery models, something that hotels never experimented with, but started doing so during the pandemic. Such models which have worked to the advantage of companies during the pandemic need to be converted into stronger revenue centres so they can continue to be relevant and contribute to overall profitability of organisations.
One noteworthy structural change that the industry should think about is that while building and designing new properties, they must keep in mind areas and spaces which can be leased or rented rather than operated by themselves. This would not only help in saving costs and generating more revenue but will also result in running operations more efficiently, while also opening more avenues for customer experience, like wellness centres, boutique shops, cafes, and so on.
A major factor, and without which no discussion about the future is complete, is the role of technology in hospitality. When we think about measures that will help the industry become more competent and more adept, tech is perhaps the foremost tool of disruption that we think of. Properties around the world are already addressing the need to integrate greater technology, and going forward, hotels must have more communication technology embedded into their functional spaces. So for example, when a conference hall is organising an event and has utilised its physical capacity of a thousand people, there can still be ten thousand more eyeballs watching that events, taking part in it virtually. Whether it is a product launch, an industry conference, or a fashion show, the restraint of being there physically does not hamper the attendance, and this opens more revenue opportunities for properties. So, while you may have invested into the right technology for video conferencing in your physical space right now, like lights, camera, acoustics, etc., you can still reap the benefits later when instead of just a thousand attendees, you are actually selling the event to ten thousand people. It gives organisers the chance to not only utilise the space more effectively, but also increase their revenue opportunity through technology and brand building.
Another trend that I have noticed, which is addressing many needs, is the concept of ‘staycation’ and ‘workcation’. These are popular terms right now, thanks to the pandemic, but will continue to be trendy afterwards too. More properties could be built in drivable leisure locations from main source markets, so people can unwind for a few days and take a break from the monotony of being confined in their homes. More smaller hotels could be designed, which are far more boutique in nature, placing a greater focus on hygiene and santisation, and allowing for a personalised and private experience. As for workcation, with work from home continuing for a big part of the urban population, these kinds of properties will let people work outside the four walls of their homes as they experience a change of scenery and visuals, boosting their productivity and mental well-being. Similarly, organisations will not allow a lot of business travel in this era of zoom and online meetings, so the industry will have to offer products and services which target their experience, like enhancing rewards within loyalty programmes.
The concept of an experiential traveller is there to stay and it will only grow in the future. Product and service will always remain key to hospitality and travel, but the kind of experience a guest goes through will become an important factor in determining customer loyalty.
When it comes to resilience, the industry will always find ways to be innovative – it always adapts. While the industry takes all possible steps to overcome the crisis and stay resilient, we should not forget that people remain key to this process. As I often say, it is extremely crucial for people to continuously learn and upskill themselves to match the pace of the changes taking place and be ready to meet the demands of the industry. Having seen both sides of hospitality – the industry and education – I believe that the right way forward is for industry and academics to move hand in hand towards progress. We will come out of this crisis stronger and smarter.
