Weathering the storm and building anew
The year that just passed is best described, for the hospitality industry, as annus horribilis and best forgotten. As the beleaguered industry was picking up the threads to start the journey afresh, the fresh wave of the pandemic has again triggered uncertainty. Being hugely capital intensive, with high operating costs, the losses in the hotel industry have a multiplier effect, every time there is a dip in travel sentiment. The hotel industry has been cash strapped and burdened with increased costs of sanitisation, social distancing and other pandemic related SOPs. However, at the same time, the pandemic has reinforced the importance of not only physical immunity, but also mental well-being, increasing a craving for experiences beyond the mundane. There is an explosion in experiential categories, such as experiential retail, wellness holidays, and so on. As Covid19 drives home the point of transience, people are finding solace in small joys and meaningful encounters. That explains the rush of visitors to hotels, resorts right after the second wave. There are green shoots, and there is wisdom in looking at the positive side too, and in getting on to build back fast.
Luckily, Indian hospitality has always counted on offering extraordinary experiences, in terms of design, style, architecture, views, culture, and culinary varieties, that makes guest experience central to services. Even in remote corners of the country, where there may be little to offer beyond bed and breakfast, the guest is indulged with warm hospitality, exotic local cuisine and unrivalled local experiences that are unique to the place. Hospitality is central to Indian DNA and the tradition of treating guests like god still inspires the hospitality industry.
There could be a lull in the business outlook for at least for the next two fiscals, according to a report by Hotelivate, “Indian Hospitality-The Stats and Pulse Report”. As per the report, the hotel occupancy is expected to breach the 65 per cent threshold only by FY24, while pre-Covid19 average daily rate (ADR) may be achieved by FY25. This assessment is in tune with the UNWTO’s view that international tourist arrivals will come back to 2019 level only in 2024. Tourism revenue was down 72 per cent over the previous year. The pace of recovery, according to UNWTO, remains slow and uneven across world regions due to varying degrees of mobility restrictions, vaccination rates and traveller confidence. "The economic contribution of tourism in 2021 (measured in tourism direct gross domestic product) is estimated at US$1.9 trillion (S$2.9 trillion), above the US$1.6 trillion in 2020, but still well below the pre-pandemic value of US$3.5 trillion," says UNWTO. The industry has to brace up for the ups and downs due to local restrictions, people’s desire for social distancing, as well as sudden spurts in demand when the virus scare is lower.
The adversity taught some lessons too and most of those lessons will stay with the industry. It is certain that the huge disruptions caused by the pandemic will impact the hospitality sector. Several trends like that of automation, rapid technology adoption, contactless service delivery protocols, sustainability, hotel staff doubling as care ambassadors, and so on are there for all to see. Hotels have pivoted around servicing the prime needs of customers, that is, health, hygiene and safety
While leading hotel brands have diversified offerings with cloud kitchens, and use of premises as quarantine centres, well thought-out curated experiences built around trust and safety will hold sway among people who would like to explore their innate desire to travel, albeit in a safe world. People who embark on a post pandemic journey will look for immersive experiences, possibly story telling around food, local crafts, traditional architectures, space history, like at old forts, and so on.
The trend towards personalisation will also make people look for greater ease and flexibility in booking and cancellations. Over 80 per cent hotels today are either unbranded or standalone. It is these hotels that will have to do greater R&D to win the traveller back. The digital environment contains the largest catchment area of customers. Online presence, and increased automation is the reigning trend all through the industry - big hotels, or small.
It is known that the unprecedented storm has put the viability of a large portion of the industry at stake. Beyond the obvious, millions of jobs directly and indirectly as also the very process of economic recovery are at stake if this important pillar of inclusive growth is left tottering.
The Hotel Association of India has been pleading for a constructive PPP to put this engine of growth in steam and for responsive and supportive policies, tax breaks, and moratoriums and so on to enable the industry to recover. The industry on its side has to start a new like startups, gathering the experiences of the last two years, keeping the long view in mind, prioritising plans, investing time in building teams that are attuned and qualified to meet the new age challenges, keep the focus on health and wellbeing of employees and guests. The industry is quickly adapting to new realities for business. Various studies have shown that more than 80 per cent of key managers see digital transformation as the greatest change and challenge. Apart from enabling health and safety confidence in consumers, it helps in quick decision making, easier response to clients, increase efficiency, reduce cost and helps in survival by impacting the bottom line - revenue. WTTC reports that some European countries are facing a different problem—of staff shortages. In the immediate future, one area of opportunity will be the capacity to blend business with leisure and reorient the hotel facilities accordingly. Hospitality is a service industry and new and unique experiences will be the greatest demand of future consumers. In that sense how to maintain a personal touch in a contactless era will continue to challenge the imagination and innovation of the industry.
MP Bezbaruah is Secretary General, HAI
