As I write my first article during a global pandemic, my title inspiration comes from the Columbian literary superstar, Gabriel García Márquez. COVID-19 has rapidly decimated the industry I have worked in for over 20 years. There have been hardships before, but this one seems darker and more insidious than anything we have seen before. Nobody knows exactly what lies ahead, but the current reality is that thousands of our hospitality industry colleagues – many in my own personal network – have lost their livelihood or taken huge cutbacks in compensation and benefits.
March was a month filled with the bad news that was staggered by geo-location, as my client base lies across varied geographies and asset types. The last of the hotel assets in my portfolio closed down on April 1. As most business comes to a grinding halt with everyone in quarantine, it has become a time for deep reflection and reconnection. I have had the chance to speak with many of my industry friends who are reeling from the effects.
With the world in quarantine, I have been surprised to see many hospitality vendors already posting their “recovery and marketing guides,” as if this is just another minor hiccup and we are weeks/months away from business as usual. It is simply irresponsible to package a pandemic into a how-to guide. One of my close friends, industry legend Martin Soler, coined a term for this: vendsplaining.*
Vendsplaining (noun): When a hotel marketing/software vendor takes a complex problem – with specific implications for each individual client – and reduces it to a simplified ‘issue’ that their one-size-fits-all proprietary guide or tool can solve.
That term quickly inspired me to come up with my own term: vendcast.**
Vendcast (noun): A webcast sponsored by one or more hotel marketing vendors that addresses problems faced by hotels by offering regional or generalized strategies and tools.
* I have obtained Martin’s permission to use this word at every given opportunity.
**At the time of writing this, there are about seven vendcasts in progress, in which the vendors are vendsplaining how to beat the pandemic with a perfect plan/guide.
There is a ton of speculation on recovery timelines. I will not be doing that in this article, in case that is what you were looking for. But the one thing everyone can agree on is that a fundamental shift is inevitable in the way we operate hotels, restaurants, and airlines and plan our travel. This article is a summation of my thoughts on how things can and should change. Many of these thoughts arose from the time I spent on calls with travel industry friends, ranging from Jedi masters, asset managers, investors, clients, and…vendors who don’t vendsplain (yes, they do exist!). I am focusing on the two areas of the travel business in which I have been professionally engaged for two decades: Revenue Optimization and Marketing.
There Will Be Blood
First things first. Nobody is coming out of this unscathed. From a remote four-room inn to the 650-room big box brand hotel across from the convention center in a major city, every property will be affected. I have seen articles from some so-called experts calling this “a swing of the pendulum.” That’s incorrect, as this is more a swing of the ax. No matter what the recovery timetable ends up being in the end…people and corporations across the globe are recognizing inefficiencies in how they conducted business before the global shutdown.
Here are some of the major travel industry players taking a direct hit:
- Marriott: Marriott International (the world’s largest hotel company) started furloughing its employees on March 17. Arne Sorenson (CEO) suspended his salary for the rest of the year and all senior executives’ salaries were slashed by 50%.
- Pebblebrook Hotel Trust: Owner of 50+ assets in the US, Pebblebrook laid off 50% of its 8,000 employees on March 17. Jon Bortz (CEO) plans to lay off an additional 2,000 employees after the first wave of cutbacks.
- Union Square Hospitality Group: Danny Meyer, founder of the cult-favorite Shake Shack, laid off 2,000 employees, approximately 80% of its workforce on March 18.
- Airbnb: Brian Chesky (CEO) said he and his executive team will take dramatic pay cuts along with eliminating their marketing budget, which was to the tune of $800 million/year. Airbnb was reeling from losses even before the pandemic took hold, partly due to its extremely high marketing costs; now they are contending with anger from hosts and guests over delayed cancellations. Experiences are becoming their loss leader.
In summary, there is no AI-powered pricing software, content strategy, or digital marketing ad campaign that can help hotels recover revenue quickly. Acceptance of loss has to be the first step in what looks to be a slow recovery. Anyone offering a swift hack to get everything back to business, as usual should be avoided, like the coronavirus itself.
Hotel Revenue Management: What’s Next?
Some revenue optimization basics are always prudent, but all strategies need to be tailored to your location, as well as regional and global financial trends. Pricing is crucial but your product still has to deliver corresponding value. Amenities like breakfast, upgrades, etc. will be more relevant than ever. So letʻs not forget the basics: your databases, room types, distribution mix, and most of all your offering all impact your profitability. What I have outlined below are some broader changes that may be coming into play over the next several months and years.
by Vikram Singh, Global Hospitality & Travel Strategist
Source: Hospitality Net
The Mazatlan Post
