The seismic shock of the Covid-19 pandemic highlighted to many organisations that they weren’t ready to deal with such an all-engrossing crisis. In 2021, consumer expectations of a rapid recovery are lower.
What travel and hospitality businesses have done to gear up for recovery in 2021: lessons from high performing organisations
The last twelve months has seen unreliable market forecasts, swinging like a pendulum, under-estimating the level of recovery in Q3 2020, and over-estimating future growth in Q4 2020. It is not only the innovative and responsive businesses that will emerge stronger, but those who are insightful. Tim Davis, founder and managing director of travel and hospitality management consultancy PACE Dimensions, shares his insights into the winning ways that organisations most primed for recovery are employing.
1. Future proof for long term resilience
Full recovery in the travel, hospitality and leisure sectors will differ by market and will greatly depend on the purpose of travel. Recovery and the return of demand to 2019 performance levels globally will likely take at least another five years. As recovery will be cautious, and the early start of demand will be price sensitive, organisations need to build a resilience strategy for a five-year approach.
2. Research investment builds competitive edge
Trends such as rates of recovery, demand, domestic marketing focus, mixed-use real estate and repurposed spaces are shaping how the travel industry is reacting to the pandemic. Travel and hospitality businesses need to develop forward looking insights on the market and the lines of business with the greatest potential and rate of return, and then pivot the marketing and resources to support and prioritise.
3. Revenue professionals’ balancing act
Revenue professionals who focus mostly on tactical price control will have to broaden their horizon in the future when travel resumes. Businesses need to increase their focus on revenue per trip against the demand and price, with the background knowledge that sub-optimal demand will be the norm for the next four years. Maximising all possible areas of revenue per guest, with the support of frictionless technology to merchandise at every relevant opportunity, will aid turning operations into profit.
4. Return on investment
Businesses should consider repurposing spaces that will not be utilised, moving to mixed-use spaces and embracing new norms from remote and flexible workforces. Large spaces traditionally found inside hotels that are unlikely to attract the same revenue as before – such as conference and banqueting facilities – are being repurposed. Expect to see some of the fastest changes in this area, with events space being dedicated to new work-from-hotel membership clubs. Already a trend pre-Covid, but likely to be accelerated, in the future greater mixed-use developments will combine hospitality, retail and working spaces delivering first-class experiences.
5. Building an agile operating model
It’s recommended that businesses transform their operating model to build greater agility, speed to innovate, and discipline in execution. Executing well is as important as a good strategy.Technology innovation has rapidly reduced the time for the fastest growth companies to move from new market entrant to dominance, and increased the level of disruption to industries.
6. Accelerate adoption of digital resources
This has been a period of accelerated digital adoption as customer buying behaviour has shifted to brands that have empowered them with the choice, control, and confidence.Winning brands have made the customer experience frictionless, reliable and consistent. Instead of investing in large, cumbersome new systems, savvy hoteliers are focused on subscription-based technology partners who can provide platforms that can truly integrate across various systems. it is important to focus on customer experience and broadening what can be sold to customers.
7. Build sustainability into your long-term plans
Travellers of tomorrow are acutely aware of their environmental footprint. Rising legislation and penalties, access to financing and broadening customer brand appeal are all growing drivers of change as well as improving operating efficiency. The combination of political, legal, economic and societal trends will start to generate green and sustainable choices that consumers have a high propensity to buy.
The seismic shock of the Covid-19 pandemic highlighted to many organisations that they weren’t ready to deal with such an all-engrossing crisis. In 2021, consumer expectations of a rapid recovery are lower. Stimulus will be more constrained, and governments more cautious at removing restrictions. To be successful in the future requires the agility to manage and respond to major events, with increasing frequency. Corporate machines need to learn to act with greater agility and speed.
Tim Davis is the CEO of PACE Dimensions, a research and management consultancy firm specialising in travel and hospitality. Prior to founding PACE Tim Davis was Senior Vice President at Hilton Hotels Corporation. PACE Dimensions has recently launched research programmes to assist travel and hospitality businesses in these turbulent times and beyond, with insights to develop a competitive edge.
