OPPORTUNITIES FOR THE POST-PANDEMIC GUEST:MORE BRAND LOYALTY, LESS PRICE SENSITIVITY
AUTHOR: Lynn Zwibak, CRME, is a revenue management expert and educator. She has over twenty years of hospitality experience with Marriott, Hilton, Crestline Hotels & Resorts, and several independent hotels. She is an adjunct professor of revenue management at Virginia Tech University and a revenue management training consultant.
There is no doubt that the coronavirus pandemic has wreaked havoc on the global hotel industry. It has led to the loss of millions of jobs and billions of dollars, not to mention the countless business trips and vacations that were disrupted.
But the pandemic presents opportunities as well; but only if we can properly harness the changing consumer behavior once the recovery begins.
THE INTERNET IMPACT
First, we must examine where we are currently, and how we got here. Around the turn of the new millennium, the first on-line travel agencies (OTAs) began to make their appearance; Expedia Group and Travelocity began in 1996, Booking Holdings began in 1997, and Orbitz began in 2001.
Since then, OTAs have come to dominate the landscape when it comes to searching for, and booking, lodging. About half of travellers under the age of 55 prefer to book hotel accommodations through metasearch or OTAs. This migration to intermediary channels has led to two trends that have threatened hotel revenues and reduced the effectiveness of revenue management practices. Those trends are increased price sensitivity and reduced brand loyalty.
Image Source: The Evolution of OTAs in the Hotel Industry, Hotel Tech Report, September 9, 2020
THE POST-PANDEMIC GUEST
The pandemic has led to significant changes in customer behavior. If properly harnessed, we in the industry can shift the focus to value rather than price, and de-commoditize the hotel product to reinforce the power of the brand.
There are four new customer behaviors identified by RateGain, as presented at the HSMAI MEA ROC Conference in December 2020, that provide such opportunities.
Specifically, the post-pandemic guest:
Understands the economic impact,
Puts health first,
And is more social.
Let us examine the opportunities presented by each of these behaviors.
60% of guests surveyed punished brands for being insensitive in their response to the pandemic. This tells us that people are paying attention to the specifics of a brand, and what it stands for. Guests recognized the power of the brand as an entity with values and social impact. In this case, the impact is negative but the opposite must be true as well. If guests are paying attention to brands’ responses to the pandemic, it is safe to assume that they are also recognizing, and rewarding, brands that respond in a way that they approve of.
Additionally, guests are recognizing that brands stand for something. Now more than ever, guests will seek out brands that they are familiar with, that they know and trust, and that they believe in. Not only does this bring back hotels’ opportunity to distinguish themselves on factors other than price, but it also contributes to the perceived value of the product. Guests will be willing to pay more for the assurance that comes from a brand that they value.
UNDERSTANDS THE ECONOMIC IMPACT
In the twenty years of my hotel career, I have worked in Sales and Revenue Management on three continents. In all markets and cultures, there has always been an undercurrent among guests that we owed them a discount. It was almost as if they forgot that we were a for-profit establishment. I am not saying that I ever gouged customers, but there were many transactions I had to turn away because the price they were demanding would have lost us money. In this crisis, there has been a worldwide focus on the impact on business. Communities and municipalities are running campaigns to support restaurants and other local establishments, recognizing that these businesses need to make money to survive. Customers are becoming more understanding that they must spend money to keep the business viable and prevent the economy from collapsing. Hotels have an opportunity to capitalize on this renewed awareness by highlighting the value that they present while maintaining reasonable price levels. If we can refrain from deep discounting, perhaps we can retrain the public that the goal is not to get the cheapest price, but rather to pay the appropriate price for the value that they receive.
PUTS HEALTH FIRST
With the increased focus on safety and sanitation, guests will be reaching out to hotels more than ever before. They may want clarification on policies, the information they could not find online, or to make special requests. For example, while booking a staycation in Manila, an acquaintance corresponded with the hotel several times prior to arrival to schedule the swab tests, as well as time at the pool and gym. This provides a new opportunity for hotels to engage with customers before their stay, and even before the reservation is made. Hotels can use this opportunity to build a relationship with the guest. Not only can they build trust, which encourages a guest to choose that hotel over a competitor. But they can also seize this chance to encourage the guest to book direct. Perhaps a direct booking discount or another, relevant promotion, could be offered. Once the guest is on-site, the hotel has another opportunity to build a relationship and develop trust. This can be done by clearly communicating and following through on all safety measures, as well as effectively honouring any special requests.
IS MORE SOCIAL
Prior to the start of the global pandemic in early 2020, people were consistently moving more of their lives online, from online purchases to streaming video to social media. But once the lockdowns began, even more people began to move their lives online, including those that had been resistant previously. This includes people who had resisted the continuing move of life on-line, as they had no other choice. And now that people are familiar and comfortable with the variety of services available virtually, they are likely to continue using them to some extent once the crisis is over. In addition to the ability to engage directly with the customer and build a relationship, this focus on social media specifically provides the final opportunity of the post-pandemic guest. More than ever before, guests are sharing their experiences online and making their thoughts and feelings available to hotels outside of surveys and other formal methods of direct customer feedback. This gives the hotel operators a unique opportunity to learn of guest sentiments of which they may otherwise not have been aware. For positive experiences, the hotel can thank the guest and reward them with a special offer. For negative experiences, the hotel can address the concern via social media, so that all followers of the post can see the service recovery in action. By engaging directly through social media rather than the less-personal channels of the past, hotels can be more agile in their responses, and better able to personify the hotel and brand. Despite all the negative that it has brought to the world, the global pandemic does provide opportunities for hotels. It has led to changes in guest behaviour that will most likely continue well after the world re-opens for travel. If we can harness these new behaviours of the post-pandemic guest, we can rebuild the focus on brand and value, undoing some of the commoditization and focus on the price of the last two decades.
WATCH MORE ON THIS TOPIC
THE SECRET SAUCE TO WINNING THE NEW HOTEL GUEST