One of the major factors that have a huge impact on the Hotel Industry is the Social and Economical Environment. No matter how well developed and organized an accommodation business is, it cannot avoid completely the effects of a crisis – especially when this crisis has to do with the safety of the travelers. It is no surprise at all that the impact of the COVID-19 on hotel revenue is enormous, with massive cancellations and some properties even suspending their operations.
Of course, this doesn’t mean that a thorough crisis management strategy cannot ease the intensity of the impact. Hotels who have made the necessary planning in advance, can always reduce the negative impact and ensure their sustainability. At the same time, comprehensive revenue management is able to smoothen the losses and protect the hotel’s long-term business.
The main result of a crisis – as far as the hotels are concerned – is the extensive fall of the hotel occupancy rates. Guests reduce dramatically their interest to the travel destination and the offer becomes by far higher than the demand. Which is the best way for a hotel to react to such a crisis? Should we focus on the short-term and more critical issues or we need to take into consideration possible long-term sustainability challenges as well?
It is a widely used practice by many hoteliers when the demand is really low to provide huge offers so as to attract the few interested travelers. Don’t do it. Guests don’t travel because they are afraid to, not because of the prices. No matter if you offer an 80% discount, they will still be afraid to travel. Of course, you will need to review your rate policy and follow the trend of the market, but you must always remember that after the end of the crisis you will need to raise your rates again and this will not be easy at all if you have destroyed them during the low-demand period.
Due to the rise of the cancellation rate during a crisis such as the one that we experience with COVID-19, many hoteliers try to set more strict policies. Don’t do that. People will not book any Non-Refundable Rateplan unless they are confident that they will be able to travel; and during a crisis, they are not. So, make sure that you will offer the flexible cancellation policies that they are looking for.
Since your chances to receive reservations for stays during the crisis period are limited, try to increase your reservations for stays after the crisis. Be creative in designing packages with reasonable discounts or added values and – as mentioned above – stick on flexible cancellation policies.
A crisis can always be turned to an opportunity. Explore more options regarding your demand and targeted markets. Examine the possibility to redesign your strategy by using new Sales Channels and targeting new Countries or Types of Guests. Once this crisis is over you will be prepared for future challenges.
The impact of the COVID-19 on hotel business has been proven to be in many cases devastating. In order to survive from the crisis, the hotels must successfully struggle with day-to-day challenges and build a thorough long-term strategy that will help them recover from the damages of the crisis period.