Measuring the Impacts of COVID-19 on the Hospitality Industry

It is easy to see why the hospitality industry receives the heaviest blow from the COVID-19 pandemic. Flights cancelled, countries locked down, public transportation, and ride-sharing services suspended. Hotels, travel agencies, restaurants and many service providers are forced to halt operations to ensure the health safety for the general public. 

Nobody has a definite answer when things will resume their normal pace. What should hoteliers do to minimise the impacts of COVID-19 and to prepare for the new normal? 

Measuring the impacts of COVID-19 on hotel businesses 

When Asia got hit by SARS, hotels’ initial reaction was to cut rates. Those that did found it took over 18 months for them to get back to the original rate levels.  

Over 8000 people from 29 countries and territories were infected with SARS. But SARS was only categorised as an epidemic, and global travelling during this period was not restricted. 

COVID-19 is a pandemic. We cannot fathom the time it would take to put our economy back into gear. Experts estimate it might take more than a year for guests to return to hotels. 

The longer the pandemic lasts, the longer it takes for the hospitality industry to recover. According to Govinda Singh, executive director of valuation and advisory services at Colliers International, “if the outbreak lasts anywhere between three and six months, room occupancy [in Singapore] could fall by at least 10 to 15 percentage points to about 65 per cent.”  

In other words, COVID-19 impacts on hospitality and the entire travel ecosystem are tremendous and unpredictable.  

Keeping everything under control 

To understand the level of impact COVID-19 has on businesses, hoteliers first need to evaluate their positions and review all products and services. The ability to grasp where businesses currently are in the market will allow hoteliers to have a clearer picture of where guests are coming from and their demographics.

Read more: What does it take to transform the booking experience?

The insights gained can help hoteliers to develop suitable plans, marketing activities, and new incentives to retain customers, such as offering welcome-back packages or suspending events instead of outright cancellations. 

Hoteliers may attempt to lower room rates to increase occupancy, but the demand for reservations will not likely to increase during this period due to large-scale travel restrictions. Hoteliers, owners, and managers should not panic as the lower occupancy rate is expected in all regions. Furthermore, price cuts can create a backlash, such as customers’ resistance, when demand starts to pick up. 

Another area hoteliers should pay attention to is managing fears and speculation, particularly when many businesses already laid off staff and cut down hours to keep payroll low and reserve cash for other urgent expenses. 

Layoffs are unavoidable, but it is also crucial to boost the remaining team members’ morale and get them trained on cross-function tasks to maintain the hotel’s infrastructure for a post-pandemic world. 

Therefore, it is vital to ensure the health and safety of staff and keep them updated on the latest protocols and preventative measures to minimise the spread of the coronavirus. Proper hand-washing regime and facilities disinfection must be carried out diligently and regularly. 

What part does technology play in this picture? 

The hospitality industry has started to invest more in technology in recent years. Most notable results we can see are the development of hotel mobile apps to streamline bookings and the implementation of IoT devices throughout hotels to personalise guests’ experience. And let’s not forget the deployment of various hotel software, such as property management solutions, predictive maintenance software,revenue management, employee management, etc. 

Businesses that already have cloud-based solutions in place can now save more on costs by scaling down usage demands. Hotels can certainly take advantage of emerging cloud-based solutions to manage hotel processes without being physically present at the venue. 

For example, a cloud-based Property Management System that links with the hotel’s mobile app can keep guests engaged, automate the check-in/ check-out process, allow guests to unlock their rooms, and adjust room conditions according to guests’ preferences. 

Revenue management system (RMS) can produce accurate demand forecasting, which then helps hoteliers to optimise cost by minimising instances of overstaffing during this low tide. 

Forecasting also includes data related to housekeeping needs, the number of staff at the front desk, food purchasing, the number of servers in restaurants and valet parking, which when made available, can give hoteliers a better overview of areas that are most affected by hotel guests. 

Hoteliers can also leverage forecasting data and price suggestions to promote the right product to the right customer at the right time via the right channel and at the right price. 

Investing in an RMS or a cloud RMS can help hoteliers to optimise profitability in the long term. 

Read more: Must-ask questions when choosing a revenue management solution 

Light at the end of the tunnel 

We see several businesses live up to their hospitality commitments by helping society when they can during the crisis. Many open their doors and turn themselves into temporary medical centres or centralised quarantine facilities as hospitals in major cities like London and New York maxed out their capacities. 

All in all, waiting out the storm is challenging, but there are unique opportunities for management teams to implement creative initiatives and regain sustainability. 

Many hotel managers are utilising this time to conduct some deep cleaning and maintenance projects that are otherwise impossible to do when hotels are full. 

Hotels will need to demonstrate to both guests and staff that their styles of operation tick all of the sustainability boxes, from physical comfort to cleanliness, fast services, and more. These factors once were the key to success in the past, and they will continue to remain true in the future.

Are you looking for cloud-based solutions to help optimise costs and streamline processes for your hotels? Talk to our consultants today and explore the various options we have for you.