COVID-19’s effects on the hospitality industry have been wide-spread, shutting down properties and reducing travel and leisure across the world. Lodging businesses who have seen impacts of the pandemic hitting the bottom line should strive to emerge stronger and better prepared after COVID-19. As travel came to almost a complete pause, many hotels and resorts were forced to suspend operations. Now is the time to revisit the approach for a changing business landscape as the industry moves towards recovery.
The following are a few strategies for revenue management and financial recovery that will be important for lodging businesses to consider.
1 Consider a long-term pricing strategy for your particular property.
Soliciting demand by drastically reducing rates may not be sustainable in the long-term and may impact your brand and positioning in the market. Rate recovery is essential to regaining profits lost due to property closures and declines in travel. As margins will be tight following the crisis, incorrect pricing techniques may affect a property’s average daily rate (ADR) and, in turn, adversely impact net operating income and asset value.
2 Rethink your marketing strategies.
Create and manage customer demand as travel increases. Take this time to strengthen the resort’s brand and continue communications with guests and owners. There are several frequently asked questions that you may want to consider clarifying, including (but not limited to):
- What health and safety measures are you enacting?
- Does the property offer flexible reservation changes or cancellations in light of an unknown future?
- What services and amenities at the resort are open and/or closed?
It is critical as part of this strategy that the resort’s website is up-to-date and is prepared to serve as a resource for potential guests and owners to find the information they need and to make reservations.
3 Launch a campaign to rebook canceled reservations.
One way to potentially generate new reservations is to launch an email campaign to those travelers who had to cancel reservations during the height of the pandemic. This is business that was previously already won so offers a pool of travelers that have, at a minimum, familiarity with the resort and potentially, loyalty to the brand. Also, travel forecasts predict that demand from local feeder markets should rebound before other travel markets, so a focus on promoting in drivable-distance markets during the rise in demand could prove fruitful.
4 Don’t underestimate the importance of Business Intelligence, Data and Trends.
Different markets will recover at different paces. Knowledge of regional travel restrictions, governmental guidelines and COVID-19 response rates is imperative to understanding consumer behavior post-crisis. Historical benchmarking data and trends will be obsolete in the near future and won’t be a useful resource on which to rely. It is increasingly important to consider business intelligence tools, such as Power BI to provide business analytics to utilize moving forward. The uncertainty of COVID-19 has led to discussions of the virus being seasonal. If that is the case, any new insight on profitability, booking and cancellation patterns and business opportunities will help in the decision-making process in the event of a future pandemic.
As stories of heroism from medical personnel, first responders, volunteers and other essential workers emerge, several lodging businesses emerge as centers of relief and are offering special or discounted rates to those serving communities during the crisis. The industry continues to adapt to challenges, and it is hopeful for recovery sooner rather than later. In the meantime, the importance of thinking ahead, strategizing for recovery and capitalizing on demand and revenue opportunities as they arise will help lodging businesses adjust to the “New Normal”.
Withum is a forward-thinking, technology-driven advisory and accounting firm, committed to helping clients in the hospitality industry be more profitable, efficient and productive in the modern business landscape. For further information about Withum, contact Lena Combs (LCombs@Withum.com) at (407) 849-1569, or visit www.withum.com.