Snatching Defeat from the Jaws of Victory.
Looking to the Autumn/Winter season, undoubtedly this will be a difficult and troubling time for the hotel industry. To say that it is unprecedented would be an under-statement. It is reasonably expected that something approaching ‘normal’ trading will return no sooner than Q2 2021 and therefore the next 7 months will pose significant challenges to hotels and indeed the wider economies of both Ireland and the UK.
Despite the constant stream of bad news and seemingly never-ending portents regarding the ‘end of the world as we know it’, operators need to maintain a measure of pragmatism and dare I say it, optimism. In essence, as we head towards what is already traditionally a challenging season for hotels, you should nevertheless strive to ensure some level of continuity in your business and whereas it may not be possible to remain open 7 days a week, it is vital that you sustain your hotel’s visibility so that when there is a pick-up – and there will be – you are in poll position to take advantage of this.
For context, whereas the industry has been rocked with recent announcements by Booking.com and Expedia to significantly reduce staff numbers worldwide, equally for example AirBnB are pressing ahead with their IPO while Dalata – despite reporting significant losses in Q1/Q2 2020 – recently committed to two further UK leases in Birmingham and Manchester. These moves alone suggest at least measured optimism for a recovery.
(Indeed, Britain’s loss may be Ireland’s gain with the latest chapter of BREXIT as FDI companies look for a more stable, less volatile location for gateway access to the EU. Possibly.)
To be clear though, OTAs are an essential part of any hotel’s distribution mix: love ‘em or hate ‘em, 3rd party agents can provide brand reach that independent hotels would be unable to achieve and are therefore a critical element in the digital eco-system. That said, as OTAs pair back their presence in the market – Expedia has pulled back for example on some Meta-Search activity – this does leave hotels with less competition for Page One rankings and therefore now could be the right time – counter-intuitive I know – to invest in increasing your online visibility to drive more direct business.
And why direct? Because bookings that come through your own website have a much lower cost of sale: we actively seek to reduce costs with utilities such as electricity and gas so why not your business development?
In terms of demand, our own experience here in Great National is that regionally based hotels are seeing a significant increase year on year in bookings through to December 2020; ADR and ABV are both holding steady and this indicates the strength of the latent demand we highlighted earlier in the Summer. Admittedly this is primarily domestic and may be finite however there is an emerging trickle of inbound demand which also seems to favour provincial and coastal locations. Corporate demand is starting to rebound also.
As to what to do to maintain your rooms’ business in the coming weeks and months, here’s a short list which might help:
- Re-align your yielding to allow for late pick-up
- Recalibrate your channel mix and renew your focus on direct
- Drive repeat demand and encourage referral
- Refresh your site content to maintain organic Google rankings
- Avoid ‘Bucket Shops’ aka deal sites
- Forensically manage your PPC, CPC and CPA
- Implement a flexible cancellation policy
- Keep close tabs on your competitive set
- Twice-weekly analyse your pickup, drop-off, pacing, etc.
The above list is by no means a ‘silver bullet’; nor is it conclusive however by applying a granular approach to managing your rooms business, you will see real, sustainable results which in turn have the potential to deliver what we all strive for in business – and life – and that is, certainty combined with a sense of control.
Macro-wise, clearly government has a role to play in protecting business and enabling it to deal with this unprecedented melt-down. And rightly so: 1 in 9 jobs in Ireland are in tourism, in the UK, it’s 1 in 10. Measures implemented to date both in the UK and in Ireland have been broadly effective. With the benefit of some semblance of a Summer banked, these reserves will, however, be insufficient to see hotels through to Spring next year and therefore more is needed. And pronto.
This includes for example a continuation of wage subsidy schemes and in Ireland’s case a radical recalibration of VAT. As to affordability, money has never been so cheap so governments should be borrowing their way out of this crisis, unlike the last crash which was underscored by prolonged austerity and therefore delayed recovery.
In reality, seeing out this pandemic will be a combination of continued, practical State supports with the efforts and commitment of business owners; banks and financial institutions including insurers also have a role to play here and should not be permitted to shirk their responsibility as was the case in the GFC – the recent ruling in the UK regarding the validity of business interruption cover is most welcome. Similarly, though, we all, as both citizens and consumers, have personal responsibilities in what is, in essence, a social contract to avoid snatching defeat from the jaws of victory. And as for the ‘anti-maskers’… it’s a mask, it’s not a political statement.