In most crises, organizations can take a step back, examine the long-term strategy, deploy resources, and put their weight behind a chosen path. In the ongoing pandemic faced throughout the world, companies like governments (for lockdowns) had no choice but to take extreme measures by drastically reducing the workforce and other expenses. It was an instinct to survive. The environment is slowly changing and requires hospitality companies to take cognizance of their actions and review their strategic choices for the future.

Commercial functions and structures also underwent dramatic changes. The business models within commercial management had been evolving over the years. It will continue to do so as customer behaviour changes around travel, and it alters the consumption at hotels and resorts.

Complexity
Advancements in technology and changing consumer behaviour in the last decade led to the emergence of new functions to support commercial organizations. These functions have evolved rapidly and require expertise. The need to be out there and address customer expectations remains strong as ever in the hyper-competitive environment.

In the ensuing years, it created multiple layers of support built on top of each other. It led to commercial organizations ballooning into massive set-ups where experts converged under one roof. These structures evolved as clusters of support or managed under different umbrellas to deliver efficiencies to varied organizations.

A lot changed last year with commercial re-alignments and massive reductions in human capital, but did the changes reflect a long-term strategy?

• How can commercial structures continue to be simplified at all levels?
• What do efficiencies mean in the newly changed environment?

Capability
The changing environment of the past years also led to redefining the commercial organization. Structures referred to as ‘Marketing Organizations’ got redefined as ‘Commercial Organizations’. Did those changes lead to an ideal structure?

• Were companies able to identify true pillars for commercial successes?
• What are the new core capabilities? Was the support infrastructure redefined?

Today, every commercial organization needs to evaluate its core capability given the pillars for commercial success, which should help drive its forward-looking strategies. It would assist companies to focus on functions that need strengthening to leap forward. Hotel companies will need to examine their structure to stay efficient if their core capability is not driving their commercial performance. Should companies look for supporting capabilities in outsourced models?

There may be a need to minutely examine tasks for each function at all hierarchical levels for its operating environment and future growth pipeline. For example, in Unboxing Revenue Management, I have argued that hotel companies that believe that the core of their revenue strategy means having an advanced revenue system presents a great case to outsource revenue management. Similarly, one can question resources needed for public relations or digital and content marketing or distribution management. Should sales structures change to reflect on newer realities of localised environments?

It by no means is a simple exercise. It requires due consideration across a host of variables such as culture, core strengths, organizational structures and the future view of the business and the company.

Talent
One of the most critical pieces of the commercial structures is the competency of the talent. It is not surprising that cost-based decisions have been the primary driver for layovers during crises that aggravated during COVID-19. As and when the recruitment process starts, hotel companies will choose relatively inexperienced talent at lower costs for greater efficiencies. It usually leads to a longer recovery curve.

As hospitality companies understand their commercial capabilities and resources, it would serve them greatly if they were to creatively use the experienced talent that is available in the marketplace. So how can hospitality companies use the abundance of talent available today to build a faster recovery path?

Strategic Alternative
Outsourcing is not an alien concept to the hospitality industry. Many functions and processes have been outsourced in the past to create efficiencies in the workplace.

Understanding hotel commercial capabilities and support that will serve well in a highly complex environment over the next few years will help build sustainable structures. Some companies find relevance in outsourcing as they operate with far few resources, and some do not pursue it as they project its support as adding value. Will companies continue to choose their traditional way of conducting business? or will they alter their strategy to move ahead?

Commercial organizations need to view outsourcing in the current environment as a strategic alternative that has the potential to influence performance and efficiencies positively.

The post Commercially Outsourced appeared first on Estilo Hospitality.

Almost a year ago, the Pandemic changed the narrative in every aspect. Across the hospitality, ecosystem hotels had to undergo the exercise of number crunching and reviewing multiple scenarios to arrive at a future outlook. The stakeholders such as the investors, the owners, management companies and many others want more clarity.

The entire exercise is complicated further with the ever-changing policies and re-introduction of lockdowns in many places. While some cities have enjoyed businesses returning to normalcy, it comes with its share of uncertainty that fluctuates with every single change in the pandemic story. 

Business on books even in current months have sometimes disappeared by 30% or more if the number of cases reported in a city/destination has gone up.  It creates a highly uncertain situation that is difficult to forecast.

Is Data Obsolete

One of the most common discussions within the management circles for at least a year has been about the relevancy of past data sets to project trends, comparing performances and gaining a foothold competitively. Rather many felt that the existing data sets have now become obsolete.  It has been a prevalent sentiment whenever hotels prepared forecasts/budgets or presented a strategy. 

To a great extent, the sentiment resonates –

• There is no basis of comparable performance – year on year pace is irrelevant
• Customer and segment mix has changed and will continue to evolve as markets open
• Channels of distribution are not as weighted as before – Some exert more influence
• Booking behaviour is now different and requires total flexibility
• Customer preferences have changed – Is your hotel in sync with customer behaviour?

The fact that every exercise including pricing, and forecasting has fundamentally been based on comparative past data has led many to believe that the datasets are unusable.  What current datasets can be used?

The Green Shoots

In recent months, destinations that have eased regulations and have been open for tourism have seen their hotel occupancies climb up.  Regions and Countries where domestic demand is a driver have seen hotel occupancies climb upwards due to lack of government restrictions.  Destinations that are primarily leisure-oriented have seen healthy occupancies in recent months. How did they fare comparatively with previous years data?

In a recent conversation I had with Gino Engels Chief Commercial Officer at OTA Insights, it became quite evident that the key in looking at meaningful data was to start examining trends wherever markets had opened up, and international travel was still valid.  According to Gino leisure destinations, such as Dubai, Florida, and many other locations had started building pace 3-months in advance for summer and winter periods last year.  OTA’s and Meta’s were key performing distribution elements in delivering healthier occupancies.

The data will always tell a story, whether aggregated or disaggregated. It will be critical for revenue heads to spot these green shoots, identify the micro-segments within a larger segment and extrapolate the data points to build a narrative. Identify the channels being used to book and construct a strategic case that helps project, manage and grow the demand.

Data and Data

There is no scarcity of data points used to build simulations and narratives to construct a strategy.  The revenue heads will need to dig at many fronts across a host of data points to put together the story, as the reasons to travel have changed.  An easier way to understand is to view data in different categories.

The Future

What are the emerging trends, and can they be aggregated? Seek out market intelligence about future pace across different dimensions, such as length of stay, preference for accommodation type, etc. 

• Examine hotel search data from metasearch, OTA and other different sources, and adjust strategy accordingly
• Look at all forward-looking data from flight searches, etc. and get an understanding of the volume of travellers expected to travel within your market
• Has your comp-set changed? Is it dynamic? Do not be limited to a pre-COVID static competitive landscape. Measure rates and availability against a wider selection of the competitors, which includes alternative accommodations
• Understand consumer sentiment and social behaviour by scanning all platforms

The Present

Is there an existing customer database? Deploy your customer data for a competitive advantage.  Seek feedback from your customers and cater to their needs by building appropriate experiences as their reasons to travel change.  Be ready to reach out and communicate with them.

The Past

There is always something to compare.  Spot the emerging trends and if the situations are comparable to any past event. Understanding various historical trends that could become comparable is key to plotting the way forward.

Above all, stay agile, be flexible and be ready to develop a Green Shoots Strategy.

The post The Green Shoots appeared first on Estilo Hospitality.

A facility like no other

Hotels for me have always been an enigma.  At the forefront, there is glamour, lifestyle, beautiful and functional spaces, interiors which one wishes in their own homes and a space that lets you be; And behind the scenes, it is a factory swarmed with people busy conducting various chores like a clockwork. While not as glamorous as the front of the house, they are buzzing with activities, aiming to achieve a common and a very simple goal. ‘Serving the Customer’.

Hotels are a place for people to unwind, to connect and to conduct businesses, to network, to be seen and to have experiences which take them on a culinary, festive, relaxed journeys. Hotels let their guests make joyful moments become a lasting memory.  While not always a perfect experience, it is the endeavour of each hospitality worker to provide genuine and caring service. 

But 2020 changed a lot to it.  Anything said towards the year gone by will be an understatement in itself, as the world and humankind at large have grappled with realities of the pandemic. While economies and businesses have suffered alike, one of the oldest industries in the world, ‘Hotels’ and Hospitality, in general, continues to have a tough time.

Hotels have generally borne the brunt of most economic crises in the past as travel reduces and companies and individuals scale back expenses.  But this time around it has been very different.  With lockdowns and closure of borders, hotels have been shut for too long yearning to come alive.

During my recent travel, a deserted airport, shut shops and practically no open food and beverage outlet was not a pleasant experience. Hotels running record low occupancies is a grim reminder of what has been the cost of the pandemic. 

As borders opened in some geographies and as lockdowns eased, many hotels were able to open their doors and welcome customers with beating drums, big and warm smiles and creating a safe and healthy environment for their guests. This is an inherent trait of the industry, ‘Welcoming and Caring’.

The resilience and feistiness of the hospitality industry has always pushed it to come through for its customers, and I believe that the industry will shine again like never before.

My sincere hope and wish that 2021 becomes a year where customers line up to recreate those experiences at hotels.

So, what will stand true in 2021 and beyond. My take on a few key elements

Hygienic yet Experiential

Pandemic days led hotels to get certifications for using the highest levels of cleaning products and develop processes to provide a safer and much more hygienic environment for its customers.  Hotels will need to keep spending more on its housekeeping as their customers will continue to hold them to a higher standard, even after the pandemic. Today is the new standard and Hotels have a responsibility to uphold this promise at all times to appear more competitive than the alternative accommodations.

The SOP’s created for hotels by various government agencies during the pandemic period should not deter hotels to build on their expertise to create memorable experiences for their guests.  Such safe practices may continue well into 2021 and hotels must bank on their competency to serve the customer, let their associates continue to create real human connections, and deliver high levels of service at all times despite restrictions. Remember, people want to travel and when they do, irrespective of the prescribed safety standards they would want to recreate beautiful memories once again

Pricing

There are deals all around. Not only the prices are at an all-time low, but the rate-driven restrictions that were either considered value add or protection against no-shows have disappeared. 

The mantra is ‘Total Flexibility’ and that may remain the norm well into 2021-2022

However, when everyone fights for the same piece of business, it usually leads to a hyper-competition that results in price wars.  Such drastic reductions in prices may have served the purpose at the height of pandemic to deliver cash flows to a certain extent, but can such practice continue to build on losses?

It would serve hotels well to build on a pricing strategy that helps to alleviate dwindling profit streams and assure hotel owners that the business turnaround will not be a 5-year process.

A price correction that reflects the change in segments and customer’s geographic base is understandable, but hotels are well-advised to hold on to their positioning and promise of the right experience which they will be able to deliver at the right price.

Customers also have a role to play.  Cannot expect quality if they are shopping for a highly discounted rate

Talent

Hospitality workforce have been affected along with other industries due to the pandemic.  There have been layoffs, salaries have been reduced and it has pushed aspirations of people behind by 3-4 years.  Too much experience has been lost and the cost of it is high. There is enough talent out there for hotels and companies to pick and choose when the demand returns.  Uncertain planning that comes with the Pandemic does not help but what would help is to ascertain needs when the demand is back.  You don’t want your guests to bear the cost of ineffective services and experiences

While it may take more time for consumer confidence to return to previously enjoyed levels, here is a strong wish for 2021 to be the year of recoveries, connections, joys, and mindful existences

The post Hotels Hotels Hotels – And a different 2021 appeared first on Estilo Hospitality.