A budget season like no other
To say that 2020 has been a challenging year in our industry is an understatement. So much has changed and so much remains unknown. As independent hoteliers and boutique properties head into the heart of budget season for the upcoming year, there are more questions than ever before.
What if there’s no reliable COVID-19 vaccine until mid-next year? How will the airlines and transportation industry changes affect our business? Is RevPAR even a useful metric to evaluate revenue streams these days? Which all ladders up to the most common question we’re hearing from our partners the past few weeks: How do we make the most of our planning efforts for 2021 given so much uncertainty?
The good news is that we’re all in it together. Nobody knows what will happen, so nobody can be expected to know it all. That said, there is much to be learned from one another. Through conversations with our partner hotels and other industry professionals, we have three observations to highlight:
Travel will likely not return to “usual” anytime soon This may seem obvious, but it’s important to keep in mind that even when a COVID-19 vaccine is widely available, the economic repercussions will have lasting effects on travel budgets in both the business and leisure sectors. Global recovery will likely be slow and gradual. Which is to say, when budgeting for 2021, consider that any “temporary” budget decisions you’ve made in 2020 (staff reductions, fewer amenity offerings, etc.) will likely need to remain in place throughout much of 2021. Your guest profile may look very different than it has in the past If you think you’re a business hotel, you may want to think again. Many of our partner properties that typically cater to business travelers have shifted their focus to local or regional leisure travelers who are looking to “get out of the house” for a night or two. Some formerly business-focused properties are creating deals tailored to parents who might want to escape the kids for a romantic weekend, while others have offered multi-room deals to encourage parents to bring their entire “pod” along with them. A large portion of leisure travel going into 2021 will be from local and regional drive markets.
Regional demand provides a great opportunity to excel at direct bookings A large portion of leisure travel going into 2021 will be from local and regional drive markets. Most hoteliers would agree that their marketing efforts in far-flung corners of the world are probably better executed by online travel agencies. Conversely, hotel marketers have a much easier time relating to the desires of those guests who are in their own backyard and can craft on-point messaging and promotions. This is the perfect recipe for driving direct bookings and reducing OTA dependency in the future. Direct bookings not only reduce commission expenses and provide situational and seasonal marketing flexibility, it also opens the door to establishing lasting relationships. And while no two properties will have addressed the current crisis in exactly the same manner, many now do have one thing in common: optimism. Even in these difficult times, hotels have recognized the opportunity to evaluate their strengths and weaknesses and focus on business decisions that provide greater adaptability to changing market conditions in the future. And that’s a good thing, whatever 2021 may bring.