COVID-19 hit the travel industry like a tidal wave, and hotels have spent the past several months being tossed around like a cork. Now, for hoteliers, it's time to find the surface and start swimming.
Make no mistake, hoteliers will need to adjust to a new normal going forward. But there are ways to power full steam ahead toward profitability.
Here’s how hotels can succeed in a post-COVID-19 world:
1. Construct a Recession-Proof Operation
Hoteliers need to prepare for a bumpy ride. U.N. jobs reports put global job losses close to 200 million. Chances are that as things level off, many of those jobs will come back — but many won’t.
Alarmingly, all signs point to an extended global recession. One World Bank report suggests the global economy will shrink by 5.2% this year.
Luckily, hoteliers don’t have to sit back and watch their operations crumble. They can use data to recession-proof their hotels now and reap higher profits during tough economic times. Here’s how:
2. Focus on Profit
Relying on revenue numbers alone to set hotel strategies has never been a good idea. During a recession, it’s easy to see how limiting metrics like RevPAR really are. As hoteliers see less and less cash coming in, it’s critical to focus on how much money is flowing to the bottom line. That means using more complete metrics, such as gross operating profit per available room (GOPPAR), to benchmark performance.
3. Improve Operations
With less revenue to work with, hoteliers need to make up ground elsewhere. The best way to boost profit during tough economic times is to lower operating costs and increase productivity. By diving into operational figures, hoteliers can see which parts of the operation are profitable, and which operations to pull back in order to free up cash.
4. Trim Costs
The leaner a hotel operation is, the more easily it can roll with the punches. That’s why hoteliers need to take time now to reexamine costs, such as:
Food and beverage (F&B) costs
Maintenance and property costs
Cutting costs across the board may not make sense. But by looking at where money is flowing, hoteliers can see where cutting back makes the most sense.
Make Customer Safety and Experience a Priority
Regardless of how drastically visitors’ behaviors change in the wake of COVID-19, one thing will remain a linchpin of hotel success: customer experience.
For hoteliers, now’s the time to reexamine spaces and invest in subtle changes that will create a more pleasant customer experience. Here’s a short list of additions to consider:
Sanitation stations — Visitors will have germs on their minds for long after the COVID-19 era is over. By adding sanitation stations at entrances and exits and other public spaces, hoteliers can encourage better hygiene and peace of mind.
Self-service payment systems — Hoteliers don’t need to eliminate cash altogether, but adding self-service payment options keeps hotel guests from passing germs on to employees. Plus, it adds a layer of convenience for guests who want independence.
F&B mobile app deliveries — By adding mobile ordering options to F&B or other room-service functions, hoteliers don’t just ease the fears of guests who are uncomfortable congregating. They can also open up new revenue streams from customers who aren’t staying at the hotel.
Before making big investments in new infrastructure, it’s best that hoteliers familiarize themselves with current maintenance costs. By understanding how much is being spent now, it will be easier to see where it’s feasible to add new resources in the future.
Keep a Close Eye on Labor
In the months and years ahead, employers across the hospitality industry will need to rehire staff and bring employees back into the fold. Unfortunately, it’s tough to build a successful hiring plan when the future is murky. And there are many questions floating in the air:
Will there be a second wave of COVID-19 cases?
How long will it take for the global economy to recover?
What will travel demand look like in the future?
With many unknowns lingering, hoteliers need to be prepared to adjust their labor strategies quickly. That all starts by examining key metrics:
Management wages and salaries
Nonmanagement wages and salaries
Outsourced labor totals
Admin and general labor costs
Sales and marketing labor costs
Going forward, successful hoteliers will use data to drive payroll decisions. By keeping a finger on the pulse of labor costs, they’ll have the raw materials to set up hiring plans for every scenario.
Use Data to Steer Post-COVID-19 Decisions
It may take a while before travel markets stabilize. When they do, the hoteliers who have a firm grasp of their operational benchmarking will come out ahead. Even if the hospitality industry continues to face choppy waters, hoteliers who use data to chart a clear course will have everything they need to convert higher profit.