The current outbreak of an extremely contagious respiratory sickness is making its rounds on a global scale. It is clearly taking its toll on almost every business sector.
In particular, hitting the bottom-line of establishments in the travel, hospitality, lifestyle and retail sectors.
For those in the travel and hospitality sector, the instinct is likely to protect revenue loss through price-slashing or discounts, or to lower costs such as reducing employee headcounts or shortening business hours, etc.
But there is also the other side, where a silver lining awaits.
Using SARS Or H1N1 As Predictor On Normalisation After COVID-19
An important factor to have in mind when the SARS or H1N1 outbreak occurred over a decade ago, it was at a time when social media was limited to LinkedIn and Myspace. The global digital information infrastructure too did not have the same convenience and immediacy of the online communication as what we have today.
In other words, during those periods of contagious outbreaks, travellers wanting to go on their leisure or business trips could not immediately check on day-to-day news for situation updates.
On the other hand, the actual business recovery and normalcy from SARS were relatively quick:
- Within one month after Hong Kong was declared SARS-free, the travel market and hotel occupancies rebounded back to 70%. It even surpassed the pre-SARS 12-month average within 2 months (South China Morning Post, 19 February 2020).
- Guangdong showed 70% hotel occupancy, mere weeks after they were removed from the WHO list of areas with local transmission (STR, 14 February 2020).
- In Singapore, hotel occupancy rates rebounded within 60 days of being declared SARS-free (South China Morning Post, 19 February 2020).
Recent research conducted by Kantar China Insights supports this. For example, while travel has been one of the heaviest hit industries in China due to COVID-19, with more than 90% of respondents cancelling or reducing travel plans, the industry is expected to rebound quickly (Kantar China Insights, 13 February 2020).
For those who have had to cancel plans, the wanderlust urges are hard to contain; the survey showed that 45% of respondents mentioned ‘travel’ as activities they were itching to do. Overall, respondents ranked travel as number 2 on their list of activities to immediately resume after the epidemic passed.
This is reflected in the after-effects of past outbreaks that came back even more favourably for the travel and hospitality industry.
The formidable medical systems that were set in place during the respective outbreaks has also led to reduction in reaction time for governments, as well as responses to containing COVID-19. Mr Parag Khanna, a geopolitical scientist, recently mentioned in an interview,
“Japan, Singapore and Korea, you can trust all three of them to get it under control because they’re rich countries with really good healthcare, even Italy too. Medical systems have improved. The ability to deploy health screening was instantaneous, be it distribution of surgical masks or temperature checks installed at every building, at the airport for everything, literally instantaneous, overnight.” (Skift, 4 March 2020)
For example, in Singapore, the government has already announced a slew of measures to assist the travel and tourism sector, as well as for workplaces, to help recover efficiently from COVID-19 (The Straits Times, 18 February 2020).
Measures For The Hotel and Travel Industry
According to industry watchers, a rational approach would be to bite the bullet, sit back and start taking stock of the business in terms of reviewing inventories and operational and non-operational procedures. Industry experts emphasize the importance of a robust revenue management strategy that will support the business long-term.
“The bottom line for hotels operating across the APAC region is, less of a time to panic and more of a time to plan.” – AccomNews Australia, 2 March 2020
From a revenue management standpoint, cutting rates and cancelling all projects may have some impact for the short-term, but it’s a proven fact that this short-term ‘solution’ does not drive demand. Instead, it will just eat away at the already tight bottom-line.
Competing properties might follow the footsteps of others in cutting on prices, but may not be in a favourable position to increase prices when recovery starts. Understandably, one will also have to contend with resistance from the general public, that the ‘normalisation of rates’ is a form of price increase.
‘It may take a few minutes to lower rates but it can take literally years to bring that ADR back up again.’ - Revenue Hub, 4 March 2020
To learn more about the impact of cutting prices, take a look at the article on from Master of Science Thesis in International Tourism Management; titled “The Impact Of Swine Flu (2009 H1N1) On The Tourism Market”. It shows tourism providers' reactions to the decreased demand following the H1N1 crisis.
“Hotels with a loyal customer base and a strong brand image which focused on providing a high-quality service and increased their marketing expenditure, did very well. While hotels, which implemented measures against quality or strong image, cut costs and, as a consequence, had to reduce prices, performed the worst”. -“The Impact Of Swine Flu (2009 H1N1) On The Tourism Market”
What Can Hotel & Travel Brands Do Before The Storm Passes?
Focus on Driving Direct Bookings
Hotels and travel brands can shift their focus to their domestic market, offer staycations, chase for business events, etc. Hotels can be more aggressive with ‘book direct’ marketing instead of totally depending on OTA (online travel agents) that eats into revenue percentage.
This is not the time to cut your marketing budget; the strategy would be to reroute it instead to focus on current customers.
Using loyalty programs, hotels can improve the relationship with their repeat customers while ensuring direct bookings. This also allows for better management of inventory and rates.
Tweak Travel Cancellation Policies
Many cruise liners have relaxed their cancellation policies in the wake of COVID-19. This helps in allaying customers’ fears, as they are then less likely to cancel immediately or refrain from booking entirely.
For many potential customers who want to travel but are currently unable to, they might be more malleable to booking in advance, as long as cancellation policies are favourable.
Be Prepared for Recovery And Plan Strategies For Next Two Quarters
Most hotel, travel or hospitality brands are usually too busy to review budgets for a brand revamp or website update. During this temporary ‘lull’ period, their marketing teams can get together to actively initiate their plans and ‘press-start’ that long overdue branding activities.
For brands looking to expand into other markets, this would also be a good time to begin planning for their marketing strategy.
For example, for hotels looking to diversify their portfolio across other countries, this would be the right time to start the production processes for concept, content, promotion campaign matrices, etc.
Instead of waiting for restrictions to be lifted before restarting their marketing campaigns, brands that can appear ‘business-as-usual’ will be first to receive a positive response from their global guests.
By showing their solidarity with global travellers, brands are cultivating that vital goodwill, especially with regular guests who must be feeling rather blindsided.
When the restrictions lift, the expectation is that the global guests, especially the FIT segment, will flood back out, right into the brands that are most welcoming.
The aim is hence to continue maintaining your brand presence through your online and offline channels. Distribution and marketing can go a long way with a plan to convert them later.
IPPWORLD’s Faith In The Hotel and Travel Industry
As a service provider of creative translation and multilingual content management for the travel, hotel, hospitality, lifestyle and retail sectors, IPPWORLD have weathered the storm during SARS as well as H1N1 outbreaks.
Indeed, history has shown that these storms certainly will pass; even though we are in present times caught in the eye of Covid-19 storm.
To support our hotel and travel clients capitalise on this downtime to revitalise their global online and offline marketing content, we at IPPWORLD wish to reciprocate, in a modest way, during such unexpected low season.
As a show of faith that the industry will rebound, IPPWORLD’s gesture is an offer of short-term discounted rates for development of localised content.
This offer is specially extended to establishments engaging with or marketing to global travellers or consumers in their respective preferred native languages.
Our proposed offer on reduced rates are for specific transcreation and localisation work scopes and applies to all orders received from March 2020 until the end of May 2020.
As a dedicated service provider for this industry, we are definitely in it together with our clients. We are confident that the industry will and can overcome this situation… and to bounce back, even stronger.