Emerging from the shadow of the pandemic, travelers are finding a new look for lodging
Remember the way things used to be in the hotel industry? Well, forget it. The lodging business has likely changed permanently as a result of the pandemic – in the experiences hotels provide and in the way they deal with customers. Lukazs Dabrowski, senior vice president-global supplier relations for HRS, the corporate hotel platform, says that when it comes to hotel-customer negotiations, “the less we try to compare with the old world the better.”
Dabrowski says he was based in the Asia-Pacific region when the pandemic began and now believes that the industry is learning to live with COVID-19. Universal changes may be permanent, he says, including a stronger focus on duty of care, cleaning protocols, employee location tools and a greater commitment to touchless stays, including contactless check-in, mobile room access and virtual payment.
According to Deloitte’s Hotel Outlook 2022, while health and safety remain a concern, business leaders are looking at longer-term impacts amid new ways to optimize travel spend. This includes catering to “laptop lugging” leisure travelers who are benefitting from remote work by taking more and longer trips, with bigger budgets.
In fact, pandemic-driven trends like combining leisure and business have gained significant traction. As a result, says Dabrowski, hotels are developing special amenities for those stays, including a high level of attention to making spaces as attractive as possible so longer stays “don’t feel like quarantine,” more variations in food menus and catering from outside the property.
Frank Passanante, senior vice president, Hilton Worldwide Sales – Americas, says the company has seen an increase in extended stay bookings, which the company attributes to remote workers traveling back to their offices or company headquarters after moving away during the pandemic. (Extended stay lodging brands have been a big winner in this period – the only segment that has consistently surpassed 2019 levels in rate and occupancy.)
Brands, forced to be innovative, are creating solutions, some of which are here to stay. Work From Hyatt, launched in 2020, facilitated working remotely with amenities like a dedicated workspace, free WiFi, food and beverage credits and more. And the company’s Office for the Day provides private use of a room for the day, WiFi, access to health facilities and dining discounts. Similarly, Hilton introduced WorkSpaces by Hilton, converting hotel rooms to private office space for daytime use.
“We do recognize that business travelers are working differently,” says Dorothy Dowling, senior vice president and chief marketing officer for BWH Hotel Group, which operates Best Western, “and their hotel room is becoming an increasingly integral part of their workflow when on the road.”
The majority of returning business travelers are salespeople, says Dowling, and they have had to change their approach to sales when many of their clients are not in the office or have restrictions around visitors onsite. “The way that today’s business travel is using hotel space is different,” says Dowling, “and it’s important that we recognize and adapt to their evolving needs.”
Wyndham Hotels & Resorts, says Carol Lynch, senior vice president, global sales, North America, is fortunate that many of its business travelers have been road warriors throughout the last two years. The everyday travelers who need to be on the road to do their job never stopped traveling, she says, adding, “whether it’s a project manager at a warehouse or crews building a renewable energy plant – our guests know they can count on Wyndham wherever their journey takes them.”
While innovation is necessary, some companies recognized the benefits of retaining their core message in the face of the crisis. Omni Hotels & Resorts, says Dan Surette, chief sales officer, is determined to maintain a full-service experience because that is at the heart of the brand’s promise. That means daily housekeeping (when wanted), full-service restaurants and personalized attention.
Despite these trends, Derek DeCross, senior vice president of global sales for IHG Hotels & Resorts, says business travel in 2022 will be “a positive surprise” for many people, especially in the latter half of the year. The recovery is being led by small and medium-sized businesses, DeCross notes, and IHG expects continuing growth in consumer demand driven by relaxed travel restrictions, increasing flight availability and the return of global events.Expectations Meet Experience
Inside hotels, travelers can expect a transformed product. As a result, communicating with business travelers about what they can expect, says Julius Robinson, chief sales and marketing officer, US and Canada for Marriott International, is essential to continuing to build confidence in travel. Options like mobile check-in, mobile chat and mobile dining, says Robinson, “all create a better, more powerful guest experience and provide more personalization for guests - with services when they want, and how they want.”
Passanante says that taking the pandemic as an opportunity to “pause, listen and understand new traveler preferences and demands,” Hilton found four consistent themes that summarize the pandemic-changed traveler: Increased efficiency, a focus on wellness, refined passions and a stronger sense of caring. As a result of their findings, he says, Hilton has revisited fitness, culinary and cultural experiences to meet those shifting sensibilities.
Hoteliers, says, Philip Bates, CEO of TMC Hospitality, a management company, “are more open-minded today than ever before and willing to experiment.”
The use of mobile to communicate has grown exponentially, says Asad Ahmed, senior vice president-commercial services, Americas, for Hyatt. He says that there has been an increased opportunity to focus on optimizing mobile experiences so it’s even easier to log in, book, chat and engage with the company at every point in a journey. Chat, says Ahmed, is perhaps “the ultimate expression of guest control,” where customers can accomplish a variety of needs across the journey.
While hotels may be trying to accommodate different traveler habits, says David Mallov, executive vice president, hotel solutions for Tripbam, the hotel shopping and analytics provider, staffing shortages make that goal challenging. In terms of dining and socializing changes, he says, the picture varies on a regional basis. In certain parts of the country where distancing and masking are more standard, he says, “use of amenities is low, in other regions less so.”
At one individual property, the venerable Hotel DuPont in Wilmington, DE, general manager Greg Kavanagh says travelers, while understanding certain travel requirements on their way to the destination, have been less forgiving once at the hotel, expecting very much the same level of service; and often voicing their unhappiness over reduced housekeeping or longer wait times via social media.Justifying Rising Rates
Some travel managers are questioning why rates have surged domestically even as hotels seem to face lower costs – closing food and beverage outlets, reducing housekeeping, maintaining smaller staffs, etc. Bjorn Hanson, adjunct professor at the New York University School of Professional Studies' Jonathan M. Tisch Center of Hospitality, says the picture is more complicated. He says that costs have soared for hotels, including higher labor, insurance, real estate taxes and almost all goods and services.
Rate discipline, says Dowling, is one area that the entire industry is trying to come to grips with as hotels battle rising costs, navigate a challenging labor market, and continue adjusting offerings to ensure the health and wellbeing of their guests. The reality of today’s economic environment, she says, is having a direct impact on rates, “and the industry needs to effectively communicate the changes and variability we’re seeing.”
Nicholas Armstrong, senior director, hotels, meetings and events for CWT, says there will be an effort to return rates closer to pre-pandemic levels for business travelers. “As we progress to a new normal post-omicron,” says Armstrong, “hoteliers will have to balance stay experience and amenities they reinstate with a new reality of health, safety and, unfortunately, cost.”
Hoteliers, says Armstrong, will be under immense pressure in the business travel space. Competition is strong from serviced-apartment providers and sharing-economy players like Airbnb and Vrbo. Rate increases, he says, will be uneven, based on market demand as well as local COVID restrictions. As a result, he says, “we will see hoteliers tout sustainability, smart room technology and other tactics to support their value to guests.”The ‘New’ Negotiation
What does this mean for traditional negotiating patterns between buyers and sellers? The exchange of data between customers and supplier, says Dabrowski, has never been more important and valuable. More than ever, he says, managers need to embrace continuous sourcing – on a quarterly basis at minimum – to capture the market reality.
At Omni, says Surette, there is more dynamic pricing than ever. But there are also companies using static rates with a “flex” option available if there is a significant dip in the average daily rate. This allows managers, he says, not to have to go through the usual “churn” of the negotiation season.
The key, says Lynch, “is the ability to be flexible in uncertain times.” Partnerships between the two parties, she says, “continue to be important and we have learned that both must be patient, flexible and open to creative options.”
BWH Hotel Group, says Dowling, is having this conversation with its customers and partners every single day because the company’s prices are dynamic. “Ultimately,” she says, “we come to a mutual understanding because we are all working towards supporting the business health of our organizations and championing our customers, clients and partners in their own recovery.”
Hanson says informal approaches will work for some companies. He says a travel manager can find a hotel director of sales and say “here what’s we can afford to pay and we’ll have no fewer than this number of nights,” even if it’s far lower than in the past. There are enough sales people in the market ready to do this deal, says Hanson, in the hopes that the buyer will remain loyal when business returns.
“It’s a fluid environment,” says Nina Marcello, principal, global hotel practice, global business consulting for American Express GBT, demanding year-round sourcing and multiple rate options. Savvy travel managers, she says, “will already be thinking about their sourcing strategies for 2023.”
Steve Reynolds, CEO of Tripbam, says travel managers need to monitor their hotel programs much more frequently or risk losing significant savings. He says asking questions like “Where are my travelers booking? Are they covered by a discount? Are my negotiated rates good? Am I getting my negotiated rate?” are going to be increasingly critical in 2022.
“Prudent travel managers and procurement professionals,” says Reynolds, “are implementing continuous sourcing, more frequent adjustments of rate caps, and the use of hotel reshop clusters to increase savings.”
Even with growing optimism about recovery, the American Hotel & Lodging Associations’ 2022 State of the Hotel Industry Report still predicts business travel will remain down more than 20 percent for much of the year, while just 58 percent of meetings and events are expected to return.
The slow return of business travel and fewer meetings and events, says Chip Rogers, CEO of AHLA, continue to have a significant negative impact on the industry. The growth of leisure and bleisure travel represents a shift for the industry, he says, “and hotels will continue evolving to meet the needs of these ‘new’ travelers.”