The impact of COVID-19 on the hotel industry

Globally, hoteliers have witnessed a sharp decrease in hotel occupancies due to COVID-19, driving many properties to close temporarily or operate at less than full capacity. This has negatively impacted profitability in the hotel industry, resulting in economic repercussions for the society. According to the American Hotels & Lodging Association, the hotel industry in the United States is expected to end 2021 with 500,000 less jobs than in 2019. To further illustrate the ramifications of COVID-19 on the hotel industry, Marriott International, the world’s largest hotel operator, recorded its first full-year loss in 2021 after more than a decade of stable revenue growth. The hotel chain had also laid-off approximately two-thirds of its corporate staff when its revenue declined by 75 percent in 2020. According to Marriott International, the fiscal impact of COVID-19 has been more severe and sustained than what the hotel chain experienced in 2001’s 9/11 and 2008’s global financial crisis.

Closer to home, Singapore’s outlook for the hotel industry, which comprises of around 400 properties and 63,000 rooms island-wide, has been similarly grim. In the period from January to September between 2019 and 2021, revenue per available room (RevPar) across the industry has declined by 60 percent from $190.60 to $76.23; the average occupancy rate has also fallen from 87.18% to 49.77% in the same period. [Source]

Hotels involved in Singapore’s event industry also bore the brunt of COVID-19. For instance, around 80 percent of couples who arranged for wedding receptions with Millennium Hotels and Resorts requested to postpone their weddings; hotels providing venue services for MICE (meetings, incentives, conventions, and exhibitions) also experienced a decline in bookings due to cancellation of large-scale events.

Besides economic impact, the emergence of COVID-19 also reshaped consumers’ mindsets surrounding guest experience and comfort in the hotel industry. Moving into the new era, the ability of hoteliers to respond to consumers’ changing needs will be essential to the recovery of the industry, especially as consumers adapt to new ways of living which influence their social conduct and consumption behaviours.

What hoteliers can do to stay agile

While the hotel industry in the Asia Pacific is expected to only rebound to pre-COVID levels from 2023 onwards, it is important for hoteliers to start preparing for this day to arrive. Some measures that hotels may adopt include:

a) Improve guest experience

Enhance safety and sanitation protocols

In the post-COVID world, safety and sanitation protocols are one of the most crucial considerations that will make-or-break guest experience; these considerations are also key to influencing consumers’ choice of accommodation. Echoing this sentiment, a survey conducted by travel news and research firm, Skift, and cloud technology company, Oracle, found that 60 percent of consumers would be more comfortable to stay in a hotel that implements extra cleaning and disinfecting procedures than one that does not.

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To meet expectations, hoteliers have drafted new policies to assure the public that adequate sanitation protocols and safety measures are implemented on hotel premises to safeguard the well-being of all guests and employees. For example, Hilton Hotel’s CleanStay program ensures a safe and hygienic experience for guests at its premises, while hotels in Singapore that meet industry-specific sanitation and hygiene criteria can be certified with the SG Clean quality mark to reflect their commitment to environmental hygiene.

Safety and cleanliness standards are also vital to a hotel’s brand identity and reputation. A hotel environment with poor adherence to such protocols can frustrate guests and drive negative reviews, impacting the frequency of future bookings. Although the new sanitary requirements in the hotel industry can be time-consuming and cost intensive, hoteliers can use this opportunity to build trust with guests and nurture a positive public reputation in preparation for consumer demand to return in the post-COVID world.

Adopt technology solutions

In addition to enhancing safety and sanitation procedures, hoteliers are also implementing technology solutions to enhance guest experience. Long gone are the days when guests are only concerned about physical comforts, such as a mattress’ quality or a carpet’s wear-and-tear. Today, the exponential increase in guest experience comes from a seamless integration of physical experience with the personalised digital experience through technology adoption. This includes the ability to launch a Netflix mobile application on a television, the capacity to perform a self-service room check-in, and more. The survey by Skift and Oracle has also found that more than 70 percent of consumers are more likely to choose a hotel that adopts self-service technology as opposed to one that does not.

Technology can also assist hotels in responding to guests’ requests safely while minimising physical contact. For instance, Hilton Hotel has unveiled more contactless options in its connected rooms initiative, allowing guests to use the Hilton Honors app to control room settings and to customise reservation preferences. Meanwhile, Minor Hotels’ group IT director, Thiruselvam Tholtan, confirmed that the hotel has planned to provide more digital options for guests, such as the ability to order food online.

Although hoteliers have been investing in technology for more than a decade, COVID-19 has accelerated this process. However, in the quest to innovate, hoteliers should be mindful about keeping things simple. Instead of building and customising new equipment from scratch, hotels ought to find ways to connect guests’ devices with established technologies in the hotel. This would help hotels save on cost while offering guests with a personalised digital experience through their own devices.

b) Pivot business models

Although international travel and large-scale events have been blinkered by safe-distancing measures during COVID-19, there is always a silver lining if hoteliers can identify new opportunities and adapt to consumers’ changing preferences. For example, hoteliers can cater to domestic demands by offering staycation bundles, adapting parts of the hotel into isolation facilities, or tapping on the telecommuting trend to allow guests to book rooms as an alternative to working from home. Hotels can also form partnerships with other companies to increase the reach and visibility of their properties.

c) Implement flexible booking policies

Due to the unpredictable nature of COVID-19, border measures have been rapidly evolving, creating uncertainties for travellers. Hence, it is imperative for hotels to adjust to the new norm by offering potential guests with the flexibility to change or cancel their reservations. Echoing this suggestion, 76 percent of consumers are more likely to make reservations with a hotel that offers flexible cancellation and refund policies than with one that does not.

To cater to consumers’ preferences, industry players like Hyatt have taken steps to extend its cancellation policy to provide guests with more flexibility to make travel arrangements once border restrictions are eased. “In addition to offering a reimagined hotel experience that is focused on safety and well-being, we want to help our guests and members book with confidence as they start planning their travels again,” said Mark Hoplamazian, President and Chief Executive Officer, Hyatt.

d) Redesign jobs

Many in the hotel industry have been exploring ways to replace manual labour and promote service concepts that require less manpower to operate. It is not unimaginable that a front-desk employee may one day become experts at customising travel itineraries, while housekeepers become the supervisors of cleaning robots through the use of mobile applications.

To further reduce labour costs during COVID-19, more than one-third of hospitality businesses have furloughed between 76 and 100 percent of their employees. However, instead of laying off manpower, hotels may want to consider redeploying existing staff to other roles within the business by offering upskilling opportunities.

To help hotels train and upskill workers, Singapore has initiated a Career Conversion Programme for hotel professionals. Under the 3-month programme, hotels can receive up to 90 percent of financial support to offset salary and course fees incurred by staff during training. By retaining and retraining staff, hotels will be better equipped to reopen and meet the influx of guests once business picks up in the near future.

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