Five reasons why hoteliers are optimistic
As global travel restrictions and laws limiting gatherings spread across the United States, the travel industry was hit with an unprecedented 42% decline in 2020. Now, the world takes its first cautious steps toward recovery, and we expect it to release significant pent-up travel demand.
In March 2021, a poll conducted of 10,000 LinkedIn followers indicated 95% of hoteliers felt optimistic, pointing toward the hospitality community’s resilience. Our industry’s optimism is well-founded, and for a good reason, with these five reports pointing to a brighter future.
1. AN INCREASE IN TRAVEL DEMAND FOLLOWED PREVIOUS RECESSIONS
The global economy has weathered economic downturns before. However, the travel industry has managed to rebound and even grow following such challenges. Since the 1970s, for example, the airline industry has seen consistent long-term growth, recovering each time following an economic slowdown. Specifically, according to a 2015 report, Global Air Passenger Markets, issued by IATA:
- 72% of the initial impact persisted one year following the initial downturn.
- Slightly more than half the impact continued two years after the initial shock.
- Less than one-fifth of the perceived impact remained by five years following the initial event.
Past precedent indicates that travelers will return as the government relaxes its restrictions and the social climate becomes more typical.
2. OWNERS APPEAR CONFIDENT WITH ADDITIONAL HOTEL SUPPLY
Travel Economics and STR have forecasted that 2021 will see a 5.4% increase in hotel-room supply, with 2022 carrying the trend forward with an additional 2.4% increase. It’s encouraging to see hotel owners investing in properties to meet today’s guest needs and compete in the markets they serve.
3. ONLINE INTEREST TRENDING UP FOR SUMMER VACATIONS AND GROUP TRAVEL
As of early spring, people had already begun expressing an interest in travel for the summer of 2021, which is in line with projections that vaccine rollouts will significantly diminish infection rates. As of March 22, 2021, the Google Trends tool shows the following online behavior since the start of the new year:
- A 335% increase in searches for “summer vacation 2021”
- A 400% increase in “wedding 2021”
- A 304% increase in “convention 2021”
Consumers are letting the hospitality industry know they want to return to experience destinations and large gatherings as soon as health and safety precautions allow. If the circulating projections that this summer see fewer restrictions materialize, it’s likely the hospitality industry will see a sizable increase in business.
4. A GROWING NUMBER OF GUESTS ARE BOOKING DIRECTLY WITH HOTELS
Guests have shown an increased pattern of booking directly with hotels throughout the pandemic. According to Kalibri Labs, in February 2021, direct bookings increased by 18.2% YoY. Several of the top-10 markets also have reported significant direct-channel demand growth comparing February 2021 to February 2020.
Kalibri Labs also found that direct bookings are 12.5 percent more profitable than bookings through third parties, even when hotels account for the additional costs associated with paid-advertising campaigns and discount-loyalty programs.
This increase in consumer behavior and bookings offers hotels considerable opportunity for revenue growth as 2021 moves forward.
5. HOTELIERS CONTINUE TO INNOVATE
One of the best votes of confidence in the hotel industry’s future comes from innovations on the part of hoteliers themselves. Marriott teamed with Milestone to create a series of “What to Expect” pages dedicated to providing travelers with up-to-date information regarding their stay, including available amenities and steps the hotel takes to keep the space clean and safe.
Another partner that excelled in innovation was Rhode Island-based Hotel Providence, which targeted and attracted numerous couples forced to cancel their weddings due to the pandemic. Hotel Providence helped them create uniquely memorable micro weddings, answering a pressing market need during times of limited gatherings.
Lastly, building digital presence through local search using Google My Business has become a critical aspect for capturing demand. With several complimentary features being tested by Google, hotels need to manage guest touchpoints to compete in their market.
With the growing interest for property information, the hospitality industry has considerable opportunity for digital growth in 2021 and beyond. Those hoteliers who adapt to guests’ needs and focus on the customer journey are well-positioned to capitalize from these online trends.
The COVID-19 pandemic profoundly impacted the travel industry in 2020 and has led many to look for a crystal ball into its future. However, the signs seem to point toward an optimistic future for hoteliers, giving reason to look toward the coming months with hope. Lean on our industry’s leaders, who have earned accolades for their work helping hotels recover, share this optimism and are using emerging trends to succeed in 2021.
Join the conversation on LinkedIn at #optimistichotelier, where our hospitality community shares uplifting news and growth strategies.
Craig Carbonniere, Jr., is the Senior Director of Hospitality for Milestone, Inc. and is a hotel industry veteran and Certified Hospitality Digital Marketer (CHDM). Since the start of the COVID-19 pandemic, he’s authored the weekly Linkedin series titled “The Optimistic Hotelier” (#optimistichotelier) to spread uplifting news throughout the hospitality industry. He can be reached at craigcarbonniere.com.