The last few months have been an unprecedented period and the uncertainty in the atmosphere has made forecasting revenue for hotels incredibly difficult. Combined with the slowdown in business, this raises questions for hospitality practitioners, particularly RM’s – how do we use this time well, not just sit on our hands but continue to create value for our properties?
At the outset
As the outbreak broke out in China and intensified around the world, the ensuing travel restrictions resulted in a double whammy for many hotels – a drop-off of reservations coming in combined with a sudden influx of cancellations. This put many hotels in a difficult situation, with most of their business suddenly wiped out and little coming in to replace it.
In this situation, many high-quality revenue forecasting systems were suddenly rendered useless. There was no pattern they could look to in order to predict recovery and many of them were forecasting that we would make budgeted numbers drawn up before Covid-19 and enjoy a swift recovery. When faced with the facts of the pandemic these predictions were completely unrealistic. As we have always maintained a manual forecast whilst still looking to the system forecast, we were well equipped to go back to a purely manual forecast where we give the hotel realistic expectations of what to expect in the coming months.
Due to the levels of uncertainty, as we dedicated more time to manual forecasting, we also drew up multiple scenarios based on potential situations regarding the spread of the virus and travel restrictions, in order to bring clarity to the management.
For countries which relied heavily on international tourism, but didn’t enter their own lockdown immediately, we found ourselves in a situation where we were competing heavily for staycation business in the immediate period of 1-2months. As no-one knew how long the situation would last for, many hotels were reluctant at first to drop their rates and devalue their brand proposition. We worked with our properties to maintain rates as best they could whilst adding in value for staycation deals and working on opaque and industry only offers.
Simultaneously, we wanted to do what we could to attract long term business for when the situation recovered, but there was a lot of trepidation amongst customers. As a result, we worked with properties to change cancellation policies so even discounted rates across all platforms comprised flexible cancellation policies.
As things got worse, hotels found themselves having to change strategies again. Forecasts were reduced massively, with costs cut where possible. Some properties were offered government quarantine take overs, or groups for migrant workers who were stuck due to travel restrictions. We found ourselves using the forecast scenarios to show the hotels their options and guide them to make the decision that was best for them.
Less reservations coming in meant less time on yielding rates and monitoring pickup. We maintained a positive attitude and decided to use this time to pursue trainings and webinars which would be useful to our clients and the industry. We also continued to expand our field, looking at how other areas, such as digital marketing, could complement the revenue management process. Upskilling over this time meant that we could use the slow periods to prepare ourselves to better support the industry for when the market (finally!) recovers.
There were, however, some difficult conversations and decisions made over this period. To see the hopes we had for many properties - and their own hopes - let down, was painful. For some properties the cost of operations were just too high, and some had to close for the short to long term.
The road ahead
So, what’s next? What will happen when governments stop offering subsidies and support to the tourism and hospitality industry? It’s easy to become discouraged as rumors abound of hotels closing and layoffs. We can’t tell for sure but there are glimmers of hope as we read of vaccine trials starting and improvements intesting which may allow for travel – and hotels – to open up again!
It’s impossible to predict exactly how different markets will recover. To get an idea though we are looking to countries which are opening and studying their trends so we have a clearer idea of what might happen for us. It’s also a great time to focus on improvement, whether it’s diving deep into data, writing new SOPS, reviewing segmentations and the setup of systems, rebuilding and changing where necessary, and refining reporting processes to be more efficient.
What about you – how are you preparing for recovery? Is there anything you would have done differently, looking back now? Let us know!
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