A businessman walks through the lobby of a hotel with his suitcase.

COVID-19 as an Opportunity for the Hotel Industry

In Blog by Janin

The corona pandemic is not only a challenge for the hotel industry; it is also an opportunity to reshape the market. Find out what hotels need to change now and why they can no longer avoid a central platform solution.

Why Hotels Benefit from End-to-End Digital Solutions

With the outbreak of the coronavirus pandemic, the travel industry began to falter, with many independent hotels struggling to survive. They need to adapt to the latest requirements in order to persist in this highly competitive market. But how, from an economic crisis, can hotels actively press ahead on the road to recovery? How can the right partner help them? And, how and why do both hotels and companies benefit when they connect with one another via an end-to-end digital solution?

Borders closed, everyday life restricted, business travel minimized — the whole world changed with the outbreak of the coronavirus pandemic. People were literally distanced from one another. And the consequences for the travel industry were fatal, especially in the business travel segment: in March and April, 96% of business travelers canceled all international trips and any trips that were not strictly necessary, according to an HRS survey. There is complete uncertainty around whether travel behavior and the volume of travel will ever return to pre-coronavirus levels.

On the other hand, it is clear that the outbreak of COVID-19 is changing the industry irrevocably. The inevitable decline in all types of travel is causing the entire travel and tourism industry to falter, and the statistics prove it: 94% of companies in this industry are noticing “significant” effects on their turnover. The anticipated global market recession is also forcing independent hotels to fight for survival, thus reshaping the entire hotel landscape. Anyone who does not act fast enough will sooner or later disappear into thin air. The available economic opportunities must therefore be reevaluated to avoid a total collapse.

Business Travelers Bring Predictability and Reliability

Now that lockdown is over, leisure travelers are leading the way in seeking out a change of scenery after months of isolation and are helping to increase occupancy levels, in the short term at least. In the long term, however, hotels should not lose sight of their most profitable customer segment: business travelers. They boost occupancy during the week, are loyal, less price-sensitive, stay for longer, and often spend money in the hotel restaurant or on room service. What is most important, however, is the predictability and reliability afforded to hotels once they have made it into a corporate hotel program. Travel buyers at large companies make strategic decisions for or against individual hotels, and since the outbreak of the coronavirus pandemic, these decisions are no longer solely based on room rates or services.

A businessman walks through the lobby of a hotel with his suitcase.
Business travelers boost occupancy during the week, are loyal, less price-sensitive, stay for longer, and often spend money in the hotel restaurant or on room service.

Only hotels that embrace the new requirements will make it into the coveted programs of global companies. More than ever, this includes the duty of care held by companies with respect to their employees. And this duty of care begins with the booking channel, before the trip even begins. Cost is not the only reasons why travel managers want travelers to book using the designated channel and, in doing so, to remain within the travel program; this enables them to ensure the safety of their travelers, who can only search for and book hotels that meet company requirements.

Hotel Guests Are Seeking a Touchless Traveler Experience

This concept goes hand in hand with contactless travel, which has become a key priority during the coronavirus pandemic. The primary obligation for hotels is to lay the groundwork for a touchless traveler experience. One key to success is to use a digital payment solution, so checking in and out at reception is no longer necessary. This has clear advantages for hotels: on the one hand, invoices can be settled quickly and easily, and on the other hand, there is no need for tiresome invoice corrections. And the best thing is that payment is guaranteed, meaning hotels no longer have to chase payments.

So, digital payments solutions are more than just a way of making life easier for hotels; they are also a reason for travel buyers to accept a hotel into their company’s travel program. Major global corporations such as Amazon and Siemens switched from traditional travel agencies to online platforms some time back. After all, settling the bill for a business trip using a digital payment method often increases employee acceptance of the company’s program.

Massive Shift in Booking Channels

The travel manager’s influence ends when a trip begins, however. It goes without saying that hotels have a responsibility to guarantee maximum safety on the ground. This includes implementing digital check-in and out procedures as described above, adhering to the latest hygiene standards in the hotel’s wellness and fitness areas, in the restaurants, and maintaining cleanliness in guest bedrooms. In order to be accepted into the programs of international companies, it is more important than ever for a hotel to be seen as a trustworthy partner rather than simply a reputable establishment.

Before the outbreak of the coronavirus pandemic, only 40% of business trips were booked via managed channels, and only half of those were as part of a negotiated program. This will see a massive shift once business trips resume, since companies now have a heightened interest in ensuring that their employees only stay in hotels with negotiated rates that have proven their compliance with the adjusted hygiene standards. This is the only way that travel managers can be certain that their company’s travel policy and consequently its duty of care are adhered to.

End-to-End Digital Solutions as a Key to Success

Hotels are therefore facing the challenge of being accepted into the programs of major and ideally global companies; no mean feat for a small or medium-sized hotel. The reason for this is that the programs are dictated by hotel chains. Although only 16% of hotels globally are run by chains, they account for 75% of the membership of corporate hotel programs.

Graphic illustrating the fragmented hotel market: Although only 16% of hotels globally are run by chains, they account for 75% of the membership of corporate hotel programs.
Although only 16% of hotels globally are run by chains, they account for 75% of the membership of corporate hotel programs.

To make it into these programs, small, independent hotels need first and foremost to choose a strong partner who can understand and coordinate the needs of both parties. On one side are the companies, who want to understand how they can adapt their hotel program to the new requirements, and on the other side are the hotels, who understand the new requirements and have to work out how they can meet them. What is helpful to both hotels and companies is the ability to analyze and use data, maximizing their level of control and transparency in this fragile environment.

End-to-end digital solutions that bring both companies and hotels together will benefit both parties. For their part, hoteliers need to understand the needs of customers who have already signed a contract. Data on booking behavior, traveler origins, and preferred booking channels can be used to create comprehensive insights that enable hotels to meet customer requirements.

This not only allows hotels to get to know travelers better, but also provides them with an overview of their competitive position. Once a hotel responds to an RFP (request for proposal), it is ranked against its competitors and receives insights into numerous KPIs, which helps managers to position the hotel in the best possible light.

Analyzing and Using Data for Optimization Helps Travelers, Companies, and Hotels

Since companies are redesigning their travel programs for a post-coronavirus world by responding to changing requirements, hotels on the other hand now have an opportunity to gain new customers. Intelligent data tools synchronize the needs of hotels and companies, so that businesses expressing an interest are linked to appropriate establishments.

Continuously analyzing data streams helps to not only understand the global hotel ecosystem but also to understand the behavior of travelers and be able to map out their decision-making processes. As a provider of data-driven technology, HRS is familiar with both the strategic goals of companies and hotel partners, and the decision-making patterns of individual travelers. This enables them to create the ideal data-driven hotel program for the company, for the hotel, and for travelers.

A businessman sits on the windowsill of his room in the hotel and works on his laptop.
Business travelers are seeking for a touchless traveler experience .

The optimum process is one in which travelers find the best hotel, which—owing to its connectedness and data transparency—continually meets the strategic requirements of the company. A touchless traveler experience increases the satisfaction of travelers who book within their company hotel program. The programs are continuously improved, from rate loading via intuitive search and booking processes through to cashless and paperless invoicing and cost management. Alongside the advantage of gaining access to new customers, hotels and companies using end-to-end digital solutions also automatically benefit from new innovations that are created as a result of market trends.

Coronavirus Pandemic as an Opportunity to Reshape the Market

The best example of this is the Clean & Safe Protocol launched by HRS after the outbreak of the coronavirus pandemic. This protocol is groundbreaking for the hotel industry, and was developed in collaboration with SGS (Société Générale de Surveillance S.A.), the world’s largest inspection, verification, testing and certification company. Based on guidelines from the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC), the Clean & Safe Protocol provides both companies and hoteliers with clearly defined standards at a time when cleanliness and building hygiene are understandably among the most important booking criteria. Only hotels that meet the criteria will receive an exclusive label to demonstrate their commitment. This label will be visible to companies within the RFP tool as well as within each booking channel, making these accommodations the preferred choice for global travelers.

Examples such as the Clean & Safe Protocol are not the only proof that now is the right time for hotels to take a bet on end-to-end digital solutions—a recent HRS survey proves it too. According to the survey, 81% of travel buyers intend to renegotiate hotel contracts for their travel program this year. Rates that include product bundles adapted to the new circumstances are particularly sought-after. Breakfast and Last Room Availability are no longer among the top priorities — instead, the demand for cancelable rates and hotels that meet the latest hygiene standards is increasing. If hotels offer the appropriate rates, over 75% of companies are prepared to sign contracts with 15 to 18-month terms. Around 58% of those surveyed would prefer to focus on just a few partners, and work with them to develop their travel program, while also granting them a larger share of the program. The coronavirus crisis can therefore be regarded as not only a challenge for the hotel industry, but also an opportunity to reshape the market.

Finally, the latest developments demonstrate that both hotels and companies can only come out on top if they understand the power of data and use it to their advantage. And this can only be achieved by working with a partner who brings together both sides through end-to-end digital solutions as described above. With the help of cloud-based big data analysis and machine learning, hotel spend and booking behavior, lodging patterns can be investigated and used to determine the necessary steps. Sourcing, booking, and paying are all processes that provide data, which both hotels and companies alike can and should use in the interest of travelers.