MBS

Make Hospitality Great once more

Lockdowns around the world had meant borders had to literally  close, retail, businesses, (most, not all) industries had to slow down, many economies almost came to a standstill. Raja Gulati, founder and organiser of the Busines Owners Summit observed in his preamble, “The most impact happened to the hospitality industry. Nobody travels or stays in hotels anymore.”

But, Agoda’s Product VP, Mayur Kamat sees this is about to change.

Due to the universal and evergreen appeal of travelling, there are  predictions that when lockdowns are lifted,  travel will increase 1.5 to at least 2 times more than before.

And there are steps the hospitality industry can take to prepare for this boom.

Due to the universal and evergreen appeal of travelling, there are  predictions that when lockdowns are lifted,  travel will increase 1.5 to at least 2 times more than before.

Lockdowns and opportunities

Things seem very bleak for a long while already.  According to Mayur, governments have banned travel, for example  Australia which has banned anyone from entering the country, including Australians.

“It has almost never happened in history. So, when it’s literally the laws preventing you, travel does not look like a good business to be in right now.” However, the thing to note is just because the world cannot travel, it does not mean the world does not want to. Mayur observed that the consumer willingness to spend on travel has not changed.

There are more people willing to spend on travel after being stuck at home or being fixed in one location, for over a year.

Make travel and hospitality great once more

Travel will increase once the pandemic is lifted, the whole world is vaccinated. By then it would be safe to start exploring without the constant threat of Covid, or fear of being stranded in foreign land.

The United States where a large portion of the population is vaccinated, is one example Mayur shared. “There is massive amount of travel now, the highest it has ever been in the last decade, even though the virus has not gone. Travel is booming.”

So, the consumer willingness to spend has actually grown. What changed is the consumer ability to spend that money because of artificial restrictions but for a limited amount of time.

Taking into account that the pace of vaccination programmes are different for different regions it is difficult to know when it is safe to travel.

But Mayur reminded the audience to keep their eye on the larger prize which is looming in the horizon.

Data – the pulse of hospitality trends worldwide

Thanks to its online platform, Agoda has an advantageous birds eye view of how travel is panning out in different parts of the world.

And Mayur has these things to say: “When things come back, it won’t be the way it was before, and with some winners and some losers.

He added, “There has to be some level of changes about how we think about customers, how we think about marketing, how we think about promotions, or partnerships, pricing, and your strategy around ensuring you are monetising for the same way you were doing before.”

Thanks to its online platform, Agoda has an advantageous birds eye view of how travel is panning out in different parts of the world.

The point is, there are investments to make now, and there is no doubt when travel comes back, business owners can make more than their fair share from the recovery.

100 days to turn your business around

“If your business crashed during Covid and it was the only source of providing food for your family, how would you go about making it flourish in 100 days, using your Super Power?” This was the question that Raja Gulati asked each expert speaker in his Business Owners Summit.

Understanding of  what can be controlled and what cannot be controlled, is the first item on the 100-day plan. Mayur explained, “The things you can control are your inputs, and you set goals around them, to achieve.” In the hospitality business, the things we cannot control are how fast the virus spreads, or how fast vaccinations roll out.

However, we can control or manage our reactions to the restrictions on hotels, in several parts of the world. For example, ensuring enough capital, and manage client and cashflows efficiently to keep being in business.

Many people are looking to stay somewhere else awhile for a change of scenery, due to fatigue from being at home 24/7.

From Mayur’s point of view, laws disallow hotels from being open, but there are no laws that say people cannot be living there, long-term.

“So you can think about changing your value proposition, that fits to government regulation while still providing a valuable service.”

The second thing is about the new customer base that has emerged, even though temporary.  Many people are looking to stay somewhere else awhile for a change of scenery, due to fatigue from being at home 24/7.

And that is opportunity for hotels, or long-term stay homes, or private homes.

Hospitality planning for the next six months, hereon…  

Before all that travel starts to come back, Mayur recommends to focus on property renting activity. The next thing to do is to ask, what would these guests need? Laundry service, food delivery, housekeeping? After creating packages with services that customers may require, next would be acquiring these target customers.

This may require marketing on Google, and Mayur shared about similar initiatives Agoda has to help properties get long-term rentals. All of these align with questions that businesses need to ask themselves like: What are the new types of customers that you want to acquire? Is your business equipped to acquire these customers? Can you afford to acquire these customers at this time?  

Ability to run quick experiments

If the answer to these questions are Yes, Mayur deems a business ready to start quick experiments. This is a super power almost anyone can possess, he said. Rather than large initiatives, the idea is to think of small experiments like leasing properties and seeing the response from it.

This is a capability that technologies can provide in a very quick and efficient manner.

For example, Mayur said he would run a few pilot marketing campaigns on Google, and see if he could acquire customers that want long-term stays, and how much he would have to pay Google (on a keyword bid) to get these type of customers to call Agoda.

So, there are new pockets of emerging demands that hospitality businesses can discover via little quick experiments, and then try to capture the customers of these demands.

“That’s the customer acquisition cost. And if that is lower than the revenue you can make from that customer, then you know you have something viable.” After the first month, one would get a sense whether this pivot towards local, domestic stay for long-term is going to work for their business.

But, there are several other things the property owner can do. For example many hospitality businesses are trying to pivot from being an accommodations to being a destination. Mayur explained, “People aren’t just going to a hotel to stay in a room, but they are travelling to a hotel to enjoy all the facilities there.”

So, there are new pockets of emerging demands that hospitality businesses can discover via little quick experiments, and then try to capture the customers of these demands. In the first one to two months of doing this, businesses will have a feel of whether they can keep themselves operational.

The last 30 days

This is the key phase to determine Winners and Losers. “Are you playing for the short-term or the long-term? Do you have the ability to take financial risk and operational risk to prepare for the possibility of borders opening and a mass of travellers pouring into the country?  

“If I want to be the top most regarded property when that happens, that is going to require spending a non-trivial amount of my time preparing for that goal. Even if it means losing money in the short term.”

Mayur explained that this effort involves investments to upgrade facilities, upgrade marketing and to think about revenue management. Perhaps even think about working with other online travel agencies (OTAs). “The objective is to make sure I rank really high on their list.”

“If I want to be the top most regarded property when that happens, that is going to require spending a non-trivial amount of my time preparing for that goal. Even if it means losing money in the short term.”

He rationalised, “Once travel demand comes back, the competition for all of this is going to be insane. You may need to spend five times more than now, to get all the right marketing going. “

The Product VP of Agoda strongly encourages property owners, “If you have the ability and financial resources, to spend the 100 days to invest for the next 2 to 3 years. There are predictions that when the pandemic clears it will be a golden era for travel with 1.5 to 2 times more activity than before Covid.”

“A massive surge is going to come your way soon. So, be prepared for that,” he concluded.

An advanced, deep dive and tactical session by Mayur  around how to take advantage of this demand surge, is available on www.businessownerssummit.com