Hotel executives from the Caribbean and Latin America say people still want to travel, but their needs and wants are changing because of the pandemic, creating an opportunity for hotels to adapt to better serve them.
GLOBAL REPORT—The coronavirus pandemic has created no shortage of challenges for the global hotel industry, but hotel executives said they are finding opportunities to improve guest experiences and their businesses as people are slowly returning to travel.
During the “View from the board room—round one” session of the CHRIS+HOLA Connect online conference presented by the BHN Group, hotel executives spoke about how their companies have been adapting to the current environment and how that will be beneficial over the long term.
People are traveling now, it’s almost all leisure and been particularly high in drive-to markets, said Danny Hughes, EVP and President of the Americas at Hilton. The health and safety protocols hotel companies have put in place have given people a sense of confidence that it’s safe to stay in a hotel, which is telling given the uncertainty about restaurants and theme parks.
What’s needed in the Caribbean is airlift to support all this, Hughes said. Though the industry is still in the early stages, he finds it encouraging that people are responding, especially within the U.S., which is a major source market. Guests are showing that they see and appreciate hotel companies have taken these extra steps, so he hopes that will translate into more adventurous travel.
For the first time since the pandemic hit in Mexico, the airport in Cancun recently reached 215 flights on a weekday, said Francisco Zinser Cieslik, executive vice chairman at Grupo Hotelero Santa Fe. In normal times, the average number of flights is 350.
It’s encouraging that people are starting to get in some leisure time, but the drawback is that pricing is starting now from a low base, he said. His company has competitors, including some independent hotels, that are desperate and dropping rate, which means it will take time for rates to come back.
The resorts in drive-to areas are seeing good numbers, and they could be higher if the government permitted it. The domestic travel market is large, as 85 out of every 100 travelers in Mexico is Mexican, he said.
“If we were allowed to, we could probably be reaching 70% in local travel,” he said.
A lost year?
The second quarter was a lost quarter, said Bruce Wardinski, president and CEO of Playa Hotels & Resorts. Wardinski said he never thought he’d see a quarter with zero revenue, as every property was shut down for the entire quarter. Since 1 July, however, the company has reopened its resorts.
“I’ve looked at 2020 as a very critical year, and it’s a critical year from being able to convince guests that you can provide an outstandingly safe, but more importantly, enjoyable resort experience,” he said. “People want to be safe, and that’s critical, but they also aren’t looking to go to a hospital or a prison. They want to go, and they want to have a resort experience and have a great time.”
Playa has been focused on ensuring the resort experience is as good as it can be while providing the safety guests are looking for, Wardinski said. Playa views 2020 as the springboard into 2021, so it is encouraging guests to go on social media and share their experiences.
“We feel now it’s really important to deliver a great experience so that people can get comfortable, so going into 2021, they’re going to want to come and experience it for themselves,” he said.
The year has not been a complete loss for Club Med, said Carolyne Doyon, president and CEO, North America. The company saw great performance in 2019 and a strong start to this year, so the pandemic has not been as catastrophic as it has been to some other sectors in the industry, such as cruise lines.
The company reopened resorts in Asia as early as April and then in the U.S. in June followed by other locations across Europe over the summer. While it won’t recoup all of its lost business, it’s doing OK, she said. Following the lockdown, the company anticipated there would be pent-up demand from families looking to go on a summer getaway as they likely canceled their previous summer plans.
“Despite this challenging climate, people still want to take a vacation,” she said.
One of the biggest changes from the pandemic will be how hotels acquire customers, Wardinski said. Playa has partnered with Hilton and Hyatt Hotels Corporation to tap into their sizeable loyalty programs and their ability to reach and connect with customers. Because of the pandemic, Playa is focusing on establishing better and direct connections with guests through its partnerships.
There are many businesses that will not survive this crisis, and in the hotel industry, that includes businesses on the distribution side as well, he said. Playa has a direct travel agent portal, so it’s letting travel agents know there’s another way to have their clients book at its resorts.
It used to be that customers had to go through a tour operator to book a package at a resort that includes airfare, ground transportation and everything else.
“You don’t need to do that today,” he said. “You can do all of that on your phone.”
The brands do a great job bringing in customers through direct channels, but there will likely be consolidation in the online channels, Zinser Cieslik said. They will lose out on business through the drop in demand, and they have high CapEx and investment costs for technology.
Guests today are going to want to be more in control of the booking process, and that is an opportunity for the brand channels to connect with them.
“If we are able to connect with that customer and to make him feel that we are taking care of him and that’s he’s dealing directly with us and there’s no surprises, that’s going to definitely be important,” Zinser Cieslik said.
The company’s internal research has shown guests trust brands more than independent properties to deliver a safe stay, so that’s an opportunity brands need to take advantage of, he said.
In North America, Club Med is distributed to its retailers and travel agencies, but it hasn’t partnered with any online travel agencies or wholesalers, Doyon said. In France, where the company is located, it has its own travel agency, allowing it to keep strong control over its distribution. It has all the digital tools it needs to talk to customers from the beginning through to the end of their journeys, she said.
“We do not have any of what we call a ‘weak link’ to our distribution, which gives us, we believe, an edge, especially in these times where costs are a challenge and where the distribution can be very, very high when you distribute through a wholesaler,” she said.