While many believed it was 'game over' for the hospitality industry, hotels have bounced back and changed the dynamics of the game. Here's a narrative of what drove this change, and the rise of hospitality 2.0.
Purveyors of luxury hospitality have always embraced that luxury is personal and private. This translates into superlative guest experiences - the terra firma for guest delight, which is a crucial indicator of performance in the industry. Once upon a time, this meant a rewards program, but with the surge in new brands entering the market, hoteliers have brainstormed to find novel ways of creating lasting impressions to forge customer loyalty.
While luxury hospitality mandates specific standards of service, which are ubiquitous across brands, the question becomes this: how much further do firms go to position themselves as the pinnacle? Free upgrades, complimentary food and beverages, club or executive lounges alone wouldn't suffice to enter that coveted space where guests would call their hotel their home. Brands have crafted copious ways to 'stay with the guest'. It is praiseworthy that the executives at all levels of the Ritz Carlton are permitted to spend up to US$2,000 (per guest, per incident) at their discretion - and even higher with the authorization of the general manager. The white glove services, Les Clefs d'Or concierge, the list goes on ad infinitum.
All these personalized services require significant human interaction, without which the essence of luxury would go into oblivion.
The hospitality industry has suffered immensely due to the COVID-19 pandemic. A McKinsey report suggests that financial statements would return to pre-covid numbers only by 2023; not discounting it may go beyond that.
The much-adored personalized and private services with elaborate executive-to-guest interactions are no longer preferred as they were before. Guests desire to enjoy the exquisiteness, yet are uncomfortable with extensive human interactions; thus it emerges that a tightrope must be walked. Brands had to invest heavily to re-instil confidence, despite having superior hygiene and safety standards since their inception. To educate guests about practices to keep properties safe for all stakeholders, brands introduced initiatives like 'Commitment to Clean' (Marriott), 'Cleanstay' (Hilton) and the likes.
In these testing times, staying relevant calls for elephantine efforts. Brands have their hands tied primarily due to the requirement to limit human interaction, implying neither can the services be as private and personal as before, nor should guests feel that the service is bereft of the quintessential essence of luxury.
The use of technology, and incorporating that technology at every step from arrival, has reached new levels. To limit face-to-face interactions, guests can check-in or out via apps that work as an access card, too, instead of the conventional front desk assisted or in-room check-in and check-out. Many have wholeheartedly welcomed this, since it has made entry/exit procedures faster and easier.
After authorities eased initial lockdown restrictions, many hotels used the stagnant room inventory to generate revenue of a different kind. The Ritz Carlton in Bangalore is the first in India and a first mover across various quarters. Exceptional and innovative was the act of repurposing an entire floor of rooms as private dining spaces called the '99 Pop Up'. The 'Starlit by the Pool' was the solace for those whose hearts desired a tropical retreat. The novel dining concepts saw immense footfall, comprised of regular patrons and first-time guests - many returning to the property for dining and stay. The dining reservations were sold out on most days - a testimony to the successful implementation of novel ideas. Other brands of the portfolio and competitors rushed to replicate these strategies across the country.
Hotels across the globe have now created private experiences for discerning customers with the option of renting entire spas and other shared spaces. Brands also recorded a surge in room bookings from guests looking for a weekend stay or to work from the hotel.
The extraordinary circumstances called for extraordinary thinking. Home deliveries from luxury hotels were nonexistent in most locations prior to the pandemic. In the quest for new revenue streams, many tapped into selling existing services beyond the walls of grandeur. Now, it has become an indispensable source of revenue to most of them, and is here to stay.
The silence of ballrooms felt ominous, for it reduced the role of the events department to nothing. Brands started to look at reproducing superlative experiences at the comforts of the patrons' residences, or estates from a different lens. Curating such experiences for events of small numbers was well received.
On a positive note, these arduous times have given the impetus to think beyond the normal, to foray into uncharted avenues, and to embrace the 'new normal'.
While many proclaimed that the pandemic had written an obituary to the industry, the industry is indubitably a phoenix, and the recent trends are promising. Key markets are exhibiting incipient signs of recovery, owing to increased vaccinations and the resumption of travel. In fact, JLL expects to see a boost in development activities in Q3 and Q4 of 2021.
I want to close this in the words of seasoned hotelier and general manager of the Ritz Carlton Bangalore, Mr Amitabh Rai, who has been at the helm of uber-luxury hotels since the age of twenty-nine. When speaking to me recently, he reflected:
"In the short term, the hospitality industry needs to consolidate, recover and re-align to meet the pacing demand. Growth of the industry is highly dependent on innovating and adapting technology to streamline and increase the efficacy of operations. The future will proliferate with increasing the revenue segments, apart from the conventional ones, with more focus on leisure travel, wellness packages, which will lead to a sustainable business model."
Written by Akshay Jogy Chacko
Resources
The Ritz-Carlton Leadership Centre: The Power of Empowerment
McKinsey and Company: Hospitality and COVID-19: How long until ‘no vacancy’ for US hotels?
Hospitality Technology: How are hotels adapting and innovating during COVID-19?
Architectural Digest: How Luxury Hotels Are Dealing With the Coronavirus Pandemic
Market Watch: COVID-19 hit the hotel industry hard. Here’s how hotels are pivoting in the new reality