Surveying The Situation

As we get ready to head into the holiday season, there are a number of challenges facing the lodging industry recovery, not the least of which is rising gas prices impacting drive-to destinations, as well as continuing concerns about COVID variants. A pair of recent consumer surveys confirmed some of these challenges while offering somewhat differing results.

According to a new national survey commissioned by the AH&LA and conducted by Morning Consult of more than 2,000 consumers, a mere 29% of Americans are likely to travel for Thanksgiving and 33% are likely to travel for Christmas. While this represents an uptick from last year when those numbers were 21% and 24%, respectively, it’s still a disappointing figure.

In addition, 52% of Americans say they plan to take fewer trips and 53% plan to take shorter trips due to rising gas prices. Furthermore, leisure travelers are making several adjustments to their travel plans based on the current state of the pandemic, including only traveling within driving distance (58%), taking fewer trips (48%), and taking shorter trips (46%).

“While vaccines have helped travelers feel more comfortable, rising gas prices and continued concerns about the pandemic are making many Americans hesitant to travel during the holidays. Despite a slight expected uptick in holiday travel this year, hotels will continue to face economic fallout from the pandemic, underscoring the need for targeted federal relief, such as the Save Hotel Jobs Act, to support the industry and its workforce until travel fully returns,” stated American Hotel & Lodging Association President and CEO Chip Rogers.

Meanwhile, Motel 6 yesterday released its fourth annual holiday survey, revealing that nearly 70 percent of those planning to travel for the holidays this year will be doing road trips to reach their destination.

The poll also surveyed over 2,000 individuals and found that 82% believe it is important to spend time with loved ones, and between Thanksgiving and New Year’s, the average traveler will be journeying a total of over 600 miles. Of those planning to travel this year, one in three (32%) stayed home last year.

The Motel 6 survey provided some other insights on travel sentiment noting that American holiday travelers are hopeful for a more peaceful experience this year, with nearly three-quarters (67%) of respondents anticipating their holiday trips to be more relaxing in 2021 after people had to change up their holiday plans last year.

Two-thirds of survey respondents plan to travel with their immediate family this holiday season, and nearly two in five (38%) will be bringing along their pets. In particular, they’re most excited to reconnect with their siblings (46%), parents (45%) and extended family (42%).

Finally, on a longer term basis while business travel recovery in 2021 proceeded at a slower pace than expected from a year ago, global business travel spending is expected to surge in 2022 with full recovery expected in 2024. This is according to the Global Business Travel Association (GBTA), which last week released the results of its latest business travel index—the BTIOutlook.

The report provides a detailed analysis of business travel in 2021 with projections for 2022 and beyond, including post-COVID-19 recovery forecasts. The BTI Outlook is an annual study of business travel spending and growth covering 73 countries across 44 industries.

Forecasts and analysis highlights:

  • Global business travel activity has begun its rebound from the sharp downturn brought about by the COVID-19 pandemic. After declining 53.8% in 2020 to $661 billion, global expenditures are expected to have rebounded 14% in 2021 to $754 billion. This was more slowly than forecasted in GBTA’s previous BTI Outlook report issued in February of this year.
  • Despite recovery setbacks in 2021, a year-over-year surge of 38% is expected in 2022 as recovery and pent-up demand kicks into a higher gear, bringing global business travel spending back to more than $1 trillion.
  • Recovery will continue into 2023, with global spending rising 23% year-over-year as even more international and group travel comes back online.
  • By 2024, global business travel is forecast to have made a full recovery, ending the year at $1.48 trillion or just above the 2019 pre-pandemic spend of $1.4 trillion.
  • In 2025, global business travel growth is forecast to slow to 4.3%–just below the 10-year average growth rate of 5.1% coming into 2020–ending the year at a forecasted $1.5 trillion.

Furthermore, according to the survey the global business travel recovery that began in late 2020 hit a fair number of bumps in 2021. Pandemic surges, variant introductions, uneven vaccination rates and mounting supply chain challenges all took their toll on previously forecast growth expectations.

North America led the recovery, the U.S. in particular, rebounding 27% in 2021. Business travel markets in Latin America, Middle East and Africa (MEA) and Asia-Pacific (APAC) all picked up 15% to 20% growth in 2021.

 

Automation Tech Needed Now

In the face of the Delta Variant and so much prolonged uncertainty over the future of global travel recovery, hotels need technology more than ever to survive.

We all know their myriad advantages in today’s world, including the ability to make more data-driven decisions, increasing social distancing for guest safety, heightening service delivery through deeper integrations and enabling remote work to keep managers engagements.

But above all, we should focus on automation because it is becoming quite clear that maintaining full staff levels is a hard nut to crack for the following reasons:

  • Numerous workers have permanently left the industry as a result of COVID-19 and the furloughs;
  • There are several macroeconomic forces at play that are requiring hotels to pay a significantly higher wage in order to recruit new labor;
  • Maintaining workers in high-touch positions to prevent sizeable turnover requires substantial monetary and non-monetary compensation that hotels cannot often afford;
  • All the additional training necessary to meet the new governmental safety guidelines disincentivizes new candidates and demotivates current employees.

We need solutions to address this labor shortage, lest our service levels suffer and, worse, we won’t have the operational bandwidth to implement new initiatives. Let’s unpack this a bit further and also deduce some ways that technology can help mitigate the issue—both involving automation and simply a smarter use of the current platforms.

When Do Hoteliers Think?

The problem with all the lean teams created during the pandemic is that, by clustering all the daily minutia into a few select personnel, those individuals aren’t left with any prolonged chunks of time to think and devote their focus to projects that will advance the business beyond steady-state management—to do the ‘deep work’ as it is known.

Compounding this new model of continuously interruptive workflows is the fact that, coming out of the pandemic, many hotels have opted to keep their teams lean, regardless of macroeconomic labor conditions. So, if skeleton crews can be assumed to be semi-permanent going forward and we know that this in turn creates a problem insofar as creating too many short, immediate and coordinative tasks, the solution is to then look at both the cultural shifts and technological tools that will help to protect managers’ time from all these somewhat toxic attention dividers.

Fewer and Better Meetings

As a quiz question, how much time is wasted on a five-person video call when four members are left waiting eight minutes for the fifth manager to join? The answer is 32 minutes of lost productivity!

Now think of other wastes of time and how they can accumulate. How much short-burst time is spent in endless email chains coordinating a one-off meeting time? Coming out of a meeting, how do you ensure that everyone knows their exact responsibilities and due dates?

To start, we advocate fewer meetings overall. Additionally, lots of calendar systems can help with coordination by setting up recurring timeslots and attaching collaborative agendas so that everyone stays on track. Importantly, there should be an easy way for any attendee who isn’t a major participant to opt-out and get access to a recording or minutes on a cloud-based work management system so that all this never devolves to crowding an email inbox.

Email Reduction Platforms

Back and forth email correspondence with guests is a great way to boost service. It’s also highly interruptive when your lean team has 10 other matters on its plate that need dedicated stretches of concentration. The solution, in a word, is chatbots.

The deployment of chatbots allows your guest services team to automatically offload all basic inquiries and reservation requests so that managers are only looped in when it’s a more complex situation or error escalation event. Second to this would be a solid and well-connected operations management system that can seamlessly deliver all the necessary service tasks to the appropriate staffer without ever notifying a manager unless it’s required.

The Biggest Cost is Your Time

To restate, perhaps the biggest benefit of automation is that it saves your team from a barrage of interruptive emails or texts that prevent managers from focusing for a solid hour on a singular project. The obstacle to implementing all of these technologies is that it is difficult to quantify the ROI.

This requires a cultural shift at the highest level. While time savings may not immediately translate into a discernable ROI figure, our hope is that an understanding of how important time savings are will suffice to elucidate the dangers of constantly distracting your managers with the everyday tasks of running a hotel.

Trending Up

While a full recovery for hospitality is going to be a multi-year effort, according to hotel experts, there are signs of progress as the industry moves towards the fourth quarter and numbers continue to trend closer to 2019 than 2020, which is when the pandemic virtually eliminated hotel demand.

That was the consensus from a handful of executives from leading research firms speaking at last week’s Lodging Conference in Phoenix in a session entitled “Speed Statistics.”

Vail Ross, SVP, global business development and marketing, STR, noted that year-to-date occupancy for the U.S. is at roughly 57%. In addition, Ross pointed out that ADR for U.S. hotels year-to-date is coming in at approximately $120 and RevPAR at roughly $69.

Ross touted the industry’s recent performance as it relates to rate.

“July of 2021 was the highest ADR ever. In August, it was the highest ADR for an August that we have recorded in the 35 years that STR has been in business,” she said.

Ross added that the rate gains have helped fuel RevPAR growth as well.

“This is different from some of the downturns that we’ve had in the past. This is primarily being driven by ADR growth so we are continuing as an industry to utilize our revenue management skills to also benefit from the type of groups and the type of individuals that are coming to our hotels,” she noted.

Mark Lomanno, partner and senior advisor, Kalibri Labs, confirmed the rate progress but pointed to other factors that could have an impact going forward.

“Over the last couple months ADR is at 2019 levels. Now I’m not sure if it’s necessarily going to stay that way primarily because the business mix is going to change again. There’s going to be a lot more groups and corporate travelers in 2022. You’re going to have negotiated rates, which is going to lower it down,” he said.

Ross emphasized the importance of group and corporate business returning to help bring back occupancy levels, which are currently at about 85 percent of previous levels. “That’s what’s been lagging the most,” she said.

Lomanno maintained that group business was already starting to lag leisure travel even prior to the pandemic.

“So what we see now is somewhat just an enhancement or an exaggerated version of what was already happening,” he said.

Adam Lair, managing director, senior partner, HVS, emphasized that a full recovery for the industry will not happen overnight.

“We may get 45% of RevPAR back this year, the numbers certainly are bearing that out, but beyond that we still feel like it’s a multi-year recovery. By the end of next year we will have most of our lost RevPAR back and a full recovery by 2024,” he said, pointing out that these are national averages and there are plenty of markets that are outperforming those numbers as well as some underperforming.

Ross reinforced the point.

“We definitely agree it’s going to be a multi-year recovery. We’re getting closer to where we were in 2019 from a RevPAR standpoint in ‘21 and then as we get into ‘22 we’re getting even closer. But it will likely be into ‘23 and ‘24 that we see more of the KPIs [key performance indicators] get back to those high levels,” she said.

However, Rachael Rothman, head of hotels research & data analytics, CBRE, did note that consumer sentiment is a significant challenge.

“Consumer confidence is at the pandemic lows and unfortunately we’ve erased all the gains made over the last 10 years. So some of us are feeling a little bit hesitant about the outlook for the economy despite GDP growth being strong and the outlook for the overall macro being robust,” she said.

Lair also noted that in addition to labor challenges and rising wages, inflation is a concern for many hoteliers.

“What does inflation do beyond this year? If it’s not transitory how much does it cut into the EBITDA growth that we had seen in the prior cycle?” he asked.

Help For Hurricane Ida Victims

As Hurricane Ida makes its way north as a tropical storm, the focus begins to shift in hard-hit cities like New Orleans to the many displaced citizens, not to mention first responders, in need of lodging. As such, hotels will play a vital role in helping the recovery efforts as they always do.

Of course, many hotel owners will be faced with a choice about how to handle the sudden surge in demand caused by the fallout of the storm from a business perspective. As an example, do they discount rooms for first responders and evacuees of the storm? Do they offer them for free? Do they provide rooms for staff and their families? What about food & beverage services?

These are not easy decisions to be sure. After all, these hoteliers have just been through an incredibly difficult 18 months and many have struggled to keep the lights on and staff employed. Nevertheless, time and time again we see hoteliers step up and provide relief.

Case in point, Bunkhouse Hotels—an Austin-TX-based hotel company—offered 100 free rooms to evacuees through today at six of its hotel locations: Austin Motel; Hotel San José; Hotel Magdalena and Carpenter Hotel in Austin; its Hotel Havana in San Antonio; and its Stagecoach Inn in Salado.

Meanwhile, according to ArkLaTex.com, evacuees from Southeast Louisiana are filling up hotels in the Texarkana with many sold out or near full capacity until next week. In addition to keeping rates down in the $100 range, many of the properties are also waiving pet fees for families seeking shelter.

In fact, to further drive home the importance of making provisions for pets, one of the most popular searches among Louisiana residents on Google has been “which hotels will allow dogs.” That question that has been searched at a rate of 2,700 percent since Hurricane Ida began, according to Newsweek.

There are many ways hotels can help out. For example, four of Florida’s popular rooftop bars are “Raising the Roof for Hurricane Ida Relief” tomorrow. Edge Rooftop Cocktail Lounge (Epicurean Hotel in Tampa, FL; Hi-Fi Rooftop Bar (Fenway Hotel in Dunedin, FL); Vantage Rooftop Bar (The Karol Hotel in Clearwater, FL); and Beacon Social Drinkery (Luminary Hotel & Co. in Fort Myers, FL) will be donating 50% of all sales from the night to the Red Cross Hurricane Ida Fund in support of those impacted by the storm.

Meanwhile, at least one of the large major brands is also keeping a close eye on the situation. Hilton is waiving cancellation and modification penalties in some cases. The company issued the following statement: “The safety and security of Hilton’s guests and team members is always our top priority.  We continue to work with our properties, local authorities and tourism partners to assess the impact of Hurricane Ida on hotel operations.”

Meanwhile, many residents are looking for financial help from organizations like FEMA (Federal Emergency Management Agency). Earlier this week it was widely rumored that FEMA would reimburse evacuees for hotel costs. However, FEMA officials noted victims need to file for Disaster Assistance online to receive any financial relief.

The reality is since there is only so much these government funded organizations can do it is going to be incumbent on hotels to provide relief to people in need. As many of the aforementioned examples point out plenty of hoteliers are up to the task.

 

 

Ingredients For Success

Hotel food & beverage outlets continue to adapt to the post-pandemic ‘new normal’ in a variety of ways designed to make feel guests feel safe and comfortable, as well as to maximize profitability in the wake of reduced demand and ongoing labor challenges.

During the recent BITAC Food & Beverage Live 2021, a trio of food & beverage experts discussed a handful of relevant issues for the industry, including changes to the breakfast buffet, condensed menus, and the creation of ghost kitchens. These topics and others were addressed during a panel discussion entitled “Ingredients For Success: Hotel F&B Outlets Alter Their Menus, Approach To Broaden Appeal.”

Dean Wendel, vp, food and beverage, Concord Hospitality, refuted the notion that the traditional breakfast buffet could be a thing of the past.

“I think they’re going to come back. There are too many brands out there that are built on that breakfast buffet and they won’t survive without it. It may look different,” he said, pointing out that many of the items are individually packaged now. Wendel did add, “I think the full breakfast buffet in some manner, shape or form will also come back.”

He also suggested there may be additional protocol changes to the “service buffet” such as guests being given gloves to handle utensils, for example. “There’s much more focus on the hygiene side of it. We used to say ‘don’t come in and clean until after service’ well now guests want to see the cleaning process happening,” he said.

Laurelle Kyte, corporate director of Sip & Savor, NewcrestImage, also pointed out the value of the breakfast buffet to limited-service brands while detailing a few changes the hotel operator has implemented.

“The demand is there for the buffet. Individually packaged is where we’ve gone with an attendant served a hot rotating item. Our focus has really been on the portion size. We’ve actually got our costs down more with the attendant service. I don’t think people are as comfortable coming back for huge plates full of things when someone is standing there serving them. It’s actually helped our bottom line a little more,” she said.

Harol Ortiz, executive chef, InterContinental Houston – Medical Center, has also observed an industry-wide movement to smaller portion sizes although he suggested an alternative solution.

“A lot of chefs have reduced portion sizes because of the food costs, which are higher because of the pandemic. I’m using local produce and local ingredients so that way I can satisfy my guests,” he said.

In addition to portion sizes shrinking, the panelists universally supported condensed or more focused menus that include fewer items as part of effort to increase efficiency.

“It’s become a big focus and a lot of it is driven by the staff that we don’t have. We need to be able to execute and make sure that we can actually get the product so we’re scaling down our menus. We’re not carrying huge inventory and prep times are greatly reduced when you’re focusing on 8 to 10 items as opposed to having maybe 15 or 20 items on a menu,” said Wendel.

Ortiz suggested the trend goes hand in hand with the movement to more casual dining. He further added that the InterContinental Houston was forced to embrace this trend as it opened shortly after the pandemic began.

“We shut down the main dining area and we reduced the menu. We didn’t have the staff to create the whole menu so we cut it almost in half. We just put the main dishes in the bar area. Right now, it’s very popular. A lot of people prefer to eat at the bar and not the restaurant,” he said.

Kyte agreed. “The focus is moving more to the bar and the lounge. Even pre-pandemic we had been moving in that direction anyway with more focused menus…The bar is really where we’re making our money so it’s tailoring the menu to fit the bar program. What do people want to eat while they’re drinking?”

Wendel took it a step further.

“We’ve been pushing our bar presence and expanding our lobby areas to make that one of the main focuses of food & beverage. We’ve gone through a couple of renovations where we’ve brought what would be the bar for the restaurant right out into the lobby, essentially right next to the front desk, and that’s become our main area for dining. Guests want to sit there, it’s more casual and it’s more comfortable,” he said, adding “you’re creating a sense of arrival as you walk in [the hotel].”

Meanwhile, in the face of reduced demand, many outlets have repurposed their food & beverage operations creating what are known as “ghost kitchens” to generate additional sources of revenue and maintain staff.

“I think that’s such an important part of the future of food and beverage, even with the uncertainty of what’s going on [with the pandemic] right now. There’s got to be additional revenue sources for F&B at hotels. It’s no longer an amenity, it’s a profit center and a revenue center. How do you keep it flowing even if occupancy is down?” asked Kyte.

Wendel detailed just how critical such solutions can be by outlining the financial benefits.

“Our early adapters that were on it from the get-go have survived due to their ability to react and set up these ghost kitchens. I have three or four hotels that are doing up to seven or eight different concepts. It doesn’t take additional food items, you’re basing your menus off what your normal menu items already are. These hotels are bringing in another $7,000 to $20,000 a month still doing these ghost kitchen concepts,” he said, later adding, “it’s helped bring staff back and kept hotels alive during dark times.”

Those dark times include the period immediately following the outbreak of the pandemic last March when guest demand dropped. But Ortiz noted the InterContinental Houston was proactive in helping to ensure the safety of guests. The hotel became the first to use the Integrated Viral Protection (IVP) Bio Defense Indoor Air Protection Filtration System. He noted the system was created by the owner of the property and reportedly kills 99.9% of the COVID-19.

“We are in the middle of the largest medical center in the world so our priority is our guests and our staff. A lot of people travel here from other countries to get treatment and they prefer to stay in our hotel. We have to make sure they are safe,” he said.

 

The Future Of F&B

Condensed menus, unique outdoor spaces, and an emphasis on food safety were all identified as key food & beverage trends as the lodging industry moves forward into the ‘new normal.’

A trio of panelists weighed in on these and other topical issues—such as the ongoing labor shortage—during BITAC Food & Beverage Live 2021, which took place last week at Loews Miami Beach in Miami Beach, Florida. The panel session was entitled to “The Future Of F&B: How Hotel Dining Will Look And Feel After The Pandemic.”

Donald Falgoust, principle, Spot On F&B Services Group—a full-service consulting and advisory group—began by noting that while group banquet business has been slow to return there are reasons for optimism.

“I think there are some green chutes out there for Q4. I think once we get through some of the things we’re dealing with right now with the [Coronavirus] variants and then what we’re going to be doing with FDA approval, I think that’s going to trigger a lot of the mechanisms that will allow us to get back [to where we were],” he said.

Falgoust further noted that when it comes to the ‘new normal’ in hospitality food & beverage one trend that he thinks will take hold is smaller menus similar to those offered by many free-standing restaurants.

“You’re going to see contraction of menus, which is done not only because we need to do that from a labor standpoint as well as the escalation of food costs, but more importantly because people don’t want to see menus with 30 items on them. They want to know what are you going to do and what are you going to do well? They don’t need a large bandwidth of items where some of them are okay and some of them are not okay,” he said.

Falgoust also emphasized the importance of the experience.

“I think you’ll see a big focus on what the venue is. It needs to be a highly socialized experience and it needs to be inviting. That experience of socialization needs to be just as important as what you experience on the F&B side. After the pandemic I think that there is a hunger for that more than there ever has been,” he said.

Lissette Landestoy, senior regional manager, Caribbean, Central and South America, Hilton Supply management, reinforced the earlier points noting the mega brand company is also “reducing menus” while emphasizing other changes to enhance the overall experience.

“We’ve been pivoting and being innovative as well. We’re using more technology, such as QR codes, as well as having that guest experience with the servers and the bartenders. So we’re trying to be more creative and innovative, but really give them that experience they’re used to at Hilton hotels,” she said.

Kristin May, chief commercial operations, Vyv—a New York-based health technology company which offers antimicrobial lighting—talked about some of the health and safety challenges that now exist.

“The food service industry now is really faced with learning very, very quickly about all of the different antimicrobial tools that are out there because it is going to be a continuing expectation,” she said.

May emphasized that a “multi-layered defense system” is critical for hotel F&B outlets going forward.

“That’s the really the common language throughout all industries now as we look to promote safety because our traditional cleaning methods now are critical and they’re needed. They have to continue but we need more because unfortunately the organisms are really smart. We will pass through this pandemic, but we have food borne pathogens and bacteria resistant pathogens so it requires adopting new technology,” she said, touting the effectiveness of light-based tools, for example.

Landestoy, for her part, emphasized Hilton’s CleanStay program in which the company partnered with The Mayo Clinic and its ongoing cleanliness efforts.

“We’ve been really putting in more different stations and putting in more effort with the team members to give that assurance to our guests so they can avoid those touchpoints,” she said.

While Falgoust endorsed the aforementioned efforts, he bemoaned the heavy focus on COVID.

“Those things are hugely important in our industry and always have been, but as we move forward I think all those things that happened with the protocols need to start to move into the background and not be at the forefront of what our experience is. It’s [COVID] still a hot button and it needs to be out there, but people need to know that’s [cleanliness] automatically what they’re going to experience. We need to get to a point where you don’t see the social distancing signs and it’s not so in your face,” he said.

Meanwhile, the momentum of outdoor dining spaces continues to gain traction, according to Landestoy, particularly in warm weather regions such as the Caribbean and South America.

“We’re maximizing in many of our properties the rooftops and balconies really taking use of that outdoor space and enjoying the nature. In my region there’s a lot of outdoor venues, we have that privilege,” she noted.

Falgoust called the outdoor dining movement “kind of a no brainer” as he detailed some of the changes.

“That’s been a big part of design for many, many years. I believe people have always enjoyed doing that and people are going to be innovative as they’ve found new ways to do that,” he said, noting that some cities have altered right of ways and parking regulations to enhance such options.

Falgoust added, “indoors are open but people still want to sit outside. It’s a natural component of what the pandemic has started.”

May, however, emphasized that those managing such venues must remain just as vigilant in terms of health and safety.

“Outdoor spaces are phenomenal and they bring a different level of experience. The expectation now is to make them feel like indoor spaces. We need to make sure we’re doing the same things inside and we’re bringing those outside so we are able to help make sure it continues to be a really fabulous space to come into,” she said.

Labor, meanwhile, continues to be a huge challenge for all of hospitality, including the food & beverage segment.

“Our next generation is going to be people that don’t necessarily have experience in hotels or restaurants, but I think what they have is a fantastic attitude, tremendous energy, and great presentation skills. They will come to us and what we need to do is become educators,” he said.

Falgoust continued, “the biggest challenge we have on that end is our front line leaders on property right now are frazzled; they’ve got battle fatigue. It’s been brutal and people have been grossly understaffed. How do we find a level where they have the time to do that teaching and also get through day-to-day tasks?

Falgoust explained that Spot On can help combat the aforementioned challenges.

“We provide that service to hotels and restaurants. We’ll bring in people that can help you take people who have never worked in the industry before and put them on a 21- or 28-day program, which gets them completely ramped up,” he said.

“The other element in the labor shortage is embracing technology. I give accolades to the hotel and staff here in their embracement of texting. That allows you to take service levels to an area where it doesn’t necessarily require interacting with an individual face-to-face, but embracing a very quick response and doing so with that service built into those responses. The same is true as we think about the environmental space and how we keep it going. There are tools available now that can help because with traditional cleaning it does require that manual intervention,” concluded May.