Typically delighted by a complimentary beverage in the lobby during check-in, hotel guests of the future might be even more excited to be treated to unlimited hand sanitizer. Let’s face it, the COVID-19 pandemic has heavily impacted the travel and hospitality sectors. Hotel occupancy is down 42% year-over-year (YoY) with roughly 80% of hotel rooms empty. Air travel demand is forecasted to fall 48% for 2020, with a projected loss of $300 billion. With our present looking really grim, brands are shifting focus to their action plans coming out of the pandemic.
The impact of the COVID-19 pandemic on the airline and hospitality industries
It is a fact that the global travel industry is one of the, if not the, hardest hit industries in the COVID-19 pandemic. At the peak of the lockdown measures across Europe, several countries experienced a staggering 99% decrease in bookings on popular accommodations sites such as Airbnb, Expedia and Booking.com compared to 2019. As countries shut their borders to protect their citizens, global tourism came to a complete halt. This hugely impacted the entire tourism ecosystem, resulting in a significant drop of movement and occupancy in the airline and hospitality industries.
Contrary to the hopes of the industry, the traditionally thriving summer period was not spared by the effects of the pandemic. While the numbers did improve compared to the early days of the pandemic, primarily as a result of local tourism activities, they were still significantly below the levels in 2019 as the world adjusted to a “new normal”. However, as new lockdown measures and travel restrictions have been introduced in several European countries in recent weeks, the industry is experiencing another notable decline in bookings.
The big question is – what will tourism look like in 2021 and beyond, and what should be the focus of the airline and hospitality industries?
The values of loyalty in a crisis
In order to determine their focus, it is important for the airline and hospitality industries to understand the impact of COVID-19 on their consumers. To help these industries prepare for the new phase of the pandemic, our Global practice published an article on “The values of loyalty in a crisis for the airline and hospitality industries”, which emphasizes the need for a shift in focus from “serving” to “adding value” for (potentially) loyal consumers. With this thought in mind, the article presents three main insights that are very much relevant in Europe, which we summarize below:
Research showed that the top 2 values of airline and hotel loyal frequent travelers are sharing with others and trying new things. In order to re-engage these travelers in the new normal, the industry should increase their focus on reward and loyalty programs with an emphasis on appealing to these values of sharing (digitally) with others and trying new experiences. We are already seeing some great examples of this, including new offerings such as online travel experiences to a dream destination, monthly subscriptions for hotel- and meeting rooms, staycation travel tours between hotels, walking food tours and providing loyal customers with a significant discount on their next reservation.
As the industry shifts towards the new normal, there is a new value that is of great importance– the feeling of safety. In line with that, the vast majority of airlines and hotels are focusing on making travelers feel as safe as possible through initiatives such as improving their sanitizing and housekeeping procedures, making it mandatory for employees to wear protective equipment, providing travelers with complimentary cleaning products, screening employee and traveler temperatures, and disclosing travelers and employees that have been tested positive for COVID-19.
Finally, as more and more interactions are moving online, airlines and hotels are expected to be more digitally-enabled than ever before, leveraging this digital transformation to surprise and delight their loyal travelers by offering connection points to their friends and family back home. We encourage the industries to find points of differentiation for digital experiences and increasing positive interactions with the brand through initiatives such as making better use of social media to inform and inspire travelers in order to develop stronger relationships, increasing email contact to inform travelers of safety protocols, shifting the online focus towards domestic target groups, and making sure that the website is always up-to-date with the latest COVID-19 status (i.e. cancellation policies, safe local experiences).
Staying focused in times of uncertainty
It is clearly evident that the airline and hotel industries are not sitting and waiting for the pandemic to end, but are proactively adapting their current business models and rethinking how they best can adapt to the changing environment. We are happy to see that the industries continue to invest in making these changes in response to the challenges that they are facing. With the enclosed article on “The values of loyalty in a crisis”, we hope to provide the airline and hospitality industries across the globe with additional insights on they can best adapt to the new normal and remain focused in these uncertain times.
Click here ( Adobe Acrobat PDF file) to download the complete article.