Could Remote Hotels Be The Big Winners Of The Post COVID World?
COVID-19 has thrown the global economy into a tailspin, with most of the world plunged into a very sudden and unprecedented recession. The crisis has catalyzed some huge changes, and no industry will avoid being either reformed or restructured in some way. Few industries, however, have been hit as hard as hospitality. With hotels shuttered for weeks and consumer spending on hotels down 78.9% YoY, the road forward for hospitality in general looks very uncertain.
Despite all that, we know over the medium term that travel will return and the industry will bounce back, just as it has done in the past after facing major crises. With people around the world having been stuck in their homes for much of the last three months, forced to cancel any existing travel plans, the desire to get away and experience somewhere new has been growing. But as we begin to be able to travel again, what has changed since the beginning of the shutdown? Who stands to win and who stands to lose?
While there are many unknowns and many factors to assess, there’s reason to believe that remote hotels have a strong opportunity to gain market share. Let’s start by assessing the market factors pointing in that direction.
People will travel again
From Asia to America, consumers who have had to cancel travel plans are starting to plan for their next trip. Additionally, a recent Ernst & Young Consumer Behaviour Survey showed that 67% of consumers expect their spending to go back to or rise above pre-COVID levels, a positive sign that financial concerns are not significantly holding back travel plans. The signs are clear: people will travel again. The question is, where will they go?
The majority plan to stay within their own country
A recent TheVacationer.com survey showed that 57% of people surveyed said they wouldn’t travel internationally in the next 12 months. And a recent survey by the Tourism Crisis Management Initiative showed that there will be some pent up demand post quarantine, but that travel will likely be closer to home initially and that people will do more driving tourism.
Less focus on flying
The majority of travellers are actively planning their next trip, with more than two-thirds seeking to travel in the coming year. Despite these numbers, there is a wider sense of insecurity about flying. In addition to that, with airlines running record losses, many air routes are now on the chopping block. Expect consumers to start considering more remote destinations within their home countries or within their travel bubble area. This could well mean a focus on locations that are accessible by car, with less reliance on air access, a stark change from the pre-COVID world.
City attractions face major difficulties
Major urban attractions such as museums, concert halls, sports stadiums and theatres have all been closed and are trying to figure out how to deal with massive ongoing restrictions. These are critical drivers of urban travel, and their loss will also represent a big reduction in travel to urban areas. People still want to travel through, and when cities lose demand, remote and rural areas will benefit.
People in cities are looking to the countryside
Declining demand for urban living and an increasing demand for rural living has also been seen in real estate demand, with the recent Residential Global Market Sentiment Survey showing that 61% of respondents anticipate a rise in the demand for rural areas. This type of significant lifestyle demand change is indicative of a shift in consumer demand that plays into the hands of remote hotels.
People want to get away from the crowds
With the backdrop of an infectious disease, it’s not a surprise that 39% of urban dwellers said the COVID-19 crisis has prompted them to consider leaving for a less crowded place. Travel specialist Jessica Griscavage of McCabe World Travel agrees, saying she expects COVID to translate into “a big increase [in bookings of] less crowded experiences moving forward.”
The overarching signs are that consumers want to travel domestically, but are staying away from cities and want to stay away from crowded places. They will be more focused on car tourism in the short term, and many will look to explore places that are ‘off the beaten track’.
Remote Hotels in Particular:
The market demand factors open up opportunities for hotels based outside of major metropolitan areas. But there are additional reasons that point to remote hotels in particular being the big winners.
Remote hotels offer space and isolation
By definition, remote hotels are located far from the crowds and the heavily populated areas. Never before has this been as big of an attraction factor as during a pandemic. This space and privacy can be a defining opportunity if marketed correctly.
Remote hotels can pivot faster
Larger hotels and hotel chains may face extra difficulties in rapidly incorporating new operating procedures and implementing them across huge international organisations. Remote hotels tend to be smaller, and they will have the upper hand in making the types of quick, on-the-spot changes that would take chains weeks to change due to all the needed approvals.
Remote hotels can be more personal
Smaller organisations can deliver customer communications in a more direct, personal and sincere way. These are big strategic advantages in a dynamic world of ever-changing consumer demands. In particular, utilising social media and direct email communications can build trust with your guest, who needs to see transparent communication now more than ever.
The uncertainty that has descended upon us this year will not disappear until such time as there is a vaccine or the virus burns itself out. But in the meantime, businesses everywhere will be looking at ways to adapt and sustain themselves into the future. While there are no guarantees
or easy ways out, there are a plethora of opportunities for remote hotels to benefit greatly if they manage this transition efficiently.
About the Author
Colin Hannan is a hotel development consultant with Proven Partners Ltd. He has founded and managed several successful businesses within hospitality and is passionate about economics and sustainability.