The COVID-19 pandemic has had an unprecedented effect on the global economy, with no sector or industry spared. In the face of this healthcare crisis and the economic recession it has triggered, businesses have been forced to restructure and transform rapidly in significant ways. Business as usual is a thing of the past, and we’re all looking ahead to determine what the new normal will be.
While all industries have been effected, the hospitality industry has been especially hard-hit, thanks to hotels being shut down for lengthy periods of lockdown, and local and international travel put on hold – not to mention the fact that consumer spending on hotels is down 78.9% year-on-year. All things considered, it’s easy to think that the hospitality industry has seen the end of its golden age, and is facing one of the hardest roads to get back to business as normal. But is this really accurate?
It’s not optimism but inevitability that we will see a return of the industry over the medium term, based on the industry’s recovery in the past from major crises. The world is hungry for travel, whether it is for business or leisure, and the cabin fever of international lockdowns where people had to cancel vacations and family holidays will likely result in an industry-wide surge in the near future. But there is no doubt that, like other industries, there’s no going back to the old system. In light of this, what will the hospitality industry look like when travel returns on a large scale? Where will the success stories be? The reality is that this crisis has brought interesting opportunities to part of this industry – namely remote hotels.
The Post-COVID-19 Hospitality Market
It’s strongly believed that there’s opportunity to be had in the hospitality market, based on the following key factors.
Travel Will Return
Already, tourists across the world, from Asia to America, are starting to plan for their next trip. According to a recent Ernst & Young Consumer Behaviour Survey, 67% of consumers expect their spending to go back to or rise above pre-COVID levels despite widespread economic recession. People who have had to cancel or postpone holidays are feeling the need to spread their wings after having to stay home for extended periods – the only question is where will they go?
Local Travel Wins Out
It looks like the answer to that question is “not far”. According to a survey by TheVacationer.com, 57% of people said they preferred to vacation and travel locally for the next 12 months. This will likely mean a notable increase in road trips and vacations that are accessible by car, to local destinations and attractions.
Dusting off the Car
While over two-thirds of people are planning to enjoy their next trip within the next 12 months, don’t expect these travellers to take to the skies. Due to a combination of increased fears of flying relating to contracting the COVID-19 virus and airlines running record losses that result in limited routes, consumers are filling their tanks and getting ready to take to the roads. As a result, it is expected that consumers will start to explore more remote destinations around their town, country and personal travel bubble, which are more accessible by car. This is a notable shift from the international and jet-setting pre-COVID-19 travel world.
City Attractions vs. Rural Retreats
One of the biggest casualties of COVID-19 has been urban attractions like museums, concert halls, sports stadiums and theatres. These venues have endured full closures and face major operating restrictions that make them and cities a less-attractive destination. While urban attractions are likely to continue to struggle, rural locations are likely to see an increase in tourism as people move out of the cities and seek more isolated attractions that can better cope with COVID-19 restrictions.
Moving to the Country
Tourism has always been in a constant state of flux between urban and rural areas. While cities were gaining ground with holidaymakers before COVID-19, the challenges of managing the resulting restrictions in a high-density population in small living spaces have indicated a post-COVID-19 preference for the countryside. A recent Residential Global Market Sentiment Survey held up this idea, reporting that 61% of respondents anticipate a rise in the demand for rural areas, putting more remote hotels at a distinct advantage.
Space, Isolation and Peace
Similarly, 39% of people living in urban areas reported that the COVID-19 crisis made it far more attractive to seek a less crowded place. The hospitality industry in country locations with small populations or in more remote areas are set to benefit as people avoid the health risks of crowded spaces, seeking fresh air, the outdoors and low-risk activities.
Currently, all signs indicate that people are as hungry for travel, if not more so, than before the COVID-19 pandemic. However, health concerns and the ability to manage COVID-19 restrictions make it more likely that tourism will be local, focussed on more rural areas that are off the beaten track, and where low-risk activities are more accessible.
Why the Market Favours Remote Hotels
So far, we’ve covered why there is increased demand for more remote hotels and how they are set to benefit post-COVID-19 as the industry opens up – but there are additional reasons why these businesses are better positioned for success.
Remote hotels are naturally located far away from bustling tourist crowds and busy, heavily populated areas. This has turned a niche vacation experience into a highly desirable attraction. In times of a pandemic where crowds equal risk, marketing space and privacy correctly is a clear win.
City-based chain hotels can be slower to act and implement changes due to their large size and corporate structure. On the other hand, remote hotels are usually independent and small, making it easier to design and implement changes. This adaptability is critical in times of crisis, where making fast, effective changes is key to seizing opportunities.
Personalisation is a cornerstone of modern marketing, and it’s easier for smaller organisations to deliver customer communications in a way that is authentic, direct and personally engaging – again, due to their small size and structure. This translates into a useful strategic advantage in a time where transparent communication and community-building is essential, and social media and direct email are powerful tools for smaller hotels to utilise.
While it is true that the uncertainty of the COVID-19 pandemic is far from over, it is important to note that opportunities for hospitality businesses to succeed are emerging as people again look towards travel to broaden their horizons and explore. By understanding how the needs and demands of the market are changing and being open to transformation and a new normal, the battered hospitality industry can reimagine itself and reposition to regain lost ground and move from strength to strength.
About the author
Colin Hannan is Principal with Proven Partners, a global hotel consultancy. He has created, owned, and operated a variety of successful hospitality businesses across the globe, and is passionate about helping hotels find optimal solutions to drive sustainable growth.