How to deal with unexpected economic events in the hotel industry
There’s no denying that the Covid-19 outbreak has hit the hospitality industry hard. It’s a tough blow for so many hardworking hoteliers who are dealing with dramatic drop-offs in numbers.
What we do know though, is that we’re also a resilient industry, and that market volatility is something we must accept. With that in mind, being prepared as best as you can for unexpected events can go some way in helping you weather unexpected economic events or sudden downturns.
Here are some considerations to keep in mind.
In instances like the Covid-19 outbreak, it’s reasonable to be waiving cancellation fees, as the issue is widespread across hotels, OTAs and airlines.
Doing right by your customers with empathy and understanding in the short-term potentially leads to long-term loyalty and guest satisfaction.
Of course, it’s worth offering your guests the option to re-book or hold on to the booking credit should they wish. Many customers are also conscious of continuing to support hospitality businesses and are themselves choosing to not request a refund and instead delay their booking.
Either way, the best way to manage the situation is to be proactive in communications. Email or phone all future bookings preemptively to discuss the options, rather than waiting for them to contact you for a cancellation. It allows you to get a clearer picture of your financial position, making it easier for you to project and manage finances for the coming months. Preno’s refund and cancellation function is easy to use. If a guest has decided to cancel a booking or wants to reschedule their stay later in the year, the property can offer credit or vouchers for the guests and Preno can easily help manage refunds.
Marketing your business
Marketing may feel like a fruitless effort at a time when travellers are just not spending, but that doesn’t mean there aren’t ways you can’t continue to invest wisely in your marketing assets. Using a downturn to best prepare your business for the upturn will pay dividends in the long run. Now might be a good time to take stock of advertising spend and where you could put a hold on spend for the short term. You could also use this time to revamp your website and marketing collateral, update tired photos or imagery and refresh messaging.
On that note, consider that new traveller demographics may emerge as downturns begin to reverse. This may mean that your brand messaging may also need to shift to better speak to the needs and requirements of different audiences. Do your research here, and engage the services of a marketing consultant who can help you if need be.
If you have a good CRM in place, use this time to make sure your contacts are segmented so that when the time comes to ramp up your marketing efforts, you can create more targeted content that best suits each of the segments. Past or loyal guests and domestic travellers will be the best place to focus marketing efforts once market conditions improve.
Have an advisor who supports you
When things change quickly, your forecast needs to, too. Having a good accounting system in place and an experienced advisor to support you allows you to quickly reassess your cash position and projections when unexpected changes happen. Significant downturns are not ideal, but if you’re in a position to understand the impacts quickly, then you can respond or adapt with more agility. Preno integrates with Xero online accounting software which gives you a real-time picture of your finances. With a clearer picture of where you stand today, it’s easier to make decisions about tomorrow.
Be prepared to adapt your business model
Remember, seasonal fluctuations are nothing new to hotel businesses, but a downturn might just signal a change of plan and some forced downtime. If you usually have a quiet season or even a shutdown for a short time, you might instead need to consider ways that you can leverage any opportunities during that time in order to make up shortfalls in the future. Where could you double-down on ancillary revenue? Or are there events, promotions or incentives you could leverage once the market begins to pick up again?
Operate at your most efficient
Keeping a close eye on expenditure and operational efficiency puts you in the best position to react to and manage economic downturns. When you have complete visibility over your business, you can see exactly where costs can be reduced or efficiencies tightened. Hotel property management software like Preno serves up insightful, real-time reporting that can help you confidently make decisions about your next steps.
Remember to also seek support when you need it. It’s important to remember that you’re not alone. Turn to industry colleagues, associations and healthcare professionals if you feel you need additional advice or support. Keep a good team of advisors around you who can help you make sense of the information in front of you so you can feel comfortable about the decisions you need to make. You can also join the Preno Facebook Community where we share tips and advice or follow our social media channels for the latest industry updates.
Our team remains available to respond to questions or requests to provide a seamless service during this time. Reach out to the Preno team on [email protected], our chat service or via our contact numbers on our website should you have further questions. We are here to help and are in this with you. Stay strong.
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