The Relationship Between ‘Industry Transparency’ and Speed of Recovery
By Trevor Stuart-Hill, Founder and president of Revenue Matters and Eric Sutfin, CMO for Social Capital Agency
Trevor Stuart-HillEric Sutfin
As with any crisis or “shock” to the hospitality and tourism industry, there is always a period of recovery followed by stabilization. Each shock has its own set of factors that caused the disruption in the first place and therefore the recovery period can vary dramatically by region, market and even by service provider within a market. That said, in the post pandemic era, there is a direct correlation between industry transparency and speed of recovery – we call this the recovery equation.
COVID-19 isn’t going away anytime soon. Of course, plenty of smart people are working on a vaccine. And while a vaccine isn’t a “cure”, it will certainly go a long way to stimulate recovery in the hospitality and tourism sectors. In the absence of a cure per se, we as an industry will have to think differently about our areas of responsibility and what role we should play in helping travelers to get moving again.
People who lived through the great depression era of the 1930’s, or World Wars for example were profoundly impacted by these events. The psychological effects of scarcity and loss associated with these experiences were hardships that had significant and long-lasting implications. Beyond affecting personal lives and commerce, this impact permeated cultural mores and values to a far greater extent than those who lived through these events originally anticipated at the time. In the wake of the COVID-19 pandemic, we too are just beginning that journey. We are just beginning to see the tip of the iceberg so to speak.
As an industry, we are at a crossroads. On one hand, we don’t quite know what the long term attitudinal and cultural impacts will be across the globe, but we also face real and significant short-term pressures that proportionate to associated shortfall in financial performance of businesses we are responsible for. In this environment, the temptation is great to operate in a silo and think about competition in a traditional way – capturing share from existing demand by pulling it away from competitors. Unfortunately, and perhaps counterintuitively, that kind of thinking will cause a protracted recovery and is detrimental to our common objective of fostering traveler trust.
So, what is the secret to stimulating travel demand in this new environment we find ourselves in and how do we come together as an industry to do it?
Let’s start by examining one possible recovery equation: Vr = T (C + M) 2
Where Vr is the improved speed (velocity) of recovery, T is industry transparency, C is consumer confidence, and M is motivation.
Let’s dissect the various components that make up the recovery equation and examine how they play a role in impacting the speed of recovery. More importantly, let’s explore some ways you can influence these elements and therefore support your own recovery.
In the classical sense, consumer confidence is a leading indication of the degree of optimism that consumers feel both about the economy in general and more specifically about their personal financial situation. Since it is a leading indicator of individuals sense of financial security, consumer confidence serves as both a precursor and building block for traveler intent. A low consumer confidence index will undoubtedly translate to a weaker rebound.YOU MAY ALSO LIKEThe Time Is Now for Direct Booking for GroupsHotels Will Need A 5-Star Rating In Safety And A 3-star Michelin Rating To Address Guest COVID-19 ConcernsRevenue Management: 15 Insights to Navigate Market Uncertaintyview allToday, and particularly as it relates to speed of recovery in the travel sector, consumer confidence isn’t enough. Travelers also have to include an assessment of risk associated with engaging in a given activity – such as staying at a hotel, eating in a restaurant or traveling in a commercial airliner for example. In other words, they need to trust that they can travel safely and can stay healthy throughout their journey. This is precisely why industry transparency will play a vital role in supporting consumer confidence and therefore the speed of demand recovery. We’ll explore the concept of transparency in a moment.
The recovery equation also highlights the non-linear impact that consumer confidence has on the speed of recovery. In other words, there is exponential value in creating and maintaining consumer confidence among prospective travelers. Of course, there are many things that are out of our direct control when it comes to consumer confidence; however, collaboration among industry players and effective communication with prospective travelers will go a long way towards reducing risk associated with travel and tourism related activities.
Motivation for travel will of course vary from one traveler to another, but it too has a has an exponential impact on the speed of demand recovery. Advertising and marketing messages can stimulate motivation, but they need to be both timely and relevant for their intended audiences. While advertisers and destination marketing organizations had a bit of latitude to aggressively market their messages broadly in the past, today’s environment is different. Travel is now a considered purchase so messaging needs to be more refined and audiences carefully targeted.
While a photo of a pretty sunset or people having fun in a warm beach destination may have been all the motivation that was required in the past, additional messaging that conveys how the traveler can simply and easily both access and experience all the destination has to offer plus how they will receive personal care and attention during their visit will be required.
Consumer confidence and motivation for travel combine to foster action on the part of the traveler and both need to exist in equal parts before they will actually cause someone to take action such as booking a trip. If one of these two elements is missing or is diminished to a degree, then the action of booking will be delayed at best or, at worst, won’t happen at all.
As an industry it is pretty evident that our success is directly tied to which we foster trust amongst the traveling public. Trust is a by-product or a result of something else – and that something else begins with transparency. Our actions and communications that consistently demonstrate and reinforce reliability, integrity and genuine care for the individual wellbeing of travelers across the multitude of touch points that they will encounter throughout their journey is essential. This is what we mean by industry transparency. No single government, destination, supplier or service provider can achieve this on their own. Transparency in this context demands a whole new level of collaboration amongst industry players.
Any breakdown in the chain of trust that is generated as the traveler moves from one experience to the next (i.e. from the airport waiting lounge to the aircraft, to health screening at the arrival airport and quarantine requirements, and from ground transportation to their accommodation, or on to an attraction etc.) will have a knock-on effect with subsequent experiences. Essentially, this traveler experience chain will only be as good as its weakest link.
In a purely competitor-vs-competitor environment and particularly in periods of soft demand, undermining the efforts of a competitor by diminishing the value of their messaging around traveler health or safety for example, or touting your sanitization protocols as being superior may be tempting. Doing so however will actually undermine traveler trust for the industry at large and ultimately slow your own recovery.
As odd or counterintuitive as it may sound, sharing information and best practices with others – including competitors, will actually help you to return to profitability more quickly. Many have already recognized the value in this approach and we have highlighted some examples in the ‘resources’ section below.
Who’s Being Transparent?
Here are just a few of the industry players that are leading the way as it relates to transparency. We applaud their efforts and encourage others to do the same:
- Since early March 2020, Hospitality Net publishes an elaborated COVID information resource with relevant news and background articles.
- Matt Maddox, CEO and his team from Wynn Resorts have published a comprehensive health and safety plan that others may benefit from.
- The International Tourism Resource Network (ITRN ) is free to join and provides a space for collaboration, inclusion an innovation across the industry.
- Travel Massive is a global organization designed to foster learning, and sharing of idea.
- American Hotel & Lodging Association (AHLA) has instituted a “Safe Stay” initiative that is focused on enhanced hotel cleaning practices, social interactions and workplace protocols. There are several free resources available on their site for non-members.
- Hotel Sales & Marketing Association International (HSMAI) has published a substantial amount of insights and other resources on the Global Coronavirus Recovery section of their website.
- Duetto is providing global booking pace data each week via their Pulse Report.
- Kalibri Labs is providing weekly dashboards designed to provide critical insights to the hotel community.
- IDeaS is providing a wealth of information on their Journey to Recovery resource page. Here you can find blogs, webcasts, articles and more.
- Hotel Recovery 2020 publishes helpful information plus calls out who is pitching in to help speed recovery within their email newsletters.
Building traveler trust through transparency is the one thing we can influence. It has the added benefit of reinforcing both consumer confidence and traveler motivation. Combined, these factors will conspire to either accelerate or delay industry recovery. The choice is up to all of us individually and collectively.Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com