Hotels in the Time of COVID: Silver Linings and a Look Ahead
April 22, 2020
U.S. Hotel outlook, including silver linings
There is no question that our world has been turned upside down, and the global hospitality industry is one of many that are suffering. Over the past few days, the hotel conversation has started to evolve, with more attention being paid to value-based properties, flexibility for consumers, shifts in approaches to dining options, and a recovery trajectory.
This is an interesting time for economy hotels, especially. According to our client, RLH Corporation Interim CEO John Russell, nearly all of the company’s 1,000+ franchisee-owned properties are still open. Many franchisees’ hotels are providing housing for essential workers: construction crews in states where construction is still considered an essential service, truckers who remain on the road, teams of traveling nurses, and front line workers who are opting to stay in hotels in order to protect their families from exposure to COVID-19. Some franchisees have teamed up with local government entities to house veterans and homeless populations during the pandemic. According to USA Today, more than 15,000 hotels have signed up for the new “Hospitality of Hope” program, through which the American Hotel & Lodging Association (AHLA) connects hotels with government agencies to provide temporary housing.
RLH Corporation has also asked its franchisees to provide significant discounts to essential workers, and they’re just one company making decisions like this. Best Western and Wyndham properties are offering status upgrades to essential workers, while Marriott and Hilton have teamed up with their partners to donate rooms to those working on the front lines.
There is no question that at this moment in time, essential business travel is at the heart of the hotel business.
The Rise of the Road Trip
As travel restrictions and stay at home orders ease around the world, the scales will start to balance, and leisure business will pick up.
In China, as lockdown restrictions began to lift, domestic sight-seeing spiked. A recent CNN article cited a Trip.com Group survey of 15,000 across 100 cities in China that found 90% of respondents will prioritize regional domestic travel over international travel. Similar predictions are being made by travel executives all over the world. As airlines explore potential solutions for pre-boarding COVID testing, increased space per passenger, and more through disinfection, travelers all over the world will take to the highways.
A rise in road travel will have a further positive impact on the economy hotel sector. With a large percentage of hotels located along interstates and in many smaller towns – often on the path or destination of a road trip – we predict a faster recovery of both occupancy levels and RevPAR – in the economy space.
The New Normal?
As hotels strive to keep consumers engaged while they shelter at home, hospitality organizations of all sizes are increasing flexibility for cancellations, date changes, and even refunds for prepaid stays.
Some travelers may take pause before booking a home rental rather than a hotel, where cleaning practices between guests may not be as streamlined. In the F&B space, we may find that self-service hotel breakfast is a thing of the past. At some sit-down restaurants, menus may look a bit different: California Governor Gavin Newsom has outlined a plan that includes disposable menus in all restaurant locations, for example. And, we expect a growing number of hotel brands will adopt mobile payment programming to minimize cross-contact.
There is still uncertainty about how the future looks, but we know this for sure: this industry and the people who keep it moving are resilient. There will be pent-up demand for leisure experiences as requirements to stay home begin to lift, and while business travel may look different, it will ultimately pick up again. There are silver linings and new adventures in our future.