An increase in spontaneous travel and reduced booking lead times could spell planning disasters for hotel management teams.
New data released by IHG has shown a significant rise in spontaneous travel with reduced booking lead times. In the UK, 69% of bookings were made within 7 days and in America this percentage increased to a staggering 87%. A rise of 46% and 58% respectively from 2019 shows how the COVID-19 crisis has substantially changed the booking habits of consumers. Consequently, labor and revenue management has become increasingly difficult for hoteliers’.
Consumers are more likely to travel domestically, especially with ever-changing travel restrictions, which further increases the likelihood of last-minute bookings. GlobalData’s COVID-19 recovery consumer survey (week 8 16th-20th September 2020) showed globally 41% of respondents ‘strongly’ or ‘somewhat’ agree to consider taking a domestic trip this year, as opposed to 21% for international trips. With less planning required for a domestic trip, a reduction in booking lead times is set to persist, prolonging the planning problem for hotels.
Labour planning becomes more difficult
Labour planning has become increasingly difficult. Hotels which rely on casual staff contracts often plan staffing levels as little as a week beforehand. But with the substantial majority of bookings made less than a week prior to arrival, hotels will find it harder to set optimum staffing levels.
Service levels are likely to be severely affected if planning errors occur. Hotels must ensure they have enough staff members to provide the expected level of service and provide a good customer experience. But if a hotel has surplus staff, the productivity levels could be low and the business is burdened with unnecessary costs. This could be detrimental when operations must be optimized to conserve cash.
With furlough schemes ending and hotels needing to conserve cash, redundancies could occur as a result. With over 1.9 million employed in the accommodation sector in the UK and US alone, according to GlobalData, the catalytic impact could be huge. Hotels must strike a balance between the correct staff levels and optimal costs to prevent unnecessary job losses.
Revenue management- a fine balance between high yield and occupancy
Revenue management optimisation is likely to be harder, resulting in a delicate balance between a higher yield or a higher occupancy rate. Modern revenue management systems are designed to obtain the maximum level of yield based on historic booking trends. This unforeseen demand change means hotel room rates could be set too high for last-minute bookings. If hotels do not optimize revenue management systems, they could be left with dwindling occupancy levels because of the higher room rate which has been set.
The hotel industry is set to be challenged going ahead with ever-changing restrictions influencing consumer booking habits. The delicate balance between yield and resource planning will continue to pose problems for all types of hotel.