Home Business Corona crisis leads to revolution in the hotel industry

Corona crisis leads to revolution in the hotel industry

by Dirk Bakker

Which trends are changing the hotel industry forever and are becoming “the new normal”? I spoke about this yesterday with Navneet Bali from Meininger Hotels, Marloes Knippenberg from Kerten Hospitality, Mark Selawry from ACT.Global and Hans Meyer from Zoku. They were guests on my panel during the worldwide webinar Hospitality Tomorrow: Follow the Sun. The hotel industry was discussed and debated, following the sun, from east to west, just like during a “real” conference, with a main stage, several sub-sessions, a reception area and a network room. The only difference: no one had to leave their home for it.

It is precisely these online initiatives that are changing business travel forever. The online opportunities to see, speak, and share information have been around for a long time. Yet we have only truly discovered them now. This has an effect on how we work, including the way we travel. Why fly abroad for a single meeting? It is unnecessary, expensive, time consuming, and certainly not sustainable.

Opportunities for the industry
In principle, that international business trip that you deliberately do not make next time is bad news for the sector. That is at least one less overnight stay. At the same time, there are opportunities to respond to this new trend. Work is not tied to location, but to human contact. Conferences, brainstorming sessions, and dinners will always be there. Creativity does not flow as easily via a screen, but it does flourish by sitting together. Hotels can play a role in this.

Some hotels now offer their vacant rooms as office spaces and their lobbies as flexible workspaces. This is convenient for CBD employees who cannot reach the office safely and quickly due to the limited lift capacity. The “two-phase working” is introduced: you start in the lobby in the morning with a cup of coffee and in the afternoon you go to the office. Lobbies are also perfect for young, innovative companies that don’t need a permanent office, just a place to occasionally meet when they really need to. This latter group will only grow in size in the future.

Is the hotel as a workplace a viable concept, once we can fully use the office as usual again? Hotel rooms are a temporary solution, but lobbies as flexible workspaces have definite potential.

More innovative hotel concepts
An important lesson from the panel is that the corona crisis will lead to more innovative hotel concepts. Mixed-use is becoming even more popular. We are seeing more and more combinations that we previously thought crazy. A clothing store with a cocktail bar, a supermarket with cooking workshops, a bicycle shop with a coffee corner. More “experiences” in restaurants, cafes, entertainment venues, libraries, and workspaces in hotel buildings.

There are also developments in the hotel operations. Hygiene and health have become an important theme. Technology plays a crucial role in this. After 9/11 there were body scans at airports, now we cannot imagine a world without it. Will our temperature be checked upon entering the hotel now? Do air systems detect viruses and immediately sound an alarm? It is technically possible, but the question is whether we are mentally ready for these developments.

Profit management turned upside down
The unassailability of the hotel industry is a thing of the past. Hoteliers’ profit management is turning upside down. It is imperative to build up reserves for bad times. Despite very good years, these buffers often turn out to be too meagre. In addition, other agreements will be made with property owners. Less fixed rents, but a larger share of turnover-related rents. That way the risks are better distributed and owner involvement is stimulated.

These interventions are already too late for some of the companies in our industry. We will only see the painful consequences at the end of the year, when the reserves have run out and government support has stopped. As with the coronavirus, some high-risk groups are hit hard. The biggest blows fall outside the cities, with small owners and hotels with low reserves, high rental costs, over-financing or who have invested little in maintenance and marketing.

Trends in acceleration
The weakest hotels go bankrupt – but we won’t necessarily miss them. It provides the opportunity for a transformation into housing or healthcare, or it becomes the birthplace of new hotel concepts. The quality of the hotel offer will only increase as a result. Market forces and ‘survival of the fittest’ doesn’t have to be purely negative. The hotel landscape will see an acceleration of the trends that have been seen in recent years, and at a faster pace than ever before. Clearly, the corona crisis has fuelled a revolution of the hotel industry.

To find out more or get expert advice for your business, get in touch with,

Dirk Bakker

Chief Executive Officer | Netherlands

dirk.bakker@colliers.com

+31 6 81 85 41 61

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