By Linchi Kwok
The COVID-19 pandemic had no doubt made an unprecedented impact on the hospitality and tourism industry. Yet, some products, such as home-sharing, extended stays, and quick-service restaurants, were able to adapt to the new changes quickly. Hence, they were not affected as much. Others might still need extra time to get back on their feet.
It might seem that the global pandemic forced businesses to respond to the new changes in the market, but the truth is COVID-19 just accelerated many of the foreseeable changes we have already expected for the future. The businesses that can navigate through the COVID-19 crisis quickly are usually the ones that are flexible and have already made plans in response to the foreseeable future.
Now that the economy is getting ready for a strong recovery, it becomes critical for businesses to take a holistic approach in planning. Dealing with the operational issues on an ad-hoc basis will not work anymore because many of the changes we observed in the market today will likely stay beyond the pandemic. For example,
Labor shortage and soaring labor costs will not go away any time soon
Hospitality jobs are demanding and typically require irregular and long working hours. Still, hospitality workers usually earn minimum wages only. Furthermore, the front service staff is always expected to provide exceptional customer service even in an abusive situation by “uncivilized” customers. As a result, it is not surprising to see that some hospitality workers who were laid off or furloughed during the pandemic would have moved to other sectors. Plus, people might have developed different perspectives of family, life, and work after the pandemic.
A recent survey with about 13,000 job seekers reveals that more than 50% of U.S. hospitality workers would not go back to their old jobs. Moreover, over 1/3 would not even consider returning to the industry. The top reasons why they wanted to switch to other industries include different work settings (52%), higher pay (45%), better benefits (29%), and remote work opportunities (16%).
In reality, however, higher pay and better benefits alone do not appear to be the solution to such a challenge. A restaurant in New York City was paying $30 an hour for a host/hostess position in the summer but received no response two weeks after the position was posted. Before the pandemic, the exact position that paid $20 an hour would have attracted “hundreds and hundreds of resumes already.”
Even worse, such a labor shortage is not a unique challenge facing the hospitality industry. In July, the U.S. reported 10.9 million openings, but there were only 8.7 million unemployed workers in the market. That means, after every single of those unemployed workers has taken a job offer, the market still would have 2.1 million unfillable vacancies. Every industry reported more job openings in July 2021 than at the pre-pandemic level in February 2020. Hospitality companies are fighting with businesses in other sectors for workers. A labor shortage, and its consequences of higher wages, will be a long-term threat to the hospitality industry.
The work-from-home trend and “bleisure” travelers will linger
Many companies cut the budget for business travel since the pandemic hit. There is also an increasing number of organizations that let employees work from home permanently. When fewer people commute or travel for work, the work-from-home (WFH) trend does not help the hospitality and tourism industry. Many also believe there is no real sense of recovery until people travel for business again. Nevertheless, it does not seem the WFH trend will end soon.
Meanwhile, “bleisure” re-emerged as a new buzzword among hoteliers and travelers because more people will mix business with pleasure during a trip in the foreseeable future. To a large extent, the WFH and “bleisure” trends can explain why extended-stay hotels and home-sharing facilities were doing well even during the pandemic.
Home-sharing businesses will continue to grow
The pandemic also hit Airbnb hard. The company reported a 90% drop in booking or a $400 million adjusted loss in the second quarter of 2020. At the same time, Airbnb also laid off 7,500 employees, or 25% of its workforce, and cut its marketing budget by 14% from 2019. Within a few months, Airbnb booking had already bounced back.
During the weekend of June 5 – 7 in 2020, Airbnb’s gross booking value had seen positive year-to-year growth for the first time since February 2020. The company also reported over 100,000 new guests in the U.S. who used the platform. In July 2020, Airbnb reported a 22% year-to-year increase in bookings. Most of all, people were booking long-term stays at Airbnb, for weeks or even for months.
Marriott also entered the home-sharing market with a pilot program in April 2018. One year later, the world’s largest hotel chain debuted its Home & Villas division. Although Marriott’s Home & Villas division is still too small compared to either the total number of Airbnb listings or the number of hotel rooms Marriott has, it continues to grow and performs really well during the pandemic.
While Airbnb and Vrbo are fighting for more hosts to meet the strong demands, it is very likely that more hotel chains would either expand their existing home-sharing operations or get into the market. Home-sharing businesses will continue to grow in the future.
Consumers will want delivery and contactless self-service even after the pandemic
Delivery service in restaurants and supermarkets, among other sectors, had observed a boost since the pandemic hit in March 2020. Additionally, restaurants, hotels, and airlines have extended or rolled out contactless self-service through mobile apps, kiosks, and facial recognition technology.
A large number of fast-food chains also introduced new restaurant designs that embrace such a trend, including double- or triple-drive-thru lanes, conveyor belt delivery, and food lockers for pick-up orders. In some cases, dining rooms become optional, where the restaurants only focus on delivery and pick-up services.
To support contactless service, Amazon rolled out Amazon One in September 2020, a new biometric payment device that relies on cloud and palm recognition technologies. Palm recognition might become another popular biometric tool in the future as it has some advantages over those more commonly used facial or fingerprint recognition technologies.
It is still uncertain when the pandemic will end. By now, consumers have been using delivery and contactless self-service to avoid unnecessary human contacts during the pandemic. They would have gotten used to it when the pandemic is over.
What holistic approach can be taken in response to the above changes?
I encourage strategic leaders to look at the above post-pandemic changes holistically. For example, it is time to revisit the service roadmap and job designs. Here are some questions to be considered:
- How can the existing offerings be redesigned with minimum human contacts and maximum human-machine interactions?
- What types of jobs can be replaced with machines or robots?
- How can the organization be restructured for lean operations?
- In which areas can machines or technology help enhance productivity?
- What new products/services (or even a new brand) can be developed to meet “bleisure” travelers’ demands?
- In which touchpoints can valuable data be automatically collected? Such data can be further analyzed to inform business decisions.
Besides what is discussed above, what other post-pandemic changes do you anticipate? What suggestions will you make to respond to those changes?
Note: This article was published in the Hospitality News (magazine) in October 2021, with the original title of “Recover 2021! A holistic approach is needed to respond to post-pandemic changes”; The picture was downloaded from MediaLease.com.
