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“Instead of dropping rates, look at value-based pricing”
Monday, 05 October, 2020, 08 : 00 AM [IST]
Coronavirus has adversely affected all major industries world over, leaving businesses with no choice but to adapt to the new normal way of life during and post pandemic. Seeking government intervention and collaborating with peers from other industries is one way where businesses can come together, in order to work towards a common goal, to get the economy up and running again. Saurabh Khurana, executive assistant manager, sales and marketing, The Lodhi, shares his views on the impact that Covid-19 has had on the hotel industry in an email interview with Kimberley Fernandes. Excerpts:

Hotel owners and independent hotel chains have the responsibility to contribute in shaping up a new world of hospitality by redefining safety, sustainability and productivity. Comment.
The uncertainty associated with this pandemic has created a lot of apprehensions amongst travellers. Going forward, there will be changes in the way they will travel with an innate sense of caution. So hotels will need to redefine safety and cleanliness and ensure uncompromising standards as people will choose an accommodation based on the visible measures being undertaken to make the experience safer for them.

This pandemic has also created an increasing thrust towards sustainable travel. More people are likely to embrace this approach - not just for the environment but also for their own well-being. This is an opportunity for all of us to rethink tourism for the future and hotels will play a crucial role in shaping up this new world of travel and hospitality.

What do you foresee hotel revenue managers doing to stay ahead of the struggle to manage price wars, occupancy drops and pressures to reduce rates?
Low occupancies and demand uncertainties might be a challenge for hotels in the initial recovery phase and could create pressure for room rates. But revenue managers will have to act prudently as they deal with these circumstances. Discounting might sound like a good idea for the short term, but dramatic price cuts can impact business in the long run. Offering special packages, value add-ons and flexible booking policies would be better options to attract early demand.

What steps will have to be taken in order to create a sustainable environment for MICE and weddings, the two major revenue-generating segments for independent hotel brands?
To cater to the new trends that the MICE and weddings segment will witness, hotels will have to reconfigure banquet setup grids in keeping with the new norms regarding safe distancing. They will also need to revise their buffet framework; instead of self-service, each section of the buffet will need to have team members wearing safety gear, available to serve food to guests. And the setup of counters will have to ensure enough gaps between guests lining up to be served.

How can the hotel industry put into action a plan for overcoming the economic downturn and low expenditure due to Covid-19?
This pandemic has triggered a severe downturn in the global economy. Economic activity is anticipated to shrink in 2020 as domestic demand and supply, trade, and finance have been severely disrupted. And the expenditure power of people has therefore also been affected.

Hospitality is amongst the worst-hit sectors amidst this crisis and it might create pressure for hotels to fall back on pricing right now, but this can have long-term effects for their businesses. Hotels should remain mindful of people’s economic reality, but instead of dropping rates they should look at value-based pricing and alternative incentives such as bundled rate offerings which would demonstrate a strong value proposition for customers. They should also focus on higher hygiene and safety standards which will top the list of consumer requirements in the coming months.

Elaborate on the concept of a staycation in the future of the hotel industry, in light of Covid-19.
Having come out of the lockdown, a short break may be more important than ever before for people. But it is likely that most people will opt for local tourism and short distance getaways for now, given the restrictions and apprehensions involved in long-haul travel. Staycations have been an old trend in the tourism industry and their popularity might peak more now. People would want to drive down to destinations closer to their homes to rejuvenate post this stressful phase.

What are your key short-term and biggest long-term challenges post-Covid-19?
This pandemic has led to a shift in consumer perceptions, requirements and behaviours, so hotels will have to focus on adapting as per these dynamic changes and have a resilient framework in place. The key challenge will be restoring travellers’ confidence and trust; therefore hygiene and safety protocols will have to be made more rigorous, whilst also ensuring that the comfort and quality of guest experience are not compromised.

Collaboration with peers in the hotel industry and outside it will be a norm post-Covid-19. Share your thoughts on the same.
In the testing times that the industry is currently facing, hotels should collaborate and link their efforts towards mutual goals. Our foremost priority right now should be to come together as a collective whole to reinstate confidence among people; this will be important in getting them back to travelling and will thereby help accelerate global tourism recovery.

Do you think it is advisable to hire local staff from within the state? Why?
Hiring locally does create a sense of community - when guests see that you’re recruiting locals, they’ll remember that your brand has supported its local area. And these professionals have a deep understanding of the local culture and business practices; which means that they can navigate potential problems with greater ease. Also, as they live close by and can get to work easily, it is beneficial for the company as well.

However it is good to have a mix of talent hired from outside the local region too, as these members are able to bring in knowledge of other markets and share it with others in the organisation.
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