Jul 03, 2020

How Will Hotels Bounce Back?

Unpacking COVID-19’s impact on the hotel industry won’t be easy. With hundreds of potential touchpoints in the hotel lobby alone, hotels must dramatically shift operations in order to recover. As domestic travel restrictions ease in the United States, travelers have started to ask: Are hotels even safe anymore?

Hotels Down to 29% Occupancy

Since March, hotels around the country went vacant, many closing for good, leading to a cascade of furloughs and layoffs for chains like Hilton, Marriott, and Hyatt. “Never in Hilton’s 101-year history has our industry faced a global crisis that brings travel to a virtual standstill,” said CEO Christopher Nassetta after laying off 2,100 people from Hilton June 16. 

“In terms of our business, COVID-19 is like nothing we’ve ever seen before,” said Marriott CEO Arne Sorenson, furloughing 4,000 workers through October. 

“COVID-19 has thrown our industry into unknown territory,” echoed Mark Hoplamazian, Hyatt’s CEO, announcing a layoff of 1,300 people.

Hotels stand at 29% occupancy globally, compared to 72% occupancy in June 2019. STR and Tourism Economics project revenue losses of 57.5% for the year, according to the American Hospitality and Lodging Association

Recovery for the hotel sector could take until 2023 or later, according to an analysis from McKinsey. It’s going to take time for hotels to return to pre-COVID levels of revenue, and many small bed-and-breakfast or mom n’ pop shops will close their doors forever. A worst-case scenario means US hotel revenue per available room will be down 20% until then

This scenario impacts luxury hotels and chains more than economy options. Already occupancy rates for braver souls show a preference for economy hotels, with May occupancy at less than 15% for luxury hotels and 40% for economy. In part, that’s because economy hotels handle more steady traffic, like business travel, truck drivers, and long-term stays. 

Recovery Depends on Demand

Even though travel restrictions may lift before then, demand may not respond accordingly. Inspiration and excitement drive demand for travel, a luxury no matter the economic climate. With so much fear, is it possible to get excited about traveling again?

Research says with the right protocols in place, yes. 65% of Tripadvisor survey respondents said they wouldn’t travel until they see physical changes at establishments that will make them safer. That requires increased health and safety measures, according to McKinsey, with “intense room cleaning” at the top of the list.

There’s no real consensus about what that means in practice, however. Even as their revenues plummet, hotels are scrambling to figure out how to introduce new cleaning standards that meet demand and CDC guidelines. Partnerships with Mayo Clinic (Hilton), Johns Hopkins (Four Seasons), or AXA Insurance (Accor) created initiatives like:

How Will Hotels Bounce Back?

Source: https://newsroom.hilton.com/corporate/news/hilton-defining-new-standard-of-cleanliness

The American Hotel and Lodging Association introduced an industry-wide standard called Safe Stay, using recommendations from the CDC. While many hotel chains signed on for Safe Stay, each one is vying to outdo the other in a new “normal” of cleanliness on top of those guidelines. How much faith travelers will put in their favorite brands is anyone’s guess, including trusting that the staff at each hotel is following those cleaning protocols. 

Hotel Staff at Greatest Risk

Hotel rooms are consistently one of the germiest places you encounter in your travels — partially because staff can easily spread disease from room to room. “Hotels will have more visual cleaning staff and sanitizing stations. Housekeepers will move from behind the scene to front and center in hotels,” predicted Tony Kim, assistant professor at Hart School of Hospitality at James Madison University, to CNBC. New positions such as “Hygiene Managers,” may become a norm for hotel staff to ensure that protocols are met and every member is trained appropriately. For most larger hotel chains, staff temperatures will be taken, and masks and gloves will be required.  

But the future hotel may not have housekeeping or many staff members at all. New technology designed to prevent contact—from partitions installed at the front desk to mobile check-in, offsite support chat rather than front desk phones, and contactless delivery of food and amenities, it seems the best way to protect staff is to eliminate them completely from the equation. 

The Westin Houston Medical Center deployed sanitization robots, created by Xenex Disinfection Services, that disinfect rooms and public areas using intense pulsed xenon ultraviolet light. In the past, these kinds of robots have been used for hospital and healthcare facility rooms.

Will Hotels Bounce Back?

An increased investment in cleaning and disinfecting services—robots aside—may not matter if travelers aren’t comfortable going anywhere. Hotels face the prospect of a long, slow recovery depending on how the coronavirus situation unfolds across the globe. Tourism will thrive again—but when hotels reopen their doors, it will look very different.

About the author

Kayla Voigt
Kayla Voigt
Always in search of adventure, Kayla hails from Hopkinton, MA, the start of the Boston Marathon. You can find her at the summit of a mountain or digging in to a big bowl of pasta when she's not writing. Say hi on Instagram @klvoigt.

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