Guests are used to shopping around and cancelling bookings when a cheaper option presents itself, so it's up to hotels to tempt guests to stay with an offer that is more enticing than pricing, says Cris Tarrant.
Providing guests with flexible booking terms was necessary during the height of the Covid-19 pandemic, but this has conditioned customers to think that they can cancel whenever they please. As we move into 2022 we may think the staycation market is holding up well, but people may be waiting for other markets to open up before they cancel their domestic booking. There's a risk that cancellation rates could increase in the near future, so the sector needs to protect itself.
Prior to the pandemic, hotels had made a big push into direct booking, to try and counter the threat from online travel agents (OTAs). There is a risk that OTAs could start offering the option to automatically cancel and rebook at lower rates, so they can offer not just the best rate when you book, but the best rate forever, allowing them to compete on a whole fresh issue. This risk is heightened in the leisure sector, which currently dominates and where the OTAs are a popular booking channel.
With guests now used to flexible booking terms, they are unlikely to give them up willingly. The hotel sector is going to have to learn to work with them and mitigate them. Operators must form stronger connections with guests through their loyalty programmes and foster actual loyal customers rather than treating a memberships programme as just a way to gain a lower rate.
Loyalty is a two-way street; if you are loyal to a hotel you expect it to be loyal back
Being innovative with your loyalty programme is essential to creating an emotional connection with guests, who will then be far more faithful to their booking. Loyalty is a two-way street; if you are loyal to a hotel you expect it to be loyal back. The current model of points-based loyalty schemes are outdated, so operators must think outside the box for ways to reward customers, otherwise there is no deep incentive to be loyal in the future.
The hotel industry needs to appreciate that the accommodation market has expanded, with consumers attracted to segments including extended stay and peer-to-peer lodging. Airbnb is now the best-known brand in the whole hospitality market and we see Gen Y in particular is more attracted to this way of booking and will continue to use it.
However, continuing caution from consumers around the pandemic does provide hotels with opportunities. Through our Hotel Guest Survey programme at BVA BDRC we have found the third most important driver out of 20 for people choosing where they'll stay when on a leisure trip is Covid safety. It's not the only reason why they stay, but it's a factor. This is where hotels have an advantage as they are seen to have better Covid cleaning and protection regimes in place than other accommodation categories.
This can be part of a hotel's armoury and gives some power back to the hotel. People feel they want to talk to the hotel itself, not an intermediary, when it comes to gathering information about Covid protocols. It's part of the messaging that hotels need to get across because many people are still seeking that reassurance. However, having strong Covid precautions is never the reason for a stay in the first place.
Looking at demand, it is widely recognised that the leisure traveller has assumed a much greater importance in the past 20 months. While as a whole we have come out of lockdown, it is younger travellers who are much more keen and enthusiastic about travelling again.
The leisure market is the one tipped for growth in the coming months and the one where hotels should be focusing. At the same time, international travel is opening up, albeit slowly, tempting some away from the domestic market. Flexibility is here to stay: if you don't offer it, someone else will.
Cris Tarrant is chief executive of research consultancy BVA BDRC
You need to create an account to read this article. It's free and only requires a few basic details.
Already subscribed? Log In