Hospitality-Tech: How to Thrive in a Post COVID-19 World

Hospitality-Tech: How to Thrive in a Post COVID-19 World

July 27, 2020



 

Download the Webinar Notes

 

Serent Capital hosted a conversation between experts in the hospitality tech industry to discuss what comes next in the post-COVID world, including:

The severe impact that this pandemic has had on the hospitality industry is well-documented, but this conversation focused on providing clarity around technology priorities for hospitality buyers, and providing insights to hospitality tech companies about how to develop alignment with brands to ensure success through and post-COVID.

During the webinar, panelists covered the following topics:

  • Key observations on the current state of affairs
  • Sales and marketing approach
  • Brands & technology decisions

Key observations on the current state of affairs

“We track checkouts and bookings very closely,” Rod Jimenez said. “Our checkouts hit bottom on April 14th at about 16% of normal occupancy for this time of year. Bookings through the system bottomed out around the same day at about 11% of our normal volume. As things started to reopen, we expected a rebound, but it’s been faster than we thought. For example, June 10th’s data already shows checkouts at 34% of normal rates.”

While numbers are improving, the full impact of COVID-19 will not be clear until we’ve made it through this crisis entirely. Plus, its different for every segment of the industry. “It’s hard to paint this recovery with a broad brush. It’s very localized,” Robert Post said.

Trends in the data today:

  • Large group bookings are the most impacted segment of the market
  • Extended stay travel, glamping, and RV rentals are the least affected
  • The trend among American consumers is to travel within drivable distance (i.e. driving to Scottsdale, AZ from Texas)

Sales and marketing approach

As Robert Post pointed out, historically hospitality companies have been able to respond to market fluctuation by lowering prices. In the case of COVID-19, that messaging is no longer relevant. Consumers care more about safety. No playbooks exist to help hospitality companies deal with this crisis.

“When the recovery begins, the hotels that survive and thrive are going to be the ones that started drumming up demand and reaching out to customers who are booking trips well in advance.”

It is critical to be part of the COVID dialog. Marketing messages need to reflect the current environment, or else they risk being viewed as tone-deaf.

Brands & technology decisions

“We need to be able to react much more quickly than we have in the past. And what worked yesterday isn’t going to work today, and probably won’t work tomorrow. It’s all going to be about speed to market and the ability to react more quickly.”

This could be a big opportunity for small and medium-size tech companies. Since large tech companies have a harder time pivoting, small companies can begin to create the innovative technology needed in the hospitality industry. That said, the solutions will also need to be quickly scalable to be able to potentially service thousands of hotels.

Tech companies should keep communication lines open. Keep the conversation going. The hospitality industry will need solutions, but with restricted budgets, those solutions must be relevant to the problems at hand. Tech companies need to pay attention to their clients to make sure they’re providing what they really need.

Hospitality companies are taking a harder look at their underlying technology. Resources have been cut and some hoteliers have more time to dedicate to carefully evaluating solutions. This is an opportunity for the best, most relevant hospitality startups to expand by delivering innovation that’s timely and overcomes real industry problems.

Rod Jimenez said, “We’ve created special offers that give our clients the ability to use our solutions at no cost for a period of time. Obviously, that gives our salespeople the ability to go knock on doors with a very valid offer: No strings attached, get the full version. From an operational standpoint, we have taken on more of the implementation burden just because we want those people to go live and book through the system.”

 

Looking forward with optimism

“Travel is innate. People may be scared but they want to travel. We’re going to see pent up demand, which is good news from one perspective. What has to be overcome is the fear factor. Maybe there’s an antidote that comes along, that would be great, but it may also be that the public just becomes resilient and realizes how to manage that,” said Jeff Bzdawka.

Robert Post provided three factors he believes will distinguish mid-sized hospitality companies who survive this downturn, versus those that do not:

 

  1. Good management of resources
  2. Having the right team with a clear understanding of hospitality
  3. The ability to bring cutting-edge technology to the forefront

 

While there isn’t a clear consensus on when the recovery will happen, the panelists agreed that real demand and real recovery will likely be tied to vaccines and therapeutics. Further, the road to recovery may be an elongated “bump-flat-bump-flat” pattern.

Recovery trends we could see:

  • Local leisure will be first to recover, but it will be uneven and hyper-local
  • The recovery of consumer transient will be “very local and very uneven” – but expect the leisure drive-to destinations to come back first. There are already local pockets of strength (e.g., Myrtle Beach and Florida Panhandle running with weekend occupancy in the 70s)
  • Recovery will differ by geography – China and US will likely rebound more quickly due to prevalent in-country travel. Europe will take longer due to cross-border restrictions
  • Group bookings will be last up the recovery curve – while we are starting to see small regional meetings and 10-15 person meetings, meaningful recovery in group is unlikely until there is widespread availability of vaccines and therapeutics
  • Late 2021 or early 2022 may be when we see the return of Q1 2020 occupancy levels
  • STR data similarly projects occupancy levels at 36% for 2020 and 52% for 2021, compared to 66% for 2019, implying that a 2021 exit run-rate may return close to pre-COVID levels

 

What a recovery will look like and when it will happen continues to evolve, however, hospitality-tech companies are continuing to innovate and create opportunities to succeed. By providing actionable insights on technology priorities for hospitality buyers and discussing tactics on how hospitality tech companies can align with brands, we hope to equip hospitality-tech leaders with the tools they need to position themselves for success in a post-COVID world.

Serent Capital invests in growing businesses that have developed compelling solutions that address their customers' needs. As those businesses grow and evolve, the opportunities and challenges that they face change with them. Principals at Serent Capital have firsthand experience at capturing those opportunities and navigating these difficulties through their experiences as CEOs, strategic advisors, and board members to successful growing businesses. By bringing its expertise and capital to bear, Serent seeks to help growing businesses thrive. Learn more about our portfolio companies.

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