Future of distribution: How changes in consumer behaviour will impact hotels
While demand makes its way back to pre-pandemic levels, the way consumers spend has changed forever. It is critical for hoteliers to rethink their hotel distribution channels and products.
In the past two years, consumer behaviour has been drastically reshaped.
While demand makes its way back to pre-pandemic levels, driven by rising consumer confidence, pent-up demand, and accumulated savings, the way consumers spend has changed forever.
This impacts the hospitality distribution space, and it is critical for all stakeholders to understand and embrace the new reality.
With my extensive experience of tech enabled hospitality businesses, here are my takeaways.
Greater digital adoption is critical for the hospitality industry
40 million new internet users came online in 2021. This brings the internet penetration in Southeast Asia (SEA) to 75%. As a reference, Europe was sitting at 82.5% in 2019.
Grocery shopping, learning and home entertainment benefited massively from digital adoption. A McKinsey study found that e-grocery shopping is likely to retain its pandemic increases, while remote learning, air travel, dining and live entertainment would likely revert closer to pre-pandemic patterns.
Changes to operations for food and beverage outlets as a result of constant closures and re-openings, as well as seating restrictions caused by the pandemic, have forced more profound and long-term changes to the dining-out experience. The more agile operators have adapted by embracing basic take away options or by creating restaurant alike experiences at home. Some took it further by moving to a full cloud kitchen concept.
Those are great steps to reduce the proportion of revenue linked to their real estate, but more could be done: food and beverage operators could create their own e-store, offering private in-home catering built around their signature dishes, a curated wine selection, and even online cooking tutorials.
The increase in time spent online also redistributed the audience profiles. Cloudflare’s radar project revealed that, in 2021, TikTok was the most popular domain, surpassing the traffic of Google or Facebook. While it is important for marketers to adopt this growing platform, they also need to ensure they remain agile and engage with their customer where they are, keeping in mind their behaviour changes faster and faster.
Work from home and virtual meetings – a thing of the past or the ‘new norm’?
Humans are social creatures and two years of isolation is a (very) long time. There is no doubt more time (and money) will be spent out of the home.
In a radio interview earlier this month, Accor’s CEO Sebastien Bazin predicted the decline in activity from international travelers, as the adoption of Zoom and Teams soared in the last 26 months, will be compensated by domestic demand.
According to an Accor internal survey, while most employees do not want to go back to the office five days a week, 70% do not want to work from home either.
Instead, Bazin expects they will be working from hotel lobbies, bars, or restaurants. He bets his hotels, mainly located in major cities, will be busy from 9am to 9pm with local demand. His hotels will compete with venues like Starbucks that has catered for that particular demand for the last ten years.
With this new audience, operators should strategize how to best capture additional revenue opportunities such as valet parking, health club, concierge services or laundry services.
If the preference for virtual meetings remains, then hotels may need to consider whether their very expensive, but underutilized, meetings and events space is being fully optimized. One trend that is worth considering is the creation of private clubs in such prime spaces, as city hotels have the locations, facilities and service staff to operate them, and there has been considerable growth in demand for such venues in recent months.
From omni channel to omni presence
The aftermath of 9-11 was a catalyst for leveraging e-commerce to maximize room nights sales.
The recovery from the pandemic can have the same impact on the distribution of hotels’ goods and services and present an opportunity to move from omni-channel to omni-presence.
Resources will be needed to upgrade the tech stack used so far.
Marriott made a move towards that direction when it announced last November the signing of an agreement with Amadeus to modernize its reservation and commerce infrastructure. With hotel stays being increasingly marketed as experiences, hotels that enable guests to purchase complementary products like spa and golf when booking a stay will gain a competitive advantage. Would the next phase of this project also enable guests to purchase other items such as the desk lamp or lounge chair of their favourite hotels or resorts?” Integrating the booking and fulfilment process with partners such as ShopBack, a fast-growing cashback reward program with multiple travel and hospitality offers, will provide even greater market presence.
Addressing the digital future is imperative
A sound distribution strategy can no longer be limited to selling rooms through a branded website, online travel agents or the GDS. It is time to get creative, look around and commit proper resources to transform and modernize practices.
Other industries have done it before, the hospitality business should not be left behind.