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A Data-Driven Look at Hospitality's Recovery | Oracle | Skift A DATA-DRIVEN LOOK AT HOSPITALITY’S RECOVERY Presented by + A Data-Driven Look at Hospitality’s Recovery SKIFT + ORACLE 2 TABLE OF CONTENTS Executive Summary 3 Executive Letter 4 Introduction 6 Signs of Recovery and the Path Forward 7 Skift and Oracle’s Hospitality Recovery Study 10 Hospitality’s Recovery Outlook 12 Focus On: Regional Variations in Recovery Outlook 16 On-Property Guest Experience 18 Focus On: Regional Variations in Technology Adoption 24 Employee Experience 25 Booking Policies and Distribution 28 Conclusion 30 ABOUT SKIFT MASTHEAD Skift is the largest industry intelligence platform Vice President, SkiftX / Katherine Townsend providing media, insights, and marketing to Editorial Director, SkiftX / Lisa Omagari key sectors of travel. Skift deciphers and defines Research Editor, SkiftX / Jeremy Kressmann trends for global CEOs and CMOs across the travel Designer / Joanna Gonzalez industry through a combination of news, research, conferences, and marketing services. ABOUT SKIFTX SkiftX is Skift’s in-house content studio. SkiftX produced this report in partnership with Oracle Hospitality. A Data-Driven Look at Hospitality’s Recovery SKIFT + ORACLE 3 EXECUTIVE SUMMARY The hospitality industry has been hit hard by the inform and guide the industry’s recovery plans. Covid-19 pandemic. Properties around the world The two organizations distributed the study to remain closed or are operating at less than full more than 1,800 hospitality leaders and more capacity, staff have been furloughed or let go, and than 4,000 consumers around the world in order customers are shifting their travel in the face of to understand their predictions and preferences constantly evolving news about reopening and regarding best practices for hospitality recovery. disease outbreaks. The topics that were investigated include But even if the current news seems dire, a growing estimates of how soon hospitality demand would feeling of resolve is emerging from hospitality recover, questions about changes to on-property executives. That’s because even if business doesn’t cleaning procedures, the use of technology to immediately return to “normal,” those in the industry minimize in-person contact, changes to the want to be ready to reopen as the process of recovery employee experience, and how hospitality and consumer demand starts to pick up. But booking and distribution strategy might evolve ensuring the recovery process goes smoothly will in light of Covid-19. The research results were require intelligent guidance and a sensible strategy. supplemented by interviews with a variety of hospitality executives and links to recent news How quickly will consumer demand start to return? stories that help put the data into context. What cleaning procedures and protocols will be needed to make guests and staff feel safe? Could What does a successful hospitality recovery low-touch hotel technology help minimize the risks strategy look like? And when will it begin to of infection? And how will hospitality distribution and pick up speed with consumers and industry booking procedures need to adapt for this new era? stakeholders? There are no easy answers to these questions. But with the help of the collective It was with many of these questions in mind that Skift wisdom shared in the following report, Skift and and Oracle Hospitality joined forces in the second Oracle Hospitality hope to provide a framework quarter of 2020 to launch a research study exploring for those in the industry to make smart decisions the strategies and procedures that would help about what comes next. A Data-Driven Look at Hospitality’s Recovery SKIFT + ORACLE 4 EXECUTIVE LETTER There is nothing we all want more than to welcome back our guests and delight them with exceptional experiences. However, the road to recovery needs to be built with data-driven insights and collaboration among leaders across the hospitality ecosystem. Indeed, the path forward is uncharted, underscoring more than ever the need for comprehensive, meaningful marketplace research. Such information is essential to gaining insights that can help us navigate the challenges Alex Alt ahead – as well as identify and seize new opportunities SVP and General Manager Oracle Hospitality that most certainly will surface. That’s why Oracle Hospitality partnered with Skift Research to conduct this global study, which surveyed thousands of hotel operators and consumers to better understand their beliefs and actions that are shaping the new hospitality landscape. The results shed light on economic trends fueling the rebound, emerging best practices in areas such as guest and employee health safety, contactless operations, and new technology innovations that will be needed to satisfy rapidly evolving consumer demands. For more than 40 years, Oracle Hospitality has been pioneering technology advances that help hoteliers adapt to ever-changing market dynamics and elevate the guest experience. And with an unprecedented commitment to support integrations, our latest offerings such as OPERA Cloud readily incorporate best-of- breed solutions – regardless of their origin – ensuring your technology infrastructure always remains relevant. Just like our software and hardware combine to unlock endless possibilities, this research project is designed to spark business renewal. It’s our way to advocate for the health of our industry, and we hope it prepares you for the “new next.” A Data-Driven Look at Hospitality’s Recovery SKIFT + ORACLE 5 A Data-Driven Look at Hospitality’s Recovery SKIFT + ORACLE 6 INTRODUCTION The Covid-19 crisis is creating an unprecedented in revenues for 2020 compared to its previous challenge for the hotel industry. After over a estimates. Meanwhile, 70 percent of hospitality decade of steady growth for owners and operators employees are currently laid off or furloughed. Hotel around the world, this devastating global health data firm STR is now predicting occupancy rates of situation has dramatically impacted consumer 38 percent for the full year of 2020. travel demand, leaving many in the industry stunned and reeling. Industry veteran Jan Freitag of STR put an exclamation point on these estimates in a recent Evolving business estimates provide a sobering analysis for Hotel News Now, noting RevPAR picture of the size and scope of the challenge. declined 51.9 percent in March. Freitag described the According to data from Oxford Economics, the situation bluntly as “the steepest monthly decline industry will experience a 50 percent decline we have ever recorded in our 35-year history.” A Data-Driven Look at Hospitality’s Recovery SKIFT + ORACLE 7 Hotel Occupancy Rates 2010 - 2020 65% 66% 66% 66% 64% 65% 62% 60% 61% 58% 38% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: STR Hotel Occupancy Rate Forecast Speaking during the early phases of the outbreak First and foremost, recovery refers to the need for executives across the industry came to a similar consumer demand for hospitality products and conclusion. “Covid-19 is having a more severe and services to return. While hotels are still reporting sudden economic impact on our business than demand that is far below normal, there is cause 9/11 and the 2009 financial crisis combined,” said for hope: a number of hospitality executives are Arne Sorenson, Marriott CEO, in a March 2020 video sounding a cautious note of optimism, pointing to address shared with company shareholders and good news from Asia Pacific hospitality businesses staff. “The worst quarter we had in those earlier crises which faced the full brunt of the virus much earlier saw a roughly 25 percent decline in hotel revenues than other parts of the globe. on average across the globe … In most markets our businesses are already running 75 percent below “There is light at the end of the tunnel in Asia, normal levels.” especially China. It still is not good, though,” said Sebastien Bazin, CEO of Accor Hotels in a May 2020 All of this reinforces the evolving recovery challenges interview. “Plan for the worst and hope for the best. now facing the hospitality industry. But with It is a time to be cautious, prudent, to stand still and those challenges there is also a growing feeling of look after your own business.” resolve emerging from executives, employees and stakeholders: what steps will those in the industry The second piece of recovery requires the need to take to place it on the path to recovery? hospitality sector to develop operational solutions to reassure travelers, adapt to their changing needs and concerns, effectively promote the industry’s SIGNS OF RECOVERY AND products, determine how to serve local communities, THE PATH FORWARD and retrain staff. “Recovery” means many different things to different On this front as well, early solutions are starting to hospitality businesses. But considering the diverse emerge. Many of the hotel properties that reacted needs of the hospitality sector, we will define the quickest to the crisis seem to be better positioned term in this report around two business outcomes. to recover faster than competitors, and are helping A Data-Driven Look at Hospitality’s Recovery SKIFT + ORACLE 8 write the playbook for others to follow suit. Consider new cleaning standards they will use to keep their the example of the Four Seasons New York, a property properties virus-free. As detailed in a recent Skift which has already made drastic adjustments to their article on the topic, there are more than two dozen operations and procedures as they shifted to serving such initiatives already in place (see chart below), medical personnel, helping inspire future recovery with the likelihood of many more soon to follow. plans for other operators. One example of these new guidelines is Hilton’s “We worked out every product and procedure we recently announced partnership with RB, maker had to turn this into a utilitarian operation,” said Four of Lysol, and the Mayo Clinic, on a new hotel Seasons Hotel New York general manager Rudy cleanliness standard called Hilton CleanStay that Tauscher in an April 2020 interview with Skift.
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