The sudden outbreak of Covid-19 (unofficially called Coronavirus) crisis swept through Chinese Lunar New Year like a hurricane, adding a layer of panic and depression to the hospitality industry which was supposed to be busy and prosperous.
According to STR, the average occupancy rate in mainland China began to decline significantly and continuously from January 14, falling from the peak 70% to less than 10%, and currently stable between 5% and 10%. Compared to an average occupancy of 55% in previous Chinese Lunar New Years, the Covid-19 epidemic has caused great trauma to the hospitality industry in China.
Meanwhile, in line with the nationwide call to “reduce unnecessary travel”, the number of tourists over Chinese Lunar New Year also decreased sharply. Affected by the epidemic, the total number of tourists between January 25 and February 14 added up to 283 million, resulting in a year-on-year decrease of 45%. During the first seven days of Chinese Lunar New Year, the number of civil aviation passengers added up to 6.65 million, which was less than half of that in last year, and the load factor was only 51.7%.
In addition to cancelling all domestic and international group travel, the Civil Aviation Administration of China and the Ministry of Transport of China together with several OTAs, revised refund policies and waived fees due to reservation changes, cancellations and extensions. Between January 24 and February 6, the Civil Aviation Administration of China has refunded more than 13 million airline tickets.
The epidemic is expected to cast a serious and lasting impact on the hospitality industry in the short term and in the next three to six months, and is likely to recover in six months’ time. Due to the suppression of customer demand during the epidemic, the industry is expected to face a period of concentrated demand release after the epidemic, based on experiences from SARS in 2003. How to quickly and accurately capture the change in customer demand, how to design a corresponding customer experience, how to turn crisis into opportunity and how to seize the opportunity for development? These have become the key challenges for hoteliers to ponder.
As an important part of a brand’s soft power, the area of Service Excellence, which EHL Advisory has always emphasized to hoteliers, becomes extremely important under such unexpected circumstances, adding value to the products and increasing market competitiveness. Written in February 2020, this article takes the perspective of customers, aiming to help analyze the shift in customer needs caused by the epidemic and providing insights to fellow hoteliers.
Focus on changes in customer experience
This epidemic has introduced many variables that are currently fogging up the prospects of the hospitality industry. During the epidemic, measures to avoid cross contamination through food, containers or human touch, have suspended the “culture of sharing”. Moreover, due to restricted motion during the epidemic, the hotel industry will have to prepare for a significant increase in tourism demand after the epidemic. How hotels coordinate their resources and adapt to this sudden increase while guaranteeing service quality is critical to their survival.
Due to the uncertainty of the changes in customer needs after the epidemic, hotels need to review their existing service offerings so as to adapt to the changes in customer experience. Restaurants in hotels may start presenting personal serving spoons when delivering a shared dish, promoting contactless delivery for in-room-dining, and designing menus in single portions rather than a sharing size. What’s more, to cope with the sudden increase in demand without sacrificing service quality, hotels can plan ahead for manpower scheduling, assess bottleneck in service delivery, allocate resources and maintain cash flow through pre-sales.
Focus on the switch in customer perceptions
Improper choice of raw foodstuff is the cause of this epidemic, which will in turn have a huge impact on customer diet structure and concepts. It is believed that after the epidemic, customers will pay more attention to the safety of food choices. While taking into account the taste, customers will rely more on whether the source of the ingredients is reliable, whether the quality of the ingredients is good enough, whether the handling of the ingredients is safe and whether the ingredients are rich in nutrition.
In response to this change in consumer-thinking, hotels need to make adjustments in a timely manner, e.g. a return to the basics of hotel standards, strictly follow HACCP, and promote the importance of hygiene within the organization. With high hygiene standards in place, hotels can promote their reliability in choosing raw materials and create a “safe” image of the hotel’s F&B offerings compared to stand-alone restaurants. This helps to instill greater acceptance from the neighborhood and generate more F&B revenue from the local community in addition to hotel guests.
Focus on the shift in consumption patterns
In order to support effective control of the epidemic, most customers avoided shopping for groceries in person, relying instead on delivery services, thereby accelerating the development of online sales and promotion. In addition, since it is not recommended to go out, customers’ social needs have shifted online, and as a result, many business owners and individuals have been using social media such as WeChat, Weibo, or Tik Tok to promote products or share lifestyle via live broadcast and online interaction.
To cope with the shift in consumption pattern, hotels can make full use of existing online platforms to enhance interaction with customers. During the epidemic period, many hotels have already expanded the catering services to online ordering and delivery. After the epidemic, hotels can retain this sales channel and offer To-Go breakfasts and Bento box delivery for the local community with hotel standard packaging, an iniative that caters to customer needs, creates additional revenue and also strengthens the “safe image” of hotels. Furthermore, hotels should make full use of their diverse online platforms, transforming them from one-way notification communication to two-way interactive communication, utilizing these channels to effectively understand and respond to customer needs in a timely manner.
Focus on quality asset management
The epidemic has had a huge impact on the entire hospitality industry and has even led to the complete closure of some hotels due to lack of cash flow support. For such assets, some hotel owners may consider selling the properties, while other survivors may look to rebranding or renovation for the purpose of repositioning and enhancing competitiveness.
How hotels should do business with a sustainable development model after the epidemic takes not only the focus on competitors’ response strategies, but more importantly an in-depth dig into the characteristics of customer needs. To some degree, improving brand culture and service standards to adapt to customer needs is critical for some independent hotels. Hotel owners and operators have to review the positioning of the brand in order to grasp the needs of the target market more accurately.
In addition, hotel owners also need to optimize asset strategy, refurbish or renovate high potential assets, and enhance asset competitiveness to cater to changes in customer needs. For under-performing assets, they need to be properly dealt with in a timely manner in order to preserve and enhance the core of the asset portfolio.
Despite the impact of the epidemic, EHL Advisory stands alongside all hoteliers in preparing for post-crisis recovery. EHL Advisory Services has 127 years of industry wisdom and experience, integrates Swiss wisdom, supports innovation and knowledge dissemination. EHL Advisory has helped more than 500 partners in over 60 countries around the world in the past 40 years with comprehensive, full-cycle sustainable solutions, based on rich experience and unique insights in the design and implementation of service excellence. Our tailor-made end-to-end solutions can help you foster a customer-centric service culture and nurture your brand with service excellence embedded in the brand’s DNA.