How the hospitality industry can recover by focusing on people

Summer is here, but the hotels, restaurants and outdoor amenities we often associate with vacation season look much different than only a few months ago. Instead of cold beverages, hotel greeters offer care kits with hand sanitizer and disposable masks; touchless transactions reduce contact during check-in; and in some states, hotels and short-term rentals still can’t be booked. These are just some of the changes for a hospitality industry especially hard hit by the COVID-19 pandemic. The metrics are grim: Consumer spending on hotel rooms, conferences and weddings has plummeted by 64.4 percent compared to a year ago, and until there’s a vaccine, trends contributing to the drop-off—such as drastically reduced business travel and related virtual work—are likely to continue. While few doubt the need for social distancing and other steps, these measures are already having a profound effect on the human experience and other brand promises the industry has historically made to customers, employees and partners. All of which begs the question: What might be next for hospitality, and what should its leaders consider as they move from today’s uncertainties to the next normal? We believe industry leaders need to focus on what could be their core strength—creating an elevated human experience, or what we call an eHX. This doesn’t just mean optimized CRM, pockets of innovation, service excellence or great apps; recent research indicates companies focusing on creating a holistic human experience are twice as likely to outperform their peers in revenue growth over a three-year period. Choices made to focus on experience today will help determine who leads in a new hospitality environment tomorrow. To make these choices, executives are examining both current finances and future investment. This likely means taking an aggressive budget stance to free up any uncommitted resources in favor of operational improvements focused on efficiency. It might also mean investing in service enhancements that touch human experiences—such as AI-driven insights that guide travel personalization—and can unlock value down the road. It will be a hard balancing act, but investing in a time of crisis can position organizations to thrive in the future. What does this mean specifically? Keep these three principles in mind as you develop recovery plans, and you’ll be able to both honor the human experience and respect the balance sheet: 1. Maintain a human-centered mindset. While hospitality organizations have taken some drastic actions in response to the pandemic, many have managed to keep people at the heart of what they do by relaxing cancellation policies, adjusting loyalty programs and sanitizing hotel rooms for customers, while helping employees either maintain work schedules or make alternative arrangements. These actions are critical to maintaining brand value. An April 2020 Deloitte study suggests that 43 percent of surveyed consumers will buy more from brands that have responded well to the crisis. One thing that’s sure to emerge more strongly post-pandemic is the value of trusted relationships, and your brand can be a beneficiary. By focusing on the human experience, hospitality brands have an unprecedented opportunity to strengthen emotional connections with customers—through virtual tours of hotels and resorts to fuel travel aspirations or by providing hotel stays for frontline healthcare workers to help keep workers’ families safe. This personal and community support leaves a lasting impression—and our research shows that when consumers feel connected to a hotel brand, they typically stay longer and spend more. In fact, the difference between a typical, highly satisfied customer and an emotionally connected customer is, on average, an entire extra night’s stay—3.5 versus 2.5—with a 1.4 spending multiplier. 2. Challenge your cost structure. Companies must meet the expectations of boards and shareholders even in times of crisis. Hotels have already made tough cost-cutting decisions as demand has evaporated. Looking ahead, they’ll need to rethink their businesses from the ground up to keep expenses in check—while never losing sight of the human impact of any cost-cutting measures. But how? Team up with your partners, evaluate suppliers and rethink operating models. Develop a better understanding of the partnerships that deliver the most value and complement shifts in customer preferences and values. You’ll need to reimagine every aspect of how you do business through a future-forward lens—how can you rethink IT, contact centers and marketing in a way that trims costs while considering the experience of the humans in the ecosystem? Even your franchise network and real estate footprint may require a reboot to make sure you’re operating in geographic areas with the most demand. 3. Reinvest to compete. As hospitality organizations reduce costs, it's essential to rethink how resources and efforts are allocated. Start by developing a centralized team to help determine what the organization's future might look like. A strong scenario-planning capability is more vital now than ever. Then think about how resources can be allocated to elevate the human experience for customers, workforce (full-time and gig worker) and partners. A refreshed understanding of those ecosystems—supported by updated technologies—will prove vital to future success. Artificial intelligence, machine learning and computational modeling will play a key role in developing an organization’s capabilities to sense, frame and act to support rapid responses to changing customer demands and preferences. As much as our shared road to recovery is long and hard to predict, one thing is certain: The hospitality industry might never be the same. We believe that organizations in the best position to thrive in the next normal are those that take this time to rethink their businesses while keeping an eye on the human experience. Eventually, customers will be back. And while some of our preferences may have changed in the interim, empathy and attention to the details that matter most will always be in demand. About Deloitte Digital At Deloitte Digital, we are guided by an aspiration to elevate the human experience. Together with all of Deloitte, we connect creativity, technology, people, and ecosystems to make an impact that matters to our clients and to society across the globe. We imagine, deliver, and run the future to deliver on the promise of digital transformation and create sustainable business futures. Learn more at www.deloittedigital.com

How the hospitality industry can recover by focusing on people

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