A long road to recovery
The hospitality industry in India continues to struggle with the pandemic with limited abatement in the prevailing risk of COVID-19 and the subsequent restrictions being imposed. The few bright spots witnessed last year are currently muted by the prevailing conditions however in the short-term, driveable locations are expected to be the first to recover just as other countries that are ahead on the recovery curve have witnessed.
Domestic tourism to drive revival of sector
So, what can the hotel industry in India do to be prepared for changes in the way people travel and what are the lessons to be learnt? China, for example, has been witnessing a boom in rural tourism so much so that the government has included it in its 14th Five Year plan. Non-urban locations in India could similarly benefit greatly if domestic travel was channelled within the country. Many state governments have taken up initiatives to reactivate the tourism sector in order to protect jobs and local businesses.
Odisha has announced new products such as glamping and caravan tourism that are well within social distancing norms while Kerala has proposed better air connectivity between tourism spots with airstrips in Bekal, Wayanad and Idukki. Globally, the future of hospitality continues to look bright with the drop in cases and return of traveller confidence. What recent data released by STR on the US market demonstrates that vaccinations matter and while demand has increased to downturn levels, it remains skewed towards rural and outdoors. If nothing else, this should give us comfort that certain trends will remain relevant for the near term.
Global investor sentiment on hospitality remains upbeat
The Hospitality Investor Sentiment Assessment results revealed that over 40 percent of global investors are expecting a significant improvement in expectations of economic conditions over the next 12 months. While investor sentiment is expected to continue to improve, it remains diversified with marginally higher allocations towards higher risk/return segments of value-add and opportunistic.
Interestingly, hotels were expected to provide the best investment opportunity followed by serviced apartments, extended stay and lastly resorts. In terms of locations as well, capital cities and gateway cities were preferred over secondary cities and resort destinations. Mumbai made it to the top three most attractive cities for hotel investments in Asia for American investors in particular. While the biggest challenge for hospitality remained economic slowdown, the general outlook on the current hotel investment market cycle has shifted to a more upbeat sentiment.
Understanding new customer behaviours: Corporate transparency and a commitment to sustainability
Most of the prevailing trends that we see today, be it safety and hygiene, automation and robotics, customisation and personalisation, mobile and contact-less, social media and chatbots to drive engagement have all been around for a few years and have simply been accelerated into the mainstream by the pandemic. While discussions on sustainability and green messaging have been ongoing, many believe that environmental, social and coverage governance (ESG) factors will be key drivers for both socially responsible investors as well as consumers. As trust becomes the key currency, high value is being placed by consumers on integrity and transparency thus making hotel brands responsible for everything from employment practices to marketing messaging.
The value of human interactions
In a world where the boundaries between reality and illusion are blurred, customers are willing to pay a premium for trusted human interactions, relegating technology to the mundane. What is also expected to change is the way people will interact and make buying decisions prior to travel. The digital experience influenced by colour, sound and light through art and music will play an important role in the selection of a destination and brands that adapt to this form of messaging stand to win. While technology will continue to play a supporting role optimising transactions, enhancing engagement and ensuring data security and secure payments, it is the use of big data and the adaptation of neurosciences into guest loyalty programs and preference tracking that is to dramatically change the way we travel experience.
An annual survey on travel behaviour and attitudes by the Expedia Vacation Deprivation Study found that 81 percent of travellers took regular vacations where the primary goal was mental health. Furthermore, they are beginning to see a vacation as a chance to tackle stress and anxiety by “hitting the reset button”. There has been a lot of research conducted on the value placed by Millennials on experiences such as cultural immersion over “stuff you can buy”. This can be further explained by neuroscience as studies have shown that just anticipating a vacation can make you happier. In addition, a recent study found that life satisfaction rose 15 days before travel and the emotional benefits lasted for about one month after returning home. Perhaps the millennials are onto something after all?
—The author, Amruda Nair, Founder & Director, Araiya Hotels & Resorts. Views expressed are personal
(Edited by : Ajay Vaishnav)