The Covid-19 crisis has catalysed and amplified certain trends and behaviours that were already growing before the crisis, although more slowly. To use a high-level example: if we had believed, pre-Covid, that 75% of the world’s workforce would be working remotely by 2030, post-Covid, we believe that same threshold will be crossed in 2025. In this example, people have been forced to use new digital technologies in their day-to-day and, in doing so, have realised that they can be just as, if not more productive than in an office setting.
Growth-focused companies have reduced operational expenses and pivoted towards cash conservation because they have learned that runway is the most crucial thing in their business. Overall, people and companies both have learned to live with less.
We know where the hospitality world is going; we know that remote work will be the future of work. We know that people will choose healthier lifestyles and seek simple and authentic experiences rather than material ones. Most of all, we know more than ever that social connections are the most valuable experiences that any hospitality company can deliver.
Given all of this, we firmly believe that the future of tourism and travel depends on three main things: adaptability, flexibility and providing access versus ownership.
I believe the impact of the Covid-19 crisis will be deeper and broader than many expect, even today.
I also believe that, with regards to hotels, some brands will remain relevant, but many will disappear unless they can adapt. Adaptability is the ability to adjust to ever-changing conditions. On the supply side, we have access to more distressed hotels at better prices than ever before. On the demand side, people want healthier, greener and more ‘remote’ lifestyles. There is also a huge opportunity in the massive influx of remote workers entering the market. People who were previously tied to desks in city-based office buildings can now take their laptops and work from a beach in Portugal, a mountain in Costa Rica or a city of their choosing. This remote worker market has ballooned to a potential 44 billion new overnight stays per year and it cannot be ignored.
The industry also needs to learn to cater more to domestic travellers. International travel will take some time to recover.
As a result of the enormous growth in easy, cheap international air travel over the last few decades, many hotel brands built portfolios focused on prime international tourist locations, with hotels built for international, not domestic customers.
Increasingly, with fleets of jets grounded and airlines going out of business, brands with mixed secondary and remote locations will perform better as people look for escapism close to home.
Many successful companies are built on the idea of giving customers flexibility, and only now is this ethos coming to hospitality and tourism.
Since the onset of the crisis, Selina has learned that if you don’t give the customer easy choices, like simple cancellation, they will — quite rightly — hesitate to purchase a product.
People want, and should have, the security not to lose their money. They want to know that the brand has their back. It is the responsibility of all hospitality brands to provide that security and knowledge.
This is easier said than done; for companies to become truly flexible, and rethink long-held beliefs, they need to create new policies. They need to adapt.
Access versus ownership
Perhaps the most interesting dynamic to observe throughout this crisis is that between access and ownership.
While this trend started 20 years ago with the rise of the subscription model, there are now tens of thousands of companies worldwide that allow people access to things without owning them. Some might argue that demand for such models is a behaviour rooted in youth. Others will claim that it is merely a result of effectively managing personal finances. What we do know is that people increasingly want the perks of owning something, without the burdens — financial or otherwise — of doing so.
The subscription model explosion has already occurred in most industries: transportation, music, film and television, and retail. It has not happened yet in the hotel world. Sure, there are member clubs, but these are focused on food and beverages, and events. In hospitality, the barrier to widespread adoption of the subscription model has always been inventory management — advances in data collection and analysis have rendered this moot. We now know how much access we can give.
Hotel brands need to combine adaptability, flexibility, and access over ownership in order to appeal to the post-Covid-19 customer. We, as an industry, are not there yet.
In recent years, hotel products have existed in one of two mutually exclusive buckets: regular hospitality offerings and co-living offerings, but the future of hospitality is somewhere in the middle. People are more eager to connect and invest in experiences.
Looking at the trends laid out earlier, hotels have the opportunity to become a housing solution for many; and today’s hotel brands will need to adapt to capitalise on this opportunity.
Rafael Museri is the co-founder and chief executive officer of Selina
This article first appeared in the December/January print edition of fDi Intelligence. View a digital edition of the magazine here.